UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

   REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
  OR  
  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2002
  OR  
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number ..... 000-29938

Pacific Internet Limited

(Exact Name of Registrant as Specified in Its Charter)

Republic of Singapore
(Jurisdiction of Incorporation or Organization)

89 Science Park Drive, #02-05/06
The Rutherford, Singapore Science Park
Singapore 118261
(Address of Principal Executive Offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the Issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

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:

Indicate by check mark which financial statement item the registrant has elected to follow:

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Table of contents

CERTAIN DEFINITIONS AND CONVENTIONS

In this Annual Report, unless the context otherwise requires, all references to:
(i) "the Company" or "Pacific Internet" is to Pacific Internet Limited, a company incorporated in Singapore;
(ii) the ''Group'' and "PacNet" are to Pacific Internet and its subsidiaries and associated companies, including Pacific Supernet Ltd ("PSL" or "Pacific Supernet"), Pacific Internet (Australia) Pty Limited ("PIA"), Pacfusion Group Holdings Pte Ltd ("Pacfusion"), Safe2Travel Pte Ltd ("Safe2Travel"), Pacific Internet Philippines, Inc. ("PIPH") (previously known as Primeworld Digital Systems, Inc1.), Pacific Internet (Thailand) Limited ("PITH"), Pacific Internet India Private Limited ("PII") and Pacific Internet (Malaysia) Sdn. Bhd. ("PIMY");
(iii) ''Pacific Internet's ISPs'' or the ''Group's ISPs'' are to those Internet service providers in which the Group has a direct or indirect equity interest, including subsidiaries and minority investments; and
(iv) the ''Asia-Pacific region'' are to the Asia-Pacific region excluding Japan.
 

1 Change of name was effected on 12th February 2003

For purposes of calculating the number of dial-up subscribers, ''subscriber'' means, with respect to the Group's Singapore Australian and Malaysian ISPs, an account for Internet access; with respect to the Group's Hong Kong ISP, a user identification code for Internet access and with respect to the Group's ISPs in the Philippines, India and Thailand, the number of prepaid cards and starter kits sold and an account for Internet access. Information as to companies in which the Group does not have a majority interest has been provided by those entities and is believed by the Group to be accurate.
 
Unless otherwise specified, all references in this Annual Report to ''U.S. dollars'', ''dollars'', ''$'' or ''US$'' are to United States dollars and all references to ''Singapore dollars'' or ''S$'' are to Singapore dollars, the legal currency of tender in Singapore.
 
Unless otherwise indicated, all information in this Annual Report reflects a one-for-two reverse share split of the ordinary shares, par value S$2.00 effected prior to the sale of the shares offered pursuant to the initial public offering by the Company on February 5, 1999 (the "Offering"). Certain technical terms used in this Annual Report are defined in the Glossary of Internet Terms set out as Annex A to this Annual Report.
 

PRESENTATION OF CERTAIN FINANCIAL INFORMATION

 The Group prepares its financial statements in Singapore dollars and in conformity with generally accepted accounting principles in the United States (''US GAAP'').
 
For the convenience of the reader, this Annual Report contains translations of certain Singapore dollar, Hong Kong dollar, the Philippine Peso, Australian dollar, Indian Rupees, Thai Baht and Malaysian Ringgit amounts into U.S. dollars as at December 31, 2002 which were S$1.7352 = US$1.00, HK$7.7464 = US$1.00, Pesos 54.2250 = US$1.00, AU$1.7545 = US$1.00, Rupees 48.2000 = US$1.00, Baht 42.3220 = US$1.00, Ringgit 3.7722 = US$1.00, respectively. No representation is made that the Singapore dollar, Hong Kong dollar, the Philippine Peso, Australian dollar, Indian Rupees, Thai Baht, Malaysian Ringgit or U.S. dollar amounts shown in this Annual Report could have been or could be converted at such rate or at any other rate.
 
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Table of contents iii

PART I


 

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

N.A
 

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

N.A
 

ITEM 3. KEY INFORMATION

ITEM 3A. SELECTED FINANCIAL DATA


The following selected consolidated financial and other data should be read in conjunction with, and is qualified in its entirety by reference to, the Consolidated Financial Statements and Notes thereto included elsewhere in this Annual Report. The consolidated statement of operations data set forth below for the years ended December 31, 1998, 1999, 2000, 2001 and 2002, and the consolidated balance sheet data at December 31, 1998, 1999, 2000, 2001 and 2002 are derived from, and are qualified by reference to, the Consolidated Financial Statements audited by Ernst & Young, independent accountants. The information presented below should be read in conjunction with "Item 5. Operating and Financial Review and Prospects."

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Exchange Rate Information


The following table sets forth the average, high, low and period-end Noon Buying Rate between Singapore dollars and U.S. dollars (in Singapore dollars per U.S. dollar) for the periods indicated starting in 1998.
No representation is made that the Singapore dollar amounts actually represent such U.S. dollar amounts or could have been or could be converted into U.S. dollars at the rate indicated, any other rate or at all.
 
Fluctuations in the exchange rate between the Singapore dollar and the U.S. dollar will affect the U.S. dollar price of the shares.
 

For a discussion of the effect exchange rate fluctuations have on the business and operations of the Group, see "Item 5A. Results of Operations - Foreign Exchange Transactions" and "Item 11. Quantitative and Qualitative Disclosures About Market Risk."

ITEM 3B. CAPITALIZATION AND INDEBTEDNESS

N.A

ITEM 3C. REASONS FOR THE OFFER AND USE OF PROCEEDS

N.A

ITEM 3D. RISK FACTORS
 
Presented below are some of the risks that could affect the Group's business. These factors should be considered in connection with any forward-looking statements and other risks described elsewhere in this Annual Report. The risks below are not comprehensive - some risks are not yet known to the Group and some risks that the Group does not currently believe to be material could later turn out to be material. All of these risks could materially affect the Group's business, results of operations and financial condition.

2
Political and Economic

The Group currently operates in Singapore, Hong Kong, the Philippines, Australia, Malaysia, Thailand and India. As such, any economic decline or deterioration in the economic condition or political instability in any of these countries could adversely affect the Group's results of operations.
 
Currency Fluctuations


The Group transacts business mainly in Singapore dollars for its Singapore operations. In addition, a substantial portion of the Group's revenue is collected in foreign currencies such as Hong Kong dollars, Australian dollars, the Philippine pesos, Malaysian ringgit, Thai baht and Indian rupees. As a result, any significant depreciation in these currencies relative to the Singapore dollar could adversely affect the value of the Group's accounts receivable and could have a material adverse effect on our results of operations. There can be no assurance that the Group's financial position or results of operations will not be adversely impacted in the future due to fluctuations in exchange rates or economic turmoil in markets that the Group conducts its business. For further details, see "Item 5A. Results of Operations - Foreign Exchange Transactions".

Also see "Item 3A. Selected Financial Data - Exchange Rate Information" on risks relating to currency fluctuation between Singapore dollars and United States dollars. 
 
Impact from Severe Acute Respiratory Syndrome ("SARS")

SARS is an illness that has been reported in Asia, Canada and Europe since early 2003. The virus, first reported in Guangdong (China), Hong Kong and Hanoi (Vietnam), has now spread to other countries, including Singapore. The SARS situation has had an impact on the economy in Asia, particularly in China, Hong Kong, Singapore and Taiwan. One of the most noticeable impacts has been the reduction in travel to and within Asia. In the first quarter of 2003, the impact of SARS was directly felt in lower commission revenue from the Group's corporate travel subsidiary, Safe2Travel and a decrease in the Group's roaming revenue. The duration of the SARS situation remains uncertain and it is difficult to quantify the impact of SARS on the Group's business in the future.
 
Competition

The marketing and pricing decisions of the Group's competitors strongly influence PacNet's business. Increased competition in the industry has caused significant downward pricing pressure across all market segments. To the extent that potential and existing customers make decisions solely or primarily on price, PacNet may be unable to retain existing or attract new customers or may be forced to reduce prices to keep existing customers.
 
PacNet may not be able to compete effectively against established competitors, which have, amongst others, greater financial, marketing, infrastructure and other resources. PacNet's key competitors in the Internet access business are mainly major telecommunications carriers or affiliates of major telecommunication carriers in each country which PacNet has a presence. Amongst others, these competitors are SingNet Pte Ltd, Singapore Cable Vision Ltd ("SCV"), and Starhub Internet Pte Ltd ("Starhub") in Singapore, Telstra Corporation Limited ("BigPond"), WorldCom ("Ozemail") and Optus in Australia, Pacific Century CyberWorks Limited ("PCCW"), NTT Communications Limited ("HKNet") and CITIC Pacific ("CPC Net") in Hong Kong, Philippine Long Distance Telephone Company ("PLDT"), Tri-Isys Inc. and Globe Telecom in the Philippines, Internet Thailand Public Limited Company and Samart Corporation Public Limited Company in Thailand, TM Net Sdn. Bhd in Malaysia and Videsh Sanchar Nigam Limited ("VSNL") in India. In addition, as PacNet is not affiliated with any major telecommunications carrier, its major competitors or affiliates of its major competitors are often also suppliers of upstream telecommunications services on which PacNet's services are dependent. Accordingly, PacNet is vulnerable to pricing pressures as well as any anti-competitive measures which may be undertaken by such suppliers.
 
Potential Fluctuations in Quarterly Results

The Group's quarterly results depend on many factors that affect the revenues, expenses and cash flows, including internal operational and strategic factors as well as external economic and market factors. Due to all the various factors that may affect the operating results, the operating results may fluctuate significantly in the future and hence, it is likely that in some future quarters, the Group's operating results or growth rate will be below the expectations of public market analysts and investors. In such event, the price of the shares will likely be materially adversely affected. See "Item 5A. Results of Operations - Potential Fluctuations in Quarterly Results" for further details.

3
Government Regulations and Licenses

The Group's operations in seven countries are subject to various regulations governing providers of telecommunications services. See "Item 5A. Results of Operations - Government Regulations" for further details.
 
The Group cannot predict the impact, if any, that any future regulatory changes or development may have on its business, financial condition or results of operations. Changes in the regulatory environment relating to the Internet access industry, including regulatory changes that directly or indirectly affect telecommunications costs or increase the likelihood or scope of competition, could adversely affect the Group's business, financial condition or results of operations.
 
Liquidity and Capital Resources

The Company believes that its existing cash and cash equivalents, existing credit facilities and anticipated cash flows from operations, will be adequate to satisfy its operating and capital requirements through 2003.
 
The Company has an outstanding commitment to the InfoComm Development Authority of Singapore ("IDA") of S$2.2 million (US$1.3 million) for the period 2003 to 2005. See "Item 3D. Risk Factors - Operating Licenses and Other Regulatory Conditions" below. The Company expects that these expenditures will be funded primarily from its cash balances and to the extent that such cash flows are not sufficient, through bank borrowings or capital leases. However, there can be no assurance that funding will be available to the Company on a timely basis or at all, or on terms acceptable to it, especially in light of the general tightening of the credit market in Singapore. Any inability to raise funds may prevent the Company from implementing its plans or may require the Company to modify or abandon some or all of its plans and may have an adverse effect on its operations.
 
Management of Growth

The growth of the Group's operations has placed, and may continue to place a significant strain on its operational, administrative and financial resources and increased demands on its systems and controls. As such, the Group needs to implement additional operational and administrative systems, hire additional personnel and upgrade its networking, operating and financial control systems. To the extent the Group is unable to manage its growth, the results of operations, financial condition and cash flow of the Group could be adversely affected.
 
Failure of Systems

The success of the Group is highly dependent on its ability to develop, maintain and enhance the long term reliability of its network connections and associated security systems. Thus, the Group needs to continually expand and adapt its network infrastructure to cater to the needs of its customers. As such, the Group is likely to use substantial financial, operational and management resources to expand, maintain and enhance its Internet network infrastructure and associated security systems. In the event the Group is unable to expand and enhance its network infrastructure, capacity and security systems in a timely basis to meet the customers' changing requirements or evolving industry standards, this could adversely affect the operations and systems of the Group.
 
The Group is primarily responsible for physical protection of its network infrastructure. However, because the Group leases its capacity from telecommunications carriers, reliance is placed on these companies for physical repair and maintenance of the leased capacities. In the event of natural disasters, power failures, telecommunications failures or other unanticipated failures, the Group's network infrastructure may cause interruptions in the services provided to our customers. These interruptions could reduce the Group's revenues and have a material adverse effect on its business, financial condition and results of operations. The Group presently does not carry any natural disaster and consequential business interruption insurance to compensate the Group for such losses that may occur.
 
Internet and the Adoption of the Internet as a Medium of Commerce and Communication

The Group's present and proposed products and services are designed for Internet users. The Internet industry is a relatively new and rapidly evolving industry. It is susceptible to rapidly changing technologies, evolving industry standards, frequent product and service innovations and uncertain levels of demand. The Internet industry is also subject to skepticism regarding consistent quality of service, cost effectiveness, high-speed options, integration with existing business applications, security, confidentiality of sensitive data, reliability and ease of use, amongst others.
 
Reliance on Telecommunications and Other Service Providers

The Group operates predominately in seven countries. It relies extensively on regional and local telecommunication carriers as well as other service companies in these countries to provide data communications capacity across the various mediums. Any disruption in these telecommunications services would result in a disruption in the services provided by the Group. As such, the Group may or may not be able to fully guarantee the uptime of its services.

4

The Group also depends on suppliers of various hardware components. Some of the components used in providing its services may be acquired from one or more sources. If these suppliers fail to supply components and products in a timely manner and in the quantities as well as at the quality levels the Group requires, the Group may experience significant difficulty in providing its services to its customers. In such instances, the brand name and services provided by the Group may be affected adversely.
 
Control by Founding Shareholders

As of April 30, 2003, SembCorp Ventures Pte Ltd ("SembVentures") owns 41.3% of the Company's outstanding Shares and SIM Ventures Pte Ltd ("SIM Ventures") owns 13.8% of the Company's outstanding Shares. Together, these founding shareholders own 55.1% of the Company's Shares and have the ability, directly or indirectly, to control the Group and direct its affairs and business. This includes, but is not limited to, the election of directors and approval of most actions requiring the approval of its shareholders.
 
SembVentures is 100% owned by SembCorp Industries Ltd ("SembCorp Industries"), which indirectly owns all of SembVentures interest in the Group. Temasek Holdings (Private) Limited ("Temasek"), the primary investment arm of the Singapore government, has direct and indirect holdings in both SembCorp Industries and SIM Ventures. As a result Temasek owns indirectly 55.1% of the Company's outstanding Shares.
 
Conflicts of Interest Between the Company and Its Controlling Shareholders

Temasek, which has the ability to control the Company, is also the ultimate majority shareholder of the Company’s two principal competitors in Singapore. In addition, Temasek's effective interest in the Company could potentially affect the Company’s operations, including its expansion plans into other countries or markets. For example, its ability to operate and expand successfully in markets outside Singapore may be adversely affected if the Company’s target customers, government agencies or business partners in those countries believe that Temasek's indirect control over the Company will prevent the Company from providing its services in a manner consistent with that foreign country's national interests. In addition, the Company pays an annual management fee to SembCorp Industries for various management and administrative services provided.
 
Dividends and Other Returns on the Company's Investments in Subsidiaries and Associated Companies

In the future, the Company relies increasingly on dividends, advances and/or other related charges from its subsidiaries and associated companies to enhance the overall earnings potential of the Group. The Company's ability to obtain returns on its investments in its subsidiaries and associated companies is subject to the profitability of these entities, restrictions imposed by applicable laws as well as joint venture contracts and financing agreements in some instances.
 
Operating Licenses and Other Regulatory Conditions

The Group is subject to significant government regulation and licensing requirements in each of the countries in which the Group operates.
 
Singapore
On April 1, 2000, the Company was awarded a Facilities-Based Operator ("FBO") License by the InfoComm Development Authority of Singapore ("IDA"), which supersedes the IASP License previously held by the Company. The FBO License is valid for a period of 15 years from April 1, 2000. See "Item 5A. Results of Operations- Government Regulations". Under the terms of the FBO License, the Company is obliged to invest in specific network infrastructure in accordance with a stipulated three-year timeline, failing which the IDA may either
(i) call upon performance bonds or undertakings provided or posted by the Company as security for the due performance of the Company of the obligations to make the corresponding stipulated investments; or
(ii) impose a fine on the Company; or
(iii) revoke the Company's FBO License.
 
In addition, the Company is obliged to abide by the Code of Practice for Competition in the Provision of Telecommunication Services issued by the IDA, effective September 29, 2000.
 
In 2002, in view of changes in technology and customer demand since 2000, the Company proposed to the IDA to change the amount and nature of the network infrastructure investments and to extend the timeline for the fulfilment of the network infrastructure investments from three years to five years. The IDA has since accepted such proposals.

5
Hong Kong
The Group also holds an ISP license issued by the Hong Kong Office of the Telecommunications Authority to operate as an Internet service provider in Hong Kong. This license is issued on an annual basis, and is due for renewal every September.
 
The Philippines
The Group's Certificate of Registration as an ISP in the Philippines was issued by the National Telecommunications Commission in the Philippines, and is due for renewal on January 26, 2007. In addition, the Group obtained a 25-year franchise from the Philippines government on January 5, 2001 to establish, operate and maintain basic and enhanced telecommunications services in the Philippines.
 
Thailand
In Thailand, the Group is licensed to operate as an ISP, by way of an agreement between the Group's associated company in Thailand and the Communications Authority of Thailand. This agreement expires on October 30, 2006.
 
India
The Group's operations in India are conducted under a 15-year license issued by the Department of Telecommunications of India, and will expire in 2014.
 
Malaysia
In Malaysia, the Group has been registered as an Applications Service Provider Class Licensee with the Malaysian Communications and Multimedia Commission since December 13, 2001. As the registration of this licence is only valid for one year, fresh registrations must be submitted annually every December.
 
The failure or inability of the Group to comply with or perform any of the conditions of the above licenses, franchises, agreements or certificates, or any revocation, non-renewal or unfavourable amendment of the conditions of the same may have a material adverse effect on the business, financial condition and results of the operations of the Group.
 
Technological Changes

The Group's future success depends upon its ability to exploit leading technologies effectively and continuously enhance its in-house technical expertise so as to provide innovative and superior services that meets the discerning needs of its customers. If the Group is unable to successfully exploit these opportunities, its ability to develop and introduce new services to market in a timely manner may be compromised, thus weakening its competitive appeal against existing and/or future competitors and new markets. Keeping up with technological advances will be expensive, and it is possible the Group will lack the necessary resources to do so.
 
The Group also faces the risk that fundamental changes may occur in the delivery of Internet access services. Currently, Internet services are accessed primarily by computers and are delivered by telephone lines. In the future, Internet services may be more readily accessible by other medium such as third generation mobile phones or become deliverable predominantly through other means such as wireless transmission. The Group will have to develop new technology or modify its existing technology to accommodate these developments. Its pursuit of these technological advances, whether directly through internal development or by licensing arrangements, may require substantial resources which may affect the Group's results of operations and financial condition.
 
To compete successfully, the Group also depends on the continued compatibility of the Group's services with hardware and software offered by various vendors. It is unclear whether any Asia-Pacific or international industry standards will be established or whether the Group will be able to conform to these new standards in a timely and competitive manner. The introduction of new products or services and any change in industry standards could affect the sale of existing products or services. This could reduce the Group's revenues, adversely affecting its business, financial condition and results of operations. Failure to anticipate these prevailing standards could have a material adverse effect on the Group's business and results of operations. In addition, services or technologies developed by others could render the Group's services or technology uncompetitive or obsolete.
 
Vulnerability of Network Infrastructure To Viruses and Other Security Breaches

Despite the implementation of security measures, the Group's network infrastructure is vulnerable to computer viruses or similar disruptive problems caused by its subscribers or other Internet users. Computer viruses or problems caused by third parties could lead to interruptions, delays or termination of service to its subscribers. Inappropriate use of the Internet by third parties could also potentially jeopardize the security of confidential information stored in the Group's computer systems or those of its subscribers. This may cause losses to the Group or its subscribers or deter potential customers from subscribing to its services. Inappropriate use of the Internet includes attempting to gain unauthorized access to information or systems - commonly known as "cracking" or "hacking." Fixing problems caused by computer viruses or other inappropriate uses or security breaches may require interruptions, delays or termination of the Group's services, which could result in lost revenues and disgruntled subscribers. To the extent the Group stores and transmits proprietary information such as credit card numbers, computer viruses or security breaches could damage its reputation and expose the Group to possible liability. The Group does not carry "errors and omissions" or other insurance covering losses or liability caused by computer viruses or security breaches.
  6
Dependence on Key Personnel

The Group's success depends significantly on the continued efforts of the Group's senior management team and its personnel. The loss of the service of one or more key personnel could have a material adverse effect on the Group. The Group does not maintain "key man" life insurance policies. The Group believes that its future success will depend in large part upon its ability to attract and retain additional high caliber personnel. Competition for such personnel is intense. There can be no assurance that the Group will be successful in attracting and retaining the personnel it requires and that the existing senior management team will remain employed by the Group.
 
Liability of Information Disseminated Through the Group's Network

The laws relating to the liability of Internet access providers and on-line services companies for information carried on or disseminated through their networks is evolving rapidly. The Group could therefore be subject to lawsuits, seeking to impose liability on the Group as it carries or disseminate information. Although no such claims have been asserted against the Group to date, they are possible, and if asserted, may be successful. Furthermore, although the Group has attempted to limit its liability by the terms of its standard service agreement, it is unclear whether its efforts would be successful in the event of any litigation or other claim against the Group. As the laws in this area develops, the potential imposition of liability upon the Group for information carried on and disseminated through its network could require the Group to take measures to reduce its exposure to such liability. These measures may be expensive and may require the discontinuation of various products or services. Any costs that are incurred in defending against asserted claims or paid to satisfy successful claims could materially adversely affect its business, financial condition and results of operations.
 
Intellectual Property

Although the Group believes that its success is more dependent upon its technical, marketing and customer service expertise than its proprietary rights, the Group relies on a combination of trademark and contractual restrictions to establish and protect its technology. See "Item 5C. Research and Development, Patents and Licences, etc - Proprietary Rights" for further details.
 
The laws of the countries in which the Group currently operates or may in the future operate may treat the protection of proprietary rights differently from, and may not protect the Group's proprietary rights to the same extent as do, laws in the US.
 
The Group may from time to time licence or use proprietary rights of third party providers for its operation. To the extent possible, the Group seeks assurance from such third party providers that they have proper authority to use or licence such proprietary rights. However, any infringement of any proprietary rights or other rights belonging to other parties arising from the Group's licence or use of third party proprietary rights may adversely affect the Group's business, financial condition or operations.
 
Material Litigation

The Company is involved in the IPO Allocation Suit more particularly described in Item 8A. See "Item 8A. Consolidated Statements And Other Financial Information - Other Information" for further details. Due to the inherent uncertainties of the lawsuit, the Company cannot accurately predict the ultimate outcome of the lawsuit. An unfavorable outcome could have a material adverse effect on the business, financial condition and results of operations of the Company in the period in which the lawsuit is resolved.
 
Ability to Maintain Profitability

In 2000 and 2001, the Group incurred a net loss of S$22.4 million and S$15.0 million, respectively. In 2002, the Group managed to achieve profitability with full-year net income of S$2.9 million (US$1.7 million). Although the Group has continued to remain profitable in the first quarter of 2003, its ability to maintain profitability may be affected if it is unable to successfully address the risks and uncertainties faced, which in particular are: -

7
  • The duration of the SARS situation remains uncertain and it is difficult to quantify the impact on the Group’s business in future quarters.
  • The Group’s inability to quantify the impact of stock-based compensation cost for certain employee stock options due to variable accounting on the Group’s net income, until the end of each quarter. Depending on the closing stock price at the end of each quarter, this cost may have a positive or negative impact on the Group’s net income.
  • Significant price competition in the existing markets where the Group operates may reduce its operating margins, resulting in net loss or lower net income.
  • Increased expenses resulting from leasing of additional capacity may adversely affect the Group’s cost structure.
  • Losses incurred by the Group’s operations in Malaysia, India and Thailand may adversely affect the Group’s performance.
  • A further deterioration or lack of improvement in the economy in the Asia Pacific region could negatively affect the Group’s revenues.
Under SFAS 142 - Goodwill and other intangible assets, if the book value of the Group's goodwill exceeds its fair value, an impairment loss will be recognized, which may adversely affect the Group's financial performance and its ability to maintain profitability.
 
Volatility of Share Prices

Pacific Internet's share price may fluctuate in response to a number of events and factors such as quarterly variations in operating results, announcements of new services or pricing options by the Group or its competitors, changes in financial estimates and recommendations by securities analysts, the operating and share price performance of other companies that investors may deem comparable, news report relating to trends in Internet and IT industry and announcements by the Group or its competitors of significant acquisitions, changes in laws in the countries which the Group operates, strategic partnerships, joint ventures or capital commitments.
 
In addition, the stock market in general, and the market prices for Internet-related companies in particular, have experienced extreme volatility that often has been unrelated to the operating performance of such companies. These broad market and industry fluctuations may adversely affect the price of Pacific Internet's share, regardless of the Group's performance.
 
Certain Anti-takeover Provisions Under the Companies Act May Affect the Company's Share Prices

Certain provisions of the Singapore Companies Act (Chapter 50) and the Singapore Code on Take-overs and Mergers may delay, deter or prevent a future takeover or change in control of the Company. Anyone acquiring an interest (either on his own or together with parties acting in concert with him) in 30% or more of the Company's voting shares must extend a takeover offer for the remaining voting shares. A person holding between 30% and 50% of the Company's voting shares (either on his own or together with parties acting in concert with him) must also make a takeover offer if that person acquires an additional 1% of the Company's voting shares in any 6-month period. These provisions may discourage or prevent certain types of transactions involving an actual or threatened change of control of the Company. Such provisions could limit the price that investors may be willing to pay for the shares of the Company.
 
Payment of Dividends in the Foreseeable Future

The Group does not anticipate paying cash dividends in the foreseeable future.
 
Possibility of Divestment By Major Shareholder

SembCorp Industries, the holding company of SembVentures, which is in turn the major shareholder of the Company, had previously announced its intention to seek a strategic investor to bring further value to the Group, and may divest all or a substantial part of its stake in the Company in that process. The Company believes that SembCorp Industries continues to actively consider such a divestiture. The possible divestment, and the identity and future plans of the strategic investor or investors, could materially affect the business and operations of the Group and the market price of the shares of the Company.
 
Singapore and United States Taxation Matters

Shareholders of the Company may be subject to certain taxes in Singapore or the United States. See "Item 10E. Taxation" for further details.
 
Table of contents 8

ITEM 4. INFORMATION ON THE GROUP

ITEM 4A. HISTORY AND DEVELOPMENT

Organization


Pacific Internet Limited was incorporated in the Republic of Singapore on March 28, 1995 as Sembawang Media Pte Ltd, and changed its name to Pacific Internet Pte Ltd on March 17, 1998. On November 23, 1998, it was converted to a public company and was listed on NASDAQ on February 5, 1999. Pacific Internet Limited's registered office and principal place of business are located at 89 Science Park Drive, #02-05/06, The Rutherford, Singapore 118261. The Company's telephone number is (65) 6872 0322. The Company's agent for service is CT Corporation System located at 1633 Broadway, New York, New York 10019, USA. Their telephone number is (212) 245 4107.
 
History and Development

Since starting commercial operations in Singapore in 1995, the Group has grown both organically and through acquisitions to become a leading provider of Internet access and value-added Internet services with established presence in Singapore, Hong Kong, the Philippines, Australia, India, Thailand and Malaysia. The Group has developed a successful ISP model based on its understanding of Asia-Pacific business requirements. PacNet has been both aggressive and innovative in its strategy to market a wide range of Internet access alternatives and Internet services to consumers and corporate customers.
 
The Group was able to ride through the difficult climate and emerged stronger to achieve full year profitability, amidst the economic uncertainties in 2002. Pacific Internet continued to drive business growth in consumer and business markets by focusing on broadband, domestic and regional corporate segments, international partnerships and value-added services.
 
In 2002, the Group further strengthened its corporate business in each country and saw a 15.5% year-on-year growth compared to 2001. At the same time, it increased its coverage from six to seven countries by launching operations in Malaysia. While most telecommunications companies and ISPs concentrate on domestic markets, Pacific Internet continued to harvest its existing corporate customer base to grow its regional corporate customer base and to up-sell value-added services to them. The Group's direct presence in seven countries, coupled with the extensive peering and international partnerships, makes Pacific Internet an attractive and reliable one-stop service provider for multinational corporations.
 
As broadband emerges as the preferred access mode in the mature markets of Singapore and Hong Kong, the Group has continued to observe a migration from dial-up to high-speed Internet access in both consumer and corporate segments. Additionally, cheaper pricing for broadband services in each of these countries has helped to drive growth in subscriber base for the Group. In 2002, the Group's broadband subscriber base grew by 118.2%, and revenue by 132.3% compared to the previous year. Broadband revenue became the second largest revenue contributor after dial-up revenues. Across the region, dial-up remains a primary source of access to the Internet especially where broadband is not widely available and the price gap between dial-up and broadband remains significant.
 
Besides growing Pacific Internet's connectivity services in the consumer and corporate segments across the region, the Group also launched new value-added services to cater to the varying needs of end users, small office home office ("SOHO") customers, small and medium enterprises ("SMEs"), domestic and multi-country enterprises. These services are offered on top of the Group's core Internet connectivity services with the objective of enhancing offerings to add value to customers' online communication needs as well as helping the Group to grow the average revenue per user.
 
The Group will continue to execute strategies in broadband, corporate and regional businesses to drive growth. At the same time, Pacific Internet will seek new international partnership opportunities to expand coverage in Asia-Pacific and leverage on the respective expertise and technologies of these partners to strengthen our service offerings.
 
Capital Expenditures, Investment and Divestment

In 1999, capital expenditures were mainly incurred for business and equity acquisitions and purchase of fixed assets, primarily funded by the net proceeds from the Company's first and second public offerings in 1999. In May 1999, the Company's wholly-owned subsidiary in Australia, PIA, acquired the business of Mira Networking Pty Ltd ("Mira") for approximately S$3.7 million. In June 1999, the Company acquired the remaining 49.9% interest in PSL from its minority shareholder, Pacific Supernet Pte Ltd for a consideration of S$16.8 million. In July 1999, PIA acquired Zip World Pty Ltd ("Zip World") for S$11.3 million, net of cash acquired. In the same month, the Company also acquired a 40.0% interest in PW Holding Corporation ("PWC"), the holding company of PIPH, for approximately S$0.7 million net of cash acquired.

9

In 2000, capital expenditures were mainly incurred for business and equity acquisitions and purchase of fixed assets, primarily funded by the remaining net proceeds from the Company's first and second public offerings in 1999 and bank borrowings. In January and February 2000, through PIA, the Group acquired the businesses of Kralizec Pty Ltd ("Zeta") and Hub Communications Pty Limited ("Hub") for S$1.4 million and S$0.5 million, respectively. Also in January 2000, Pacific Digiway Limited ("Digiway"), an investment holding company, was incorporated in Thailand. The Company subscribed to 4,900 ordinary shares of Baht 10 each, representing a 49% equity interest in Digiway. Digiway in turn holds a 26% direct equity interest in IT Star Co., Ltd. In March 2000, the Company completed the acquisition of a 49% direct equity interest in IT Star Co., Ltd., which is the holding company of World Net & Services Company Limited ("World Net"), an ISP based in Thailand for S$2.0 million. In April 2000, PIA acquired Hunterlink Pty Ltd ("Hunterlink"), an ISP located in Newcastle, Australia for S$5.9 million. In May 2000, the Group acquired the travel and travel-related businesses of Safe & Mansfield Travel Group Pte Ltd ("SMTG") through Pacfusion for S$10.0 million. In September 2000, the Company disposed off its 15% equity stake in 1-Net Singapore Pte Ltd ("1-Net Singapore") for S$1.9 million.
 
In 2001, capital expenditures were mainly incurred for purchase of fixed assets. During the year, the Group issued 5,084,746 shares of Pacfusion Limited at US$0.59 per share to an unrelated party. As a result of the issuance, approximately S$5.5 million was raised and the Group's interest in Pacfusion Limited decreased from 100% to 92.11%. On March 16, 2001, following a restructuring exercise, the Group disposed 8.9% of its equity interest in PIPH for S$0.2 million to an unrelated party, reducing its direct interest in PIPH from 40.0% to 31.1%. As a consequence of the restructuring, the Group was able to meet the criteria set out by SFAS 94 - Consolidation of All Majority-Owned Subsidiaries and EITF 96-16 - Investor's Accounting for an Investee When the Investor Has a Majority of the Voting Interest but the Minority Shareholder or Shareholders Have Certain Approval or Veto Rights, and ceased equity accounting for its investment in PIPH and consolidated PIPH from that date. On December 19, 2001, Pacific Digiway Limited ("Digiway"), an investment holding company, increased its equity interest in PITH from 26% to 41%. As a result, the Company's effective interest in PITH was increased from 61.7% to 69.1%.
 
In 2002, amount of capital expenditures incurred totaled S$5.5 million (US$3.2 million), which was mainly for the purchase of network equipment on replacement basis. There was no divestment during the year.
 
ITEM 4B. BUSINESS OVERVIEW

Industry Background

Over the past two years, the global telecommunications and Internet industry has been impacted by the challenges brought about by the effects of the worldwide economic slowdown. In particular, operators in Europe and the United States like Deutsche Telekom, British Telecom, Worldcom and Global Crossing have had to battle large corporate debts and implement significant restructuring, cost cutting and bankruptcy protection measures to stay afloat.
 
According to an International Telecommunications Union ("ITU") report released in December 2002, the impact of the worldwide economic slowdown was not as significant in Asia Pacific. The report found that during this period, the Asia Pacific region began to emerge as the new global telecommunications epicenter, with seven out of the world's top ten operators by profit margin emerging from Asia Pacific. In addition, the region is leading in mobile subscription and broadband growth as well as development of advanced telecommunications technology.
 
The telecommunications market is expected to continue its growth momentum, growing by 11% over the prior year. This growth will be driven predominantly by deregulation and pent-up demand in developing countries (IDC, 2003). Internet subscribers in the Asia Pacific are estimated to total some 78 million in 2002, (Gartner Dataquest, 2001) with Internet penetration rates ranging from 46% in Australia to 1% in India (Infocomm Development Authority of Singapore, January 2002).
 
At the end of 2002, the Asia Pacific region had some 14.5 million subscribers accounting for 40.4% of global DSL subscribers (Point Topic, 2003). Although the region's broadband market will continue to be dominated by Asymmetrical Digital Subscriber Lines ("ADSL") and cable broadband, the emergence of new high speed access technologies and lower subscription fees will further fuel broadband growth with more cost-effective alternatives (The Yankee Group, 2002). In turn, this will pave the way for the introduction of more multimedia rich applications across the region, with ISPs racing to roll out services for consumers and businesses.
 
The Group continues to see growth potential in the Asia Pacific region. With presence in seven countries in the Asia Pacific region, the Group continues to tap into developing countries where Internet penetration has much potential, and to push on strongly in developed countries where broadband access and applications are increasingly popular.
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Strategy

The Group's ultimate overall strategy is to be the leading End-to-End Internet service provider in Asia-Pacific, providing a full suite of Internet-related services to both consumers and corporate customers. The Group believes that, as the Internet market in the Asia-Pacific region grows, the critical competitive factors will be market leadership and access to a substantial subscriber base for Internet access service across geographic markets in the Asia-Pacific region. Market leadership and a substantial Internet access subscriber base will then form the foundation for value-added services and e-services. The Group believes that it is well positioned to be an End-to-End Internet service provider, from providing basic Internet access service, data hosting and applications development to providing a one-stop service to corporate customers for their Internet-related business requirements.
 

The Group will focus on the following strategies to grow its business:

  • Focus on broadband services, a fast growing industry segment. The Group plans to focus on growing broadband business aggressively in markets that are ready to adopt broadband access while defending its narrowband business. The Group will also target its existing narrowband subscriber base to migrate upwards to its broadband access plans. In markets that are not ready to adopt broadband access, the Group will continue to grow its narrowband subscriber base. The Group plans to introduce broadband access via as many modes of access as possible (for example, DSL and cable) where a viable business model can be pursued. This strategy is heavily dependent on the telecommunications regulatory framework in each market providing open access to different infrastructure for broadband access service providers.
  • Expand strongly in the corporate market, which gives better margins. The Group plans to continue to expand its corporate business strongly as margins from corporate business are better than consumer business. Regional corporate business is also a specific area that the Group plans to expand by leveraging on corporate clients that are common across the countries that the Group operates in. The Group targets multinational corporations with regional presence by offering regional connectivity as a one-stop reliable service provider.
  • Grow the regional businesses outside Singapore by increasing subscriber base in the existing six countries and exploring new markets. The Group plans to grow the regional businesses outside Singapore to achieve leadership in each of the market it operates in. Besides the existing countries, the Group plans to explore new markets in the Asia-Pacific region to further extend its regional reach.
  • Introduce innovative services and solutions to create greater value for customers. Besides basic Internet access, the Group plans to continue to innovate to develop new services and solutions to create greater value for its customers. The Group believes that such innovative services and solutions will increase the loyalty of its customers.
  • Leverage on international corporate partnerships to accelerate our growth in existing and new markets. The Group plans to seek partnerships with international corporations to accelerate its plan to expand its existing markets and to enter new markets. These international corporations include global carriers that plan to expand into the Asia-Pacific region.
The Group believes that its ultimate goal of becoming the end-to-end Internet service provider will position it to grow together with corporate customers as they increase their Internet-related business requirements. The Group believes that this one-stop service concept will propel the Group forward to become one of the leading Internet players that can cater to the varying Internet-related needs of both consumers and corporate customers in the Internet age.
 
Services

The Group provides a comprehensive suite of Internet solutions to meet the varying needs of consumers and corporate customers of every size from SOHOs, start-ups, SMEs to regional and multinational corporations with multi-site presence. Given that Pacific Internet is the largest pan-Asian telco-independent ISP by geographical reach, we are uniquely qualified to provide a one-stop service for regional connectivity across the seven countries we operate in as well as other parts of the world through our partners.
 
From basic narrowband and broadband access to value-added Internet services, the Group plans to attract customers, increase hourly usage and create additional revenue streams. By offering high-quality, price-competitive Internet access and related services at a variety of price points, the Group seeks to develop both the consumer and corporate segments in each geographic market it enters.

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The following table shows the source of the Group's gross revenue for the following periods:
ACCESS BUSINESS

Major Internet Access Products

Dial-up access - Internet access for consumers and small corporate customers using modems to dial into the Group's ISP Dial-Up network at a speed of up to 56 Kbps.
 
Network ISDN Access - high-speed dial-up Internet connection at a speed ranging from 64 - 256 Kbps, offered to both consumer and corporate market.
 
Leased line access - Twenty-four hours high-speed dedicated Internet access to carry data traffic at a speed from 64 Kbps up to a 2Mbps Internet connection.
 
Consumer broadband ("ADSL") and Corporate broadband ("SDSL") - offer up to 1.5Mbps broadband connectivity for both consumer and corporate users under time-based or volume-based packages.
 
Wireless broadband @ home - targeted at homeowners who prefer a simple and hassle-free connection providing mobility and flexibility in the home environment.
 
Wireless broadband @ work - targeted at small office home office ("SOHO"), small and medium enterprises ("SMEs") and companies wanting to have a wireless high speed setup in the office, which offers greater flexibility and mobility within the office environment.
 
Value-Added Internet Services for Consumers

The Group's Internet services for consumers are designed to meet the needs of individuals with varying levels of Internet experience and Internet utilization. Value-added services, which are available for an additional fee, include wireless hotspots, which allow consumers to enjoy Internet roaming at selected hotspots, e-mail paging and other message services and remote access to Internet accounts. In Singapore, gaming, entertainment and e-learning content have been introduced on a chargeable basis to drive consumer broadband subscription.
 
Value-Added Internet Services for Corporate Customers

The Group's value-added Internet services for corporate customers include email outsourcing service, web hosting, Internet Data Center Service, Internet Backup Service, Managed Security Service, Managed Virtual Private Network Service and International Roaming Service. The Group also offers e-services through its subsidiary, Pacfusion.
 
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E-COMMERCE BUSINESS

Pacfusion offers web-based solutions in the following areas:

Enterprise Portal Development - Includes building of enterprise portals for the purpose of marketing and relationship management, content publishing and management, personalization, serving of web services and legacy system integration.
 
E-Commerce Applications - Offers online payment and transaction management systems like credit card and cash card implementations and integration with back-end fulfillment services providers, along with catalog tools for e-retailing.
 
Enterprise Business Solutions - Includes e-business applications like knowledge management, intranets within the enterprise and e-procurement solutions to facilitate, integrate and streamline solutions with the trading partners.
 
Hosting and Maintenance - Leveraging on its parent, Pacific Internet, Pacfusion bundles hosting and maintenance services along with development, offering customers a one-stop solution.
 
TELECOMMUNICATIONS

In 2000, the Company launched its prepaid International Direct Dial ("IDD") service. In 2001, the Company scaled down this business due to a change in strategic direction to focus on its core competencies in Internet-related services. This service has since been terminated in 2002.
 
TRAVEL

The Group's travel business branded Safe2Travel is the second largest corporate travel agency in Singapore. Its core business is business travel management for corporate customers. Safe2Travel provides a range of services including air ticketing, hotel reservation, car rental booking, corporate incentive travel, trade mission travel and other customized travel arrangements.
 
Pricing

The Group employs a number of pricing structures for its various Internet access packages. For dial-up access, the Group typically employs a two-tiered scheme, with a flat monthly rate for a fixed number of hours, followed by an hourly charge for additional hours. A similar pricing structure is applied to the broadband access packages, except the packages are either denominated in usage hours and/or volume. For both dial-up and broadband access packages, there are also unlimited usage hours and/or volume packages available. The Group believes that this pricing strategy encourages more efficient use of the Group's expensive international bandwidth. The Group's leased line customers are billed using a fixed monthly rate, which does not vary with usage levels.
 
The Group monitors its pricing strategies very closely to ensure competitiveness and constantly reevaluates its pricing strategies.
 
Marketing and Sales

The Group's sales and marketing efforts are targeted at both the consumer and corporate customers segments using the following mediums:

Advertising -Services are advertised in print, radio, electronic and broadcast media.
 
Tradeshows - The Group participates in selected tradeshows.
 
Direct Marketing -Services are promoted directly to customers through promotional inserts in mail, packages.
 
Member Referral Program - Recognizing the power of word-of-mouth marketing, existing customers are rewarded for referring and recommending services to their friends.
 
Channel Marketing - Channel partners are used to extend coverage of both the corporate and consumer segments. They include leading hardware and software manufacturers, system integrators and business partners in selected vertical markets.
 
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Direct Sales Force - Sales executives are deployed at retail outlets and via telemarketing selling direct to consumers. For corporate business customers, a direct corporate sales team grouped by industries, target at the respective vertical markets. Additionally, the Group employs a regional sales team that serves multinational corporations with multi-site presence.
 
Singapore

First Wireless Services ISP
Following the introduction of consumer wireless services for home and hotspots in 2001, Pacific Internet introduced wireless solutions for businesses in 2002. This completed the suite of Wireless Broadband services with the aim of offering our consumer and corporate customers complementary services for seamless, convenient and fast connectivity at home, work and hotspots.
 
Industry Awards
In 2002, Pacific Internet continued to win industry recognition through a series of awards including Business Management Asia Magazine's Most Innovative ISP Award and TelecomAsia Magazine's "Best Asian ISP" Award, which the company has won for four consecutive years.
 
Business Partnerships
Pacific Internet established a strategic partnership with Hitachi Data Systems, a world leader in data storage technology to jointly launch an Internet Backup Service ("IBS"). This is a value-added data storage services for SMEs and SOHOs in Singapore. Pacific Internet also established partnerships with companies like SonicWall to provide managed firewall services to corporate customers and Boostworks to offer "Speedbooster", Singapore's first Web acceleration service using compression technology for our dial-up and broadband customers.
 
Participation in the Singapore Powerline Trial
In line with Pacific Internet's strategy to innovate and stay at the forefront of broadband and Internet development, we completed a six-month Powerline Broadband trial with Singapore Power Telecommunications, the telecommunications arm of Singapore Power Ltd in 2002. Involvement in these trials, provided Pacific Internet with an opportunity to try out and understand the Powerline technology and assess its commercial potential. Powerline broadband technology is an alternative broadband access solution, which can complement existing DSL ("ADSL and SDSL") services for corporate and consumer segments. Currently, Pacific Internet is assessing the commercial potential with Singapore Power Telecommunications before deciding on a commercial roll-out.
 
First 3-Dimensional Massive Multi-Player Online Role Playing game
In May 2002, Pacific Internet officially launched its paid online gaming business with the commercial launch of El Kardian, a Massive Multi-Player Online Role Playing Game ("MMORPG"), which was introduced for beta trial the previous year via our Pan Asian Gaming Network ("paGn"). This was followed by the commercialization of another MMORPG game, Darkspace in November.
 
The paid online gaming business operates on both a pre and post-paid model and will enable Pacific Internet to grow its online gaming and broadband services to deliver more exciting and compelling value-added services to customers. The objective is to drive growth through a new untapped revenue stream and further expand the online gaming business footprint in Asia. Leveraging on the Group's regional presence, El Kardian has also been introduced to customers in Hong Kong and Macau in December 2002.
 
Hong Kong

First ISP to provide Broadband Roaming Service
Pacific Supernet introduced broadband roaming enabling consumer and corporate customers to connect at high-speed at different Internet hotspots, such as hotels, shopping malls and airports while travelling. The Broadband Roaming Service is positioned as a premium value-added service, addressing the demand of individuals and companies enabling them to access corporate networks while on business trips.
 
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Launch of Enterprise Voice-over-Internet Protocol ("VoIP") Solution "BizVoice"
The introduction of this value-added service enabled Pacific Supernet to up the ante against traditional international voice services offered by telecommunications companies. For the first time, companies could enjoy cost savings and unlimited voice and data communications by paying a fixed flat rate to extend domestic and regional intra-company communications via existing corporate networks in Guangdong and Hong Kong. BizVoice is targeted at SMEs and large multi-national corporations ("MNCs") looking for a flexible and scalable service that supports a full range of connectivity modes from broadband, leased line and IPLC, combined with IP-VPN to ensure secure voice and data exchange. In the future, there are plans to extend coverage to customers' regional offices in other parts of China.
 
Launch of Various Corporate and Consumer Broadband Services
To further capitalize on the growth of broadband in Hong Kong, Pacific Supernet has continued to enhance its range of broadband offerings for the home and business segments in 2002. In February 2002, it was the first ISP in Hong Kong to launch a 6Mps Broadband service offering a high quality and cost-effective solution to medium and large corporations, enabling them to deploy innovative web-based content and applications faster and cheaper.
 
In the same month, Pacific Supernet introduced a DIY ("Do-it-yourself") Broadband Service that allows end users to set up their own home network, quickly and conveniently, through a simple plug-and-play interface. This service is positioned as a convenient option for end users to drive the demand for broadband ADSL services. It provides a cost saving choice by eliminating the installation charge for customers.
 
The Philippines

Prepaid Market
In an effort to grow our pre-paid business and increase sales in a highly competitive market, PIPH extended their dealer coverage for pre-paid services by signing 300 new dealer agreements in 2002.
 
Launch of Network Broadband Access for Corporates
PIPH launched a network broadband service for SMEs and SOHOs in Metro Manila. To strengthen the service offerings, it explored additional partnerships with local telecom companies to gain access to alternative infrastructure for two digital subscriber line packages: network broadband access and network broadband access plus. The aim is to enable PIPH to further tap into the growing broadband market and complement existing suite of corporate Internet solutions.
 
Extension of Country Coverage
PIPH extended coverage of the Philippines to include Davao city in the southern Philippines island of Mindanao. With the addition of Davao, PIPH is currently present in seven cities with the other six being Metro Manila, Cebu, Bulacan, Cavite, Laguna, and Batangas.
 
Australia

New Consumer and Corporate Broadband Services
In 2002, PIA launched a range of cost-effective high consumption broadband services called Big Pipe DSL. The Big Pipe DSL range of services includes 5Gigabyte ("GB"), 10GB, 20GB and 50GB of data transfer per month for high traffic broadband users. The new services have broadened PIA's range of DSL services and enhanced its capability to deliver competitive, scalable and tailored DSL solutions for high volume traffic broadband companies like design and architecture firms.
 
Hunterlink, PIA's subsidiary in the Newcastle area has also launched an affordable high-speed DSL broadband and a wireless LAN service to expand its broadband DSL service to a national level. As part of the Group, Hunterlink is also able to extend multi-country coverage for customers located in Australia, leveraging on the Group's presence across seven countries in the Asia Pacific.
 
The launch of PIA's new HomeDSL services in March 2002 was made possible by the reduction of wholesale DSL pricing by Telstra. The new service enabled consumers to customize their own DSL plan by selecting the speed, megabytes, optional extras and contract period. HomeDSL is part of PIA's strategy to help Australians move online with high-speed Internet via affordable entry plan pricing, competitive and flexible plans and pay-by-the-month offerings.
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Partnership with NEC Nextep
PIA partnered with NEC to deliver a new business grade broadband DSL service over NEC's NEXTEP network in Australia. By delivering broadband DSL over the NEXTEP network, PIA was able to improve network availability and reliability of its DSL services for the business market. For the first time, PIA was able to offer Premier Business DSL customers a 99.9% service uptime guarantee.
 
Industry Recognition
In AC Nielsen's Annual Australian Online Internet User Survey, PIA was rated number two amongst Australian ISPs for overall customer satisfaction. In addition, PIA was also rated number one in the category of Customer Satisfaction for Speed of Connection.
 
The leading regional Internet Service Provider in Newcastle, Hunterlink won the Innovative User of Telecommunications Award at the Australian Telecommunications Users Group ("ATUG")-Hunter Valley Telecommunications Industry Awards 2002. The Innovative User of Telecommunications Award is awarded annually and recognizes excellence in the telecommunications arena in Hunter Valley.
 
India

Head Office Shift to Bangalore
PII has further strengthened its infrastructure and consolidated the operations to be closer to their corporate customers in order to service them better. PII continued to maintain direct present in three cities, Mumbai, Bangalore and Pune, but have shifted the headquarters to Bangalore, for closer proximity to the many domestic, multinational and information technology firms located there.
 
Opening of Cyber cafe in Pune
PII converted part of the office space in Pune to a Cyber Cafe to improve services to the student community in this location. The opening of the Cyber Cafe has also contributed to PII's brand building efforts in support of the strategy to grow market share in this market segment.
 
Greater Focus on Global Roaming and Value-Added Services
In line with the strategy to offer a comprehensive range of services besides connectivity to corporate customers, PII invested in a data centre in Bangalore and introduced new co-location and hosting value-added services for corporate customers. In addition, partnerships with global roaming partners like iPass were strengthened to enhance roaming offerings for corporate customers and cater to their communication needs while travelling.
 
Thailand

Expansion of Consumer Internet Services Nationwide
In April 2002, PITH signed a contract with the Telecommunications Organization of Thailand ("TOT"), which allowed PITH to provide Internet services covering all 76 provinces nationwide. This strategic tie-up provided PITH with an extended presence across the country via a larger distribution network to serve the needs of customers throughout Thailand for the first time. In tandem, PITH also launched the Unlimited X-Treme and Refillable X-Press Instant Internet Packages nationwide. Both products provide users with an email address and supported the TOT, TelecomAsia and Thai Telephone & Telecommunications ("TT&T") numbers to enable access via these company's Internet protocol numbers and 1,222 TOT network. PITH also offered domestic roaming services as a free value added service to its existing monthly and prepaid subscribers for Internet access from any part of the country.
 
First ISP to launch SDSL
In line with the Group's strategy to be a leading broadband player in the region, PITH partnered with leading media carriers such as Samart Broadband and United Broadband Technology ("UBT") to offer broadband packages targeted at SMEs and MNCs (multinational companies) looking for cost effective high speed Internet solutions. With this, PITH became the first ISP to launch SDSL services in Thailand for the SME market in January 2002.
 
PITH's overall business strategy will continue to focus on the corporate business segment, and this will be complemented by consumer offerings as part of the company's strategy to adopt a balanced business approach and build brand awareness with the public.
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Partnership with Aeon Than Sinsap
In March 2002, PITH entered into a strategic partnership with leading financial services provider, Aeon Than Sinsap (Thailand) Public Company Limited to launch a new Internet Unlimited Access Service for Aeon Credit Card Holders. PITH leveraged this collaboration to drive growth in a new markets and extend distribution channels for its Internet services.
 
Malaysia

In 2002, Pacific Internet launched the operations in Kuala Lumpur, Malaysia to service the regional connectivity needs of existing corporate customers. The venture into Malaysia is part of the Group's strategy to strengthen its Asia Pacific coverage to extend services to MNCs across the region. PIMY's corporate services include leased line, integrated services digital network ("ISDN"), virtual private network ("VPN"), roaming, email outsourcing and hosting services. In the future, new services will be introduced in line with customer demand.
 
Customer Service

The Group's Customer Support group comprises ten key units, namely Customer Support Hotline, Consumer Sales, Customer Support Retention, Technical Support, Customer Support (Operations), Customer Support (Correspondence), IT Support, Human Resource & Administration, Training and Service Quality.
 
Customer Support Hotline deals with billing and general customer enquiries. Consumer Sales handles telesales arising from consumer promotions. Requests for termination of broadband and dialup accounts are handle by Customer Support Retention. These three units operates from 8.30 a.m. to 6 p.m., Mondays to Fridays (except Public Holidays). Technical Support provides services 24-hours-a-day, seven-days-a-week to support the technical needs of consumers and corporate customers.
 
Customer Support (Operations) takes care of administrative matters such as brochures fulfillment and maintenance of customer accounts. Customer Support (Correspondence) handles non-phone requests such as emails, letters and faxes. IT Support provides the backbone system support to the call centre. This includes maintaining and managing the CRM and Aspect Systems. The team also liaises with the MIS department on any billing and Oracle issues. Human Resource & Administration oversees recruitment, welfare and human resource matters.
 
PacNet Training Academy takes care of training needs including regular product training while the Service Quality Centre ensures that the call centre meets high level of service standards and establishes benchmarks for the Customer Support group.
 

The Group considers customer services as an integral component in driving the business. The Group is committed to providing the best customer service in the industry for both new and existing customers. Our customer service teams strive to provide a personally memorable positive experience for every interaction that customers have with the Group. Continuous efforts are carried out to achieve this purpose. These include, but are not limited to:

  • Conducting regular surveys to determine the customer satisfaction level as well as the gathering of feedback to improve upon service excellence.
  • Professional training and development to transform the customer service teams into a committed customer-focused team of professionals via setting up of the PacNet Training Academy. This academy aims to ensure the staff are constantly trained and equipped with strong product knowledge and skills to deliver high service quality.
  • Establishing and refining internal process for service excellence.
  • Investment in integrated and support systems to enhance performance measurement, staff productivity and operational efficiencies and effectiveness.
  • Benchmarking with an established set of world-class standards adopted by the Customer Operations Performance Centre (“COPC”).
COPC is an established system that helps contact centres to achieve operational efficiency with customer satisfaction and retention. The two key drivers of superior service under the COPC methodology are speed and accuracy. Speed relates to the time taken to complete phone and non-phone transactions e.g. emails, faxes and letters. Accuracy is the ability to provide accurate answers to customer inquiries.
 
Infrastructure

The Group's systems and network infrastructure are designed to provide customers with reliability and speed as well as to minimize costs through efficient use of the international bandwidth and implementation of a scalable infrastructure. Reliability is primarily achieved through redundancy in mission critical systems that minimize the number of ''single points of failure'' (i.e. points where the failure of a single component of the network could interrupt network operations). Speed is achieved through clustered systems, diverse network architecture, multi-peered Internet backbone connections, aggressive load balancing and high-speed switching cores. Efficient use of bandwidth is attained through policy-based routing and enhanced Internet web caching algorithms that optimize traffic through the Group's multiple Internet connections. Scalability derives from a clustering and switching system network architecture at each of the Group's network locations with provisioning for future expansion needs.
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Following is a diagram illustrating the current configurations of the Group's regional networks in Singapore, Hong Kong, Australia, the Philippines, India, Thailand and Malaysia.
 

PacNet Regional Network

Network Infrastructure

Singapore. The Group's network currently consists of two main point-of-presence ("POPs") in Singapore, which are connected to the Internet through multiple independent international circuits. Each of the POPs comprises dial-up access servers with digital modems providing up to 56 Kbps modem access and ISDN services; routers for leased line customer access and servers for Internet services such as email, Usenet news, web caching, and domain name service. These Singapore POPs are linked together by a private high-speed underground fiber-optic cable and a back-up wireless connection using infrared technology. This internal backbone is capable of handling sustained high-speed traffic, and its high level of redundancy substantially reduces potential data loss and avoids congestion. This backbone also incorporates a Layer2 Switching technology, which is capable of operating under extreme load and is highly scalable. The private backbone was upgraded to Gigabit Ethernet in first quarter of 2001.
 
The third POP, a 10,000 sq ft Internet Data Centre ("IDC") was commissioned in February 2001. The IDC is linked back to the 2 main MegaPOPs via private optical fibre laid between the 2 sites and backup via an OC3 Laser Link.
 
The Group has configured its network to maximize efficient use of its bandwidth. The Group has applied policy routing technology that distributes its traffic load at any given time as evenly as possible over its available Internet connections. This reduces the likelihood that any one connection will exceed its bandwidth, and thereby reduces the likelihood of congestion.
 
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The Group has diversified into broadband Internet access through reselling the ADSL services from the incumbent SingTel ADSL network. The Group is also offering its own DSL broadband services to Corporate Network Customers through leasing of private copper pairs from SingTel and connecting to its own Digital Subscriber Line Access Multiplexer ("DSLAM"). This service is currently available in and around the Central Business District ("CBD") area.
 
The Group has also designed an enhanced Internet web caching system that stores requested data on its server after it has been initially retrieved. When such data is requested thereafter by other customers, it is retrieved from the Group's local server, rather than from the Internet, which spares the Group from using its expensive international bandwidth. The Group's network system incorporates firewalls to protect internal data from external sources, and its dual POP structure provides a redundant network in case of catastrophic network failure. The Group's facilities are backed up by a computer-controlled uninterruptible power supply with surge protection and power conditioning. In addition, an automatic onsite diesel generator provides power for prolonged power outages.
 
The Group also maintains a 24x7 Network Operations Center (''NOC'') in all its regional POPs. This continually staffed facility is responsible for round-the-clock monitoring of the status of all computer room facilities, network and system components and applications deployed throughout the Group's infrastructure. The NOC is responsible for all operational communications between the internal departments of the Group as well as external providers of services to the Group. The NOC has customized a network management system based on publicly available network management tools and commercial network management packages. This in-house system provides real-time monitoring of each component or application and is responsible for notifications of quality of service problems as well as failures. Sophisticated historical and statistical analysis software used in the NOC provides data to management about the quality of service the Group's customers are experiencing.
 
The Group maintains its applications on a variety of systems from a number of vendors. The major applications, such as e-mail, web and news access services, utilize a network of servers connected directly to the Group's high-speed switched network. This direct connection minimizes latency and provides the shortest path for customers accessing these applications. The Group deploys a cluster of servers to distribute the load of applications and to provide fault-tolerance against hardware or application failure. Utilizing off-the-shelf hardware has resulted in significantly reduced operations expense.
 
In addition to the three POPs in Singapore that form the core of the Group's internal network, the Group also has presence in six other regional countries, namely Hong Kong, the Philippines, Australia, Thailand, Malaysia and India to serve those markets.
 

Hong Kong. The Hong Kong POP is connected to the Internet through the following links:

  • A 30 Mbps link to the Internet via Sprint Hong Kong, which has direct links to US, Japan, Singapore & China.
  • A 100 Mbps link to the Internet via Reach backbone, which has direct links to US, UK, China & has the biggest Asian coverage in Hong Kong.
  • A 45 Mbps link to the Internet via Qwest Hong Kong, which has direct links to US, Japan & Singapore.
The Group's POP in Hong Kong has two data centres which are geographically located in two regions. One is located in Reach's Telecom House in Wanchai, Hong Kong Island. The other is located in New T&T (second largest local carrier in Hong Kong) Central Office in Kwun Tong, Kowloon. The two data centres are interconnected by two geographically diversified 100Mbps Fast Ethernet links. Each data centre has separated international links. Both data centres are capable of supporting all the services. Each data center is linked to the local Hong Kong Internet Exchange ("HKIX") via 2 dedicated 100Mbps Fast Ethernet link.
 
The link to HKIX is for peering with other Hong Kong ISPs to allow for exchange of Internet traffic within Hong Kong. The Hong Kong POP is connected to the Group's POPs in Singapore via a 45Mbps IPLC. The IPLC connection allows for the exchange of regional traffic among Hong Kong, the Philippines, Australia and Singapore, and access to the Group's international Internet connections.
 
The Group provides both asymmetric and symmetric broadband service via PCCW's and New T&T's DSL and fibre network. The service speed ranges from 1.5Mbps, 2M, 3M, 6M, 10M up to 25Mbps.
 
The Philippines. The Group's POP is connected to the Internet through the following links:
 
  • A 6 Mbps full duplex submarine fiber link to Teleglobe's North America Internet services backbone. Teleglobe's North America backbone is an OC12 network, which is present at every major POP and data exchange in North America and Europe, and connects directly to UUNet, MCI and Sprint at multiple points in its network.
  • 2 Mbps each to Digitel and ETPI respectively. Digitel and ETPI are one of the major telecom players in the Philippines and offer Internet backbone services to Asia and the US. ETPI’s foreign nodes are as follows: Cable & Wireless – San Francisco; UUNET – USA; PCCW-HKT & Concert.
  • A 45 Mbps T3 link to Globe Telecom (“Globe”). Globe is one of the leading full service telecommunication providers offering a wide range of data and Internet services. Globe connects to the Internet via Savvis, UUNet, Cable and Wireless, Teleglobe, Abone, KDD, Singnet and Reachnet.
  • A 45Mbps T3 simplex satellite link from Loral Internet Services
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The Group's POP at Pasig City, Manila, is directly connected to the telecommunications infrastructure of five telecommunications providers in the Philippines: PLDT, Globe Telecom, Bayan Telecommunications, Digitel Telecom and Eastern Telecoms.
 
The POP is linked to the local Philippines Internet exchange ("PHIX") via a leased 2 Mbps link to allow for peering with other Philippines ISPs for the exchange of in country Internet traffic. A peering with Manila Internet Exchange ("MIX") was set up in September 2000 through a 2 Mbps leased line. A third private peering link connects to Globe Telecom Internet Services through a 512kbps leased line for traffic between Globe Telecom customer and PacNet.
 
The 2 Mbps frame relay connection to the Group's POPs in Singapore, Hong Kong and Australia is for exchange of regional traffic and access to the Group's multiple international Internet connections.
 

Six remote POPs for dialup access has been set up since 1999 and a seventh pop was setup in November 2002 as part of the network's expansion:

  • Cebu: a 4 Mbps link connects the Cebu POP to the Taipan POP at Pasig
  • Quezon City (“QC”): a STM-1 155 Mbps link connects the QC POP to the POP at Pasig
  • Cavite: a E1+256Kbps link connects the Cavite POP to the POP at Pasig
  • Bulacan: a 768Kbps link connects the Bulacan POP to the POP at Pasig
  • Batangas: a E1 2Mbps link connects the Batangas POP to the POP at Pasig
  • Laguna: a E1 & 512kbps link connects the Laguna POP to the POP at Pasig
  • Davao: a E1 link connects the Davao Pop to the POP at Quezon City

The Group has successfully set up a fixed wireless network for its countrywide backbone connecting Cebu, Bulacan, Cavite at E1 capacity for selected POPs.

Australia. The Group's network in Australia has four major POPs in Melbourne, Sydney, Brisbane and Newcastle with onsite staff managing the network, servers and the IDC. Remote POPs are also in place in the other capitals in, Adelaide, Canberra and Perth by co-locating with IDC companies, and regional POPs are located in Mornington Penninsula, Geelong, Campbelltown, Wollongong, Penrith, Gosford, Maitland, Muswellbrook, Singleton, Gold Coast and Sunshine Coast. The major POPs are interconnected via ATM, Ethernet and DS3 Technologies and each of them is connected to the Internet through upstream providers and peers.
 

Sydney is connected to the Internet via the following links:

  • A 46 Mbps ATM link to WorldCom for international access
  • A 45 Mbps ATM link to Telstra for domestic and international access
  • A 20 Mbps link to AusBone, COMindico, PIPE and other peers
  • A 16 Mbps ATM link to the Brisbane POP
  • A 24 Mbps ATM link to the Melbourne POP
  • A 45 Mbps link to the Newcastle POP
  • A 10 Mbps link to UEComm for peering and to provide backup paths to Melbourne and Brisbane
  • Various small Internet peers of around 2Mbps each

Melbourne is connected to the Internet via the following links:

  • A 24 Mbps ATM link to Sydney POP
  • A backup 10 Mbps path through UEComm to Sydney POP
  • A 20 Mbps link to AUSIX (at Global Centre/VCPL)
  • A 20 Mbps link to AusBone, Comindico, Victorian Internet Exchange (“VIX”) and other peers
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Brisbane is connected to the Internet via the following links:

  • A 16 Mbps ATM link to Sydney POP
  • A backup 10 Mbps path through UEComm to Sydney POP
  • A 10 Mbps link to iSeek
  • A 10 Mbps to AusBone, Comindico and PIPE

Newcastle is connected to the Internet via the following links:

  • Two links of 2 Mbps each to Telstra Internet
  • A 45 Mbps link to the Sydney POP
The Group's primary Australian connectivity to international sites is provided by a 46 Mbps WorldCom service delivered over Ethernet to the Sydney POP. Connectivity to local sites is achieved through extensive peering including Internet exchanges such as PIPE, Aus Bone, WAIX, VIX, AUSIX, primarily connected by Ethernet, private peers such Unite and Comindico and domestic transit through a 45 Mbps ATM link to Telstra.
 
The Group is providing broadband Internet services nationally via ADSL using infrastructure of Telstra and Nextep. It is looking at providing VoIP services to call centre companies, having significant experience in the use of VoIP internally.
 
India. The Group currently operates in three cities in India connected to the Internet through the following Internet links with Videsh Sanchar Nigam Ltd ("VSNL") and Reach (Mumbai, India):
  • 1x2 Mbps link to VSNL in Mumbai POP
  • 1x2 Mbps link to Reach in Mumbai POP
  • 1x 512Kbps link to VSNL in Bangalore POP
  • 1x 1.5Mbps link connecting Astra (Satellite bandwidth via NewSkies.net, UK) in Bangalore
The Group's POP in Mumbai is directly connected to the telecommunications infrastructure of Mahanagar Telephone Nigam Ltd ("MTNL"). A 2 Mbps domestic link provide connectivity between Mumbai and Bangalore, and another 512kps domestic link connect both Mumbai and Pune together. A 512Kbps link connects Pune POP and Bangalore POP to provide redundancy with respect to authentication and intercity traffic. There is no ISP Internet exchange in India yet and all Internet traffic is exchanged via the connection to VSNL/Reach. Presently, the Mumbai POP is connected to the Group's POPs in Singapore and Hong Kong via virtual links (GRE tunnels).
 
The Group has an IDC in Bangalore providing co-location, web hosting and other data centre services for the Indian operations.
 
Thailand. The Group network currently consists of two main POPs in Bangkok.
 
The first POP (PI # 1) is located in LPN building which houses dial-up access servers with digital modems providing up to 56Kbps modem access, ISDN and DSL services; routers for leased line customer access and servers for Internet services such as email, web, caching and domain name hosting. This POP is connected to the Internet via international leased circuits that links to the Group's POPs in Singapore running on different submarine cable provider such as APCN, Sea-Me-We3 and MT. PI # 1 is connected to the Internet via the following links:
  • 20 Mbps link to the Group's POPs in Singapore
  • 12 Mbps link to NIX (Domestic Exchange)
  • 8 Mbps to CAT POP
  • 8 Mbps link to the TOT and TT&T nationwide domestic network
The second POP (PI # 2) located at the CAT Building was commissioned in December 2002, supports primarily co-location services and leased line customers. PI # 2 is connected to the Internet via the following links:
  • 8 Mbps link to Netplus
  • 1 Gbps link to NIX (Domestic Exchange)
  • 8 Mbps fibre optic link to PI # 1 POP
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Malaysia: The Group's network in Malaysia has two major POPs located in Kuala Lumpur and Penang interconnected via a 2 Mbps backbone. The Kuala Lumpur POP is connected to the Internet through the following links:
  • 2 Mbps link via TMNet Malaysia which has direct access to US, Europe and other Asian countries
  • 2 Mbps link via the Group's POPs in Singapore which has full access to the Internet
  • 2 Mbps link on 100BasedT connection via Reach Malaysia which has full access to the Internet
 
Notwithstanding the attributes of the Group's network, it is subject to malfunctions and other limitations, any of which could have a material adverse effect on the Group's business, financial condition and results of operations.
 
Management Information Systems
 
The Group has adopted a decentralised approach for its management information systems needs in both accounting and billing systems. In Singapore, Hong Kong and the Philippines, Oracle Financials is used to support accounting functions. In Australia, India and Thailand, Microsoft Great Plains, Tally and Alphasoft are used for its accounting functions respectively. From mid 2002, Pacific Internet has implemented the new java-based billing system that is able to process the usage records and computes the charges almost real-time. This allows for fairly up-to-date reporting of the revenues. Other features of the new billing system include support for multiple billing cycles, proration of charges and discounts, and interfaces for setting up product and pricing. For Australia, PIA has enhanced its java-based billing system developed in house and has adopted it across the various branches. For Hong Kong, Philippines, Thailand and India, a billing system developed on Oracle platform is being maintained.
 
Competition
 
The intensity of competition has continued to increase in Asia's telecoms and Internet industry across all segments driven by continued market deregulation, price competition and introduction of new services from incumbents and smaller ISPs. The region is now the largest telecommunications market and an emerging epicenter for global growth with seven out of the world's top ten most profitable telecom operators being Asian (ITU 2002).
 
Some competitors have financial, network and telecom facilities significantly greater than the Group's, whilst incumbents enjoy advantages as a result of their monopoly over local exchange facilities. Although incumbent operators continue to dominate in home markets, they face mounting pressure to protect market shares as competing operators consolidate and strengthen their positions in the data services space. The Group anticipates that broadband deployment will gain greater momentum in 2003 with operators continuing to vie for greater market share spurred on by increasing bandwidth utilization by customers and opportunities created by market deregulation policies of Asia Pacific governments (The Yankee Group Report, August 2002).
 
Singapore
 
Surveys conducted by the regulator, IDA report that broadband usage has seen modest growth in the home and business environments over the last two years. Cable subscriptions continue to be the highest in the residential market, while ADSL dominates in the corporate segment. Wireless Broadband initiatives are also on the increase with both Singnet and StarHub introducing competitive wireless services.
 
In 2002, the merger of StarHub and SCV was completed with the companies integrating their fixed line, mobile, international long distance and Internet services units. StarHub and IDA have started working out the open access framework to enable interested parties to resell broadband services utilizing the HFC cable network (IDA, 24 January 2003). Singapore Power Telecommunications, a new infrastructure owner, also launched Singapore's first Powerline Communication ("PLC") trials in April 2002 where Pacific Internet was a trial partner. When commercialized, PLC will provide an alternative 'last mile' connectivity to service providers who do not own the necessary infrastructure to reach their customers.
 
Hong Kong
 
Due to the difficult economic climate, a string of bankruptcies, mergers and consolidations have taken place, most notably from the exit of PSInet, Level 3, and the scaling down of Reach's business. New challengers to the incumbent include New World Telecom ("NWT") and M3Com who boasts of connectivity across the Asia Pacific. In addition, ISPs have started to offer new services such as Wireless Lan, Voice over IP ("VoIP"), Virtual Private Network ("VPN"), Video Conferencing and Managed Security solutions.
 
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From just one ISP in 1990, there are now approximately 260 as of mid-2002. In addition, there is a broadband boom underway with many providers offering ADSL and cable broadband services such as PCCW, Wharf T&T, iCable, and Citi Pacific. In the first half of 2001, Hong Kong had the highest rate of growth in the world for household Internet penetration (Hong Kong Broadband Networks and Services Report, September 2002), by June 2002, there were a total of 2.6 million Internet subscribers, including dial up and broadband (The Yankee Group Report, August 2002).
 
The Philippines
 
As of end 2001, there were approximately 183 licensed ISPs in the Philippines (National Telecommunications Commission ("NTC"), November 2002), but currently there are only approximately 50 active players as many have folded due to the difficult economic climate. Most telcos like PLDT, Globe, BayanTel and Digital have adopted a conservative outlook in 2002 and refocused their businesses into high growth areas like broadband and value-added Internet Protocol ("IP") services away from traditional voice where revenues are declining.
The Philippines government has outlined its strategy for the Information, Communication and Technology ("ICT") sector to implement policies for ensuring faster delivery of ICT through the improvement of infrastructure within the country. It will also establish a Department of Information and Communications Authority ("DICA") to oversee all ICT related functions. In addition, the government is also pushing to accelerate the granting of permits and licenses for private sector telecommunication providers of broadband services and other key telecommunications services (Infotech, April 2002). It has also identified seven IT Hubs; Pasig-Ortigas Business District, Makati-Global City Business District, Alabang-Paranaque Business District, Subic-Clark Special Economic Zones, Cebu-Asia Town IT Park and the University Belt areas where infrastructure and services from operators will be enhanced to cater to the needs of corporates located in these areas (Info-communications Status Report, November 2002).
 
Australia
 
Telstra's dominance is slowly being challenged with tighter deregulation measures, including the introduction of fines in the event that the company fails to offer high speed Internet rivals the ability to sell similar services and an accounting separation of Telstra's wholesale and retail businesses to ensure greater industry transparency. In September 2002, Australia had 563 ISPs compared to some 718 two years earlier. As ISPs consolidated their positions through mergers and acquisitions, there were significant movements between size and ranges of their operations based on subscriber figures. Such a consolidation within the industry has varied the competitive playing field for smaller ISPs (Australian Bureau of Statistics, March 2003).
 
With the broadband market growing, the data market will see rivals to Telstra, Optus, AAPT and Primus taking up over 50% of the market made up of ISPs, Data Services Providers and Broadband Providers as they consolidate their positions (Australian Telecommunications Report 2002-2003). According to data released by the Organization for Economic and Co-operations Development ("OECD") in January 2003, Australia has slipped from the 15th to the 18th place for broadband penetration rankings amongst OECD countries, despite the increase in its overall broadband subscriber base.
 
India
 
The number of licensed operators in India remains relatively unchanged in 2002 with approximately 140 ISPs offering services covering 300 cities and towns. Concerted efforts by the government to raise teledensity in India has seen communication infrastructure extended to more parts of the country. This has enabled the population to gain greater access to basic telecommunications services as well as Internet access.
 
VSNL was privatized by the government in February 2002, through a 25% sale of its stake to the Tata Group while still retaining 26.13% of its interests. This was the first move by the government to transfer control of a state owned telecom operator to the private sector (ITU, November 2002). At the same time, the proposed merger of state-run telecom operators Bharat Sanchar Nigam Limited ("BSNL") and MTNL is also under review (Business Standard, 31 January 2003).
 
In April 2002, the regulator opened the IP Telephony market allowing ISPs to offer long distance voice services. The proposed privatization of state-owned telecom companies and the relaxation of restrictions on foreign direct investments in telecom companies from 49% to 74% is likely to benefit the industry with increased investment from private operators in the telecommunications sector to level the playing field with incumbent players.
 
Thailand
 
In 2002, Shin Satellite's CS Communications and Loxley Information Service's Point Asia Dot Com, merged due to rising costs, retail price competition and slow growth in subscriber bases (Business Day, 4 June 2002). Initiatives to privatize State-owned telecom companies are in progress, where a merger between TOT and Communications Authority of Thailand ("CAT") is being considered. Concurrently, the issue relating to concessionary holdings of both companies in other telco and Internet businesses will need to be resolved. These developments are likely to open the market further, create new opportunities for foreign operators and pave the way for further mergers and consolidations.
 
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Besides TOT and Telecom Asia ("TA"), high-speed Internet services have been introduced by United Information Highway ("UIH"), UBT, Shin Satellite and Samart Telecoms using a variety of technologies. As telecom infrastructure and Internet usage are highly concentrated in Bangkok, a nationwide fibre optic network is needed to provide coverage in urban and rural areas on a common platform to boost growth in Internet penetration throughout the country. TOT is in the process of rolling out the fibre optic network, targeted for completion by mid 2003.
 
Malaysia
 
In 2002, the Malaysian Communications and Multimedia Commission officially introduced a regime of quality of service ("Qos") measurements for the country's fixed, mobile and Internet service providers. With this regime in place, operators may be fined if they fail to meet service quality benchmarks set by the regulator. The Qos help to promote fairer competition and provide independent players with greater security in dealings with incumbent operators (Telecom Asia, January 2003).
 
Currently the three major broadband players are TMNet, Time dotcom and Jaring. However, broadband is still not available nationwide and services are concentrated in the Klang Valley, urban areas of the central Selangor state and selected business and residential buildings in areas like Mont Kiara. Wireless Broadband services have also emerged from TMNet, Time dotcom and Maxis at selected hotspots, predominantly in the capital city of Kuala Lumpur. (CMPNet Asia, March 2003).
 
Table of contents 24

ITEM 4C.  ORGANIZATIONAL STRUCTURE

The following chart illustrates key elements of the corporate structure of the Group (excluding certain intermediate and wholly-owned subsidiaries) as of April 30, 2003:

ITEM 4D.  PROPERTY, PLANTS AND EQUIPMENT
 
The Company's three POPs, as well as its corporate headquarters, the Internet Data Centre, Network Operations Centre and customer support centre are located in several facilities in the Singapore Science Park with a total floor area of approximately 4,834 square meters. The Company has entered into several leases with expiry date ranging from 2002 to 2004. The Company also leases space, typically 25 square meters in several retail centers in Singapore to house its Internet retail shops.
 
Pacific Supernet's corporate headquarters and customer support centre in Hong Kong are located in the Hong Kong International Trade and Exhibition Center ("HKITEC"). The lease on this facility, occupying a total of approximately 1,611 square meters, is expiring on December 31, 2003.
 
PIPH's corporate headquarters, call centre and Internet Data Centre ("IDC") room in the Philippines are located in one facility in Manila, with a total area of approximately 1,813 square meters. This facility is covered under three separate leases with the latest lease expiring in February 2008. In addition, PIPH also entered into several leases for its POPs and game shops in Cebu, Batangas, Bulacan, Cavite, Laguna, and Metro Manila.
 
PIA's corporate headquarters in Australia occupies an area of approximately 1,122 square meters at Southbank Boulevard, Melbourne, with the lease expiring in April 2004. PIA also leases one retail outlet in Sydney and branch offices in both Sydney and Newcastle.
 
PII's corporate headquarters in India is located in Bangalore with a total floor area of approximately 368 square meters. PII also leases a total floor area of 219 square meters for use as office space, POPs and customer service department in Pune and Mumbai.
 
PITH's office is currently located in Bangkok with a floor area of 1,405 square meters. In addition, PITH also has one POP located at Chonburi.
 
PIMY's office is located in Menara Maxis, Kuala Lumpur City Centre. It has approximately 150 square feet.
 

Table of contents

ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS


 
The following discussion and analysis is based on and should be read in conjunction with the accompanying audited Consolidated Financial Statements and the Notes thereto contained on Form 20F for the year ended December 31, 2002. The Consolidated Financial Statements for the years ended December 31, 2002, 2001, and 2000 have been prepared in accordance with the U.S. Generally Accepted Accounting Principles.
 
Overview
 
The Group currently provides a broad range of Internet access and Internet services to consumers and corporate customers in Singapore, Hong Kong, Australia, the Philippines, India, Thailand and Malaysia. Since its inception, the Group has grown rapidly by:
  • making strategic acquisitions of companies or businesses to increase its customer base and revenues;
  • expanding its service offerings; and
  • providing superior customer service and technical support.

The Consolidated Financial Statements of the Group reflect the consolidated results of operations and financial position of the Company and its subsidiaries. On March 16, 2001, the Group, via a restructuring exercise, established that it met the criteria to consolidate the financial statements of PIPH under SFAS 94. Hence, since March 16, 2001, PIPH has been consolidated with the Group's financial statements. Although the Company has indirect ownership of more than 50% for PITH, it will continue to account for the investments in this entity using the equity method until the criteria set under SFAS 94 to consolidate the financial statements of these investments has been met. The Group also accounts for its 49% ownership interest in PII using the equity method. Its interest in the results of operations of PII, PITH and PIPH (prior to March 16, 2001) are all reflected in the income statement in the line item entitled ''Equity in Profit (Loss) of Unconsolidated Affiliates'' for 2001 and 2002.
 
In 2002, the Group continued to forge ahead strongly with its broadband and corporate focused strategy. The Group has seen its broadband subscriber numbers increase from 17,006 in year 2001 to 37,100 by the end of 2002. The corporate-focused strategy has resulted in the Group achieving a significant milestone where corporate revenue overtook consumer revenue in 2002. For the year ended December 31, 2002, revenues from the corporate sector contributed to 58% of the total revenues in 2002. The Group's regional reach in Asia-Pacific, coupled with its local touch, is the key differentiating factor and its competitive advantage over local ISPs.
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The Group closed 2002 with total revenues of S$157.0 million (US$90.5 million) and achieved net profit of S$2.9m (US$1.7 million). This represents an improvement in revenue of 11.3% as compared to last year.
 
Critical Accounting Policies and Estimates
 
PacNet's discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, management evaluates its estimates, including those related to revenue recognition, network service costs, bad debts, intangible assets, deferred taxes, investments, restructuring and contingencies. PacNet based its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates under different assumptions or conditions.
 
PacNet believes that the following critical accounting policies affect the more significant judgments and estimates used in the preparation of financial statements.
 
Revenue recognition
 
PacNet recognizes revenue in accordance with SEC Staff Accounting Bulletin No. 101, Revenue recognition in Financial Statements ("SAB 101"), as amended and other related guidance. SAB 101 requires four basic criteria to be met before revenue can be recognized: (1) pervasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed and determinable; (4) collectibility is reasonably assured. Determination of criteria (4) is based on management's judgments regarding the nature of the fee charged for services rendered and products delivered and the collectibility of those fees. Should changes in conditions cause management to determine these criteria are not met for certain future transactions, revenue recognized for any reporting period could be adversely affected.
 
Network service costs
 
Access to Internet for customers outside of our base of owned POPs is provided through capacity leased from a number of third-party telecom providers. PacNet is, in effect, buying capacity in bulk at a discount, and providing access to its customer base at the normal rates. PacNet's network service costs represent a significant portion of its cost of sales and the related liabilities represent a significant portion of accrued expenses. Network service costs accruals are frequently based on best estimates due to delayed or late billing by telecom companies, the complexity of its agreements with telecom companies and the frequency of disputes.
 
Bad debt
 
PacNet maintains allowances for doubtful accounts for estimated losses resulting from inability of customers to make required payments. If the financial position of customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.
 
Goodwill and other identifiable intangible assets
 
Intangible assets consist primarily of acquired customer lists and customer contracts. Acquired customer lists represents capitalization of specific costs incurred for the purchase of other customer lists from other ISPs, and is amortized on a straight-line basis over its estimated useful lives, ranging from four to five years.
 
Goodwill and other intangible assets are periodically reviewed for impairment to ensure they are properly valued. Conditions that may indicate an impairment issue exists include an economic downturn, changes in churn rate of subscribers or a change in assessment of future operations. In the event that a condition is identified that may indicate an impairment issue exists, an assessment is performed using a variety of methodologies, including discounted cash flow analysis and estimates of sales proceeds.
 
Deferred income taxes
 
PacNet records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. While PacNet has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for valuation allowance, in the event PacNet were to determine that it would be able to realize its deferred tax assets in the future in excess of its recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made. Likewise, should PacNet determine that it would not be able to realize all or part of its net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made.
 
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Legal contingencies
 
Pacific Internet is involved in material legal proceedings as disclosed in "Item 8A. Consolidated Statements and Other Financial Information - Other Information". PacNet is also involved in legal proceedings that it considers normal to its business and has accrued its estimate of the probable costs of defending these proceedings. The estimate has been developed in consultation with outside counsel handling PacNet's defense in these matters and is based on analysis of potential results, assuming a combination of litigation and settlement strategies. Save as disclosed, PacNet does not believe these proceedings will have a material adverse effect on its consolidated financial position. It is possible, however, that future results of operations for any particular quarterly or annual period could be materially affected by changes in assumptions of the effectiveness of strategies related to these proceedings.
 
ITEM 5A.  RESULTS OF OPERATIONS
 
2002 Compared to 2001
 
Net Revenues
 
The Group ended 2002 with total net revenues of S$157.0 million (US$90.5 million), up 11.3% from the prior year. 2002 was a challenging year typified by weak market sentiments and downward price pressures. Broadband continued to be the leading segment in terms of revenue growth while dial-up revenues continued to decline. Generally, this trend is expected to continue in the near future as Internet-savvy users continue to migrate to higher speed broadband services at more affordable prices. Nonetheless, in some countries in which the Group operates, dial-up is still the primary source of Internet access, especially where broadband services are not widely available and/or affordable.
 
Dial-up Access. Dial-up revenue for the year was S$58.4 million (US$33.7 million), accounting for 37.2% of total revenues, down from 49.3% one year ago. Apart from the migration of users from dial-up to broadband services, downward price pressures also contributed to the reduction in revenue. In Singapore, Hong Kong and Australia, broadband services are widely available and increasingly affordable, resulting in a shift of demand from dial-up to broadband. In the Philippines and Thailand, however, given the economic slow-down, more home users are favoring the lower priced prepaid dial-up services compared to the traditional post paid dial-up services. Going forward, the Group expects declining contribution from the dial-up segment. However, the Group will continue to take initiatives to (i) sustain its current dial-up subscriber base in matured markets such as Singapore and Hong Kong via attractive pricing bundled with value-added services to enhance the value proposition of these services; (ii) grow the prepaid dial-up market in the Philippines, India and Thailand.
 
Broadband Access. Broadband revenue grew 132.3% to S$41.6 million (US$24.0 million) compared to last year. As of December 31, 2002, the Group had 37,100 broadband subscribers, a growth of 118.2% over the previous year. The strong growth in broadband revenue was principally driven by the increase in broadband subscribers in Singapore, Hong Kong and Australia. For the year ended December 31, 2002, PIA's broadband revenue increased more than seven fold whilst the subscriber base quadrupled to 4,200. For the same period, Pacific Internet in Singapore doubled its revenue to S$18.4 million (US$10.6 million). Despite intense competition in the broadband market, Pacific Supernet, the Group's second largest revenue contributor, was able to record a healthy broadband revenue growth of 57.0% year-on-year. The increase in broadband revenue from the growth in subscriber base was partially offset by a decrease in revenue as a result of a reduction in broadband average revenue per user ('ARPU'). Competition resulted in downward price pressures, which in turn fuelled demand. In Singapore, consumer broadband ARPU per month declined 12.7% year-on-year, from S$63 (US$36) to S$55 (US$32). The decline was due to higher level of discounts and the launch of a new lower-speed (384kbps) Unlimited-Access Plan in October 2002. This new access plan was designed to capture greater market share in the ADSL broadband arena. Corporate broadband ARPU in Singapore also dipped year-on-year, from S$373 (US$215) to S$302 (US$174). Similarly, Pacific Supernet which operates in a much more aggressive broadband market, experienced a 40.1% decline in corporate broadband ARPU year-on-year. In terms of revenue mix, broadband revenue contributed 26.5% of the Group's revenue for the year, a significant increase from its 12.7% contribution one year ago. Pacific Internet expects broadband revenue to be one of its key revenue drivers in the near term as the popularity of high-bandwidth multimedia applications and on-line entertainment continues to grow.
 
Leased Lines. Leased line revenue for the year was S$25.8 million (US$14.9 million), representing a decline of 6.1% when compared to last year. Revenues declined largely due to erosion of ARPU. As an indication, Pacific Internet's ARPU in Singapore dropped 17.8% from S$2,317 (US$1,335) to S$1,905 (US$1,098).
 
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Value-Added Services. The Group currently provides a variety of value-added services to cater to the different needs of today's Internet-savvy customers. Value-added services includes, amongst others, global roaming, web-hosting, anti-virus solutions, wireless access and data services. Value-added services revenue grew to S$13.0 million (US$7.5 million) this year, representing an increase of 30.2% year-on-year. The increase was largely due to higher roaming revenue.
 
Commission revenues. Commission revenue relates to travel commission generated by the Group's travel arm - Safe2Travel, which is the second largest corporate travel-ticketing agent in Singapore. Safe2Travel applies Emerging Issue Task Force No. 99-19 ("EITF 99-19"), Reporting Revenue Gross as a Principal Versus Net as an Agent, in the recognition of commission revenues. As such, all air-ticketing revenues are recorded at the net amount, i.e. the amount charged to the customer less the amount payable/paid to the airlines. For this year, Safe2Travel earned a total commission revenue of S$9.0 million (US$5.2 million), representing 5.8% of its gross ticket sales of S$154.9 million (US$89.3 million). Although the commission revenues are recorded net, Safe2Travel's accounts receivables and payables are recorded at the gross amounts charged to the customer and payable to the airlines, respectively. This partly explains the significant balance of accounts receivable and payable in the Group's balance of accounts receivable and payable in the Group's balance sheet relative to its revenues and cost of sales. As of December 31, 2002, Safe2Travel's accounts receivable and accounts payables were S$11.5 million (US$6.6 million) and S$4.1 million (US$2.4 million), respectively. Commission revenue registered an increase of 10.2% when compared to last year due to the higher volume of airline tickets sold.
 
Other. Other revenues include interconnect revenue for dial-up traffic terminating into Pacific Internet's network in Singapore, e-service revenue, online gaming revenue and system integration revenues. For the year, other revenues rose 14.1% compared to one year ago. This increase was largely due to Pacific Internet's interconnect revenue in Singapore, offset partially by a reduction in e-services revenue.
 
Cost of Sales and gross profit
 
The Group's cost of sales consists primarily of telecommunications services for international leased circuits, flat monthly charges for the use of telephone lines to the Group's modem pools, leased line service charges, and installation charges. The Company also pays 1% of its annual audited gross revenues generated by Internet access services in Singapore to the IDA as an annual license fee. Cost of sales also includes licensing fees for software paid to third parties.
 
When compared to the prior year, cost of sales increased 13.0%, in line with overall revenue growth and the shift in revenue mix from dial-up and leased line business to broadband business. Year-on-year gross margin declined slightly from 59.5% to 58.8%.
 
Operating Expenses
 
Staff Costs. Staff costs as a percentage of gross revenue reduced from 31.1% last year to 29.0% this year. The decrease is mainly due to the decrease in deferred compensation costs. It is partially offset by the increase in staff costs in Australia and Hong Kong in order to cope with higher operations in these areas. Furthermore, overall staff productivity has improved as evidenced by the increase in the revenue per employee per quarter from S$0.035 million (US$0.020 million) in the fourth quarter of 2001 to S$0.038 million (US$0.022 million) in the fourth quarter of 2002. The Group has implemented control on total staff strength in order to improve staff productivity. The Group's staff strength as at year-end was 1,056 compared to 1,077 one year ago.
 
Sales and Marketing Expenses. Sales and marketing expenses consist primarily of sales commissions, costs of promotional materials, advertising, cost of customer premise equipment offered to new customers as sales incentives, and third-party sales commissions. Sales and marketing expenses for the year ended December 31, 2002 was S$5.5 million (US$3.2 million), representing a decrease of 11.4% compared to last year. In prior years, the Group had incurred higher advertising expenses in establishing the brand name and launching new products and services such as broadband and Pacfusion services in year 2000.
 
Other General and Administrative Expenses. Other general and administrative expenses consist mainly of travelling expenses, office expenses and professional and consultancy fees. For the year, these were 11.6% of net revenues, compared to 13% one year ago. This improvement was largely due to effective cost management.
 
Depreciation and Amortization. Depreciation and amortization expenses decreased 41.6% for the year ended December 31, 2002. The decline was a result of the adoption of SFAS 142 - Accounting for Goodwill and Other Intangibles with effect from January 1, 2002. Under SFAS 142, goodwill and indefinite lived intangible assets are no longer amortized but reviewed annually (or more frequently if impairment indicators arise) for impairment. The Group has performed the goodwill impairment test and believes that goodwill was not impaired. As such, there was no impairment charge this year. By adopting this new standard, the Group need not account for goodwill amortization, which amounted to S$8.0 million (US$4.6 million) in the prior year.
 
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Allowance for Doubtful Accounts Receivable. For the year ended December 31, 2002, allowance for doubtful accounts receivable decreased 39.3% compared to last year. As a percentage of net revenues, it reduced from 3.2% last year to 1.7% this year, as a result of more effective credit management.
 
Other Income (Expenses)
 
Other expenses consisted largely of equity in losses of unconsolidated affiliates, net loss in foreign exchange translation and interest expense incurred.
 
Equity in losses of unconsolidated affiliates comprises mainly losses incurred by the Group's operations in Thailand and India. Compared to 2001, losses from these affiliates reduced by 62.4% mainly due to continuous revenue growth. This trend is expected to continue as these operations mature and grow.
 
Net loss in foreign exchange was mainly due to exchange differences arising from funding of operations in Hong Kong, Australia and the Philippines using Singapore dollars. These were largely unrealised and the exchange loss recorded this year was a result of the Singapore dollar strengthening against the Hong Kong dollar and the Philippine peso.
 
Income Taxes
 
In 2002, in accordance with SFAS 109 - Accounting for Income Taxes, PIPH made a valuation allowance of S$1.3 million (US$0.7 million) on its deferred tax asset. Under the guidelines of SFAS 109, a valuation allowance is required if it is more likely than not, that some or all of the deferred tax assets will not be realized. This valuation allowance, coupled with the Group's higher taxable income, resulted in an increase in taxation for the year.
 
Net Income
 
The Group's full-year net income of S$2.9 million (US$1.7 million) is a marked improvement from a loss of S$15.0 million one year ago. Revenue growth, effective cost management and the absence of goodwill amortization were the main contributors to this improvement. Had goodwill not been amortized and acquired workforce been reclassified to goodwill in 2001, 2001 net loss would have been S$6.8 million (US$3.9 million).
 
2001 Compared to 2000
 
Net Revenues
 
For the year ended December 31, 2001, net revenues increased 29.1% to S$141.1 million from S$109.3 million in 2000. In the Singapore Internet access business, where the Group generated 50.5% of its net revenues for the year ended December 31, 2001, net revenues increased 12.5% to S$71.2 million from S$63.3 million for the year ended December 31, 2000. The increase in net revenues generated by its Singapore operations was attributed to growth in broadband and corporate leased lines subscribers. For the same period, net revenues in Hong Kong increased by 39.5% to S$28.8 million from S$20.7 million mainly due to the success of its broadband products. The revenues in Australia stood at S$17.6 million and contributed 12.4% of the Group's net revenues. The Group also recorded revenues of S$13.0 million upon consolidation of PIPH from March 16, 2001.
 
Dial-up Access. Revenues from dial-up access services provided to consumers and corporate customers, which accounted for 46.8% of the Group's total gross revenues for the year ended December 31, 2001, increased 5.5% to S$66.1 million from S$62.7 million in 2000. The increase in dial-up revenue was mainly due to the consolidation of PIPH with effect from March 16, 2001. Dial-up revenues for mature markets like Singapore, Hong Kong and Australia have declined slightly as compared to last year. This was a result of ongoing competition from higher-speed access service like broadband.
 
Leased Lines. Leased line services are provided primarily to corporate customers and include a wide variety of Internet access options that are tailored to the customer's requirements. Leased line revenues increased 22.6% to S$30.9 million in 2001 from S$25.2 million in 2000. In Singapore, the leased line revenues increased 8.0% to S$19.6 million. In Australia, leased line revenues grew 116.8% to S$3.7 million this year. As of December 31, 2001, the Group served 2,228 leased line subscribers.
 
Broadband Access. The Group introduced broadband access services in the 3rd quarter of 2000 and has seen significant growth since then. As at December 31, 2001, the Group served 17,006 broadband customers across over 4 countries - Singapore, Hong Kong, Australia and Thailand. Broadband revenues increased 7 fold to S$17.9 million when compared to 2000, and contributed 12.7% of the Group's total revenues. The Group believes that broadband is an integral part of its growth strategy as multimedia applications become more popular and consumers become more Internet-savvy.
 
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Value-Added Services. Revenues from value-added services registered year-on-year growth of 3.9% for the year ended December 31, 2001. The increase in revenues came from global roaming and web hosting.
 
Commission revenues. Commission revenue relates to travel commission generated by the Group's travel arm - Safe2Travel, which is the second largest corporate travel-ticketing agent in Singapore. Year-on-year, revenue rose 91.1% mainly due to Safe2Travel's acquisition of the businesses of Trident Travels Ltd and Neptune Travel Services (Pte) Ltd ("Trident") in May 2001.
 
Other. Other revenues for the year ended December 31, 2001, increased by 184.5% when compared to 2000. The increase was mainly from the Group's e-services arm, Pacfusion.
 
Cost of Sales and gross profit
 
The Group's cost of sales consists primarily of telecommunications services for international leased circuits, flat monthly charges for the use of telephone lines to the Group's modem pools, leased line service charges and installation charges. The Company also pays 1% of its annual audited gross revenues generated by Internet access services in Singapore to the IDA as an annual license fee. Cost of sales also includes licensing fees for software paid to third parties.
 
The Group's gross profit margin was 59.5% this year, compared to 66.3% last year, due to downward price revisions in response to competitive pricing and larger proportion of broadband revenue, which has lower margins.
 
Operating Expenses
 
Staff Costs. Staff costs were S$43.9 million for the year ended December 31, 2001, which represent an increase of 8.7% when compared to last year. This was mainly due to consolidation of PIPH's staff costs with effect from March 16, 2001. Staff costs as a percentage of gross revenue has decreased from 38.0% in 2000 to 31.1% this year. This was a result of the Group's focus on improving the productivity of its people. Included in staff costs were compensation costs relating to the Group's share option plans. For the year ended December 31, 2001 stock-based compensation costs recognized by the Group in accordance with APB No. 25 Accounting for Stock Issued to Employee and SFAS No. 123 Accounting for Stock Based Compensation were S$1.3 million. Details on the option plans are found in "Item 6E. Share Ownership".
 
Sales and Marketing Expenses. Sales and marketing expenses consist primarily of sales commissions, costs of promotional materials, advertising, cost of customer premise equipment offered to new customers as sales incentives, and third-party sales commissions. Sales and marketing expenses for the year ended December 31, 2001 declined 42.3% when compared to 2000. As a percentage of gross revenue, sales and marketing expenses decreased from 10.2% to 4.4% of gross revenues for the year ended December 31, 2000 and 2001, respectively. This decline was a result of management's increased focus on the corporate market, and more effective use of the advertising dollar to achieve revenue growth without proportionate increase in sales and marketing expenses.
 
Other General and Administrative Expenses. Other general and administrative expenses decreased 5.7% when compared to 2000. Other general and administrative expenses consist mainly of travelling expenses, office expenses and professional and consultancy fees. The decrease was a result of the Group's continuous effort at cost management.
 
Depreciation and Amortization. Depreciation and amortization expenses registered a year-on-year increase of 17.2% for the year ended December 31, 2001. The increase was mainly due to purchases of fixed assets and accelerated depreciation of certain telephony assets to be in line with their useful lives. Included in amortization expenses is the amortization of website development costs. In accordance with the Emerging Issues Task Forces ("EITF") Position on Accounting for Website Development Costs, the Group has capitalized certain website development costs. These costs are amortized over a period of 2 years as the Company expects it will be 2 years before major revamp will occur on these websites.
 
Impairment of fixed assets. The Group assesses the potential impairment of long-lived assets when events or circumstances indicate the carrying amount of an asset may not be recoverable. In accordance with SFAS 121 - Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of, the Group uses an estimate of future net cash flows of the related asset or asset grouping over the estimated remaining life to evaluate whether the long-lived assets are recoverable. For the year ended December 31, 2001, the Company recorded an impairment loss of certain telephony assets of S$3.3 million due to a change in strategic direction to scale down its telephony business.
 
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Allowance for Doubtful Accounts Receivable. Allowance for doubtful accounts receivable registered a year-on-year increase of 107.1% for the ended December 31, 2001, when compared to 2000. The increase was mainly due to the consolidation of PIPH, effective March 16, 2001.
 
Other Income (Expenses)
 
For the year ended December 31, 2001, other expenses comprised largely of equity in losses of unconsolidated affiliates, offset by gain on foreign currency. The Group registered a gain in foreign currency of S$1.0 million this year due to appreciation of the regional currencies against the Singapore dollar.
 
Equity in losses of unconsolidated affiliates was mainly attributed to losses incurred by the Group's start-up operations in India and Thailand. During the year, the Group rationalized its operations in India and Thailand and had successfully reduced their burn rate; equity in losses of unconsolidated affiliates dropped 17.8%, from S$5.6 million last year to S$4.6 million this year.
 
Income Taxes
 
The Group recorded an income tax credit of S$0.5 million for the year ended December 31, 2001 mainly due to the recognition of PIPH's deferred tax asset.
 
Net Loss
 
As a result of the foregoing, the Group had a net loss of S$15.0 million for the year ended December 31, 2001, compared to a net loss of S$22.4 million for the year ended December 31, 2000.
 
Foreign Exchange Transactions
 
The Group presently does not have a hedging policy for foreign exchange transactions. Most of its expenses and revenues are incurred in Singapore dollars, which is its functional currency, primarily and, to a lesser extent, Hong Kong, Australian dollars and the Philippine Pesos. In other markets in which the Group operates, revenues are largely generated in the same currency in which its expenses are incurred. Any depreciation in the currencies of markets in which the Group operates, relative to the Singapore dollar, could have a material adverse effect on the Group. The imposition of exchange control regulations restricting the conversion of such currencies into Singapore dollars could also adversely affect the Group. The Group recognized a net foreign exchange gain of S$0.5 million, S$1.0 million and loss of S$0.7 million (US$0.4 million) for the years ended December 31, 2000, 2001 and 2002, respectively. The loss recorded in 2002 was largely related to the translation of Hong Kong dollars, Australian dollars and the Philippine Pesos into Singapore dollars for the purpose of consolidating results from PSL, PIA and PIPH.
 
Certain of the Group's international transmission capacity charges are denominated in U.S. dollars, and purchase orders for certain equipment may from time to time be denominated in U.S. dollars. For the year ended December 31, 2002, the Group did not enter into hedging transactions with respect to these foreign currency risks. However, the Group may evaluate the appropriateness and effectiveness of hedging such risks in the future.
 
Potential Fluctuations in Quarterly Results
 
The Group's future success depends on a number of factors, including rates of new subscriber acquisition, subscriber retention, capital expenditures and other costs relating to the expansion of operations, the timing of new product and service announcements, changes in the Group's pricing policies and those of its competitors, market acceptance of new and enhanced versions of the Group's products and services, changes in the level of Internet usage, changes in operating expenses, changes in the Group's strategy, personnel changes, the introduction of alternative technologies, the effect of potential acquisitions, increased competition in the Group's markets (including as a result of the recent liberalization of the Singapore ISP market), changes in foreign currency exchange rates, general economic factors and specific economic conditions in Internet and related industries.
 
The Group's operating results, cash flows and liquidity may fluctuate significantly in the future. The Group's revenues depend on its ability to attract and retain subscribers who purchase Internet access on a month-to-month basis. The Group's dial-up subscribers have the option of discontinuing their subscriptions for any reason effective at the end of any given month. The Group's leased line subscribers have the option of discontinuing their subscriptions for any reason effective upon 30 days' advance written notice. The Group's expense levels are based, in part, on its expectations as to future revenues. To the extent revenues are below expectations, the Group may be unable or unwilling to reduce expenses proportionately, and operating results, cash flows and liquidity would likely be adversely affected. Due to all of the foregoing factors, it is likely that in some future quarters the Group's operating results or growth rate will be below the expectations of public market analysts and investors. In such event, the price of the shares will likely be materially adversely affected.
 
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Government Regulations
 
In many Asian countries, providers of Internet access and Internet services are subject to regulation as providers of telecommunications services. In addition, since many Asian countries continue to regulate or censor the contents of various media, providers of Internet access and Internet content may face restrictions on their ability to make certain content available to their customers. The Group currently faces regulation of this kind in Singapore.
 
In addition, since the Internet remains a fairly new and rapidly developing phenomenon, it is likely that additional laws and regulations may be adopted in countries where the Group has or will have ISP operations with respect to the Internet, covering issues such as content, privacy, pricing, encryption standards, consumer protection, electronic commerce, taxation, copyright infringement and other intellectual property issues. The Group cannot predict the impact, if any, that any future regulatory changes or development may have on its business, financial condition and results of operations. Changes in the regulatory environment relating to the Internet access industry, including regulatory changes that directly or indirectly affect telecommunication costs or increase the likelihood or scope of competition, could adversely affect the Group's business, financial condition and results of operations.
 
Singapore
 
Infocommunications Development Authority of Singapore ("IDA"). The Group's Singapore ISP business is regulated by the IDA. Before April 1, 2000, Pacific Internet operated under an Internet Access Service Provider Licence dated September 5, 1995 (the ''IASP License''), which was to expire in September 2000.
 
On April 1, 2000, Pacific Internet was awarded a Facilities-Based Operator ("FBO") Licence by the IDA, which supersedes the IASP License previously held by Pacific Internet. With the FBO Licence, the Company is licensed to provide not only narrow-band and broadband Internet access services to both individual and corporate customers in Singapore, it may also offer other telecommunication services including international simple resale ("ISR") services, Internet exchange services, wholesale of Internet bandwidth and wireless Internet connectivity services.
 
The FBO Licence is valid for a period of 15 years from April 1, 2000. An annual license fee of 1% of the Company's annual audited gross turnover based on the provision of services during the Company's financial year, subject to a minimum of S$0.1 million, is payable. The FBO Licence is non-transferable except with the IDA's prior approval. Other conditions imposed on the Company under the terms of the FBO License include the obligation to observe price control arrangements imposed by the IDA, to provide interconnection of the Company's network with the networks of any other requesting IDA-approved licensees, and comply with the provisions under the Code of Practice for Competition in the Provision of Telecommunication Services (the "Code"), which was issued by the IDA and effective September 29, 2000.
 
The Code is intended to promote the efficiency and international competitiveness of the infocomms industry in Singapore, promote and maintain fair and efficient market conduct and effective competition between players in the telecomms industry in Singapore and encourage, facilitate and promote industry self-regulation. The provisions under the Code obligate the Company to, inter alia, observe any quality of service standards imposed by the IDA, publish information relating to the services provided by the Company including the pricing and terms and conditions, and ensure the confidentiality of all subscriber information. Under the Code, the Company is also required to seek IDA's approval prior to implementing any change in ownership, shareholding or management of the Company.
 
The FBO Licence may be modified or amended by the IDA at its sole discretion. The IDA may also, under certain circumstances, suspend or cancel the FBO License in whole or in part, or impose a fine of an amount determined at its sole discretion.
 
In relation to the provision of Internet access services, IDA's quality of service standards require that the Company must attain the minimum targets of 99.5% network availability for dial-up access and 99% network availability for broadband access (measured in terms of hours of operation), 95% dial-up service accessibility (i.e., Internet connection success rate) and 99% leased line service accessibility, and achieve a maximum service activation time (from the date of receipt of application) of three working days for dial-up access, five working days for broadband access and seven working days for leased line access. In addition, the IDA has set maximum targets of 85 milliseconds and 300 milliseconds for local and international broadband network latency (for round trip) respectively and 90% for broadband bandwidth utilization. The Group's operations in Singapore have complied with, and the Group believes its operations will continue to meet or exceed, the IDA Quality of Service Standards.
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As a precondition to the award of the FBO Licence, the Company was required to commit to IDA a total of S$43 million worth of capital investment over a three-year period. In order to secure the Company's due performance of this obligation, the Company was also required to post performance bonds in total value of S$2.15 million in favour of IDA over the three-year period. The Company has discharged its obligations for the milestones committed for years 2000 and 2001 that are worth S$1.05 million in performance bond value. In view of changes in technology and customer demand since 2000, the Company had proposed to IDA to change the amount and nature of the capital investments planned for 2002 and 2003 and to extend the fulfillment period in respect of the capital investments by two years. In April 2003, the IDA approved a revised capital commitment of a total of S$2.2 million (US$1.3 million) for the period 2003 to 2005. The revised performance bond for the period 2003 to 2005 is S$0.11 million (US$0.06 million). The Company has fulfilled the revised capital commitment of S$0.54 million (US$0.31 million) for 2002 and IDA has discharged the performance bond for 2002. The performance bond of S$0.59 million (US$0.34 million) for the milestones to be completed by end 2003 which the Company submitted to the IDA on January 13, 2003 will also be replaced by a lower performance bond of S$0.07 million (US$0.04 million) in June 2003.
 
Media Development Authority of Singapore. Internet service regulation falls under the purview of the Media Development Authority of Singapore (the ''MDA''), which is a successor organisation to the Singapore Broadcasting Authority, the previous regulator. Pacific Internet and its Singapore ISP competitors are automatically licensed under the MDA's Class Licence Scheme and are required to register with the MDA within 14 days from the commencement of their services as ISPs and pay a license fee of S$1,000 per year. Under the MDA's licensing framework, ISPs are required to block out objectionable sites (which are primarily pornographic sites) as directed by the MDA. ISPs must also use their best efforts to ensure that their services (i) comply with the Codes of Practice that the MDA may issue from time to time (including the Internet Code of Practice); and (ii) are not used for any purpose that is against the public interest, public order or national harmony or that offends good taste or decency.
 
Internet content providers (''ICPs'') in Singapore who provide information on the World Wide Web (including Pacific Internet and other ISPs, web publishers and web server administrators) are also regulated by the MDA and ISPs are required to use their best efforts to ensure that their websites and programs conform to the MDA's Codes of Practice.
 
The Group has enhanced an Internet web-caching system, which it believes effectively blocks websites that the MDA has designated as objectionable. In addition, Pacific Internet has sought and intends to continue to seek from time to time the MDA's approval of certain of its Internet content to ensure compliance with the MDA's guidelines.
 
Hong Kong
 
Office of Telecommunications Authority. The Group's Hong Kong ISP, Pacific Supernet, is subject to regulation by the Office of the Telecommunications Authority (''OFTA''). OFTA assists Hong Kong's Telecommunications Authority in (i) administering and enforcing the provisions of the Telecommunication Ordinance and the Telephone Ordinance, (ii) regulating and licensing telecommunications services and (iii) ensuring the effective operation and successful development of Hong Kong's telecommunications industry. Under regulations promulgated under the Telecommunication Ordinance, Internet access services are ''public non-exclusive telecommunication services,'' and the provision of such services requires an annual Internet Access Service Provider Public Non-Exclusive Telecommunications Service License (an ''ISP PNET License''). The Group believes that OFTA does not limit the number of ISP PNET Licenses issued, or otherwise regulate the number of ISPs in Hong Kong. Pacific Supernet holds one of over 150 ISP PNET Licenses issued by OFTA as of November 30, 1999. Pacific Supernet's current ISP PNET License requires an annual fee of HK$750 and requires Pacific Supernet to submit information to OFTA from time to time upon its request, is not transferable without the prior written consent of OFTA, and is renewable annually. OFTA will likely grant additional ISP PNET Licenses in the future, which could increase ISP competition in Hong Kong.
 
Pacific Supernet's ISP PNET License does not cover international telephone services or external circuits for voice or voice programme transmission services, which Hong Kong Telecom International Limited had the exclusive right to provide until December 31, 1998. Competition in international telephone services was introduced on January 1, 1999, when OFTA commenced issuance of non-exclusive international simple resale-of-voice (''voice ISR'') licenses. The Company has applied for and obtained an External Telecommunications Services ("ETS") License in April 29, 1999 that allows the Company to provide Internet telephony services. Pacific Supernet's ETS License #518 requires an annual fee of HK$750 and requires Pacific Supernet to submit information to OFTA from time to time upon its request, is not transferable without the prior written consent of OFTA, and is renewable annually. Pacific Supernet has cancelled its ETS License on May 1, 2001.
 
Although the PRC government regulates the Internet content of ISPs and ICPs in China, ISPs and ICPs in Hong Kong are not currently subject to such regulations.
 
The Philippines
 
The Group's ISP in the Philippines is subject to Republic Act No. 7925, ''An Act to Promote and Govern the Development of Philippines' Telecommunications and the Delivery of Public Telecommunications Services'' (the ''Philippines Telecommunications Act'' or the ''PTA''). ISPs are considered value added service providers under the PTA, and as such are required to register with the National Telecommunications Commission (the ''NTC''). The Group's ISP in the Philippines has registered with the NTC and will be required to renew such registration prior to January 2007, when its current registration expires. Under present policies, the NTC does not restrict or otherwise limit the number of registrations it issues.
 
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The Philippine Constitution prohibits telecommunications entities, including ISPs, from having more than 40% of their share capital owned by persons who are not citizens of the Philippines and from appointing any executive managing officer that is not a citizen of the Philippines. Accordingly, there are restrictions against the Group acquiring a majority stake in or actively managing its or any other ISP in the Philippines.
 
The Group's operations in the Philippines are not subject to legal requirements, regulations or restrictions insofar as concerns the content provided through its Internet services.
 
On January 5, 2001, the President of the Philippines signed Republic Act No. 8992 entitled "An Act Granting the Primeworld Digital Systems, Inc. A Franchise to Construct, Install, Establish, Operate and Maintain Telecommunications Systems throughout the Philippines" which is the telecommunications franchise granted to the Philippine ISP. The said franchise included authority to engage in, inter alia, "mobile, cellular and wired or wireless, fiber optics, multi-channel distribution systems, local multipoint distribution system, satellite transmit and receive systems and other telecommunications systems and their value-added services such as, but not limited to, transmission of voice, data facsimile, control signals, audio and video, information service bureau and all other telecommunications systems technologies as are presently available or will be available through technical advances and innovations in the future". The franchise has a term of 25 years from date of effect of the said law unless earlier revoked by Congress.
 
Australia
 
ISPs are subject to a range of statutory obligations in respect of service provision, facilities, contents of communication carried and security of communications.
 
Telecommunications Act: Although the Telecommunications Act 1997 (Cth) (the "Act") does not refer specifically to ISPs, they fall into the category of "carriage service providers" because they supply to the public a listed carriage service (a carriage service between two points, one of which is in Australia) using a carrier's network. To the extent that an ISP also uses a listed carriage service to supply content to the public (such as interactive games, video-on-demand or on-line information services), it can also be classified as a "content service provider".
 
ISPs that provide content as well as carriage are likely to be regarded as both carriage service and content service providers under the Act. Consequently all ISPs have a general obligation to comply with the provisions of the Act and with applicable industry standards and codes. Carriage service providers must comply with the National Security Obligation under Parts 13, 14, 15 and 16 of the Act, Interception Obligations under Section 324 of the Act and any applicable international conventions or codes of conduct.
 
Carriage service providers are also required to comply with the Telecommunications (Consumer Protection and Service Standards) Act 1999 ("TCPSS Act"). Under the TCPSS Act, an ISP must register with the Telecommunications Industry Ombudsman Scheme.
 
Security of Communications: Part 13 of the Act makes it an offence for an ISP and its employees to utilize or disclose information obtained in the conduct of its business relating to contents or substance of a communication carried by the ISP; or carriage services supplied, or intended to be supplied by the ISP; or the affairs of personal particulars of another person.
 
Exceptions are to be made in respect of disclosures required by law including information necessary for the enforcement of criminal law, protection of public revenue or to ASIO for the performance of its function.
 
Interception. ISPs are required to do their best to prevent their network and facilities being used in the commission of offences against the laws of the Commonwealth, States and Territories. Under the Telecommunications (Interception) Act 1979 (Cth), ISPs are obliged to ensure that their network facility is able to intercept a communication passing over it in accordance with the warrant issued under the Act (Section 324). The ISP must also provide access to the traffic-related data generated to process the traffic. Traffic related data includes signalling information contained within the IP datagrams and calling line identifier of the telephone service used by the interception subject to connect to the ISP (ISPs are only required to provide plain text version of encrypted information where the ISP has itself encrypted information).
 
Content. The Broadcasting Services Amendment (Online Services) Act 1999 (Cth) (the "BSA") introduced a regulatory framework for online content that is unsuitable for children or likely to cause offence to a reasonable adult.
 
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The scheme applies only to Internet content hosted in Australia, and Internet carriage services supplied to end-users in Australia. However, the definition of "Internet content" expressly excludes ordinary electronic mail.
 
The BSA obliges ISPs to take reasonable steps to restrict access to illegal and highly offensive material hosted overseas and to comply with a range of "online provider rules" including compliance with certain industry codes and standards. Contravention of an online provider rule is an offence. The relevant codes include the Internet Industry Association Content Code 1 (ISP Obligations in Relation to Internet Access Generally), Content Code 2 (ISP Obligations in relation to Access to Content Hosted Outside Australia) and Content Code 3 (ISP Obligations in relation to Hosting Content Within Australia), all of which came into effect on 9 May 2002.
 
ISPs must also take down or block access to illegal or highly offensive material if directed by the Australian Broadcasting Authority (the "ABA"). Any person who believes that an ISP is providing access to prohibited content may make a complaint to the ABA. The ABA also has powers to investigate possible breaches of the BSA in respect of anything that occurred after January 1, 2000.
 
Although ephemeral content (i.e. e-mails) is exempt from provisions of the BSA, penalties may be incurred under section 85ZE of Crimes Act 1914 (Cth) for knowingly or recklessly using a carriage service in a manner which would cause an offence to a reasonable adult.
 
In March 2003 the Government announced that it is reviewing its online content regulation regime largely in response to a report by the Australia Institute that shows that Internet pornography is easily accessible to children.
 
Copyright. At present, an ISP's obligations to protect copyright owned by users of their networks are not clear. The Copyright Amendment (Digital Agenda) Act 2000 (which came into effect on 4 March 2001) introduced a range of amendments designed to clarify liability for authorization of copyright infringement. These include section 36(1A) which provides a non-exclusive list of matters that a court will take into account to determine whether a person is liable for authorizing another person to infringe copyright. The relevant factors are (a) the extent, if any, of the person's power to prevent the doing of the act concerned; (b) the nature of any relationship between the alleged authorizing party and the person that does the act; and (c) whether the alleged authorizing party took any reasonable steps to prevent or avoid the doing of the act including complying with any relevant industry codes of practice.
 
Section 29(6) provides that a communication other than a broadcast is taken to have been made by the person responsible for determining the content of that communication. Section 39B also provides the so-called "facilities exception"; that is, persons (including carriage service providers) who provide facilities for the making of communications are not taken to have authorized copyright infringement merely because another person has used the facilities to engage in copyright infringement. The Digital Agenda amendments further provide that any temporary copies of a work that are made as part of the technical process of accessing such a work on the Internet will not constitute an infringement of copyright.
 
Similar provisions exclude carriers and carriage service providers from liability for authorizing infringement of moral rights (section 195AVB).
 
Despite the amendments, it is not clear whether the exemptions will be available to ISPs that have notice of copyright infringement but fail to take reasonable steps to prevent that infringement. For example, it appears likely that an ISP that monitors users and retains the ability to penalize breaches of copyright may be considered to have "authorized" copyright infringement which it knows of but has not taken steps to remove.
 
Industry Standards and Codes: Carriage service providers, service providers and others are subject to the regulatory regime administered by the Australian Communications Authority (the "ACA"). Some of the matters that may be dealt with by industry code or industry standard include customer complaints, handling of personal information and accuracy of billing. Compliance with an industry code is voluntary, but compliance with an industry standard is mandatory for an industry standard that applies to participants in a particular section of the telecommunications industry. However, once an industry code is registered, the ACA can direct any participant in a section of the telecommunications industry which is breaching the code to comply with it, whether they are a voluntary code signatory or not. As of March 2003, the ACA has registered 17 industry codes and no industry standards.
 
Privacy: The Privacy Act 1988 (Cth) provides that from 21 December 2001, all private sector businesses (with some exceptions like enterprises with an annual turnover of less than A$3 million and political parties) are required to comply with ten legislated privacy principles, or a code of conduct which imposes obligations which are overall at least equivalent to those in the principles. The requirements include obligations to, for example:
  • ensure that the people from whom information is collected have a reasonable likelihood of knowing the purpose for which the information is sought, the identity of the organization and how to contact it, the fact that the data subject can gain access to the information, the types of organizations which the information is usually disclosed to, any law that requires that the information be collected and the consequences for the data subject if the information is not provided;
  • collect only personal information that is necessary for an organization's functions and to do so only by lawful and fair means;
  • only use information for direct marketing without prior consent if a prominent and free opportunity to opt out of further communications is provided with each communication;
  • take reasonable steps to make sure that the information it collects, uses and discloses is accurate, complete and up-to-date and that it is protected from misuse, loss, and unauthorized access, modification and disclosure; and
  • publish clearly expressed policies on its management of personal information.
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Trade Practices Act: The Trade Practices Act 1974 (Cth) (the "TPA") is a comprehensive legislative framework covering consumer protection, restrictive trade practices and access to essential services such as telecommunications. The Australian Competition and Consumer Commission (the "ACCC") is a government organization responsible for administering and enforcing the provisions of the TPA.
 
In general, Part XIB of the TPA confers powers on the ACCC to prevent anti-competitive conduct in telecommunications markets. For example, Part XIB provides that a carriage service provider with a substantial degree of market power in a telecommunications market must not take advantage of that power (together with other conduct) with the effect, or likely effect, of substantially lessening competition in that or any other telecommunications market.
 
ISPs are also subject to the consumer protection provisions of the TPA which apply to dealings with customers and the public. Relevant provisions include those dealing with liability for misleading or deceptive conduct and other unfair practices; non-excludable conditions and warranties applicable to contracts with consumers; and price exploitation. With limited exceptions, any term of a contract that purports to exclude, restrict or modify the application of the consumer protection provisions of the TPA is void.
 
India
 
PII's ISP license is governed by the provisions of the Indian Telegraph Act 1885, Indian Wireless Telegraphy Act 1933, and TRAI Act 1997 as modified from time to time.
 
PII has been granted a license by the Ministry of Communications and Information Technology, Department of Telecommunications ("DOT") to establish, maintain and operate on a non-exclusive basis Internet and Internet telephony services in the territory of India (the "License Agreement"). Internet Telephony as defined in PII's ISP license is a service to process and carry voice signals offered through public Internet by the use of personal computers ("PC") or IP based customer premises equipment connecting either of the following: (i) PC to PC (within or outside India); (ii) PC in India to telephone outside India; or (iii) IP based H.323/SIP terminals connected directly to ISP nodes to similar terminals (within or outside India).
 
A license fee has to be paid by PII for the full duration for which the license is granted. The telecommunications authorities have waived the license fee for a period up to October 31, 2003. A nominal license fee of One Indian Rupee per annum will become payable from November 1, 2003. PII cannot, without prior written consent of DOT to either directly or indirectly, assign or transfer its rights to another party either in whole or in part. Any violation of the terms of the license shall be construed as a breach of the License Agreement and the license shall be liable for termination.
 
In the interest of national security, PII is required to block Internet sites and/or individual subscribers, as identified and directed by the telecommunications authorities.
 
Direct interconnectivity between two separately licensed ISPs is permitted. However, interconnectivity is not permitted between ISPs who are permitted to offer Internet Telephony services and the ISPs who are not permitted to offer Internet Telephony services. Authorized public/government organizations will be allowed to provide Internet gateway access including international leased circuits directly without going through VSNL gateways. Private ISPs are allowed to provide such gateways after obtaining security clearances for which the interface of private ISPs shall only be with the telecommunications authorities.
 
PII may obtain the transmission link on lease from DOT, licensed basic service operators, railways, state electricity boards, National Power Grid Corporation or any other operator specially authorized to lease such lines to the ISPs. PII may also establish its own transmission links within its service area for carrying traffic originated and terminated by its subscribers, provided that such capacities are not available from any other authorized agencies and subject to permission of the telecommunications authorities.
 
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The Indian laws do not limit or regulate the number of ISPs in India. PII's license is valid for an initial term of 15 years unless terminated earlier in accordance with the terms thereunder. If requested by PII, extension may be granted by the DOT at suitable terms for a period of five years or more at a time.
 
Thailand
 
Telecommunications Related Legislation
 
Operation. Legislation relating to telecommunications in Thailand is contained in a number of Acts but essentially reserves the following services for either the Telephone Organization of Thailand ("TOT") or the Communications Authority of Thailand ("CAT"):
 
1) the establishment, operation and maintenance of telegraph and telephone offices within Thailand; and
2) the reception, storage and delivery of messages and everything else concerning telegraph and telephone services in accordance with rules and regulations prescribed by the Minister of Transport and Communications.
 
Internet services require a concession issued by either CAT or TOT or to be carried out in joint venture with TOT or CAT.
 
Foreign Ownership Restriction
 
The internal policy of the Ministry of Transport and Communications previously specified that the foreign ownership limit in any licensed telecommunication company was 40 per cent of the total issued shares. Any joint venture contracts entered into by private sector and state enterprises (in the case of Internet Services, CAT) were practically drafted to specify foreign shareholding limits as imposed by that policy. As a result of the economic crisis in Thailand in 1997 and 1998, the Policy and Planning Bureau of the Ministry of Transport and Communications issued the Memorandum of the Office of the Policy and Planning Bureau of the Ministry of Transport and Communications No. 0208.1 dated February 2, 1998 to relax foreign shareholding limits in licensed telecommunication companies. The limit on foreign investment was changed from 40 per cent to 49 per cent of the total issued shares.
 
Licenses and Approval
 
Operation. The main license, which the Group's operational Thai ISP, WorldNet & Services Company Limited, ("WNS"), is required to hold in order to operate its business, is the license from CAT. By execution of an Internet Service Agreement with CAT, it is deemed that WNS is licensed by CAT to operate Internet services in Thailand. The license, which is valid for ten years, will expire on October 30, 2006.
 
Malaysia

The Group's Malaysian ISP business is regulated by the Malaysian Communications and Multimedia Commission ("CMC"), a body corporate established pursuant to the Malaysian Communications and Multimedia Commission Act 1998 as the regulator for the converging communications and multimedia industry in Malaysia.
 
The licensing regime under the Communications and Multimedia Act 1998 ("CMA") is formulated to be both technology and service neutral. There are two types of licences which can be issued under the CMA, namely individual and class licences.
 
Pacific Internet (Malaysia) Sdn Bhd ("PIMY"), the Group's ISP in Malaysia, has been registered as an Applications Service Provider Class Licensee (pursuant to its "ASP Class Licence") since December 13, 2001. Class licensing is a new model of regulation which aims to minimize regulatory barrier to market entry, and under PIMY's ASP Class Licence, it is allowed to provide Internet access services.
 

In order to obtain class licences, applicants are required to register with the CMC in accordance with the Communications and Multimedia (Licensing) Regulations 2000 and Communications and Multimedia (Licensing) (Amendment) Regulations 2001 promulgated under the CMA. The registration of PIMY's ASP Class Licence is entered into registers maintained by the CMC. As the registration of an ASP Class Licence is only valid for one year, PIMY must submit fresh registrations annually together with an annual registration fee of RM2,500.

Presently, the provision of PSTN telephony and IP telephony services are not permitted under an ASP Class Licence.
 
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Liability of Internet Applications Service Providers for content: While in jurisdictions, such as the United States of America and the United Kingdom, the laws governing liability for content, eg. content which infringes copyright or is defamatory, have been amended to accord innocent carriers a defence provided that they took action to limit dissemination of such content, similar provisions are not yet available in Malaysia.
 
However, the CMA has introduced self-regulation within the industry whereby the CMC may appoint industry forums to prepare various industry codes. Compliance with these codes is voluntary (other than the consumer codes which must be complied with as a condition of the licence granted by the CMC). In order to encourage compliance, the CMA affords a defence against any prosecution, action or proceeding of any nature, whether in a court or otherwise, which is taken against a person (who is subject to the voluntary industry code) regarding a matter dealt with in that code. The Content Forum has prepared a draft Content Code which, among others, regulates the provision of content by classifying it into categories based on suitability by age group and prohibiting content which is indecent, offensive, false, menacing or obscene.
 
Where the carrier caches commonly accessed websites to make Internet surfing more efficient, this may result in a reproduction of copyrighted materials. Under the Copyright Act 1987, such reproduction without consent will amount to copyright infringement which the carrier may be liable for. However, the Content Code (if the draft is ultimately registered in its present form) accords the carrier with a defence provided that (i) the content was made available online by a third party; (ii) the content was transmitted through the system or network to the user; and (iii) the reproduction and storage was part of an automatic technical process to make such content available to users.
 
The Content Code has been submitted to the CMC circa November 2002. Once the CMC is satisfied that the code is consistent with the objects of the CMA, the CMC will register the same. Upon registration, the Content Code will become effective and PIMY will be able to comply with it and benefit from the defence available. At this time, the Content Code has not yet been registered with the CMC.
 
The Malaysian government has also taken action against those spreading rumors about communal riots and political instability via the Internet, eg. through e-mails. The spreading of false information via the Internet may result in the culprits being charged under several laws such as the Internal Security Act 1960 and the Sedition Act 1948. While PIMY may not have knowingly disseminated such information, it may be still be liable as the conduit used for this purpose.
 
In view of the above, PIMY will remain liable for the content communicated through or stored in its systems until such time when the relevant laws have been revised to accord an innocent carrier with protection or a defence against claims arising from such content.
 
Liability of Internet Applications Service Providers to consumers: Similar to the Content Forum, the Consumer Forum has, for the time being, prepared two consumer codes, namely the General Consumer Code and the Internet Access Service Provider Consumer Code ("IASP Code"). Presently, neither of these codes has been registered by the CMC. Once they have, PIMY is required to comply with them. The IASP Code (if the draft is ultimately registered in its present form) is of particular importance to PIMY as it relates to the provision of its Internet access services, eg. by ensuring that services meet specific standards and that security measures are implemented to safeguard the carrier's network.
 
PIMY would also need to comply with the Consumer Protection Act 1999 if the scope of its services include services which are meant for personal, domestic or household consumption. The said Act imposes several implied guarantees on PIMY's provision of such services including its use of reasonable care and skill, and fitness for a particular purpose.
 
Exchange control regulations: Malaysia has imposed specific foreign exchange controls which regulate, among others, dealings and transactions involving Malaysian currency, ie. Ringgit Malaysia, foreign currencies, gold and Malaysian securities between residents and non-residents. These exchange controls are enacted in the Exchange Control Act 1953, and supplemented by the Exchange Control Notices issued by the Central Bank of Malaysia. As a general rule, the exchange control regulations prescribe that any payments made to or received from a non-resident by a resident, whether in Ringgit Malaysia or foreign currency, would require the prior permission of the Controller of Foreign Exchange ("Controller").
 
Notwithstanding the general rule, Exchange Control Notice 4 states that the Controller grants his general permission to such payments which do not exceed the value of RM50,000 (with effect from April 1, 2003, the threshold before this date was RM10,000) and are for any purpose other than the import of goods. Where the payment is in a foreign currency of over RM50,000 in value, the general consent of the Controller still applies subject to the resident completing and submitting the requisite administrative documentation. The issuance of dividends by PIMY for its shares which are held by non-residents, eg. the Company, would be classified as payments and as such, the provisions of Exchange Control Notice 4 would apply.
 
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Payments made for investments abroad or under a guarantee made for non-trade purposes are also subject to the administrative documentation, however the permitted threshold is RM10,000. Where these payments exceed RM10,000 or its equivalent value, the prior approval of the Controller is required.
 
These exchange control requirements are not industry-specific and being a company incorporated in Malaysia, PIMY will need to comply with these requirements in its dealings with the rest of the Group abroad or any other non-residents. Failure to do so may render PIMY liable for an offence under the Exchange Control Act 1953 which, if found guilty, may result in the payment in question being forfeited or PIMY having to pay a fine of up to three times its value.
 
ITEM 5B.  LIQUIDITY AND CAPITAL RESOURCES

Liquidity
 

Since its inception in 1995, the Group has required substantial capital resources to finance the acquisition of its fixed assets and to fund its working capital. The Group has obtained such funding primarily through sales of equity securities, borrowings from affiliates, bank borrowings and capital leases of equipment.

The following table summarizes the Group's statements of cash flows for the periods presented:
 
For the year ended December 31, 2002, the Group generated a cash surplus of S$11.2 million (US$6.4 million), of which S$22.6 million (US$13.0 million) was generated from operating activities. The greater operating cash inflow was a result of strong operating performance.
 
Cash used in investing activities of S$5.9 million (US$3.4 million) was primarily used for acquisition of fixed assets. Cash used in financing activities amounted to S$5.5 million (US$3.2 million), primarily due to repayment of bank borrowings, capital leases as well as loan to affiliates.
 
The Group ended December 31, 2002 with cash and cash equivalents of S$35.2 million (US$20.3 million). Cash and cash equivalents are held in interest-bearing demand deposit accounts with various financial institutions mainly in Singapore, Hong Kong, Australia and the Philippines. The Group believes that it has sufficient working capital to meet its present requirements.
 
Borrowings
 
As of December 31, 2002, the Company had a payable due to STIC Investment Pte Ltd of S$4.3 million (US$2.4 million). This represents short-term borrowings, which bears interest of 6% per annum and has no fixed terms of repayment.
 
As of December 31, 2002, the Company had payables due to SembCorp Industries and SembVentures amounting to S$2.8 million (US$1.6 million) and S$4.3 million (US$2.5 million) respectively. The amount payable to SembVentures largely relates to the sales proceeds of the second offering whilst those payable to SembCorp Industries largely relates to management fees and payments made on behalf of the Company. The amounts payable to SembCorp Industries and SembVentures are interest-free and have no fixed terms of repayment.
 
As of December 31, 2002, the Group had uncommitted revolving credit facilities, representing short-term loan facilities, overdraft facilities and guarantees from various banks of S$24.9 million (US$14.4 million). The weighted-average interest rate was 1.6% per annum. Total unused credit facilities available to the Group as of December 31, 2002 were S$13.7 million (US$7.9 million).
 
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S$5.0 million of the total available credit facilities was under an agreement that requires the Company to remain a subsidiary of SembVentures. Repayment of outstanding amounts under the credit facilities is guaranteed by SembVentures. Although the Company is no longer a subsidiary of SembVentures, the facilities are still available to the Company. However, the bank has the right to withdraw the facilities due to the change in the relationship between the Company and SembVentures.
 
Commitments for Capital Expenditures
 
The Company has committed to IDA that it will spend S$2.2 million (US$1.3 million) over a period of three years, largely on capital equipment and infrastructure.
 
ITEM 5C.  RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
 
Product Development
 
The Group continuously evaluates latest technologies and applications for possible introduction. Since its inception in 1995, the Group has developed a number of products and services not previously available in any of its markets, including EmailPaging, WebFAX and EmailSMS. The Group has also developed an enhanced Internet web caching system and adapted policy-based routing algorithms to its network to optimize traffic over its international links and other systems designed solely for its own use.
 
The Group has implemented transparent caching, by using Layer 4 switching technology and together with their network architecture for web pages on all its regional hubs. The aim of the project is to achieve load balancing, efficient use of international bandwidth and fast surfing experience for the end users. The Group has introduced high-end routers and switches (from Cisco Systems and Juniper Network) to their Core Network, so as to achieve Telco-grade solution to deliver a higher quality of service and ensure capacity to meet higher customer demands.
 
PacNet started offering broadband services by using the wholesale solution from the local Telco infrastructure. The Broadband solution will be provided to all the customers, i.e. consumer and corporate, as Broadband (i.e. ADSL, SHDSL) is where the growth will be for the following years in the Asian region. The Group will also continue to focus on the development of wireless technology such as IEEE802.11a/b/g and the convergence towards interoperability (together with Broadband technology).
 
The Group's regular team of network engineers, which undertakes most of the Group's product development work, is currently working to improve the technology the Group is using for Internet telephony and real-time Internet faxing. VoIP and FoIP Gateways and Gatekeeper have been deployed in the Group's regional hubs. Major services/products that the Group has engineered include: WebMail services, WorldFAX service, provider of outsource solution in DNS, Email, security, dialup and roaming; NT web-hosting; Ezhtml home page generator; managed network/router; managed firewall.
 
The Group has developed a unified RADIUS solution for use in its regional network for authentication, accounting and access control to the services it offered. The goal is to achieve simplicity, reliability and to cater for better control in the Group's own service offerings. The Group has also developed an application for control of duplicate logins in its dialup access pool.
 
The Group is continuously looking into evaluation of new system technologies, applications and hardware, which includes but is not limited to: enterprise storage systems from IBM, SUN, COMPAQ and HDS; Linux and Open-Source solution; WAP servers and applications; Unified Messaging Systems; telecommunication systems which combined the traditional circuit switch network with the VoIP technology; integration of VoIP into e-commerce solutions, helpdesk support systems; centralize technical/customer support system; wireless access; broadband access; open-sources technology; and latest technology from Microsoft .Net architecture.
 
Proprietary Rights
 
General. Although the Group believes that its success is more dependent upon its technical, marketing and customer service expertise than its proprietary rights, the Group relies on a combination of trademark and contractual restrictions to establish and protect its technology. It is the Group's policy to require employees and independent contractors and, when possible, suppliers to execute confidentiality agreements upon the commencement of their relationships with the Group. These agreements provide that confidential information developed or made known during the course of a relationship with the Group must be kept confidential and not disclosed to third parties except in specific circumstances.
 
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Licenses. The Group has obtained authorization to use the products of each licensor of software that the Group bundles in its front-end software product provided to subscribers. The particular applications included in the Company's start-up packages have, when necessary, been licensed, including Microsoft Internet Explorer from Microsoft Corporation (the licences are automatically renewed for successive one-year terms), Netscape Navigator from Netscape Communications Corporation (the licence is automatically renewed annually) the evaluation version of WinZip from Nico Mak Computing, Inc., Adobe Acrobat Reader from Adobe Systems Incorporated (licence is valid unless terminated by licensor ) and mIRC by MIRC Co. Ltd, WS_FTP from Ipswitch, Inc. (license automatically renewed annually).
 
Historically, any license fees charged to the Group upon enrolment of additional subscribers were generally passed through to subscribers in their start-up fees. However, the Group has increasingly waived start-up fees in Singapore due to competitive pressures and has absorbed the cost of license fees. Microsoft currently does not charge the Group a license fee with respect to the Group's distribution of Microsoft Internet Explorer; however, there can be no assurance that such arrangement will continue in the future. The Group currently intends to maintain or negotiate renewals of all relevant existing software licenses and authorizations as necessary. The Group may also want or need to license other applications in the future. Other applications included in the Group's start-up package are shareware that the Group has obtained permission to distribute or that are from the public domain and are freely distributable.
 
Trademarks. Trademark protection for the "Pacific Internet" mark and logo has been applied for in India. However, no assurance can be given that the registration will be approved. The "Pacific Internet" mark and/or logo is a registered trademark of the Group in Singapore, Australia, China, Hong Kong, Indonesia, Japan, Malaysia, the Philippines, South Korea, Thailand and Taiwan. The Group has also registered the "Pacific Supernet" mark and logo in Hong Kong. The Company has abandoned its applications for the registration of the "PACfusion.com" mark and logo in Malaysia, India, US and Hong Kong. "PACfusion.com" is a registered trademark of the Group in Singapore, Taiwan, China and Thailand. The "Safe2Travel" mark and logo have also been registered in Singapore. The Group also acquired the "Pacific Internet" US federal registered mark and also the registered mark in the State of California. The Group plans to seek copyright protection under the laws of those countries in which the Group operates to the extent its material is protectable under such copyright laws. The laws of the countries in which the Group currently operates or may in the future operate may treat the protection of proprietary rights differently from, and may not protect the Group's proprietary rights to the same extent as do, laws in the US. The Group expects that it may license in the future, certain of its proprietary rights, such as trademarks, to third parties.
 
ITEM 5D.  TREND INFORMATION
 
See "Item 4B. Business Overview - Industry Background" and "Item 5. Operating and Financial Review and Prospects".
 

ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES


 Table of contents
ITEM 6A.  DIRECTORS AND SENIOR MANAGEMENT
 
The following table sets forth certain information regarding the directors and senior management of Pacific Internet as of May 31, 2003:

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Ko Kheng Hwa has served as a director since July 1997. He was appointed as Deputy Chairman of the Board of Directors in October 1999 and has served as Chairman of the Board of Directors since February 2000. Mr Ko is also Managing Director of the Economic Development Board of Singapore.
 
Low Sin Leng was appointed as a director since December 2000 and was appointed Deputy Chairman on 22 April 2002. Ms Low is also the Chief Operating Officer of SembCorp Industries. SembCorp Industries owns SembCorp Ventures, which in turn owns 41.3% of Pacific Internet as of April 30, 2003.
 
Tan Tong Hai was appointed as a director since March 2001. Mr Tan is also the President and Chief Executive Officer of Pacific Internet.
 
Chia Whye Liang Anthony was appointed as a Director in March 2000. Mr Chia was also the Chief Executive Officer of MediaCorp Interactive Pte Ltd ("MediaCorp Interactive"). MediaCorp Interactive is a related corporation of SIM Ventures, who owns 13.8% of Pacific Internet as of April 30, 2003. Mr Chia resigned from the Board on 28 February 2003.
 
Phua Chin Chor was appointed as a Director on April 7, 2003. Mr Phua is the Group Financial Controller of Media Corporation of Singapore Pte Ltd ("MCS"). MCS owns SIM Ventures, which in turn owns 13.8% of Pacific Internet as of April 30, 2003.
 
Tsao Yuan Mrs Lee Soo Ann was appointed as a director since October 2000. Dr Lee Tsao Yuan is also the Executive Director of Skills Development Centre Pte Ltd.
 
Chong Phit Lian was appointed as a director in April 2002. She has served as President of Pacfusion Limited since March 2001. Ms Chong is also the Chief Executive Officer of Singapore Precision Industries Pte Ltd.
 
Low Tan Ling @ Gracy Seow was appointed as a Director in April 2002. Mrs Gracy Choo was previously the Executive Vice President and Special Assistant to the Deputy Chairman & President of United Overseas Bank Ltd prior to her retirement in July 2002.
 
Yeo Wee Kiong was appointed as a Director in April 2002. Mr Yeo is also the Managing Director of Yeo Wee Kiong Law Corporation.
 
Wee Thiam Kim Lawrence was appointed as a Director in April 2002. Mr Wee is the Senior Vice President of CSC Computer Sciences Pte Limited.
 
Linda Hoon Siew Kin has served as Joint Company Secretary since August 1998. Ms Hoon was appointed as an alternate director to Low Sin Leng in February 2002. Ms Hoon is also Senior Vice President and General Counsel, Group Legal Operations of SembCorp Industries.
 
Tan Hwee Siang Nancy has served as Chief Financial Officer since July 2002. She first joined the Company as Deputy Director, Finance in October 1999.
 
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Ong Teck Guan was appointed as Managing Director of the Company since January 2001. Prior to this appointment in Singapore, he was the Acting General Manager of PSL in Hong Kong.
 
Kuk Cho Yiu was appointed as Managing Director of PSL since January 2002. He first joined PSL as Account Manager in August 1997.
 
Julia Theresa S. Yap has served as Managing Director of PIPH since April 1997, and was one of the original incorporators of PIPH in 1996.
 
Dennis Muscat was appointed as Managing Director of PIA since August 2001. He first joined PIA as Financial Controller in February 1999.
 
Prithayuth Nivasabutr has served as Managing Director of PITH since November 2000.
 
Lim Hock Koon has served as Managing Director, Pacific Internet Malaysia since August 2002. He is also the Senior Vice President, Regional Corporate Sales of the Company.
 
Mah Swee Keong has served as Joint Company Secretary since April 1999. Mr Mah is also the Senior Vice President of Group Legal of the Company.
 
ITEM 6B.  COMPENSATION

Compensation of Directors. For the year ended December 31, 2002, the aggregate amount of compensation accrued by Pacific Internet to all of its directors was approximately S$0.6 million (US$0.3 million), other than reimbursement of all reasonable expenses for attendance at Board meetings.
 
Compensation of Senior Management. For the year ended December 31, 2002, the aggregate amount of compensation accrued by Pacific Internet to all of its senior management was approximately S$1.6 million (US$0. 9 million).
 
ITEM 6C.  BOARD PRACTICES

The minimum number of directors required under our Articles of Association (the "Articles") is two. Mr Wong Kok Siew and Dr Judy Lim retired during the year. Mr Yeo Wee Kiong, Mr Lawrence Wee and Mrs Gracy Choo were appointed to the Board, increasing the size of the Board to nine, excluding one alternate director. Subsequent to the year end, Mr Anthony Chia resigned from the Board on February 28, 2003 while Mr Phua Chin Chor was appointed to the Board on April 7, 2003. With the exception of Mr Ko Kheng Hwa, whose appointment as Chairman is for a fixed term ending on February 7, 2004, there is no fixed term of office for the other directors and the directors of the Company are not subject to retirement under the Articles.
 
The Company has not entered into any contracts with its directors for the purposes of securing their services as directors of the Company.
 
Executive Committee
 
The Executive Committee ("EXCO") was established in May 2001 by the Board to facilitate the role of the Board in guiding the management of the Company towards enhancement of their decision-making process, management systems and strengthening the core competencies of the Group, with the ultimate objective of improving business performance, productivity, efficiency and asset management within the Group.
 
The four-member EXCO comprises of Mr Ko Kheng Hwa, Ms Low Sin Leng, Mr Anthony Chia and Mr Lawrence Wee. With Mr Anthony Chia's resignation as a Director, he also ceased to be a member of the EXCO on February 28, 2003. The EXCO meets regularly and has also been delegated authority to exercise certain of the Board's powers in fulfilling its charter. The President and Chief Executive Officer is responsible for the overall management and day-to-day operation of the Company. The Board has conferred upon the EXCO and the President and Chief Executive Officer certain discretionary limits and authority for capital expenditure, budgeting and human resource management. In total, the EXCO met three times during the year.
 
Audit Committee
 
The Audit Committee ("AC") consists of four members from the Board. They are Mr Ko Kheng Hwa (Chairman), Dr Lee Tsao Yuan, Mrs Gracy Choo and Mr Yeo Wee Kiong, all of whom are independent.
 
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The AC discharges its functions of assisting the Board in fulfilling its fiduciary responsibilities relating to corporate governance and reporting practices of the Company. The AC also seeks guidance from the Best Practices Guide on Audit Committee issued by Singapore Exchange Securities Trading Limited ("SGX-ST"), the Report and Recommendations of the US Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees and the SGX-ST Listing Manual. The AC met a total of four times during the year.
 
In the course of discharging its duties under the AC charter, the AC is empowered to seek any information from the Company's employees, and to this end, all employees and management are obliged to extend their fullest cooperation. The AC is further empowered by the Board to obtain legal and other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary.
 
Compensation & Administrative Committee
 
The Administrative Committee and the Compensation Committee were reconstituted and merged to form the Compensation & Administrative Committee ("CAC") in May 2002.
 
Ms Low Sin Leng, Mr Lawrence Wee and Mr Yeo Wee Kiong were appointed to form the CAC. The CAC, comprising all non-executive directors who are not employees of the Company, will carry out the dual function of deciding on compensation for key employees, Board of Directors and administering Company-wide incentive schemes such as the Company's share option plans. The CAC held its first meeting on January 21, 2003.
 
Litigation Committee
 
The Litigation Committee, comprising exclusively of independent directors, namely Mr Yeo Wee Kiong, Dr Lee Tsao Yuan, Mrs Gracy Choo and Mr Lawrence Wee, was established in November 2002 to decide on the Company's defence of the US IPO allocation class action litigation.
 
See "Item 8A. Legal Proceedings" for further details on the US IPO allocation class action litigation against the Company.
 
Nominating Committee
 
In January 2003, the Board approved the establishment of the Nominating Committee, consisting of all independent directors, namely Dr Lee Tsao Yuan, Mr Lawrence Wee, Mrs Gracy Choo and Mr Yeo Wee Kiong. The primary purpose of the Nominating Committee is to develop and recommend the Board's criteria for the selection of new directors, identify individuals qualified to become Board members in accordance with such criteria and to make recommendations on such qualified candidates for appointment to the Board.
 
ITEM 6D.  EMPLOYEES

The information presented below indicated the number of employees the Group employed for the years ended December 31, 2000, 2001 and 2002:

The following table summarizes the functional distribution of the Group's full-time ("F") and part-time ("P") employees in the Company and its consolidated subsidiaries as of December 31, 2002:
Only employees from the consolidated subsidiaries are included in the above information.

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The Group's employees, except for that of Safe2Travel, are not covered by any collective bargaining agreements. The Group has not experienced any strikes or work stoppages by its employees.
 

ITEM 6E.  SHARE OWNERSHIP

As at December 31, 2002, none of the Directors who held office at the end of the financial year had any interest in shares or debentures of the Company, except as follows :

(1) These options are granted under the 1998 and 1999 share option plans of the Company, subject to continued employment. These share options, upon vesting, are exercisable within the time periods ranging from February 4, 2000 to April 9, 2006 at prices ranging from US$3.09 to US$32.48 per share.
 
(2) Mr. Chia resigned from the Board on February 28, 2003. His options were extended for two years from the date of his resignation.
 
(3) Dr. Judy Lim Meng-En resigned from the Board on May 30, 2002. Her options amounting to 20,000 shares were extended for two years from the date of her resignation.
 
(4) Mr. Wong Kok Siew resigned from the Board on April 22, 2002. His options amounting to 20,000 shares were extended for two years from the date of his resignation.
 
Issuance of Share Options
 
As of December 31, 2002, options to subscribe for 1,461,775 ordinary shares were issued and outstanding, of which 215,000 and 326,800 were held by directors and senior management of the Company, respectively. Of these options outstanding, options to subscribe for 267,300 ordinary shares were granted under the Company's 1998 Employees' Share Option Plan and options to subscribe for 1,194,475 ordinary shares were granted under the Company's 1999 Share Option Plan. The exercise prices of these options range from US$3.09 to US$32.48. The expiration dates of the options range from February 2004 to April 2006.
 
1998 Employees' Share Option Plan (the "1998 Plan")
 
The 1998 Plan was established by the Company in November 1998 and became effective on February 5, 1999. The 1998 Plan is administered by the Administrative Committee* of the Board of Directors. Our employees are eligible to receive option grants under the 1998 Plan. All options granted under the 1998 Plan will have a term no longer than five years. The aggregate number of shares subject to outstanding options granted under the 1998 Plan will not at any time exceed 10% of Pacific Internet's outstanding fully-diluted equity, except that concurrent with the Company's initial public offering, the Company granted options to purchase up to 1,500,000 shares (of which 10.9% remains outstanding of Pacific Internet's outstanding fully-diluted shares, after giving effect to the initial public offering) at an exercise price equal to the initial public offering price of US$17.00. (the "IPO Options"). The IPO Options become exercisable as to 25% of the shares subject to the options on each of the first and second anniversaries of the grant date and as to the remaining 50% of the shares subject to the options on the third anniversary of the grant date.
 
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Options granted under the 1998 Plan are not transferable by the optionee, other than by will or by laws of descent or distribution, and each option is exercisable during the lifetime of the optionee only by such optionee or, in the case of certain disabilities, by the representative of the optionee. Options granted under the 1998 Plan terminate upon termination of the optionee's employment; provided, however, that in the case of termination due to disability, redundancy, retirement or in certain other cases approved in writing by the Administrative Committee, options may generally be exercised within six months of termination. If an optionee dies, his or her options are exercisable by the optionee's representative at any time within one year after the optionee's death.
 
The exercisability of options outstanding under the 1998 Plan may be fully or partially accelerated under certain circumstances such as a change in control of our company, as defined in the 1998 Plan. In the event of certain changes in our capitalization, our Administrative Committee will make appropriate adjustments in one or more of the number of shares available for future grants under the 1998 Plan, the number of shares covered by each outstanding option or the exercise price of each outstanding option.
 
The 1998 Plan will terminate automatically on February 4, 2009. The Administrative Committee may at any time terminate and may from time to time amend or modify the 1998 Plan, subject to shareholder approval of certain amendments; provided, however that no amendment, modification or termination of the 1998 Plan shall in any manner adversely affect any options theretofore granted under the 1998 Plan without the consent of the optionee.
 
1999 Share Option Plan (the "1999 Plan")
 
On November 10, 1999, the Company established the 1999 Plan. The 1999 Plan is administered by the Administrative Committee of the Board of Directors. Employees, consultants and directors of the Company are eligible to receive option grants under the 1999 Plan. All options granted under the 1999 Plan will have a term no longer than five years. The aggregate number of shares subject to outstanding options granted under the 1999 Plan will not at any time exceed such number which, together with the total number of ordinary shares issued under or subject to options our 1998 Plan, equals 20% of the Company's then issued share capital on a fully diluted basis.
 
The Administrative Committee has the authority to determine, in its sole discretion, to whom options may be granted under the 1999 Plan and the terms of such options, including the exercise price, the number of shares subject to each option, the exercisability thereof, and the form of consideration payable upon such exercise. The exercise price of all options granted under the 1999 Plan must be at least equal to the "fair market value", as determined by the Administrative Committee, of the shares on the grant date. Fair market value is defined under the 1999 Plan as the arithmetic average of the officially quoted closing price of the Company's shares on the Nasdaq Stock Market's National Market for the five trading days immediately preceding the date of grant.
 
Options granted under the 1999 Plan are not transferable by the optionee, other than by will or by laws of descent or distribution, and each option is exercisable during the lifetime of the optionee only by such optionee or, in the case of certain disabilities, by the representative of the optionee. Options granted under the 1999 Plan generally terminate upon termination of the optionee's employment; provided, however, that in the case of termination due to disability, redundancy, retirement or in certain other cases approved in writing by the Administrative Committee, options may generally be exercised within six months of termination. If an optionee dies, his or her options are exercisable by the optionee's representative at any time within one year after the optionee's death.
 
The exercisability of options outstanding under the 1999 Plan may be fully or partially accelerated under certain circumstances such as a change in control of our company, as defined in the 1999 Plan. In the event of certain changes in our capitalization, our Administrative Committee will make appropriate adjustments in one or more of the number of shares available for future grants under the 1999 Plan, the number of shares covered by each outstanding option or the exercise price of each outstanding option.
 
The 1999 Plan will terminate automatically on November 9, 2009. The Administrative Committee may at any time terminate and may from time to time amend or modify the 1999 Plan, subject to shareholder approval of certain amendments; provided, however that no amendment, modification or termination of the 1999 Plan shall in any manner adversely affect any options theretofore granted under the 1999 Plan without the consent of the optionee.
 
* On May 30, 2002, the Administrative Committee and the Compensation Committee were re-constituted and merged to form the Compensation & Administrative Committee ("CAC"). The CAC will carry out the dual function of deciding on compensation for key employees, the Board of Directors and administering Company-wide incentive schemes such as the Company's share option plans.  
Table of contents 47

ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
 
ITEM 7A.  MAJOR SHAREHOLDERS
 
Major Shareholders
 

SembVentures and SIM Ventures are subsidiaries of SembCorp Industries and Media Corporation of Singapore Pte Ltd, respectively. Both SembVentures and SIM Ventures are effectively controlled by Temasek, the principal holding company of the Government of Singapore. Although Temasek is the Group's ultimate parent, the Group does not have any special status under Singapore law as a result of such ownership. In addition to having effective indirect control over the Group, Temasek also indirectly controls SingNet and Starhub - the Group's principal competitors in Singapore. The Company, SingNet and Starhub are each managed at one or more corporate levels below Temasek, and the Group is not aware of any actual conflicts arising from Temasek's interests in such companies.

As of April 30, 2003, 12,983,291 shares were outstanding. The following table sets forth the ownership of Pacific Internet's shares as of April 30, 2003 by each person known by Pacific Internet to own more than 5% of the shares outstanding. The information as to beneficial ownership has been furnished by the respective shareholders of Pacific Internet, and except as indicated in the table below or the footnotes thereto, the shareholders named in the table have sole voting and investment power with respect to the shares set forth opposite such shareholder's name.

(1) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares subject to options or warrants held by that person that are currently exercisable or exercisable within 60 days of April 30, 2003 are deemed outstanding. Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of that person.
 
(2) Temasek, the principal holding company of the government of the Republic of Singapore, owns, 51.5% of SembCorp Industries, SembCorp effectively owns 100% of SembVentures, which is Pacific Internet's 41.3% shareholder.
 
(3) Temasek beneficially owns 100% of SIM Ventures, the 13.8% shareholder of Pacific Internet prior to the Offering. Temasek may therefore be deemed to indirectly beneficially own the shares owned by SIM Ventures.
 
Pacific Internet has issued one class of securities only and all holders of these securities are entitled to the same voting rights. See "Item 10B. Memorandum and Articles of Association" for further details on the rights of shareholders.
 
As of April 30, 2003, according to the Company's share register, 5,839,725 of the Company's ordinary shares, representing 45.0% of the Company's outstanding shares, were held by a total of 69 holders of record with addresses in the US. Since certain of these ordinary shares were held by brokers or other nominees, the number of record holders in the US may not be representative of the number of beneficial holders or where the holders are resident.
 
ITEM 7B.  RELATED PARTY TRANSACTIONS

Management fees
 
The Company paid an annual management fee to SembVentures and SembCorp Industries, for various management and administrative services provided. These services were provided by SembCorp Industries and SembVentures to all its strategic business units based on the application of pre-defined weightage to parameters such as profitability. For the years ended December 31, 2000, 2001 and 2002, management fees paid or payable to SembVentures and SembCorp Industries were S$1.3 million, S$nil and S$0.1 million respectively. For the year ended December 31, 2001, such management fees of S$0.3 million were written back due to waiver of amounts provided in prior years. For the year ended December 31, 2002, management fees paid to SembCorp Industries amounted to S$0.11 million (US$0.06 million). This transaction was approved by the Audit Committee on January 29, 2003.
 
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IT Services
 
On May 20, 2003, the Company entered into a three-year agreement with SembCorp Industries for the provision of managed e-mail and other optional IT-related services including firewall, VPN and WAN services (the "IT Services"). The IT Services may also be provided to strategic business units of SembCorp Industries on an opt-in basis. The fees payable to the Company for the IT Services would depend on the number of email accounts supported and the optional services that are eventually taken up and would range from approximately S$0.45 million (US$0.26 million) to S$1.6 million (US$0.9 million). This transaction was approved by the Audit Committee on January 29, 2003.
 
Web Content and Management Services
 
On January 1, 2002, the Company entered into a one-year agreement with Pacfusion for the provision of web content, management and other services for its homepage at www.pacific.net.sg. In consideration for the services provided, the Company paid Pacfusion S$0.05 million (US$0.03 million) per month. This transaction was approved by the Audit Committee on February 6, 2002.
 
ITEM 7C.  INTERESTS OF EXPERTS AND COUNSEL

N.A
 

Table of contents

ITEM 8.  FINANCIAL INFORMATION


 
ITEM 8A.  CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
 
See "Item 18. Financial Statements".
 
Other Information
 
Legal Proceedings
 
On December 6, 2001, a class action lawsuit ("IPO Allocation Suit") was instituted in the United States District Court for the Southern District of New York against the Company and several of the Company's former directors and officers as well as against the underwriters who handled the Company's 5 February 1999 initial public offering ("IPO"). The complaint filed with respect to the IPO Allocation Suit alleges violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 and is based primarily on the assertion that there were undisclosed commissions received by the underwriter defendants and agreements or arrangements entered into by the underwriters for additional purchases of the Company's securities in the aftermarket by selected investors at pre-determined prices. The action seeks damages in an unspecified amount. In April 2002, an amended complaint was filed against the Company. The amended complaint included, amongst others, allegations of price-manipulation in the Company's IPO as well as in its second offering conducted in May 1999.
 
The Company has been advised by its US counsel that similar class action suits have been filed against about 300 other companies that went public between 1998 and 2001 and that all such cases have been consolidated before a single judge for case management purposes. On July 15, 2002, the Company and the individual defendants, along with the other issuers and their related officer and director defendants, filed a joint motion to dismiss based on common issues. On February 19, 2003, the Court denied the motion to dismiss as to all claims brought against the Company and the individual defendants except for claims brought against the individual defendants under Section 10(b) of the Securities Exchange Act of 1934 which were dismissed. Discovery is now expected to proceed.
 
The Company believes that it and the individual defendants have meritorious defenses to the claims made in the complaints and intends to contest the lawsuit vigorously. However, the litigation remains at a preliminary stage. Due to the inherent uncertainties of the lawsuit, the Company cannot accurately predict the ultimate outcome of the lawsuit. An unfavorable outcome could have a material adverse effect on the business, financial condition and results of operation of the Company in the period in which the lawsuit is resolved.
 
The Group is or may be potentially involved in other litigation incidental to its business. Although the outcome of any such litigation is not presently determinable, the resolution of such litigation is not expected to have a material adverse effect on its business. No assurances can be given with respect to the extent or outcome of any such litigation in the future.
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Dividends
 
In a general meeting, the Company may, by ordinary resolution, declare dividends but no dividend will be payable in excess of the amount recommended by the directors. Singapore law allows dividends to be paid out only out of profits of the Company, determined in accordance with accounting principles generally accepted in Singapore. As the Company is incorporated in Singapore, all dividends declared will be denominated in Singapore currency. The Company has not declared any dividends to date. The amount of the Company's retained earnings for distribution was approximately S$0.02 million (US$0.01 million). The Group does not anticipate paying cash dividends in the foreseeable future.
 
ITEM 8B.  SIGNIFICANT CHANGES

N.A.
 

Table of contents

ITEM 9.  THE OFFER AND LISTING


Trading Markets

The Company's outstanding shares are listed on the Nasdaq Stock Market's National Market under the symbol "PCNTF". The following table sets forth, for the periods indicated, the high and low last reported sales prices per share as furnished by the Nasdaq Stock Market's National Market. 
The last reported sale price of the share as quoted on the Nasdaq Stock Market's National Market on May 30, 2003 was US$7.84 per share.
 

Table of contents

ITEM 10.  ADDITIONAL INFORMATION

ITEM 10A.  SHARE CAPITAL

N.A.
 
ITEM 10B.  MEMORANDUM AND ARTICLES OF ASSOCIATION

Organization and Register
 
Pacific Internet Limited is a company limited by shares organized under the laws of the Republic of Singapore under the Companies Act, Chapter 50 (the "Companies Act"). The company number with the Singapore Registry of Companies and Businesses is 199502086C.
 
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Objects and Purposes
 
Pacific Internet's principal activities consist of the provision of Internet access services, sale of network configuration equipment and design and maintenance of websites.
 
A detailed list of all the other objects and purposes of the Company is set forth in Clause 3 of its Memorandum of Association which was filed as an Exhibit to our registration statement on Form F-1 (Commission File No. 333-9654) in connection with our initial public offering in February 1999 and is available for examination at our registered office at 89 Science Park Drive, #02-05/06 The Rutherford, Singapore 118261, Republic of Singapore.
 
Board of Directors

The Companies Act requires a director to declare at a meeting of the Board of Directors if he or she has any interest, directly or indirectly, in a contract or proposed contract with the company. Under the Company's Articles of Association, such director is not allowed to vote in respect of any proposal in which he has any interest directly or indirectly and shall not be counted in the quorum at a meeting in relation to any resolution which he is not entitled to vote. The remuneration of the directors is approved at the general meeting of the shareholders.
 
The directors are authorized under the Articles of Association of the Company to exercise all the borrowing powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital and to issue debentures and other securities. As such, the authority of the directors to exercise such powers of the Company may be modified by way of alteration of the relevant Articles as elaborated below.
 
The minimum number of directors required is two. No shares are required to be held by a director for director's qualification. The directors of the Company are not subject to retirement under its Articles of Association.
 
Under the Companies Act, as amended with effect from May 15, 2003, no person of or over the age of 70 years shall be appointed to act as a director unless the shareholders at an annual general meeting vote with a simple majority in favor of his appointment to hold office until the next annual general meeting of the company.
 
Dividends

The Company, may by ordinary resolutions of its shareholders, declare dividends at a general meeting, but not in excess of the amount recommended by its directors. Dividends shall be payable only out of the profits of the Company. The Company may also capitalize its share premium account and apply it to pay dividends, if such dividends are satisfied by the issue of shares to the shareholders. The directors may also declare an interim dividend without the approval of its shareholders. All dividends are paid pro rata among the shareholders in proportion to the amount paid up on each shareholder's ordinary shares, unless the rights attaching to an issue of any ordinary shares provides otherwise.
 
New Shares
 
New shares may only be issued with the prior approval of the shareholders of Pacific Internet in a general meeting. Such approval, if granted, will lapse at the conclusion of the Annual General Meeting following the date on which the approval was granted, or the expiration of the period within which the next Annual General Meeting after that date is required by law to be held, whichever is the earlier. The shareholders have provided general authority to issue any remaining unissued shares prior to the next Annual General Meeting, or the expiration of the period within which the next Annual General Meeting after that date is required by law to be held, whichever is the earlier. Subject to the provisions of the Companies Act, the allotment and issue of all new shares are under the control of the directors who may allot and issue the same with such rights and restrictions as they may think fit.
 
Transfer of Shares
 
Subject to applicable securities laws, shares of the Company are freely transferable but the directors may, at their discretion, decline to register any transfer of shares which are not fully paid up or upon which the Company has a lien. Shares may be transferred by a duly signed instrument of transfer in the usual common-form or in a form approved by the directors. The directors may decline to register any transfer of shares evidenced in certificated form unless, among other things, it has been duly stamped and is presented for registration together with the share certificate and other evidence of title as they may require. The Company will replace worn-out, defaced, lost or destroyed certificates for shares upon, among other things, the applicant furnishing evidence and indemnity as the directors may require.
 
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Voting Rights
 
Voting at any meeting of shareholders is by a show of hands unless a poll is duly demanded. If voting is by a show of hands, every shareholder who is present in person or by proxy at the meeting has one vote. On a poll every shareholder who is present in person or by proxy has one vote for every share held by him. A poll may be demanded by the chairman of the meeting or by any member present in person or by proxy, and (i) representing not less than 1% of the total voting rights of all members having the right to vote at the meeting or (ii) holding shares in Pacific Internet conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than 1% of the total sum paid up on all the shares conferring that right.
 
Bonus and Rights Issue
 
In a general meeting, the Company may, upon the recommendation of our directors, capitalize any reserves or profits (including profits or monies carried and standing to any reserve or to the share premium account) and distribute the same as shares, credited as paid-up, to the shareholders in proportion to their shareholdings. The directors may also grant to shareholders rights to take up additional shares. Such rights are subject to the Articles of Association, any conditions attached to such grant and the regulations of the stock exchange on which the shares are listed.
 
Takeovers

The acquisition of shares of public companies is regulated by, inter alia, the Companies Act and the Singapore Code on Take-overs and Mergers (the "Take-over Code"). Any person (either on his own or together with parties acting in concert with him) acquiring an interest in 30% or more of our voting shares is obliged to extend a takeover offer for the remaining shares which carry voting rights, in accordance with the provisions of the Take-over Code. "Parties acting in concert" will be presumed to include related and associated companies, directors (including their close relatives), pension funds, discretionary funds and financial advisers (in respect of shares held by them and funds managed by them on a discretionary basis where the shareholdings of the financial adviser and any of those funds total 10% or more of the equity share capital of the acquiring party). The offer must be in cash or be accompanied by a cash alternative at not less than the highest price (excluding stamp duty and commission) paid by the offeror or parties acting in concert with him for shares of that class during the offer period and within six months prior to its commencement. A mandatory takeover offer is also required to be made if a person holding between 30% and 50% (both inclusive) of the voting shares (either on his own or together with parties acting in concert with him) acquires additional shares representing more than 1% of the voting shares in any six-month period.
 
Liquidation or Other Return of Capital

On a winding-up or other return of capital, subject to any special rights attaching to any other class of shares, shareholders will be entitled to participate in any surplus assets according to their rights and interests in the Company.
 
Indemnity
As permitted by the Singapore law, the Articles of Association provide that, subject to the Companies Act, the directors and officers will be indemnified by the Company against any liability incurred by them in defending any proceedings, whether civil or criminal, which relate to any of their acts or omissions as our officer, director or employee. This indemnity, however, is subject to: (i) a judgment being given; (2) them being acquitted or (3) relief being granted by the court, depending on the nature of the proceedings. Directors and officers may not be indemnified by the Company for his or her liability in respect of any negligence, default, breach of duty or breach of trust of which they may be guilty in relation to the Company.
 
As at February 14, 2003, the Company has purchased directors' and officers' liability insurance ("D&O Insurance") against any of those liabilities, up to an amount of US$10.0 million, except where the liability arises out of, amongst others, conduct involving dishonesty or a willful breach of duty or allegations such as those in the IPO Allocation Suit (as defined under "Item 8A. Consolidated Statements and Other Financial Information - Other Information").
 
At present, save for the IPO Allocation Suit referred to at Item 8A above, there is no pending litigation or proceeding involving any of our directors, officers, employees or agents where indemnification would be required or permitted. Save as disclosed, we are not aware of any pending or threatened litigation or proceeding that might result in a claim for indemnification.
 
General Meetings of Shareholders
 
Pacific Internet is required to hold an Annual General Meeting once in every calendar year and not more than 15 months after the preceding Annual General Meeting. The directors may convene an Extraordinary General Meeting whenever they think fit, and they must do so upon the request in writing of shareholders representing not less than 10% of the paid-up share capital of Pacific Internet. In addition, two or more shareholders holding not less than 10% of the issued share capital of Pacific Internet may call a meeting of shareholders. Unless otherwise required by law or by the Articles, voting at general meetings is by ordinary resolution (requiring an affirmative vote of a simple majority of those present and voting). An ordinary resolution suffices, for example, in respect of appointments and removals of directors. A special resolution (requiring an affirmative vote of at least 75% of those present and voting) is necessary for certain matters under Singapore law, such as an alteration of the Articles. Subject to the Companies Act, at least 21 days' advance written notice specifying the intention to propose the resolution as a special resolution must be given of every general meeting convened for the purpose of passing a special resolution. Subject to the Companies Act, at least 14 days' advance written notice must be given of every general meeting convened for the purpose of passing an ordinary resolution.
 
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Limitations on Rights to Hold or Vote Shares
 

Except as discussed in "Item 10B. Memorandum And Articles of Association - Transfer of Shares, Voting Rights and Takeovers" and "Item 3D. Risk Factors - Certain Anti-takeover Provisions Under The Companies Act May Affect The Company's Share Prices ", there are no limitations imposed by the laws of Singapore or by our Articles of Association on the right of non-resident shareholders to hold or vote our shares.
 
ITEM 10C.  MATERIAL CONTRACTS

The following is a summary of each contract that is material to the Group as of the date hereof and was not entered into by the Group in the ordinary course of business.
 
Joint Ventures/ Strategic Alliances

Thailand

The Company and Digiway Limited (subsequently renamed Pacific Digiway Limited) as purchasers and Wong Fan Voon and Saran Lertcharoenwongsa as sellers entered into an agreement dated January 10, 2000 (as amended by an Amendment Agreement dated March 5, 2000, and a letter from the sellers dated March 23, 2000) for the sale and purchase of 49% and 26% respectively of the then issued share capital of IT Star Co., Ltd. (subsequently renamed Pacific Internet (Thailand) Limited) for a collective consideration of US$1.2 million.
 
Synergy Net Holding Company Limited ("Synergy"), Pacific Digiway Limited (formerly known as Digiway Limited, Pacific Internet Limited, Saran Lertcharoenwongsa and Wong Fan Voon entered into a Shareholders Agreement dated March 23, 2000 in respect of Synergy's, Pacific Digiway's and Pacific Internet Limited's participation as shareholders in IT Star Co., Ltd (subsequently renamed Pacific Internet (Thailand) Limited ("IT Star"). The Shareholders Agreement records, inter alia, the terms and conditions on which the shareholders would sell and purchase shares in IT Star and provide funding for IT Star and regulates their relationship with each other as shareholders in IT Star and in respect of certain aspects of the affairs of IT Star.
 
Pursuant to a restructuring exercise effected in December 2001, Synergy transferred its interest in Pacific Internet Thailand Limited ("PITH") to Pacific Digiway Limited and Multimedia & Services Company Ltd ("MMS") respectively. As a result of such transfer, Pacific Digiway Limited's stake in PITH increased by 15% from 26% to 41% and MMS became a shareholder of PITH holding a 10% stake.
 
India

The Company, Primeast Investments Ltd ("Primeast") and PII entered into a Joint Venture Agreement dated February 28, 2001 ("JVA") (as amended by a Supplementary Agreement dated the same day) to regulate the relationship of the Company and Primeast in their capacity as shareholders of PII. In conjunction with the execution of the Joint Venture Agreement, the Company and PII entered into a Management and Technical Assistance Agreement dated February 28, 2001 pursuant to which the Company agreed to provide PII with management, supervisory and technical expertise in connection with PII's business. In addition, the Company and PII entered into a License Agreement dated February 28, 2001 pursuant to which PII obtained the right to use certain intellectual property of the Company for PII's business.
 
On January 6, 2003, the Company, Primeast, PII and Glade Trading Company Private Limited ("Glade Trading") entered into a Deed of Ratification And Accession Cum Amendment (as amended by a Supplementary Agreement No.2 dated the same day) in order to: (i) make Glade Trading a party to the JVA; (ii) ratify and sanction the new proposed shareholding structure of PII; and (iii) effect the requisite amendments to the JVA.
 
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The Philippines
 
Pursuant to a restructuring exercise, the Company entered into a Shareholders Agreement dated March 16, 2001 with Primeworld Ventures, Inc and Hyperlink Holdings, Inc for the purpose of re-organizing PWC, the holding company of its Philippine operations, PIPH. In conjunction with such re-organization, the Company also entered into a Shareholders Agreement dated the same date with PW Holding, Renato A. Yap and Julia Theresa S. Yap for the purpose of re-organizing PIPH.
 
Bandwidth/ Broadband Services Agreements

The Company and Singapore Telecommunications Limited ("SingTel") entered into an agreement dated 1 October 2001 relating, amongst others, to the subscription by the Company of Internet bandwidth from SingTel's Universal Internet Access Service as well as ISDN30 services to be provided by SingTel. Under the agreement, SingTel also agreed, upon the satisfaction of certain conditions, to grant the Company credits based on the amount of use made of SingTel's ISDN30 services subscribed by the Company for the purpose of providing Internet access to the Company's subscribers. These credits may be used by the Company to offset against sums due or payable by the Company for services provided by SingTel.
 
Sale of Business Agreement

On January 18, 2001, the Company executed an agreement for the sale of its e-commerce business to Pacfusion Limited for a consideration of US$17.0 million (the "Sale of Business Agreement"). In accordance with the Sale of Business Agreement, the purchase price was satisfied by the issuance of 28,813,560 ordinary shares of US$0.001 each by Pacfusion Limited to the Company.
 
Pursuant to the Sale of Business Agreement, a Deed of Assignment was also executed on January 18, 2001 for the assignment of the relevant e-commerce assets by the Company to Pacfusion.
 
Subscription Agreement and Warrant Agreements

An agreement was executed between Mitsubishi Corporation ("Mitsubishi") and Pacfusion Limited on January 22, 2001 for the subscription of 5,084,746 ordinary shares of US$0.001 each by Mitsubishi in Pacfusion Limited. The consideration of US$3.0 million was paid by Mitsubishi for the issuance of the shares.
 
The parties also executed a warrant agreement on the same date for the issue of 5,084,746 warrants by Pacfusion Limited to Mitsubishi and the warrants were issued to Mitsubishi on January 22, 2001.
 
A warrant agreement was also executed between the Company and Pacfusion Limited on January 18, 2001 for the issuance of 33,898,305 warrants by Pacfusion Limited to the Company. The warrants were issued to the Company on January 18, 2001.
 
Shareholders Agreement and Supplemental Shareholders Agreement

Further to the subscription for shares by Mitsubishi and the Company in Pacfusion Limited, a shareholders agreement and supplemental shareholders agreement were executed on January 22, 2001 between Pacfusion Limited, Mitsubishi and the Company to govern the relationship between the shareholders inter se and with the Company.
 
Acquisition Of Retail ISP Businesses Of Reach

The following agreements were entered into as part of the Reach acquisition deal whereby the Company and its Malaysian and Thailand entities acquired the retail ISP business assets of the Reach group of companies in Singapore, Malaysia and Thailand respectively for a purchase consideration based on 25% of the actual revenue collected from the customers acquired pursuant to such acquisitions, for services provided during the period of twelve months commencing from November 11, 2002:
  • A Sale and Purchase of Business Agreement dated 11 November 2002 between the Company and Reach Internet Services Pte Ltd ("Reach-SG") for the purpose of acquiring Reach-SG's retail ISP business assets in Singapore ("Sale of Business Agreement-SG"). Pursuant to the Sale of Business Agreement-SG, a Deed of Assignment was also executed on 11 November 2002 for the assignment of the relevant customers contracts by Reach-SG to the Company.
     
  • A Sale and Purchase of Business Agreement dated 11 November 2002 between World Net & Services Co., Ltd ("WNS"), the Company and Reach Communications Services (Thailand) Limited ("Reach-TH") for the purpose of acquiring Reach-TH's retail ISP business assets in Thailand ("Sale of Business Agreement-TH"). Under the Sale of Business Agreement-TH, the Company had given a guarantee to Reach-TH equivalent to the total purchase consideration agreed to be paid by WNS to Reach-TH in connection with the said acquisition. Pursuant to the Sale of Business Agreement-TH, a Deed of Assignment was also executed on 11 November 2002 for the assignment of the relevant customers contracts by Reach-TH to WNS.
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  • A Sale and Purchase of Business Agreement dated 11 November 2002 between Pacific Internet (Malaysia) Sdn. Bhd. ("PIMY"), the Company and Reach Internet Services (MSC) Sdn Bhd ("Reach-MY") for the purpose of acquiring Reach-MY's retail ISP business assets in Malaysia ("Sale of Business Agreement-MY"). Under the Sale of Business Agreement-MY, the Company had given a guarantee to Reach-MY equivalent to the total purchase consideration agreed to be paid by PIMY to Reach-MY in connection with the said acquisition. Pursuant to the Sale of Business Agreement-MY, a Deed of Assignment was also executed on 11 November 2002 for the assignment of the relevant customers contracts by Reach-MY to PIMY.
     
  • A Master Services Agreement dated 11 November 2002 between the Company and Reach Global Services Limited whereby the Company, on behalf of the Group had agreed to acquire a minimum amount of wholesale bandwidth services from the Reach group of companies.


Franchise Agreement
 

The Company and Pacific Internet (Thailand) Limited ("PITH") entered into a Franchise Agreement dated 7 February 2002 pursuant to which PITH obtained the right to use certain intellectual property of the Company for PITH's business.


 
ITEM 10D.  EXCHANGE CONTROLS

There are currently no exchange control restrictions in Singapore. Under Singapore law, there are tax implications on the remittance of dividends to non-resident holders of the Company's securities. See "Item 10E. Taxation - Singapore Tax Considerations" for further details.
 
ITEM 10E.  TAXATION

Singapore Tax Considerations
 
The following summary is based on current Singapore tax law. The summary does not purport to deal with all aspects of taxation that may be relevant to particular purchasers of Pacific Internet shares in light of their investment or tax circumstances. Prospective purchasers of shares should consult their tax advisers as to the Singapore tax consequences of the purchase, ownership and disposition of shares.
 
Taxation of Dividends - Imputation System
 
Subject to the following paragraph, dividends paid by Pacific Internet on shares (including distributions in cash, stock dividends or other property), whether made to a shareholder who is a resident or non-resident of Singapore, are not subject to further Singapore withholding taxes.
 
Under current provisions of the Income Tax Act, Chapter 134 of Singapore, corporate profits earned in the financial year or other basis period ended 2002 are taxed at a rate of 22%. In addition, three-quarters of up to the first S$10,000 of the company's chargeable income, and one-half of up to the next S$90,000 are exempt from corporate tax. This partial exemption is not applicable to Singapore dividends received by companies.
 
Before 1 January 2003 (and to a certain extent between 1 January 2003 and 31 December 2007), pursuant to the transitional rules for the new one-tier corporate tax system (see - "Taxation of Dividends - New One-Tier Corporate Tax System"), the imputation system of corporate taxation applied in Singapore. Under the imputation system of taxation, the tax paid on the profits by a resident company is imputed to the shareholders when they receive the after tax profits as dividends. Thus, the shareholders receive dividends ("Franked Dividends") net of the tax paid by Pacific Internet. Franked Dividends received by either a resident or a non-resident of Singapore are not subject to withholding tax.
 
A holder of shares who is not resident in Singapore is taxed on Franked Dividends at the corporate income tax rate. As the tax paid by Pacific Internet on the profits is imputed to the shareholders at the normal corporate tax rate, no further Singapore income tax will be imposed on the net dividends received by a non-resident holder of shares and the non-resident holder will not receive any tax refund from the Inland Revenue Authority of Singapore.
 
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A corporation will be regarded as resident in Singapore if the control and management of its business is exercised in Singapore. An individual will be regarded as resident in Singapore in a year of assessment, if, in the preceding year, he was physically present in Singapore or exercised an employment in Singapore (other than as a director of a company) for 183 days or more, or if he resides in Singapore.
 
Taxation of Dividends - New One- Tier Corporate Tax System
 
The one-tier corporate system became effective from 1 January 2003 (subject to certain transitional tax rules). Under this system, the tax collected on corporate profits is final and dividends (One-tier Dividends) paid by a Singapore resident company will be tax exempt in the hands of a shareholder, regardless of whether the shareholder is a company or an individual and whether or not the shareholder is a Singapore tax resident. One-tier Dividends received by either a resident or a non-resident of Singapore are not subject to withholding tax.
 
Companies may have unutilized dividend franking credits as at 31 December 2002. To enable companies to make use of the unutilized dividend franking credits as at 31 December 2002, there will be a five-year transitional period from 1 January 2003 to 31 December 2007 for such companies to remain on the imputation system for the purposes of paying Franked Dividends out of its unutilized dividend franking credits as at 31 December 2002.
 
Accordingly, so long as Pacific Internet has not moved to the one-tier corporate tax system, shareholders may continue to receive Franked Dividends with credits attached under the imputation system of taxation.
 
Dividend vouchers issued by Pacific Internet will distinguish between Franked Dividends and normal tax exempt dividends not being exempt dividends under the one-tier system. If Pacific Internet has fully utilized the dividend franking credits or if it elects to move to the one-tier corporate tax system at an earlier date, the dividend vouchers issued by Pacific Internet will distinguish between normal tax exempt dividends and exempt dividends under the one-tier system.
 
Disposition of Shares

Under current Singapore tax law, there is no tax on capital gains, and, thus, any profits from the disposal of shares are not taxable in Singapore unless the vendor is regarded as carrying on a trade in shares in Singapore, in which case, the disposal profits would be construed to be of an income nature and subject to tax as trade profits rather than capital gains.
 
Singapore Estate Duty

Previously, movable property of individuals not domiciled in Singapore was subject to Singapore estate duty. However, on 3 May 2002, the Minister for Finance announced in the fiscal year 2002 budget that movable property of individuals not domiciled in Singapore will be exempt from Singapore estate duty.
 
Singapore estate duty is imposed on the value of most immovable property situated in Singapore and on most movable property, wherever it may be situated, owned by the individuals who are domiciled in Singapore, subject to specific exemption limits. The shares of Pacific Internet are considered to be situated in Singapore as it is a company incorporated in Singapore.
 
Thus, a holder of such shares who is domiciled in Singapore will be subject to Singapore estate duty upon his or her death. Singapore estate duty is payable to the extent that the value of the shares (or in aggregate with any other assets, subject to Singapore estate duty) exceeds S$600,000. Any such excess will be taxed at a rate of 5% on the first S$12,000,000 of the individual's Singapore chargeable assets and thereafter at a rate of 10%.
 
United States Federal Income Taxation
 
The following is a summary of the principal United States federal income tax consequences under present law of an investment in the shares. This summary applies only to investors that hold the shares as capital assets and that have the U.S. dollar as their functional currency. It is also assumed that no U.S. holder (as defined below) owns 10% or more of the outstanding shares of the Company.
 
Except as discussed below, the Company believes, and the discussion therefore assumes, that it is not and will not become a passive foreign investment company for United States federal income tax purposes. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS ABOUT THE UNITED STATES FEDERAL, STATE AND LOCAL TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF SHARES.
56
As used herein, the term ''U.S. holder'' means a beneficial owner of shares that is (i) a United States citizen or resident, (ii) a corporation or partnership organized under the laws of the United States or any political subdivision thereof, or (iii) an estate the income of which is subject to United States federal income taxation regardless of its source or (iv) a trust which is subject to the supervision of a court within the United States and the control of a United States person as described in section 7701(a)(30) of the United States Internal Revenue Code of 1986, as amended (the ''Code'') or has a valid election in effect under applicable United States Treasury regulations to be treated as a U.S. person. The term ''non-U.S. holder'' refers to any other beneficial owner of shares.
 
U.S. Holders
 
Dividends and Other Distributions
 
Distributions with respect to the shares (other than certain pro rata distributions of shares) generally will be includible in the gross income of a U.S. holder as ordinary income when the dividends are received by the holder to the extent paid out of the Company's current or accumulated earnings and profits, as determined under United States federal income tax principles. The dividends generally will be foreign source income and generally will be either "passive income" or "financial services income" for United States foreign tax credit purposes. Effective January 1, 2003, dividends paid by "qualified foreign corporations (non-U.S. corporations) will be eligible for reduced tax rates ranging from 5% to 15%. Qualified foreign corporations include foreign corporations that are eligible for benefits of a comprehensive income tax treaty with the U.S. that contains an information exchange program, and foreign corporations whose stock is readily tradable on an established U.S. securities market. To the extent, if any, that the amount of any such distribution exceeds the Company's current and accumulated earnings and profits as so computed, it will be treated first as a non-taxable return of the U.S. holder's tax basis in its shares to the extent thereof, and then, to the extent in excess of such tax basis, as capital gain. Dividends paid in Singapore dollars will be includible in a U.S. dollar amount based on the exchange rate in effect on the date of receipt by the holder of shares, regardless of whether the payment is in fact converted into U.S. dollars. Any gain or loss recognized on a subsequent sale or conversion of the Singapore dollars for a different amount generally will be United States source ordinary income or loss. Distributions to U.S. holders of property other than cash will be the fair market value of such property on the date of distribution.
 
A U.S. holder will not be eligible for a foreign tax credit against its United States federal income tax liability for Singapore taxes paid by the Company and deemed under Singapore law to have been paid by the shareholders of the Company.
 
Capital Gains
 
A U.S. holder will recognize taxable gain or loss on any sale or exchange of a share in an amount equal to the difference between the amount realized for the share and the U.S. holder's basis in the share. Such gain or loss will be capital gain or loss. Capital gains of non-corporate U.S. holders, including individuals, derived with respect to capital assets held for more than one year are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. Any gain or loss recognized by a U.S. holder will generally be treated as United States source gain or loss for United States foreign tax credit purposes.
 
Passive Foreign Investment Company
 
The Company does not believe that it is a passive foreign investment company (a ''PFIC'') for United States federal income tax purposes and expects to continue its operations in such a manner that it will not become a PFIC in the future. In making the determination that it is not a PFIC, the Company is relying on its projected acquisition and capital expenditure plans for the current and future taxable years. If the Company's actual acquisition and capital expenditure plans do not follow the projected schedule, it is likely that the Company will become a PFIC. The determination of whether the Company is a PFIC is made annually and thus is subject to change. In general, the Company will be a PFIC for any taxable year if either (i) at least 75% of the Company's gross income is passive income or (ii) at least 50% of the value (determined on the basis of a quarterly average) of the Company's assets is attributable to assets that produce or are held for the production of passive income. The Company will notify U.S. holders if it determines that it has become a PFIC for any taxable year.
 
If the Company were a PFIC for any taxable year during which a U.S. holder held shares, the U.S. holder would be subject to special tax rules with respect to (a) any ''excess distribution'' (generally, any distributions received by the U.S. holder of the shares in a taxable year that are greater than 125% of the average annual distributions received by the U.S. holder in the three preceding taxable years, or, if shorter, the U.S. holder's holding period for the shares) by the Company to the U.S. holder and (b) any gain realized on the sale or other disposition (including a pledge) of the shares, unless the mark-to-market election discussed below is made. Under these special tax rules, (i) the excess distribution or gain would be allocated ratably over the U.S. holder's holding period for the shares, (ii) the amount allocated to the current taxable year (and any taxable year prior to the first taxable year in which the Company is a PFIC) would be treated as ordinary income, and (iii) the amount allocated to each of the other years would be subject to tax at the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax would be imposed with respect to the resulting tax attributable to each such prior year.
 
57
If the Company were a PFIC in any taxable year, an indirect U.S. holder may be treated as the owner of its proportionate amount of shares actually held by a partnership, trust or PFIC in which it has an interest, or by a corporation if such person owns (directly or indirectly) at least 50% in value of the corporation's shares. Such an indirect U.S. holder must take into income its portion of any excess distribution received by the actual holder or any gain recognized by the actual holder on the shares. An indirect U.S. holder also must treat an appropriate portion of its gain on the sale or disposition of its shares in the actual U.S. holder as gain on the sale of the PFIC shares. A U.S. person may also be attributed shares that it has an option to purchase. If the Company were a PFIC, under these attribution rules U.S. holders may be treated as owners of their proportionate share of any shares in a PFIC held by the Company. The PFIC attribution rules are complex and holders should consult their own tax advisors as to the effect of such rules on their ownership of the shares.
 
If the Company were a PFIC, a U.S. holder could avoid the application of the special tax and interest charges discussed above if it made a mark-to-market election provided in Section 1296 of the Code for the first taxable year it holds the shares and the Company is a PFIC. Instead, the U.S. holder would be required to include as ordinary income each year in which the Company is a PFIC the excess of the fair market value of the shares over such U.S. holder's adjusted basis in such shares, and would be entitled to deduct as an ordinary loss each year the lesser of (i) the excess of the U.S. holder's adjusted basis in such shares over their fair market value or (ii) the excess of the total amounts included in income in prior years over the total amount of deductions allowed in prior years under these rules. A U.S. holder's adjusted basis in its shares would be increased by the amount of any income inclusions and will be decreased by the amount of any deductions. The mark-to-market election is effective for the taxable year for which the election is made and all subsequent taxable years in which the Company is a PFIC, unless the shares cease to be regularly traded on a national securities exchange or the IRS consents to the revocation of the election. Prospective investors should consult their tax advisors about the desirability of making such a mark-to-market election.
 
If the Company were a PFIC, the Code provides that a U.S. holder could also avoid the application of the special tax and interest charges discussed above if it made an election to treat the PFIC as a ''qualified electing fund'' under Section 1295 of the Code. The Company, however, does not intend to comply with the requirements necessary to permit a holder to make such an election.
 
A U.S. holder who owns shares during any year that the Company is a PFIC would be required to file Form 8621 with the Internal Revenue Service ("IRS").
 
Prospective investors should consult their own tax advisors as to the potential application of the PFIC rules to their shares.
 
Non-U.S. Holders

A non-U.S. holder generally will not be subject to United States federal income tax on dividends paid by the Company with respect to the shares unless such income is effectively connected with the conduct by the non-U.S. holder of a trade or business in the United States.
 
A non-U.S. holder generally will not be subject to United States federal income tax on any gain recognized on the sale or other disposition of the shares unless such gain is effectively connected with the conduct by the non-U.S. holder of a trade or business within the United States, or, in the case of gains recognized by non-U.S. holders who are individuals, such individuals are treated as U.S. tax residents for at least part of a given tax year due to physical presence in the United States.
 
Effectively connected dividends and gains of a non-U.S. holder generally will be subject to tax in the same manner as dividends and gains received by a U.S. holder. Such dividends and gains realized by a corporate non-U.S. holder may also, under certain circumstances, be subject to an additional ''branch profits tax'' at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.
 
Information Reporting and Backup Withholding
 
In general, information reporting requirements will apply to dividends in respect of shares or the proceeds received on the sale, exchange or redemption of shares paid within the United States (and in certain cases, outside the United States) to U.S. holders other than certain exempt recipients (such as corporations), and a backup withholding tax may apply to such amounts if the U.S. holder fails to provide an accurate taxpayer identification number or to report interest and dividends required (after repeated notification by the IRS) to be shown on its United States federal income tax returns. The amount of any backup withholding from a payment to a U.S. holder will be allowed as credit against the U.S. holder's United States federal income tax liability.
 
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In general, information reporting requirements and backup withholding will not apply to non-U.S. holders when the payor is foreign.
 
U.S. Estate Taxation
 

An individual holder who is a U.S. citizen or resident (for U.S. estate tax purposes) will have the value of the shares included in the individual's gross estate for U.S. estate tax purposes. An individual holder may be entitled to a tax credit against the holder's U.S. estate tax to the extent the individual holder actually pays Singapore estate tax on the value of the shares; however, prospective purchasers should consult their own tax advisors regarding the Singapore estate tax consequences of their investment.
 
ITEM 10F.  DIVIDENDS AND PAYING AGENTS

N.A.
 
ITEM 10G.  STATEMENT BY EXPERTS

N.A.
 
ITEM 10H.  DOCUMENTS ON DISPLAY

Documents concerning the Company which are referred to or filed as exhibits in this document may be inspected and copied at the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington D.C. 20549, at the prescribed rates. The SEC also maintains a website at http://www.sec.gov that contains reports, proxy statements and other information regarding registrants that file electronically with the SEC. In addition, materials filed by the Company with SEC can be inspected at the Company's offices at 89 Science Park Drive, #02-05/06, The Rutherford, Singapore 118261.
 
ITEM 10I.  SUBSIDIARY INFORMATION

N.A
 

Table of contents

ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


 
The Group presently does not have a hedging policy with respect to foreign exchange transactions and has no exposure to derivative financial instruments. Most of its expenses and revenues are incurred in Singapore dollars (except for PSL, PIA, PIPH, PITH, PIMY and PII, whose functional currency is Hong Kong dollars, Australian dollars, the Philippine Pesos, Thai Baht, Malaysian Ringgit and Indian Rupees, respectively), which is its functional currency. In other markets in which the Group operates, revenues are generated in the same currency in which its expenses are incurred. Any depreciation in the currencies of markets in which the Group operates relative to Singapore dollars could have a material adverse effect on the Group. Impositions of exchange control regulations restricting the conversion of such currencies into Singapore dollars could also adversely affect the Group. The Group realized a net exchange loss of approximately S$0.7 million (US$0.4 million) for the year ended December 31, 2002. The gain or loss relates to translations of Hong Kong dollars and Australian dollars and the Philippine Pesos into Singapore dollars for the purpose of consolidating results from PSL, PIA and PIPH was recorded as other comprehensive income (loss).
 
Certain of the Group's international transmission capacity charges are denominated in U.S. dollars, and purchase orders for certain equipment may from time to time be denominated in U.S. dollars. Although from time to time the Group may evaluate the appropriateness and effectiveness of hedging such risks, the Group currently does not plan to enter into hedging transactions with respect to these foreign currency risks.
 
The Company obtains additional financing through short-term bank borrowings. Surplus funds are placed with reputable banks. The Company also has long-term loans receivable from related companies. As of December 31, 2002, our exposure to interest rate risk was relatively low in view of the low outstanding debt obligations the Group has. Further information relating to the Company's interest rate exposure is also disclosed in "Item 18. Financial Statements".
 

ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

N.A.
 
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PART II


 

ITEM 13.  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES


 
N.A.   
 

ITEM 14.  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS


 

N.A.   
 

Table of contents

ITEM 15.  CONTROLS AND PROCEDURES

Within 90 days prior to the date of filing of this Annual Report, the Group carried out an evaluation, under the supervision and with the participation of the Group's management, including its Chief Executive Officer and its Chief Financial Officer, of the effectiveness of the design and operation of the Group's disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14 (c) under the Securities Exchange Act of 1934, as amended). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Group's disclosure controls and procedures are designed to ensure that information required to be disclosed by the Group in the reports which the Group files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the US Securities Exchange Commission (SEC)'s rules and forms and are operating in an effective manner.   
 
There have been no significant changes in the Group's internal controls or in other factors that could significantly affect the internal controls subsequent to the date the Group completed its evaluation.   
 

ITEM 16.  [RESERVED]


 
N.A.
 
ITEM 16A.  AUDIT COMMITTEE FINANCIAL EXPERT

N.A
 
ITEM 16B.  CODE OF ETHICS
 
N.A
 
ITEM 16C.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

N.A
 
Table of contents 60
 

PART III

 

ITEM 17.  FINANCIAL STATEMENTS


The Group has responded to Item 18 in lieu of responding to this Item.
 

ITEM 18.  FINANCIAL STATEMENTS


The following financial statements are filed as part of this Annual Report, together with the report of the independent auditors :
  • Report of Independent Auditors to the Board of Directors and Shareholders of Pacific Internet Limited
  • Report of Independent Public Auditors to the Stockholders and Board of Directors of PIPH
  • Consolidated Balance Sheets as at December 31, 2001 and 2002
  • Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2000, 2001 and 2002
  • Consolidated Statements of Cash Flows for the years ended December 31, 2000, 2001 and 2002
  • Consolidated Statements of Shareholders' Equity for the years ended December 31, 2000, 2001 and 2002
  • Notes to Consolidated Financial Statements

ITEM 19.  EXHIBITS


The following exhibits are part of this Annual Report:
 
1.1 Memorandum and Articles of Association of Pacific Internet(1)
2.1 Specimen certificate representing Pacific Internet shares(7)
4.1 1998 Employees' Share Option Plan(2)
4.2 Tenancy Agreement between Giant Manor Investment Limited and Hong Kong Supernet Limited (now known as Pacific Supernet Limited) dated January 15, 1999(4)
4.3 Agreement for the Provision of Facilities Housing Service dated January 19, 1999 between Hong Kong Telecom CSL Limited and Hong Kong Supernet Ltd (now known as Pacific Supernet Limited)(3)
4.4 GlobInternet Service Agreement for the provision of Teleglobe of Service dated February 16, 1999 between Pacific Internet Philippines, Inc. and Teleglobe International Corporation(7)
4.5 First Amendment as of February 4, 2000 to the GlobInternet Service Agreement dated February 16, 1999 between Pacific Internet Philippines, Inc. and Teleglobe International Corporation(7)
4.6 Agreement for the Shared and Non-Guaranteed Internet Access Service between Hong Kong Telecom CSL Netplus and Hong Kong Supernet Limited (now known as Pacific Supernet Limited) dated February 25, 1999(4)
4.7 Lease of Units 67, 69, 71, 73, 74 and 78 on the 5th Floor of Hong Kong International Trade & Exhibition Centre dated March 19, 1999 by the International Trademart Company Limited to Hong Kong Supernet Ltd (now known as Pacific Supernet Limited)(2)
4.8 Lease Agreement between International Trademart and Hong Kong Supernet Ltd (now known as Pacific Supernet Limited), to lease a showroom office at Hong Kong International Trade & Exhibition Centre(4)
4.9 Shareholders' Undertaking dated May 19, 1999 between Sembawang Ventures Pte Ltd, SIM Ventures Pte Ltd and Pacific Internet (4)
61
4.10 Agreement for the Purchase of Business of Mira Networking Pty Ltd dated May 20, 1999 between Pacific Internet (Australia) Pty. Limited and Mira Networking Pty Ltd(6)
4.11 Contract of Lease for Unit 301, a condominium unit on the 3rd Floor of First Abacus Financial Center along Samar Loop corner Panay Road, Cebu Business Park, Cebu City dated June 10, 1999 between Pacific Internet Philippines, Inc. and Sun Life Assurance Company of Canada(7)
4.12 Agreement for the Purchase of Zip World Pty Ltd dated June 11, 1999(6)
4.13 Service to the Internet Information Exchange Centre contract no. 019 dated June 23, 1999 between World Net & Services Co., Ltd and The Communications Authority of Thailand (in Thai)(7)
4.14 Telstra Wholesale Form of Agreement dated June 28, 1999 between Pacific Internet (Australia) Pty. Limited and Telstra Corporation Limited for the provision of Telecommunication services(7)
4.15 Agreement for the Purchase of Pacific Supernet Limited dated June 28, 1999 between Pacific Supernet Pte Ltd and Pacific Internet(7)
4.16 Agreement for the provision of earth station and microwave link dated June 28, 1999 between Pacific Internet Philippines, Inc. and Philippine Communications Satellite Corporation(7)
4.17 Contract of Lease for a portion of the 3rd Floor of the Guevara Building, located at Estrella St., Poblacion, Malolos, Bulacan dated July 5, 2000 between Pacific Internet Philippines, Inc. and Teresita Guevara(7)
4.18 Contract of Lease for the premises located at the 2nd Floor of the building designated as Rm 205-206 of Melta Building located at Aguinaldo Highway, corner Sampaguita Village I, Imus, Cavita dated July 29, 1999 between Pacific Internet Philippines, Inc. and Victor M. Bautista(7)
4.19 Telecommunications Switching Services and Facilities Agreement dated October 20, 1999 between Pacific Internet and Teleglobe International Corp(6)
4.20 1999 Share Option Plan(5)
4.21 Agreement for the Purchase of the Business of Kralizec Pty Ltd dated December 17, 1999 between Pacific Internet (Australia) Pty. Limited Kralizec Pty Ltd, Nick Andrew and Nancy Masami Andrew(6)
4.22 Deed of Variation of Sale of Business Agreement dated January 19, 2000 between Pacific Internet (Australia) Pty. Limited, Kralizec Pty Ltd, Nick Andrew and Nancy Masami Andrew(7)
4.23 Globesat Service Lease Contract dated December 21, 1999 between World Net & Services Co., Ltd and The Communications Authority of Thailand (in Thai) together with the Application-cum-Agreement for SingTel Internet Exchange Service(7)
4.24 Agreement for the Purchase of the Business of Hub Communications Pty Ltd dated December 17, 1999(6)
4.25 Agreement for the Purchase of Hunterlink Pty Ltd dated January 3, 2000(7)
4.26 UULink ATM Service Agreement for the provision of ATM service between UUNet Hong Kong Limited and Pacific Supernet Limited dated January 5, 2000(6)
4.27 Agreement for the sale and purchase of the issued share capital of I.T Star Co., Ltd dated January 10, 2000 between Pacific Internet, Pacific Digiway Limited, Wong Fan Voon and Saran(6)
4.28 Amendment Agreement dated March 5, 2000 to the Agreement for the sale and purchase of the issued share capital of I.T Star Co., Ltd dated January 10, 2000 between Pacific Internet, Pacific Digiway Limited, Wong Fan Voon and Saran(7)
4.29 Lease Proposal for Unit G-26, Tech Park Mall, Lower Ground Floor in International Tech Park, Bangalore dated January 11, 2000 signed by Information Technology Park Ltd and Pacific Internet India Private Ltd(6)
4.30 Globestat Service Lease Contract dated January 24, 2000 between World Net & Services Co., Ltd and The Communications Authority of Thailand (in Thai)(7)
62
4.31 Lease Contract for Units 1903-1905 and Units 1901-1902 located at the 19th Floor of the Taipan Place dated February 1, 2000 between Pacific Internet Philippines, Inc., Einstee Relty, Inc. and Wranco Jean International, Inc.(7)
4.32 ISP Participation Agreement dated March 22, 2000 between Pacific Supernet Limited and Internet Mpas Limited(7)
4.33 Internet Roaming Service Agreement dated March 24, 2000 between Pacific Internet and iPass, Inc(7)
4.34 Amendment no. 1 dated July 25, 2000 to the Internet Roaming Service Agreement dated 24 March 2000 between Pacific Internet and iPass, Inc(7)
4.35 Contract of Lease for the wing porting of the Second Floor of J. Alcasid Business Center along the National Highway, Crossing, Barrio Real, Calamba, Laguna dated March 31, 2000 between Pacific Internet Philippines, Inc. and J. Alcasid Realty & Development, Inc(7)
4.36 Licence to Provide Facilities-Based Operations dated April 1, 2000 granted by the Infocommunications Development Authority of Singapore(7)
4.37 Agreement dated April 28, 2000 for the Sale and Purchase of the Business of Safe & Mansfield Travel Group Pte Ltd(7)
4.38 Master Deed of Assignment dated May 4, 2000 between Safe2Travel.com Pte Ltd and Safe & Mansfield Travel Group Pte Ltd(7)
4.39 Offer from Pan Asia Business Services to Pacific Internet India for office space at Bangalore dated May 10, 2000(7)
4.40 Wholesale Master Services Agreement dated May 15, 2000 between Pacific Internet and MCI WorldCom Asia Pte Ltd(7)
4.41 Letter of Amendment to the Wholesale Master Services Agreement dated May 15, 2000 between Pacific Internet and MCI WorldCom Asia Pte Ltd(7)
4.42 Contract of Lease for the mezzanine floor of RL Building located at 143 P. Purgos St. corner Silang Street, Batangas City dated May 26, 2000 between Pacific Internet Philippines, Inc. and spouses Rolando B. Ada and Lucila L. Ada(7)
4.43 Loan Agreement dated May 22, 2000 between TravelFusion.com Limited and Safe2Travel.com Pte Ltd(7)
4.44 Loan Agreement dated May 22, 2000 between Safe2Travel.com Pte Ltd and Asia-Pacific Retail Concepts Pte Ltd(7)
4.45 Loan Agreement dated May 22, 2000 between Safe2Travel.com Pte Ltd and Safe & Mansfield Travel Group Pte Ltd(7)
4.46 Agreement for Digital Data Services dated May 29, 2000 between Pacific Supernet Limited and Cable & Wireless HKT Telephone Limited(7)
4.47 Passenger Sales Agency Agreement dated June 1, 2000 between Safe2Travel.com Pte Ltd and IATA(7)
4.48 Acceptance of Offer to Lease dated June 2, 2000 between Safe2Travel.com Pte Ltd and Singapore Technologies Holdings Pte Ltd for the lease of 3 Lim Teck Kim Road #01-04, Singapore 088934(7)
4.49 Acceptance of Offer to Lease dated June 2, 2000 between Safe2Travel.com Pte Ltd and Singapore Technologies Holdings Pte Ltd for the lease of 3 Lim Teck Kim Road #02-02, Singapore 088934(7)
4.50 Disclosure Letter dated June 19, 2000 between Safe2Travel.com Pte Ltd and Safe & Mansfield Travel Group Pte Ltd(7)
4.51 Lease Agreement of Office No. 3 and 13 on upper ground floor & third floor respectively on Rachana Trade Estate at Law College Road, Erandawana, Pune dated June 21, 2000 between Pacific Internet India and Rachana Associates(7)
63
4.52 A-Bone VPN Service Partnership Agreement dated June 27, 2000 between Pacific Supernet Limited and Asia Internet Holding Co., Ltd(7)
4.53 Internet Roaming Agreement dated July 25, 2000 between Pacific Internet and GRIC Communications, Inc(7)
4.54 Addendum to Internet Roaming Agreement dated July 25, 2000 between Pacific Internet and GRIC Communications, Inc(7)
4.55 Agreement dated August 28, 2000 for the Conveyance of Telecommunications Traffic between Pacific Internet and World Navigation (BVI) Limited(7)
4.56 Facilities Management Services Agreement dated August 29, 2000 between Pacific Supernet Limited and New T&T Hong Kong Limited(7)
4.57 High Speed International Circuit Service Lease Contract dated September 7, 2000 between The Communications Authority of Thailand and World Net & Services Co., Ltd (in Thai)(7)
4.58 Contract of Lease for a portion of the roof deck of the common areas of First Abacus Financial Center for the purposes of installing a microwave antennae dated September 7, 2000 between Pacific Internet Philippines, Inc. and First Abacus Financial Center Condominium Corporation(7)
4.59 Lease Contract for Units 301-302 located at the 3rd Floor of the Taipan Place dated September 13, 2000 between Pacific Internet Philippines, Inc. and JP Frances Holdings Inc.(7)
4.60 Lease Contract for Unit 201 located at the 2nd Floor of the Taipan Place dated September 13, 2000 between Pacific Internet Philippines, Inc. and JP Frances Holdings Inc.(7)
4.61 Sale and Purchase Agreement dated September 27, 2000 between Pacific Internet, Singapore Cable Vision Pte Ltd, Singapore Telecommunications Ltd, Starhub Pte Ltd, Singapore Communication Investment Pte Ltd and MediaCorp Interactive Pte Ltd(7)
4.62 Broadband Access Service Agreement dated October 9, 2000 between Pacific Internet and Singapore Telecommunications Limited(7)
4.63 Agreement dated October 9, 2000 between Pacific Internet India and Fascel Limited for the provision of bandwidth(7)
4.64 Master Service Agreement dated October 12, 2000 between Pacific Supernet Limited and Level 3 Communications Limited(7)
4.65 International Telecommunications Service Agreement dated November 21, 2000 between Pacific Internet and DiGi Telecommunications Sdn Bhd for the provision of international telecommunications services between Singapore and Malaysia(7)
4.66 Tenancy Agreement for Research Unit(s) at Singapore Science Park dated December 11, 2000 between Pacific Internet and Arcasia for premises at 83 Science Park Drive, #03-04 The Curie, Singapore 118258(7)
4.67 Republic Act No. 8992 entitled "An Act Granting the Primeworld Digital Systems, Inc. (now known as Pacific Internet Philippines, Inc.) a Franchise to Construct, Install, Establish, Operate and Maintain Telecommunications Systems Throughout The Philippines" approved by the President of the Philippines on January 5, 2001(7)
4.68 Sale of Business Agreement dated January 18, 2001 between Safe2Travel.com Pte Ltd and Trident Travels Ltd and Neptune Travel Services Pte Ltd(7)
4.69 Warrant Agreement dated January 18, 2001 between Pacific Internet and Pacfusion.com Limited(7)
4.70 Sale of Business Agreement dated 18 January, 2001 between Pacific Internet and Pacfusion.com Group Holdings Pte Ltd(7)
4.71 Deed of Assignment dated January 18, 2001 between Pacific Internet and Pacfusion.com Group Holdings Pte Ltd(8)
64
4.72 Warrant Agreement dated January 22, 2001 between Pacfusion.com Limited and Mitsubishi Corporation(7)
4.73 Shareholders Agreement dated January 22, 2001 between Pacfusion.com Limited and Mitsubishi Corporation(7)
4.74 Supplemental Shareholders Agreement dated January 22, 2001 between Pacific Internet, Pacfusion.com Limited and Mitsubishi Corporation(7)
4.75 Share Subscription Agreement dated January 22, 2001 between Pacfusion.com Limited and Mitsubishi Corporation(8)
4.76 Agreement for SingTel STIX Service dated February 14, 2001 between Pacific Internet (Australia) Pty. Limited and Singapore Telecom (Australia) Pty. Limited(7)
4.77 Tenancy Agreement dated February 15, 2001 between Pacific Supernet Limited and International Trademart Company Limited(7)
4.78 Global.net Service Agreement dated February 20, 2001 between World Net & Services Co., Ltd and Cable & Wireless IDC Inc. (in Thai)(7)
4.79 International Services Agreement dated February 27, 2001 between Pacific Internet and Edge2net, Inc.(7)
4.80 Joint Venture Agreement dated February 28, 2001 between Pacific Internet, Pacific Internet India Private Limited and Primeast Investments Ltd(8)
4.81 Supplementary Agreement dated February 28, 2001 between Pacific Internet and Thakral Brothers (Pte) Ltd (8)
4.82 Management and Technical Assistance Agreement dated February 28, 2001 between Pacific Internet and Pacific Internet India Private Limited relating to the provision by Pacific Internet to Pacific Internet India Private Limited of management, supervisory and technical expertise (7)
4.83 License Agreement dated February 28, 2001 between Pacific Internet and Pacific Internet India Private Limited relating to the licensing to Pacific Internet India Private Limited of the right to use certain intellectual property of Pacific Internet (7)
4.84 Application for Netplus Internet Services by Pacific Supernet Limited and the Terms and Condition for Cable & Wireless HKT CSL Netplus Internet Services(7)
4.85 Agreement for provision of domestic bandwidth dated 28 February 2001 between Pacific Internet (Australia) Pty. Limited and Cable & Wireless Optus Limited(8)
4.86 Shareholders Agreement dated March 16, 2001 between Pacific Internet, Primeworld Ventures, Inc. and Hyperlink Holdings, Inc for the purpose of re-organizing PW Holding Corporation(7)
4.87 Shareholders Agreement dated March 16, 2001 between Pacific Internet, PW Holding Corporation, Renato A. Yap and Julia Theresa S. Yap for the purpose of re-organizing Pacific Internet Philippines, Inc. (7)
4.88 Deed of Guarantee dated March 19, 2001 between Pacific Internet and Oversea-Chinese Banking Corporation Limited ("OCBC") for credit and banking facilities granted to Safe2Travel.com Pte Ltd(8)
4.89 Continuing Guarantee dated 9 April 2001 between Pacific Supernet Limited and Trilease International Limited for the lease loan on equipment(8)
4.90 Internet Roaming Agreement dated April 27, 2001 between Pacific Internet (Australia) Pty. Limited and GRIC Communications, Inc.(8)
4.91 Payment Plan Agreement dated May 2001 between Pacific Internet and Oracle Corporation Pte Ltd(8)
4.92 Wholesale Master Service Agreement dated June 7, 2001 between Pacific Internet and Starhub Pte Ltd(8)
4.93 Electronic Banking Services Agreement dated August 31, 2001 between Pacific Internet and the Development Bank of Singapore(8)
65
4.94 Loan Agreement dated September 13, 2001 between Pacific Internet and Thakral Brothers (Pte) Ltd, along with Guarantee by Gurmukh Singh Thakral of even date securing the loan(8)
4.95 Service Request-cum-Agreement dated September 24, 2001 between Pacific Internet and Singapore Telecommunications Ltd for SingTel Local Asynchronous Transfer Mode (ATM) Service(8)
4.96 ISP Peering Agreement dated October 4, 2001 between Pacific Internet and AT&T Worldwide Telecommunications Services Singapore Pte Ltd(8)
4.97 License Agreement dated October 1, 2001 between Pacific Internet India Private Ltd and Messrs Rachana Associates for the premises known as Office No.3, Upper Ground Floor, Rachana Trade Estate, at CTS No. 105 FP No. 84 Law College Road, Erandawana, Pune(8)
4.98 Collaboration Agreement dated November 19, 2001 between Pacific Internet and Hitachi Systems Pte Limited for delivery of Internet Data Back-up Services(8)
4.99 Accredited Partner Programme Agreement dated December 4, 2001 between Pacfusion Group Holdings Pte Ltd and WorldPay Pte Ltd for the distribution of the Click-and-Build software and payment services(8)
4.100 Franchise Agreement dated February 7, 2002 between Pacific Internet (Thailand) Limited and Pacific Internet relating to the licensing to Pacific Internet (Thailand) Limited of the right to use certain intellectual property of Pacific Internet*
4.101 Banker's Guarantee dated 27 February 2002 issued by United Overseas Bank Limited to Diners Club (Singapore) Pte Ltd for the benefit of Safe2Travel Pte Ltd*
4.102 Amending Agreement No. 9 to the Wholesale Form of Agreement dated 10 September 2002 between Pacific Internet (Australia) Pty. Limited and Telstra Corporation Limited for the provision of Telecommunication services*
4.103 Sale and Purchase of Business Agreement dated 11 November 2002 between Pacific Internet and Reach Internet Services Pte Ltd ("Reach-SG") for the purchase of Reach-SG's retail ISP business assets in Singapore*
4.104 Sale and Purchase of Business Agreement dated 11 November 2002 between World Net & Services Co., Ltd, Reach Communications Services (Thailand) Limited ("Reach-TH") and Pacific Internet for the purchase by World Net & Services Co., Ltd of Reach-TH's retail ISP business assets in Thailand*
4.105 Sale and Purchase of Business Agreement dated 11 November 2002 between Pacific Internet (Malaysia) Sdn. Bhd., Reach Internet Services (MSC) Sdn Bhd ("Reach-MY") and Pacific Internet for the purchase by Pacific Internet (Malaysia) Sdn. Bhd of Reach-MY's retail ISP business assets in Malaysia*
4.106 Master Services Agreement dated 11 November 2002 between Pacific Internet and Reach Global Services Limited for the purchase of bandwidth*
4.107 Master Deed of Assignment dated 11 November 2002 between Pacific Internet and Reach Internet Services Pte Ltd*
4.108 Master Deed of Assignment dated 11 November 2002 between World Net & Services Co., Ltd and Reach Communications Services (Thailand) Limited*
4.109 Master Deed of Assignment dated 11 November 2002 between Pacific Internet (Malaysia) Sdn. Bhd. and Reach Internet Services (MSC) Sdn Bhd*
4.110 Deed of Ratification and Accession cum Amendment dated 6 January 2003 between Pacific Internet India Private Limited, Pacific Internet, Glade Trading Company Private Limited and Primeast Investments Ltd*
4.111 Supplementary Agreement dated 6 January 2003 between Pacific Internet and Thakral Brothers (Pte) Ltd*
6.1 Computation of earnings per share@
8.1 List of significant subsidiaries*
12.1 Audit Committee Charter of Pacific Internet(7)
12.2 Certification by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
12.3 Consent of Ernst & Young*
Table of contents 66
(1) Incorporated by reference to the exhibits of the registrant's registration statement on Form F-1, filed under the Securities Act of 1933 with the Commission (Commission File No. 333-9654).
 
(2) Incorporated by reference to the exhibits of the registrant's registration statement on Form S-8, filed under the Securities Act of 1933 with the Commission (Commission File No. 333-10242).
 
(3) Incorporated by reference to the exhibits of the registrant's annual report on Form 20-F as filed under the Securities Exchange Act of 1934, with the Commission on March 25, 1999 (Commission File No.000-29938).
 
(4) Incorporated by reference to the exhibits of the registrant's registration statement on Form F-1 filed under the Securities Act of 1933 with the Commission (Commission File No 333-10356).
 
(5) Incorporated by reference to the exhibits of the registrant's registration statement on Form S-8, filed under the Securities Act of 1933 with the Commission on November 12, 1999 (Commission File No. 333-11122).
 
(6) Incorporated by reference to the exhibits of the registrant's annual report on Form 20-F as filed under the Securities Exchange Act of 1934, with the Commission on May 16, 2000 (Commission File No. 000-29938).
 
(7) Incorporated by reference to the exhibits of the registrant's annual report on Form 20-F filed under the Securities Exchange Act of 1934, with the Commission on June 30, 2001 (Commission File No. 000-29938).
 
(8) Incorporated by reference to the exhibits of the registrant's annual report on Form 20-F filed under the Securities Exchange Act of 1934, with the Commission on June 30, 2002 (Commission File No. 000-29938).
 
* To be filed herewith
@ See "Item 18. Financial Statements - Consolidated Statements of Operations and Comprehensive Income for years ended December 31, 2000, 2001 and 2002"

Table of contents 

SIGNATURES
 
The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and has duly caused and authorized the undersigned to sign this Annual Report on its behalf.
 
PACIFIC INTERNET LIMITED
 
By : /s/ Tan Tong Hai
Name: Tan Tong Hai
Title: President and Chief Executive Officer
Date: May 31, 2003
67

 

CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Tan Tong Hai, certify that:

  1. I have reviewed this Annual Report on Form 20-F of Pacific Internet Limited;
     
  2. Based on my knowledge, this Annual 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 Annual Report;
     
  3. Based on my knowledge, the financial statements, and other financial information included in this Annual 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 Annual Report;
     
  4. The registrant's other certifying officers 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 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 Annual 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 Annual Report (the "Evaluation Date"); and
    c) presented in this Annual 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 officers 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 officers and I have indicated in this Annual 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.

Date: May 31, 2003
/s/ Tan Tong Hai
Tan Tong Hai
President and Chief Executive Officer
68
 
CERTIFICATION BY THE CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
 

I, Tan Hwee Siang Nancy, certify that:

  1. I have reviewed this Annual Report on Form 20-F of Pacific Internet Limited;
     
  2. Based on my knowledge, this Annual 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 Annual Report;
     
  3. Based on my knowledge, the financial statements, and other financial information included in this Annual 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 Annual Report;
     
  4. The registrant's other certifying officers 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 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 Annual 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 Annual Report (the "Evaluation Date"); and
    c) presented in this Annual 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 officers 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 officers and I have indicated in this Annual 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.

Date: May 31, 2003
/s/ Tan Hwee Siang Nancy
Tan Hwee Siang Nancy
Chief Financial Officer

69

Table of contents

ANNEX A
GLOSSARY OF INTERNET TERMS & SERVICES PROVIDED BY THE GROUP
A-Bone A regional Backbone in Asia operated by AIH in Japan.
 
ADSL (Asymmetric Digital Subscriber Line) A technology that lets you transmit data over telephone lines faster - as much as 7 million bps - in one direction than in the other.
 
ATM (Asynchronous Transfer Mode) An information transfer standard that is one of a general class of packet technologies that relay traffic by way of an address contained with the first five bytes of a standard fifty-three-byte-long packet or cell. The ATM format can be used by many different information systems, including local area networks, to deliver traffic at varying rates, permitting a mix of voice, data and video (multimedia).
 
Backbone A high-speed communications link that connects smaller, independent networks.
 
Band A range of frequencies between two defined limits.
 
Bandwidth The relative range of analog frequencies or digital signals that can be passed through a transmission medium, such as glass fibers, without distortion. The greater the bandwidth, the greater the information carrying capacity. Bandwidth is measured in Hertz (analog) or Bits Per Second (digital).
 
bps (bits per second) A measure of how fast data is transmitted. Often used to describe modem speed.
 
Cache A special high-speed storage mechanism or a reserved section of main memory.
 
Capacity Refers to transmission.
 
Carrier A provider of communications transmission services by fiber, wire or radio.
 
Chat To talk (or type) real-time to other network users from any and all parts of the world. Chatting requires an Internet Relay Chat (IRC) program like mIRC or Microsoft Chat.
 
Digital Describes a method of storing, processing and transmitting information through the use of distinct electronic or optical pulses that represent the binary digits 0 and 1. Digital transmission/switching technologies employ a sequence of discrete, distinct pulses to represent information, as opposed to the continuously variable analog signal.
 
DirectPaging Allows anyone on the Internet to send an instant numeric or text message of up to 300 characters directly from the web. Because DirectPage is offered through the Internet, others can page the subscriber from anywhere in the world without having to pay long distance charges.
 
DirectSMS Allows a subscriber to send a short message of up to 158 characters to a cellular or mobile telephone in Singapore.
 
Domain Part of the official name of a computer on the Internet - for example.
 
E1 Also known as CEPT1, the 2.048 Mbps rate used by a European CEPT carrier to transmit 30 64 kbps digital channels for voice or data calls, plus a 64 kbps signaling channel and a 64 kbps channel for framing and maintenance.
 
A-1
 
E-commerce Electronic commerce utilizing the Internet.
 
Electronic mail or
e-mail 		An application that allows a user to send or receive messages to or from any other user with an Internet address, commonly termed an e-mail address.
 
EmailPaging Pages a subscriber upon receipt of an e-mail on the Group's network and allows the subscriber to read up to 300 characters of an e-mail, regardless of the pager service or type of pager.
 
EmailSMS Enables a subscriber to receive short e-mail text messages of up to 158 characters on a cellular or mobile telephone.
 
Extranet An Internet technology used to connect a company with its customers and business partners.
 
FTP (File Transfer Protocol) A protocol that allows file transfer between a host and a remote computer.
 
Firewall A computer system that connects a local network to the Internet and, for security reasons, lets only certain kinds of messages in and out.
 
Frame Relay A high-speed, data-packet switching service used to transmit data between computers. Frame Relay supports data units of variable lengths at access speeds ranging from 64 kilobits per second to 2 megabits per second. This service is well suited for connecting local area networks, but is not presently well suited for voice and video applications due to the variable delays that can occur. Frame Relay was designed to operate at high-speeds on modern fiber optic networks.
 
Gateway A computer that connects one network with another, where the two networks uses different Protocols.
 
Global Roaming Allows a subscriber in Singapore, Hong Kong and the Philippines to access their Internet accounts while on the road without incurring expensive long distance access charges. Subscribers have remote access to their Internet accounts from more than 2,700 locations in over 150 countries, with access charges limited to the cost of a local call.
 
Hit An action on a website such as when a user views a page or downloads a file.
 
Home page The entry page, or main page, of a website.
 
Host A computer on the Internet.
 
Hub A location within a network where there is an agglomeration of links and equipment through which traffic is routed to other points in the Internet.
 
ICP (Internet Content Provider) A company that develops and provides content and information on the Internet.
 
Internet An open global network of interconnected commercial, educational and governmental computer networks that utilize a common communications protocol, TCP/IP
 
Internet telephony, IP telephony or VOIP (Voice-over Internet Protocol) A technology which uses the Internet for the delivery of services normally associated with the telephone network, including long-distance or international real-time voice calls.
 
A-2
IP (Internet Protocol) Originally developed by the U.S. Department of Defense to support inter-working of dissimilar computers across a network. This Protocol works in conjunction with TCP and its usually identified as TCP/IP.
 
ISDN (Integrated Services Digital Network)
  		A digital network that combines voice and digital network services through a single medium, making it possible to offer subscribers digital data services as well as voice connections.
 
ISP (Internet Service Provider)
  		A company that provides businesses and individuals with access to the Internet.
 
Interconnect Connection of a telecommunications device or service to the PSTN.
 
Internet Consulting Desktop, server and network configuration; Intranet and Extranet design and implementation; website design; consulting on the implementation of ''firewalls'' and other security structures; development of ''turnkey'' solutions for electronic commerce and other Internet business applications. The Group provides these services in Singapore directly through a team of experienced engineers and programmers, and in Hong Kong and the Philippines through a select group of independent consultants whom the Group regards as strategic partners. The Group will continue to evaluate whether it is appropriate to establish in-house capabilities in Hong Kong and the Philippines.
 
Intranet A private version of the Internet that lets people within an organization exchange data by using popular Internet tools, such as browsers.
 
Kbps Kilobits per second, which is a measurement of speed for digital transmission expressed in thousands of bits per second.
 
kilo- Prefix meaning one thousand (1,000) or often, with computers, 1,024.
 
LAN (Local Area Network) A network designed to move data between stations within a relatively small geographic area.
 
Leased Line Telecommunications line dedicated to a particular customer along a predetermined route.
 
Mbps Megabits per second, which is a measurement of speed for digital signal transmission expressed in millions of bits per second.
 
Mega- Prefix meaning one million (1,000,000).
 
MegaPOP A central, large-scale point of presence which hosts all of the major network infrastructure.
 
Modem A piece of equipment that connects a computer to a data transmission line (typically a telephone line).
 
Multiplexing An electronic or optical process that combines a large number of lower speed transmission lines into one high-speed line by splitting the total available bandwidth into narrower bands (frequency division), or by allotting a common channel to several different transmitting devices, one at a time in sequence (time division).
 
A-3
 
On-line Commerce Turnkey, low-cost solutions for the implementation of a true, database-driven Internet store that corporate customers may locate in the Group's Pacific Internet Mall, an on-line mall offering merchandise that may be purchased by placing an order through the Pacific Internet network via an on line credit card transaction. The Group has developed proprietary systems that enable it to ''lease space'' in the mall to businesses to advertise and sell their products and services. The Group plans to provide these services in Singapore through in-house capabilities, and in Hong Kong and the Philippines through in-house capabilities and strategic partners.
 
On-line services Commercial information services that offer a computer user access through a modem to specific menus of information, entertainment and communications data. These services are generally closed systems and many offer limited, if any, Internet access.
 
Page-views Refers to a Hit on an HTML (Hyper Text Markup Language) page (access to non-HTML documents are excluded).
 
Peering The commercial practice under which nationwide ISPs exchange each other's traffic without the payment of settlement charges.
 
POPs Points of Presence.
 
Portal A principal entry point and gateway for surfing the Internet that provides useful web-related services and links.
 
Protocol A formal description of message formats and the rules two or more machines must follow in order to exchange such messages.
 
Router A device that receives and transmits data packets between segments in a network or different networks.
 
Server Software that allows a computer to offer a service to another computer. Other computers contact the server program by means of matching client software. In addition, such term means the computer on which server software runs.
 
SLIP (Serial Line Interface Protocol) A communications protocol that allows direct, dial-up access to the Internet over phone lines.
 
Switch A device that selects the paths or circuits to be used for transmission of information and establishes a connection. Switching is the process of interconnecting circuits to form a transmission path between users and it also captures information for billing purposes.
 
T0, T1, T3 Standard telecommunications industry digital signal formats, which distinguishable by bit rate (the number of binary digits (0 and 1) transmitted per second). T0 service has a bit rate of 64 kilobits per second and typically transmits only one voice conversation at a time. T1 service has a bit rate of 1.544 megabits per second and typically transmits 24 simultaneous voice conversations. T3 service has a bit rate of 45 megabits per second and typically transmits 672 simultaneous voice conversations.
 
TCP/IP (Transmission Control Protocol/ Internet Protocol) A compilation of network-level and transport-level protocols that allow computers with different architectures and operating system software to communicate with other computers on the Internet.
 
A-4
 
WAN (Wide Area Network) This is a network which spans a large geographic area relative to office and campus environment of LAN. WAN is characterized by having much greater transfer delays due to laws of physics.
 
Web caching High-speed storage mechanism for web content.
 
WebFAX Allows a subscriber in Singapore to send faxes to any fax machine in Singapore via the Internet using standard web browsers or mail applications. The fax recipient does not need to have a Pacific Internet or other Internet account.
 
Webserver A server connected to the Internet from which Internet users can obtain information.
 
World Wide Web or web A network of computer servers that uses a special communications protocol to link different servers throughout the Internet and permits communication of graphics, video and sound.
 
Table of contents A-5

REPORT OF INDEPENDENT AUDITORS


To the Board of Directors and Shareholders
Pacific Internet Limited

We have audited the accompanying consolidated balance sheets of Pacific Internet Limited as of December 31, 2002 and 2001, and the related consolidated statements of operations and comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2002. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of Primeworld Digital Systems, Inc. (subsequently known as Pacific Internet Philippines, Inc.), a subsidiary, which statements reflect total assets constituting 9% in 2001, and total revenues constituting 9% in 2001 of the related consolidated totals. Those statements were audited by other auditors who have ceased operations as a foreign associated firm of the Securities and Exchange Commission Practice Section of the American Institute of Certified Public Accountants and whose report dated January 15, 2002, expressed an unqualified opinion on those statements, and our opinion, insofar as it relates to 2001 data included for Primeworld Digital Systems, Inc., is solely based on the report of the other auditors.

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

In our opinion, based on our audits and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Pacific Internet Limited at December 31, 2002 and 2001 and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America.

/s/ Ernst & Young
ERNST & YOUNG


Singapore
February 28, 2003

F-1

Report of Independent Public Accountants

 

 

The Stockholders and the Board of Directors
Primeworld Digital Systems, Inc.

SyCip Gorres Velayo & Co

6760 Ayala Avenue
1226 Makati City
Philippines
Tel 632 891 0307
Fax 632 819 0872
www.sgv.com.ph

We have audited the accompanying balance sheets of Primeworld Digital Systems, Inc. as of December 31, 2001 and 2000, and related statements of income, changes in stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Primeworld Digital Systems, Inc. as of December 31, 2001 and 2000, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the Philippines.

Certain accounting practices used by the Company in preparing the accompanying financial statements conform with the accounting principles generally in the Philippines, but do not conform with the accounting principles generally accepted in the United States. A description of these differences and a reconciliation of net loss and stockholders’ equity to the accounting principles generally accepted in the United States are set forth in Note 19 to the financial statements.

/s/ Sycip Gorres Velayo & Co
January 15, 2002

THIS IS A COPY OF AN ACCOUNTANTS’ REPORT PREVIOUSLY ISSUED BY SYCIP GORRES VELAYO & CO. THIS REPORT HAS NOT BEEN REISSUED BY SYCIP GORRES VELAYO & CO.

F-2

CONSOLIDATED BALANCE SHEETS
(Singapore and U.S. Dollar Amounts in Thousands, except Share Data)

ASSETS
      December 31,
        2001   2002   2002
    Note   S$   S$   US$
Current assets:              
    Cash and cash equivalents     24,001   35,179   20,274
  Short term investments 5   -   250   144
  Accounts receivable, net of allowance for doubtful accounts of
S$4,283 and S$5,133 (US$2,958) at December 31, 2001
and 2002, respectively		     33,006   29,059   16,747
  Receivables from related parties 6   8,223   5,302   3,056
  Inventories     164   482   278
  Prepaid expenses and other current assets 7   3,001   2,840   1,637
  Loan receivable 13   549   111   64
  Deferred income taxes 20   2,328   1,288   742
 
 
 
Total current assets     71,272   74,511   42,942
 
 
 
Non-current assets:              
  Investments in unconsolidated subsidiaries and affiliates 8   20   2   1
  Long term investments 9   349   202   116
  Fixed assets and website development costs - net 10   26,179   21,121   12,172
  Intangible assets 11   2,994   1,224   705
  Goodwill 12   25,330   26,344   15,182
  Loan receivable from unconsolidated affiliates 14   4,767   4,987   2,874
  Deposits and other assets     1,239   977   563
  Deferred income taxes 20   941   646   372
 
 
 
Total non-current assets     61,819   55,503   31,985
 
 
 
Total assets     133,091   130,014   74,927
 
 
 

See accompanying notes

F-3

CONSOLIDATED BALANCE SHEETS
(Singapore and U.S. Dollar Amounts in Thousands, except Share Data)

LIABILITIES AND SHAREHOLDERS’ EQUITY
      December 31,
        2001   2002   2002
    Note   S$   S$   US$
Current liabilities:              
    Bank borrowings 15,16   3,920   3,236   1,865
  Accounts payable     10,903   12,730   7,337
  Payables to related parties 17   19,426   12,507   7,208
  Accrued expenses and other liabilities 18   23,522   23,706   13,662
  Deferred income 19   3,162   2,263   1,304
  Current portion of capital lease obligations with related parties 21   227   -   -
  Current portion of capital lease obligations with unrelated parties 21   452   498   287
  Income tax payable     2,074   3,186   1,836
 
 
 
Total current liabilities     63,686   58,126   33,499
 
 
 
Non-current liabilities:              
  Capital lease obligations with unrelated parties, less current portion 21   587   810   467
  Deferred income 19   40   -   -
  Deferred income taxes 20   3,272   2,410   1,388
 
 
 
Total non-current liabilities     3,899   3,220   1,855
 
 
 
                 
Commitments 21            
                 
Minority interest     3,598   2,760   1,590
                 
Shareholders' equity              
  Ordinary shares, S$2 par value; authorized 25,000,000 shares,
issued and outstanding 12,815,066 and 12,815,066 shares at
December 31, 2001 and 2002, respectively		     25,631   25,631   14,771
  Additional paid-in capital     93,424   92,741   53,447
  Accumulated other comprehensive loss     (2,942)   (2,226)   (1,283)
  Accumulated deficit     (52,746)   (49,856)   (28,732)
  Deferred compensation     (1,459)   (382)   (220)
 
 
 
Total shareholders' equity     61,908   65,908   37,983
 
 
 
Total liabilities and shareholders' equity     133,091   130,014   74,927
 
 
 

See accompanying notes

F-4

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Singapore and U.S. Dollar Amounts in Thousands, except Share and Per Share Data)

      December 31,
      2000   2001   2002   2002
    Note S$   S$   S$   US$
Revenues                
     Dial-up access   62,659   69,499   58,421   33,668
  Broadband access   2,339   17,923   41,635   23,994
  Leased line access   25,219   27,482   25,818   14,879
  Value-added services   8,533   9,994   13,012   7,499
  Commission revenue   4,293   8,203   9,043   5,212
  Other (1)   3,199   7,976   9,101   5,245
 
 
 
 
Total Gross Revenues   106,242   141,077   157,030   90,497
Toll rebates, net of expired rebates   3,044   -   -   -
 
 
 
 
      109,286   141,077   157,030   90,497
 
 
 
 
Operating costs and expenses                
  Cost of sales   36,862   57,193   64,648   37,257
  Selling, general and administrative expenses (2) 4 70,754   68,577   69,382   39,984
  Depreciation   7,906   11,135   10,610   6,114
  Amortization of goodwill and intangible assets   9,917   9,754   1,587   915
  Impairment of fixed assets 10 -   3,332   -   -
  Allowance for doubtful accounts receivable 22 2,183   4,522   2,747   1,583
 
 
 
 
Total operating expenses   127,622   154,513   148,974   85,853
 
 
 
 
Operating (loss) income   (18,336)   (13,436)   8,056   4,644
 
Other income (expense)                
  Interest income   1,930   558   414   238
  Interest expense (3)   (360)   (809)   (705)   (406)
  Gain on disposal of unquoted investment   1,718   24   -   -
  Equity in loss of unconsolidated affiliates   (5,624)   (4,624)   (1,738)   (1,002)
  Foreign exchange gain (loss)   545   1,013   (695)   (401)
  Others   296   734   919   530
 
 
 
 
Total other expenses   (1,495)   (3,104)   (1,805)   (1,041)
 
 
 
 
 
(Loss) income before income taxes and minority interest   (19,831)   (16,540)   6,251   3,603
Provision for income taxes 20 (2,621)   458   (4,199)   (2,420)
 
 
 
 
      (22,452)   (16,082)   2,052   1,183
Minority interest in loss of consolidated subsidiaries   47   1,117   838   483
 
 
 
 
Net (loss) income   (22,405)   (14,965)   2,890   1,666
Other comprehensive (loss) income                
  Foreign currency translation   (1,231)   (841)   766   442
  Unrealized loss (net of income tax of
S$16 (US$9)) in available-for-sale securities 		  -   -   (50)   (29)
 
 
 
 
Comprehensive (loss) income   $(23,636)   $(15,806)   $3,606   $2,079
 
 
 
 
 
Net (loss) income per share:                
  Basic   $(1.75)   $(1.17)   $0.23   $0.13
 
 
 
 
  Diluted   $(1.75)   $(1.17)   $0.23   $0.13
 
 
 
 
 
Weighted average number of ordinary shares outstanding:                
  Basic   12,794,193   12,815,066   12,815,066   12,815,066
 
 
 
 
  Diluted   12,794,193   12,815,066   12,815,066   12,815,066
 
 
 
 
 
(1) Includes sales to:                
  - former intermediate parent company   21   63   74   43
  - affiliated companies   339   541   986   568
(2) Includes management fee paid and payable to (written back from)
:- former intermediate parent company		 25 1,298   (250)   120   69
(3) Includes interest paid to affiliated company   139   493   429   247

See accompanying notes

F-6

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Singapore and U.S. Dollar Amounts in Thousands)
    December 31,
    2000   2001   2002   2002
    S$   S$   S$   US$
Cash flows from operating activities:              
     Net (loss) income (22,405)   (14,965)   2,890   1,666
  Adjustment to reconcile net cash provided by
(used in) operating activities		              
      Equity in loss of unconsolidated affiliates 5,624   4,624   1,738   1,002
      Allowance for doubtful accounts receivable 2,183   4,522   2,747   1,583
      Depreciation 7,906   11,135   10,610   6,114
      Amortization of goodwill and intangible assets 9,917   9,754   1,587   915
      Minority interest (47)   (1,117)   (838)   (483)
      Provision (credit) for deferred income taxes 1,012   (2,117)   473   272
      Realized gain on disposal of unquoted investment (1,718)   (24)   -   -
      Loss (gain) on disposal of fixed assets 16   149   (34)   (20)
      Write-off of fixed assets 438   434   215   124
      Impairment of fixed assets -   3,332   -   -
      Amortization of deferred compensation 1,577   1,257   394   227
      Deferred government grant (1,194)   -   -   -
Changes in operating assets and liabilities, net of effects
from business acquisition and dispositions:		              
  Accounts receivable, net (19,898)   1,827   1,200   692
  Balances with related parties 3,753   (2,059)   (1,668)   (962)
  Inventories, net 116   147   (318)   (183)
  Prepaid expenses and other assets 695   (561)   958   552
  Accounts payable 9,484   (4,240)   1,827   1,053
  Other payables 669   (3,519)   (200)   (115)
  Deferred income (1,801)   338   (96)   (55)
  Income tax payable (1,128)   89   1,112   641
 
 
 
 
Net cash (used in) provided by operating activities (4,801)   9,006   22,597   13,023
 
 
 
 
Cash flows from investing activities:              
  Acquisition of fixed assets (14,287)   (7,992)   (5,516)   (3,179)
  Investment in unconsolidated affiliates (4,694)   -   -   -
  Proceeds from divestment of unquoted investment 1,943   644   -   -
  Proceeds from divestment of subsidiary -   5,157   -   -
  Proceeds from disposal of fixed assets 208   192   246   142
  Acquisitions of subsidiaries and businesses, net of cash acquired (16,346)   -   -   -
  Purchase of marketable securities -   -   (250)   (144)
  Purchase of intangible assets (71)   (154)   (165)   (95)
  Web development costs (816)   (133)   -   -
  Release of pledged fixed deposits -   3,232   -   -
  Loan to affiliates (2,547)   (4,213)   (220)   (127)
 
 
 
 
Net cash (used in) provided by investing activities (36,610)   (3,267)   (5,905)   (3,403)
 
 
 
 
Cash flows from financing activities:              
  Proceeds from bank borrowings 1,987   864   947   546
  Repayment of bank borrowings -   -   (1,631)   (940)
  Repayment of capital lease obligations -   (907)   (780)   (450)
  Repayment of loan from affiliates (1,170)   -   (4,050)   (2,334)
  Proceeds from issuance of ordinary shares 4,971   -   -   -
 
 
 
 
Net cash provided by (used in) financing activities 5,788   (43)   (5,514)   (3,178)
                 
Net (decrease) increase in cash and cash equivalents (35,623)   5,696   11,178   6,442
                 
Cash and cash equivalents at beginning of year 53,928   18,305   24,001   13,832
 
 
 
 
Cash and cash equivalents at end of year 18,305   24,001   35,179   20,274
 
 
 
 
Supplemental disclosure of cash flow information:              
  Cash paid during the year for interest 39   771   683   394
  Cash paid for income taxes 2,470   1,485   2,649   1,527

See accompanying notes

F-8

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Singapore and U.S. Dollar Amounts in Thousands, except Share Data)
    Ordinary shares Amount Additional paid-in
capital		 Accumulated deficit Accumulated other comprehensive
(loss) income		 Deferred compensation Total shareholders' equity Amount Additional paid-in
capital		 Accumulated deficit Accumulated other comprehensive
(loss) income		 Deferred compensation Total shareholders equity
      ------------------------------------------------ Singapore $ -------------------------------------------- -------------------------------------------------------- US $ -------------------------------------------------
Balance at January 1, 2000   12,643,566 $25,287 $88,761 $(15,376) $(870) $(7,041) $90,761            
                             
Net loss   - - - (22,405) - - (22,405)            
Issue of shares through the exercise of 1998 ESOP   171,500 344 4,627 - - - 4,971            
Deferred compensation relating to options   - - (2,153) - - 2,153 -            
Amortization of deferred compensation   - - - - -  1,577 1,577            
Foreign currency translation   - - - - (1,231) - (1,231)            
           
Balance at December 31, 2000   12,815,066 25,631 91,235 (37,781) (2,101) (3,311) 73,673            
                             
Net loss   - - - (14,965) - - (14,965)            
Deferred compensation relating to options   - - (595) - - 595 -            
Amortization of deferred compensation   - - - - - 1,257 1,257            
Gain on deemed disposal of shares of a subsidiary company   - - 2,784 - - - 2,784            
Foreign currency translation   - - - - (841) - (841)        
           
Balance at December 31, 2001   12,815,066 25,631 93,424 (52,746) (2,942) (1,459) 61,908 14,771 53,841 (30,398) (1,696) (841) 35,677
                         
Net income   - - - 2,890 - - 2,890 - - 1,666 -  - 1,666
Deferred compensation relating to options   - - (683) - - 683 - - (394) - - 394 -
Amortization of deferred compensation   - - - - - 394 394 - - - - 227 227
Unrealized loss (net of income tax of S$16 (US$9)) in available-for-sale securities   - - - - (50) - (50) - - - (29) - (29)
Foreign currency translation   - - - - 766 - 766 - - - 442 - 442
Balance at December 31, 2002   12,815,066 $25,631 $92,741 $(49,856) $(2,226) $(382) $65,908 $14,771 $53,447 $(28,732) $(1,283) $(220) $37,983

See accompanying notes

F-9

Table of contents

Notes to the Consolidated Financial Statements
December 31,2002
(Amounts presented in thousands of Singapore and US dollars unless otherwise indicated)

1  ORGANIZATION

 

Pacific Internet Limited ("PIL" or the "Company"), together with its subsidiaries and associated companies, is an Internet service provider ("ISP") in Asia. Incorporated in the Republic of Singapore on March 28, 1995 as Sembawang Media Pte Ltd, it changed its name to Pacific Internet Pte Ltd on March 17, 1998. On November 23, 1998, it was converted to a public company and was listed on NASDAQ on February 5, 1999.

 

  PIL and its consolidated subsidiaries are hereinafter collectively referred to as the "Group".

 

2 BUSINESS ACQUISITIONS

 

  Singapore

 

  On June 9, 2000, Pacfusion.com Limited (subsequently known as "Pacfusion Limited") was incorporated in Bermuda ("Pacfusion"). Pacfusion currently has an authorized share capital of 262,000,000 shares at par value of US$0.001 each and an issued and paid-up capital of US$64,406.78 divided into 64,406,780 shares of US$0.001 each. The Company currently owns 92.1% of Pacfusion. On April 12, 2000, Pacfusion.com (Singapore) Pte Ltd was incorporated in Singapore and subsequently changed its name to Pacfusion.com Group Holdings Pte Ltd and then to Pacfusion Group Holdings Pte Ltd ("Pacfusion Group Holdings"). Pacfusion Group Holdings' principal activities are that of an investment holding and electronic commerce and portal business. During 2000, Pacfusion.com (Malaysia) Sdn. Bhd. (subsequently known as "Pacfusion (Malaysia) Sdn. Bhd."), Pacfusion.com (Australia) Pty Limited ("PF Australia") and TravelFusion.com Limited ("TravelFusion") were also incorporated in Malaysia, Australia and Bermuda on April 19, 2000, May 8, 2000 and April 27, 2000, respectively. On March 14, 2000, Pacfusion.com (Thailand) Limited ("PF Thailand") was incorporated with Pacfusion Group Holdings holding 49% of its issued share capital. The Group also acquired a shell company and renamed it Pacfusion.com (Hong Kong) Limited ("PF Hong Kong") on March 8, 2000 for a nominal sum. On December 10, 2002, the Group purchased a 92.0% interest in Pacfusion.com (India) Private Limited ("PF India"), a company incorporated in India, for a consideration of S$4 (US$2).

 

  During 2002, the Group conducted a restructuring exercise on its dormant subsidiaries. Pacfusion (Malaysia) Sdn. Bhd. commenced liquidation on September 28, 2002 while PF Hong Kong was deregistered with effect from December 13, 2002. The Group also plans to wind up its other dormant subsidiaries, namely PF Thailand and PF India.

 

  Safe2Travel.com Pte Ltd (subsequently known as Safe2Travel Pte Ltd) ("Safe2Travel") was incorporated on April 8, 2000 to acquire the travel and travel related businesses from Safe & Mansfield Travel Group Pte Ltd ("SMTG") for a purchase consideration of S$10,000. SMTG is an established International Air Transport Association (IATA) accredited travel agency in Singapore with a focus on the corporate travel market since its formation in 1918. In December 2000, an intercompany loan of S$9,962 granted to Safe2Travel by Travelfusion.com Limited ("Travel Fusion") was converted into equity. As a result, TravelFusion increased its interest in Safe2Travel from 85% to 92.5%.

 

  Australia

 

  On January 19, 2000, Pacific Internet (Australia) Pty Limited ("PIA") acquired the business of Kralizec Pty Ltd ("Zeta Internet") for approximately S$1,396. Zeta Internet, is an Internet Service Provider founded in 1985 in Sydney and was one of the first ISPs to operate in the metropolitan area with the commercialization of the Australian Internet industry in 1994.
 
  On February 1, 2000, PIA acquired the business of Hub Communications Pty Ltd ("Hub Communications") for S$536. Hub Communications is an Internet Service Provider established in Brisbane, Australia in 1995 and operated a chain of Internet cafes in Brisbane's Central Business District.
 
  On April 5, 2000, PIA acquired Hunterlink Pty Limited ("Hunterlink") for S$5,915. Hunterlink is an Internet Service Provider based in Newcastle. Hunterlink was acquired for its reliability, customer service and customer base.
 
  These acquisitions added approximately 16,000 dial-up, 170 leased line and 400 web hosting accounts to the Group.
  F-10
  The above acquisitions were accounted for using the purchase method of accounting. The purchase prices have been allocated to the assets acquired and liabilities assumed based on the estimated fair values at the date of the acquisition. The excess of purchase prices over the estimated fair values of the net assets acquired has been recorded as goodwill. The operating results of these acquisitions are included in the consolidated results of operation from the date of acquisition. For accounting policy on goodwill, please refer to Note 3. A summary of the purchase prices allocation is as follows:
  Thailand
 
  On January 5, 2000, Pacific Digiway Limited ("Digiway"), an investment holding company, was incorporated in Thailand. The Company subscribed to 4,900 ordinary shares of Baht 10 each, representing a 49% equity interest in Digiway. Digiway in turn held a 26% direct equity interest in IT Star Co., Ltd. Digiway also owned 51% equity interest in PF Thailand.
 
  In March 2000, the Company completed the acquisition of a 49% direct equity interest in IT Star Co., Ltd., which was the holding company of World Net & Services Co., Ltd ("World Net"), an ISP based in Thailand for S$2,040. Headquartered in Bangkok, World Net had points of presence in Ayuthaya, Chon Buri and Songkha. Subsequently, IT Star Co., Ltd changed its name to Pacific Internet (Thailand) Limited ("PITH").
 
  On December 19, 2001, Digiway increased its equity interest in PITH from 26% to 41%. As a result, the Company's effective interest in PITH was increased from 61.7% to 69.1%.
 
  Philippines
 
  On March 18, 1998, the Company acquired a 40.0% stake in Primeworld Digital Systems, Inc. (subsequently known as Pacific Internet Philippines, Inc.) ("PIPH"), a Philippines corporation that provides Internet access in the Philippines. On July 31, 1999, the Company acquired 40.0% in PW Holding Corporation ("PWC"), a Philippines corporation, which in turn held 56.7% of PIPH.
 
  On March 16, 2001, the Company disposed 8.9% of its equity interest in PIPH for S$201 to an unrelated party, reducing its direct interest in PIPH from 40.0% to 31.1%. With this disposal, the Company owns direct and indirect interests of 31.1% and 22.7% respectively in PIPH. As a consequence of the above changes, the Group ceased equity accounting for its investment in PIPH and consolidated PIPH from that date.
 
 

The following presents the condensed unaudited pro-forma results of operations of the Group as though the consolidation of PIPH had occurred as of the beginning of the period, as well as the preceding period:

  Malaysia
 
  Pacific Internet (Malaysia) Sdn. Bhd. ("PIM") was incorporated on March 2, 1999 and commenced operations in the second quarter of 2002. Its principal activity is the provision of Internet access service to corporate customers.
  F-11
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Principles of Consolidation
 
  The accompanying consolidated financial statements include the accounts of the Company and its majority owned subsidiaries after elimination of all significant intercompany balances and transactions. Investments in 20.0% to 50.0% owned affiliates are accounted for by the equity method.
 
  Where the Company has an indirect ownership of more than 50.0% in its subsidiaries, it will continue to account for these investments using the equity method until it has met the criteria set out by Statement of Financial Accounting Standards ("SFAS") No. 94 - Consolidation of All Majority-Owned Subsidiaries and EITF 96-16 - Investor's Accounting for an Investee When the Investor Has a Majority of the Voting Interest but the Minority Shareholder or Shareholders Have Certain Approval or Veto Rights.
 
  Accounting Records
 
  The Company maintains its records and prepares its statutory financial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 and the Singapore Statements of Accounting Standards. The Company has obtained waivers from the Registrar of Companies and Businesses in Singapore from preparing, amongst others, consolidated financial statements prepared in accordance with the Singapore Statements of Accounting Standards ("SING GAAP").
 
  The accompanying consolidated financial statements differ from the consolidated financial statements that would have been issued for statutory purposes in Singapore if the exemption was not obtained, in that they reflect certain adjustments, not recorded in the Company's books, which are appropriate to present the consolidated financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). The principal adjustments relate to: (1) capitalization and amortization of goodwill (2) deferred income taxes, and (3) stock-based compensation.
 
  All dollar amounts included in the financial statements and in the notes herein are Singapore dollars ("S$") unless designated as U.S. dollars ("US$").
 
  Foreign Currency
 
  The Company and its subsidiaries, except for those noted below, consider the Singapore dollar as their functional currency. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are recognized in the results of operations when incurred. Pacific Supernet Limited ("PSL") considers the Hong Kong dollar as its functional currency. PIA and PF Australia consider the Australian dollar as their functional currency. PIPH considers the Philippine Peso as its functional currency. PIM considers the Malaysian Ringgit as its functional currency.
 
  The assets and liabilities of PSL, PIPH, PIA/PF Australia and PIM are translated into Singapore dollars ("S$") from their respective functional currencies at the exchange rate at the balance sheet date, and revenues and expenses are translated into S$ at the weighted average exchange rates for the year. Resulting translation adjustments are recorded as a component of comprehensive income.
 
  The Group's share of net assets of PWC, Pacific Internet India Private Limited ("PII") and PITH are translated into S$ from Philippine Pesos, Indian Rupees and Thai Baht, respectively at the exchange rate at the balance sheet date. The Group's share of the operations of PWC, PII and PITH are translated into S$ from Philippine Pesos, Indian Rupees and Thai Baht, respectively at the weighted average exchange rates for the year, respectively. Resulting translation adjustments are recorded as a component of comprehensive income.
 
  The accompanying consolidated financial statement amounts expressed in US$ amounts are included solely for the convenience of the readers and have been translated at S$1.7352 to US$1.00, the approximate exchange rate at December 31, 2002. No representation is made that the S$ amounts could have been, or could be, converted into US$ amounts at that or any other rate.
  F-12
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
 
  Cash and Cash Equivalents
 
  The Group includes in cash and cash equivalents all short-term, highly liquid investments that mature within three months of their acquisition date. Cash equivalents consist principally of investments in interest-bearing demand deposit accounts with financial institutions and are stated at cost, which approximates fair value.
 
  The Group maintains cash and cash equivalents with various financial institutions mainly in Singapore, Hong Kong, Australia and the Philippines. The Group performs periodic evaluation of the relative credit standing of these financial institutions that are considered in the Group's investment strategy.
 
  Short term and long term investments
 
  Long term and short term investments consist of equity securities and corporate debt securities. These investments are accounted for in accordance with SFAS No. 115 - Accounting for Certain Investments in Debt and Equity Securities. The Group has classified all marketable securities as available-for-sale. Available-for-sale securities are reported at fair value with changes in unrealized gains and losses, net of applicable taxes, recorded in a separate component of stockholder's equity. Realized gains and losses are included in Other income and expenses and are determined on a specific identification basis. In the event that the carrying value of an investment exceeds its fair value and the decline in value is other-than-temporary, an impairment charge is recorded and a new cost basis for the investment is established. Fair value for investments in public companies are determined using quoted market prices. Fair value for investments in privately-held companies are estimated based upon one or more of the following: pricing models using historical and forecasted financial information and current market rates; liquidation values; and quoted market prices of comparable companies. In order to determine whether a decline in value is other than temporary, the Group evaluates, among other factors: the duration and extent to which the fair value has been less than the carrying value; the financial condition and business outlook of the company, current market conditions and future trends in the company's industry; the company's relative competitive position within the industry; and the Group's intent and ability to retain the investment for a period of time sufficient to allow any anticipated recovery in fair value. Other-than-temporary declines in fair value from the original cost are charged to the Consolidated Statement of Operations in the period the loss is established.
 
 

Fixed Assets and Website Development Costs

Fixed assets, including equipment under capital leases, are stated at cost and are depreciated or amortized using the straight-line method over the shorter of the estimated useful lives of the assets or the term of the related lease, as follows:
 
  Depreciation of assets under capital lease is included in depreciation expense.
 
  In accordance with EITF 00-2 Accounting for Web Site Development Costs, the Group has capitalized certain website development costs. These costs are amortized over a period of 2 years as the Group expects it will be 2 years before major revamp will occur on these web sites.
 
  Repair and maintenance costs are charged to expense as incurred, whereas the cost of renewals and betterment that extend the useful life of fixed assets are capitalized as additions to the related assets. Retirement, sale and disposals of assets are recorded by removing the cost and accumulated depreciation from the asset and accumulated depreciation accounts with any resulting gain or loss reflected in the statement of operations.
 
  Concentration of Credit Risk
 
  The Group provides Internet access, e-commerce and travel-related services. The Group has thousands of individual customers primarily located in Singapore, Hong Kong, Australia, the Philippines, India, Thailand and Malaysia. The Group performs ongoing credit evaluations of its customers' financial condition, and generally requires no collateral from its customers. The allowance for doubtful accounts receivable is based upon the expected collectibility of outstanding accounts receivable at the balance sheet date.
 F-13
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
 
  Use of Estimates
 
  The preparation of financial statements in conformity with US GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported results of operations during the reporting period. Actual results could differ from those estimates.
 
  Inventory
 
  Inventory consists of products and equipment parts for resale and is stated at the lower of cost (calculated on a first-in-first-out basis) or market value.
 
  Accounts Receivables and Loan Receivable
 
  Accounts receivables, which generally have 30-90 days terms, are recognized and carried at original invoiced amount less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.
 
  Loan receivable is recognized and carried at cost less an allowance for any uncollectible amounts.
 
  Allowance for Doubtful Debt
 
  The Group maintains allowances for doubtful accounts for estimated losses resulting from inability of customers to make required payments. The Group reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectibility of individual balances. In evaluating the collectibility of individual receivable balances, the Group considers many factors, including the age of the balance, customer's historical payment history, their current credit-worthiness and current economic trends. As of December 31, 2001 and 2002, the Group's allowance for doubtful debts was S$4,283 and S$5,133 (US$2,958), respectively.
 
  Intangible Assets
 
  Identifiable intangible assets consist of the following:
 
  (i) Trademarks, service marks and domain names - The Group has registered certain trademarks, service marks and domain names in the United States Patent and Trademark Office and other jurisdictions. The Group believes the service marks and domain names are of material importance to the Group's business and are amortized on a straight-line basis generally over a period of ten years.
 
  (ii) License fee - License fee represents the cost of the license to operate as an Internet service provider ("ISP") in Singapore for a five-year period commencing September 1995. In April 2000, the Company was awarded a Facilities-Based Operator license for a 15-year period, commencing April 1, 2000. License fees are amortized on a straight-line basis over its estimated economic life of five years. In 2002, a license to use the Internet messaging server software with estimated useful life of 5 years was purchased.
 
  (iii) Acquired customer list - Acquired customer list represents capitalization of specific costs incurred for the purchase of customer lists from other ISPs and is amortized on a straight-line basis over a period ranging from 4-5 years.
 
  (iv) Acquired workforce - Acquired workforce represents capitalization of the purchase price associated with the acquisition of workforce as part of the acquisition of SMTG. The amount capitalized is based on the expected cost to acquire such a workforce. Prior to 2002, acquired workforce was amortized on a straight line basis over a period of 5 years. Effective January 1, 2002, in accordance with SFAS No. 141 - Business Combinations, the unamortized balance for acquired workforce, of S$620 (US$357), which has been recognized as an intangible asset separate from goodwill in prior years, has been reclassified to goodwill.
 
  Annually, the Group reviews, and if necessary, adjusts the carrying value of intangible assets if the facts and circumstances suggest intangible assets may be impaired. If this review indicates the intangible assets may not be recoverable, as determined based on the undiscounted cash flows of the entity acquired over the remaining amortization period, the carrying value of intangible assets will be reduced by the estimated shortfall of the discounted cash flows.
  F-14
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
 
  Goodwill
 
  Goodwill represents the excess of the purchase price of acquired businesses and companies over the fair value of the net assets acquired.
 
  In January 2002, the Group adopted SFAS No. 141 - Business Combinations. In accordance with SFAS No. 141, the unamortized balance for acquired workforce, of S$620 (US$357), which has been recognized as an intangible asset separate from goodwill in prior years, has been reclassified to goodwill.
 
  In January 2002, the Group adopted SFAS No. 142 - Accounting for Goodwill and Other Intangibles, which requires companies to stop amortizing goodwill and certain intangible assets with an indefinite useful life. Instead, SFAS No. 142 requires that goodwill and intangible assets deemed to have an indefinite life be reviewed for impairment upon adoption (January 1, 2002) and annually thereafter.
 
  Under SFAS No. 142, goodwill is deemed to exist if the net book value of a reporting unit exceeds the estimated fair value. Fair value is determined based on the present value of estimated expected future cash flows using a discount rate commensurate with the risk involved.
 
  Government Grants
 
  Grants from the government are recognized in the Consolidated Statement of Operations where there is reasonable assurance that the grant will be received and all matching conditions will be complied with.
 
  Revenue Recognition
 
  Service revenues are recognized in the period the service is rendered in accordance with Staff Accounting Bulletin, SAB 101 - Revenue Recognition in Financial Statements. Provision for discounts and uncollectible amounts are made when the related revenue is recognized. Provision for toll rebates is made based on the usage hours of dial-up customers in Singapore and is deducted from the gross revenues. This program ended on December 31, 1999 and the last day for redemption of rebates was on March 9, 2000. A reversal of unredeemed rebates was made in connection with this program's expiration.
 
  Revenue for pre-paid cards is generally recognized based on usage hours. In the event that such usage hours cannot be determined or reasonably estimated, revenue is deferred and recognized upon expiration of the pre-paid cards.
 
  Commission revenues are generated from travel suppliers for air travel, hotel rooms, car rental, vacation packages and cruises. Commissions from air travel suppliers are recognized upon confirmation of pending payment of the commission. Commissions from other travel suppliers are recognized upon receipt.
 
  Advertising revenues are derived primarily from the delivery of advertising impressions on the www.pacific.net.sg web site. Advertising revenues are recognized based on services rendered or number of impressions shown.
 
  Peering, which does not generate revenue, is an arrangement that allows an ISP to exchange traffic with one or more other carriers by establishing the necessary protocols for data interchange. The principal cost in maintaining such arrangement, the cost of leasing international lines, are included in the Company's cost of sales. The Company has a peering relationship with other ISPs in Singapore through their respective connections via 1-Net Singapore Pte Ltd ("1-Net"). At present, ISPs have agreed to absorb their respective costs rather than charge each other for traffic exchanged.
 
  The Group presently does not provide refunds to dial-up or leased line subscribers. Registration and activation fees are payable at the time applications are processed. Revenues generated from such fees are deferred and amortized over the estimated average life of a subscriber relationship of five years. The fees deferred and not yet amortized are shown on the Group's balance sheet as "Deferred income". Revenues are recorded for monthly charges (which include a certain number of "free hours") and for hours-used in excess of such "free hours". Free months are offered in connection with referral programs or promotional discounts. Because these free months are usually given without a contract at the beginning of a subscription period, no revenue is recognized during the free months as the customer's continuance is not assured. Special gifts (other than products provided free by co-advertisers) given to customers or potential customers are previously included as advertising or promotional expenses. In 2002, the Group has adopted EITF 01-09 - Accounting for Consideration Given by Vendor to a Customer or a Reseller of the Vendor's Products. While the Task Force did not reach a consensus on the classification of the expense associated with free products, the SEC Observer indicated that the SEC staff believes that the expense should be classified as cost of sales. In 2002, the Group has applied EITF 01-09 prospectively and recorded an amount of S$410 (US$236) relating to free products in cost of sales. No reclassification of prior-period financial statements are made as the amount relating to previous years cannot be separated out from sales and marketing expenses with reasonable reliability.
  F-15
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
 
  Revenue Recognition
 
  Revenues on merchandise sales from retail operations are recorded when items are sold. Other revenues associated with retail operations are regular registration, activation and monthly subscription fees (which are recognized as described above) and fees for hourly usage of in-store Internet terminals (for which revenues are recorded when the service is provided).
 
  The Group enters into fixed-price, long-term contracts for the installation and commissioning of Internet and intranet systems. Revenues from such contracts are recognized on the percentage-of-completion method as measured by the costs incurred to date as a percentage of the total contracts' estimated cost. Provision for estimated losses on uncompleted contracts are recognized in the period in which such losses are determined.
 
 

The Group provides website application and development services that include multiple element arrangements, which may include any combination of hardware, services or software. These arrangements and stand-alone software arrangements may also involve any combination of software maintenance, software technical support or unspecified software upgrades. When some elements are delivered prior to others in an arrangement, revenue is deferred until the delivery of the last element unless there is all of the following:

  • Objective evidence of fair value of the undelivered elements, which is the price charged by the Group to an external customer for the same element when such element is sold separately.
  • The undelivered elements do not affect the quality of use or value to the customer of the delivered elements.
  • An element has been delivered.
  Advertising
 
  Advertising costs, primarily advertisements through mass media and billboards, are expensed when incurred. Advertising expense for the years ended December 31, 2000, 2001 and 2002 were S$9,238, S$5,661 and S$4,823 (US$2,780), respectively.
 
 

Per Share Data

Earnings per share is computed in accordance with SFAS No. 128, Earnings per Share. Under SFAS No. 128, earnings per share is calculated using the weighted average number of Ordinary Shares outstanding during the year. The effect of the Company's stock options were not included in the computation of diluted earnings per share for the year ended December 31, 2000, 2001 and 2002 because their inclusion would have been anti-dilutive.
 
  Fair Value of Financial Instruments
 
  The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short maturity of these instruments.
 
  The carrying amount of the debt issued pursuant to the Group's bank credit agreement approximates fair value because the interest rates change with market interest rates.
  F-16
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
 
  Stock-Based Compensation Plans
 
 

The Group has adopted the disclosure-only provisions of SFAS No. 123 Accounting for Stock Based Compensation and applies Accounting Principles Board Opinion No. 25 Accounting for Stock Issued to Employees ("APB No. 25") and related interpretations in accounting for its employee stock-based compensation plans. For options issued to non-employees under its stock-based compensation plan, the Group has accounted for them as provided under SFAS No. 123. The fair value of the options granted is estimated using the Black-Scholes option-pricing model.

If the Company elected to recognize compensation costs for all plans based on the fair value of the options at the grant dates, consistent with the method prescribed by SFAS No. 123, net loss and loss per common share would have been different as the pro forma amounts indicate below:
 
3   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
 
 

Stock-Based Compensation Plans (cont'd)

The table below summarized the weighted average fair value and exercise price of the stock options granted during the year.

  Gain on issuance of shares by subsidiaries
 
  At the time a subsidiary sells newly-issued shares to unrelated parties at a price in excess of its book value, the Group's net investment in that subsidiary increases. If at that time, the subsidiary is not a newly-formed, non-operating entity, nor a research and development, start-up or development stage company, nor is there question as to the subsidiary's ability to continue in existence, the Group records the increase as part of the line item "other gains, net" in its Consolidated Statements of Operations. Otherwise, the increase is reflected in "Gain on deemed disposal of shares in a subsidiary company" in the Group's Consolidated Statement of Shareholders' Equity.
 
4

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses comprise the following :

  For the years ended December 31, 2000, 2001 and 2002, the professional and consultancy fees include management fees paid or payable to the Company's former immediate parent and intermediate parent company of S$1,298, S$nil, and S$120 (US$69) respectively. For the year ended December 31, 2001, such management fees of S$250 was written back due to waiver of amounts previously provided.
 
  Defined contribution costs, which are included in payroll and related staff costs, are S$2,659, S$3,674 and S$3,665 (US$2,112) for the year ended December 31, 2000, 2001 and 2002, respectively.
 
5 SHORT TERM INVESTMENTS
 
  The Group's short term investments, which consist of Singapore corporate variable rate notes, are considered available-for-sale and have debt maturities of more than 1 year and less than 5 years. The carrying amount approximates fair value.
  F-18
6 RECEIVABLES FROM RELATED PARTIES
 
  As of December 31, 2001 and 2002, the amounts receivable from related parties included amounts of S$377 and S$986 (US$568) from the sale of goods and services respectively.
 
  As of December 31, 2001 and 2002, included in the amount receivable from SembCorp Ventures Pte Ltd are advances made to and payments made on behalf of SembCorp Ventures Pte Ltd.
 
  The amount receivable from PITH relates to the loan to PITH and payments made by the Company on their behalf.
 
  The amount receivable from Pacific Internet India Private Limited and World Net & Services Co., Ltd relates to payments made by the Company on their behalf.
 
  The amount receivable from affiliates - others mainly relates to sale of air-tickets and provision of Internet access services.
 
  The above receivables are interest-free with no fixed terms of repayment, except for the loan to PITH, which bears interest of 8% per annum.
 
7

PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following:
  Grant receivable relates to certain projects for which the Government of Singapore has pre-approved the Company's estimated expenditures (up to an authorized amount) and has agreed to reimburse the Company over the grant period. The grant period ended in December 31, 2001.
  F-19
7 PREPAID EXPENSES AND OTHER CURRENT ASSETS (Cont'd)
 
  Recoverable from third parties primarily relate to staff expenditure advances that are recorded as receivables until related expenses are actually incurred and submitted by the recipient.
 
  Scholarship recipients are bonded to the Company for a period of eight years. Expenditures relating to scholarship awards are capitalized at the time of outlay and are amortized over the bond period of one to six years, provided that the recipient fully performs in accordance with the terms of the bond. Such expenditures are recoverable pro-rata from the recipient to the extent such individuals do not complete their bond period of service with the Company.
 
8 INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES
 
  On March 16, 2001, the Company, via a restructuring exercise, established that it met the criteria to consolidate the financial statements of PIPH under SFAS No. 94 - Consolidation of All Majority-Owned Subsidiaries and EITF 96-16 - Investor's Accounting for an Investee When the Investor Has a Majority of the Voting Interest but the Minority Shareholder or Shareholders Have Certain Approval or Veto Rights. As part of the restructuring, the Company disposed 8.9% of its direct equity interest of 40.0% in PIPH, thereby holding direct and indirect interests of 31.1% and 22.7% respectively. As a result of the restructuring exercise, since March 16, 2001, PIPH has been consolidated with the Group financial statements.
 
  On January 5, 2000, Digiway, an investment holding company, was incorporated in Thailand. The Company subscribed to a 49.0% equity interest in Digiway, which in turn held a 26.0% equity interest in PITH. From March 2000 to December 19, 2001, the Company effectively owned 61.7% interest in PITH, comprising a 49.0% direct equity interest and 12.7% indirect interest via Digiway. On December 19, 2001, Digiway increased its equity interest in PITH to 41.0%. As a result, the Company's effective interest in PITH was increased to 69.1%.
 
 

The Group will continue to account for PITH using the equity method until it has met the criteria to consolidate the financial statements of PITH under SFAS No. 94 - Consolidation of All Majority-Owned Subsidiaries and EITF 96-16 - Investor's Accounting for an Investee When the Investor Has a Majority of the Voting Interest but the Minority Shareholder or Shareholders Have Certain Approval or Veto Rights.

Summarized combined balance sheet and statement of operations for the unconsolidated subsidiaries, PITH and PIPH (prior to consolidation) is presented below:

  On October 9, 1998 the Company entered into a non-binding Memorandum of Understanding ("MOU") with Thakral Brothers (Pte) Ltd ("Thakral Brothers") to enter into a strategic joint venture for the operation of an Internet-related and ISP business in India (the "India Joint Venture"). On February 5, 1999, PII was incorporated in India. On September 30, 1999, the Company acquired a 49.0% equity interest in PII. PII has obtained a nationwide license that allows it to provide public Internet access in any city in India. On February 28, 2001, the Company formally signed a joint venture agreement with an affiliate of Thakral Brothers.
 
  As of December 31, 2002, the unamortized difference between the amount at which the investment in PITH was carried and the amount of the Group's underlying equity in net assets represents goodwill of S$704 (US$406).
  F-20
8

INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES (Cont'd)

Summarized combined balance sheet and statement of operations for the unconsolidated affiliates, namely PWC, PII and Digiway is presented below:
 
  For the year ended December 31, 2000, PII deferred revenues of S$296, as the revenue recognition criteria set out in SAB 101 were not met. The deferred revenues were recognized in 2001.
 
9 LONG TERM INVESTMENTS

The following table summarizes the Group's investment in securities, all of which are considered available-for-sale and long-term investments.
  Unquoted equity investments are accounted for under the cost method. Any impairment in the value of the investments is reported in the Consolidated Statement of Operations in the year the impairment is identified. The impairment analysis is performed based on the specific identification method. These investments generally consist of minority equity interests in companies in related Internet or telecommunication businesses. These companies are incorporated in the United States of America, Singapore or Philippines.
 
  Quoted equity investments are carried at fair value, with any unrealized gains and losses, net of applicable taxes, reported in a separate section of stockholder's equity. Realized gains and losses are included in the statement of operations and are determined on a specific identification basis. Other than temporary declines in market value from the original cost are charged to the Consolidated Statement of Operations in the period in which the loss occurs. These investments consist of equity interest in a telecommunication company incorporated in the Philippines.
  F-21
10 FIXED ASSETS AND WEBSITE DEVELOPMENT COSTS - NET
 

F-22

11 INTANGIBLE ASSETS
 

Intangible assets consist of the following:

12 GOODWILL

  F-23
  In June 2001, The FASB issued SFAS No. 142 - Goodwill and Other Intangible Assets. This standard eliminates the amortization of goodwill, requires annual impairment testing of goodwill and introduces the concept of indefinite life intangible assets. The new rules also prohibit amortization of goodwill associated with business combinations that close after June 30, 2001. An initial transition impairment test of goodwill must also be performed in 2002 as of January 1, 2002. The Group completed this initial transition impairment test and the annual impairment test and determined that goodwill is not impaired.

The changes in carrying amount of goodwill for the year ended December 31, 2002, are as follows:

In accordance with SFAS No. 141 - Business Combinations, the unamortized balance for acquired workforce, which has been recognized as an intangible asset separate from goodwill, has been reclassified to goodwill effective January 1, 2002.

The following table presents the prior period's reported net income adjusted to exclude goodwill amortization.

13 LOAN RECEIVABLE
 
  Loan receivable is unsecured and bears interest at 6.50% (2001: 6.25% to 6.50%) per annum.

 

14 LOAN RECEIVABLE FROM UNCONSOLIDATED AFFILIATES
 
  Loan receivable from unconsolidated affiliates is unsecured, interest-free and is not expected to be repaid within one year.
  F-24
15 BANKING FACILITIES
 
  As of December 31, 2001 and 2002, the Group had uncommitted revolving credit facilities, representing short-term loan facilities, overdraft facilities and guarantees from various banks, of S$18,407 and S$24,939 (US$14,372) respectively. The weighted average interest rate was 1.6% per annum. Total unused credit facilities available to the Group as of December 31, 2001 and 2002 were S$12,811 and S$13,689 (US$7,889), respectively. As of December 31, 2001 and 2002, PIA utilized S$74 (US$43) of the Company's credit facilities to issue banker's guarantee in favor of a third party for the lease of premises. As of December 31, 2001 and 2002, PSL utilized S$334 and S$756 (US$436) of the Company's credit facilities to issue banker's guarantee in favor of a third party for the sale of bandwidth and telecommunication lines.
 

16 BANK BORROWINGS

17 PAYABLES TO RELATED PARTIES

  As of December 31, 2001 and 2002, the amount payable to related parties included amounts of S$(250) and S$120 (US$69) for the purchase of goods and service respectively.
 
  As of December 31, 2001 and 2002, the amount payable to SembCorp Ventures Pte Ltd largely relates to the sales proceeds of the Company's second offering and payments made on behalf of the Company. The amount payable to SembCorp Industries Ltd largely relates to payments made on behalf of the Company.
 
  As of December 31, 2001 and 2002, the amount payable to STIC Investment Pte Ltd relates to short-term borrowings, which bears interest of 6% per annum respectively, with no fixed terms of repayment. Other payables above are interest-free and have no fixed terms of repayment.
 
  As of December 31, 2001 the amount payable to SMTG relates to a loan granted by SMTG to Safe2Travel. The loan has been repaid during the year.

F-25
18 ACCRUED EXPENSES AND OTHER LIABILITIES
 

The components of accrued expenses and other liabilities are as follows:

19 DEFERRED INCOME

F-26

20 INCOME TAXES

21 LEASES AND COMMITMENTS

  The Company leased computer equipment and software, and furniture and fixtures under capital leases from a related party, Sembawang Capital Pte Ltd ("Sembawang Capital"). Most of these capital leases contain purchase options, and contain certain renewal options at the end of the original lease term. In the event that no less than two months prior to the expiration of the term of the agreement, the Company can make written request for extension of the term of the agreement. Capital lease repayment to Sembawang Capital for 2000, 2001 and 2002 is S$1,170, S$907 and S$227 (US$131) respectively.
 
  The Company leases its corporate offices under non-cancelable operating leases, which expire at various dates in 2002, 2003 and 2004. The Company has the option to extend each of these leases for an additional three years.

 

  Operating leases also include international leased lines with cancelable and non-cancelable leases expiring at various dates in 2002 and 2003. The lease agreements do not include renewal options.
 
  Pursuant to a grant commencing March 1998, the Infocomm Development Authority of Singapore ("IDA") has agreed to reimburse the Company, as part of the government's strategy to develop Singapore as the Internet hub for the Asia-Pacific region, for up to S$207 per month for costs incurred in leasing international lines between its Singapore hub and each of Hong Kong, the Philippines and Japan. The Company is eligible for reimbursement of monthly leasing costs under this grant for a period of three years which ended in 2001.

Future minimum lease payments for capital leases and operating leases with initial or remaining terms of one year or more are as follows as of December 31, 2002. 
F-29
21 LEASES AND COMMITMENTS (Cont'd)
 
  Supply contracts for satellite bandwidth of S$5,229 (US$3,013), of which S$3,239 (US$1,866) is payable within one year from December 31, 2002 and S$1,990 (US$1,147) is payable within one year from December 31, 2003 were included in operating leases.
 
  Rental payments under operating leases are expensed on a straight line basis over the periods of the respective lease. Rental expense for operating leases, excluding international leased lines, for the years ended December 31, 2000, 2001 and 2002 was S$4,496, S$5,676 and S$5,155 (US$2,971), respectively. Net expenses for international leased lines for the years ended December 31, 2000, 2001 and 2002 was S$14,528, S$21,172 and S$19,121 (US$11,019), respectively.
 
  Commitments
 
  The Company has committed to IDA that it will spend S$2,200 (US$1,268) over a period of three years, largely on capital equipment and infrastructure.
 
  On November 11, 2002, PIL, PIM and PITH acquired certain retail ISP business assets of Reach Internet Services Pte Ltd, Reach Internet Services (MSC) Sdn. Bhd. and Reach Communications Services (Thailand) Limited, respectively. The purchase consideration was based on 25% of the actual revenues collected from customers acquired for the period of 12 months from November 11, 2002. In addition, the Group commits to purchase 720 mbps of bandwidth in aggregate from the Reach group of companies over a two-year period commencing from November 11, 2002.
 

22 VALUATION AND QUALIFYING ACCOUNTS

23 GAIN ON DEEMED DISPOSAL OF SHARES OF A SUBSIDIARY COMPANY
 
  For the year ended December 31, 2001, a gain on deemed disposal of shares of S$2,784 was recorded in the additional paid-up capital of shareholders' equity. It related primarily to the issuance of 5,084,746 common shares of Pacfusion Limited at US$0.59 per share to an unrelated party. As a result of the issuance, approximately S$5,541 was raised and the Company's interest in Pacfusion Limited decreased from 100% to 92.11%.
 
24 DECLARATION OF DIVIDENDS
 
  In a general meeting, the Company may, by ordinary resolution, declare dividends but no dividend will be payable in excess of the amount recommended by the directors. Singapore law allows dividends to be paid only out of profits of the Company, determined in accordance with accounting principles generally accepted in Singapore. As the Company is incorporated in Singapore, all dividends declared will be denominated in Singapore currency. The Company has not declared any dividends to date. The amount of the Company's retained earnings available for distribution was approximately S$18,000 (US$10,373). The Group does not anticipate paying cash dividends in the foreseeable future.
Table of contents F-30
25 RELATED PARTY TRANSACTIONS
 
  Prior to May 1999, the Company was a 74.99% owned subsidiary of SembCorp Ventures Pte Ltd (formerly known as Sembawang Ventures Pte Ltd). The Company's intermediate parent companies at that point in time were Sembawang Corporation Ltd and SembCorp Industries Ltd.
 
  In May 1999, the parent company, SembCorp Ventures Pte Ltd, diluted their shareholdings from 54.6% to 41.8%. Since then, SembCorp Ventures Pte Ltd and SembCorp Industries Ltd are considered as the former immediate parent company and former intermediate parent company, respectively.
 
  The Company paid an annual management fee to its former immediate parent company and former intermediate parent company for various management and administrative services provided. These services were provided by its former immediate parent company and former intermediate parent company to all its strategic business units based on the application of pre-defined weightage to parameters such as profitability. For the years ended December 31, 2000, 2001 and 2002, management fees paid or payable to the Company's former immediate parent company and former intermediate parent company was S$1,298, $nil and S$120 (US$69), respectively. For the year ended December 31, 2001, such management fees of S$250 was written back due to waiver of amounts previously provided.
 
  On September 2000, the Company sold its 15% equity interest in 1-Net Singapore Pte Ltd for S$1,943 to MediaCorp Interactive Pte Ltd ("MediaCorp Interactive"). At the time of the aforementioned sale, one of the directors of the Company also held a directorship on the board of directors of MediaCorp Interactive and Media Corporation of Singapore Pte Ltd ("MCS"). MCS owns a 13.9% stake in the Company through its wholly-owned subsidiary SIM Ventures Pte Ltd. MediaCorp Interactive is a wholly-owned subsidiary of MCS.
 
  On June 20, 2000, the Company through its subsidiary Safe2Travel, acquired the travel and travel-related businesses of SMTG (the "SMTG Acquisition") for S$10,000. At the time of the SMTG Acquisition, the Company indirectly owned 85% of the issued share capital of Safe2Travel. SMTG was a 75%-owned subsidiary of SembCorp Industries at the time of the SMTG Acquisition. SembCorp Industries through its wholly-owned subsidiaries, SembVentures, also held 41.8% of the issued share capital of the Company. Pursuant to the terms and conditions of the SMTG Acquisition, Safe2Travel had agreed to extend a loan of S$5,000 to SMTG. The loan from Safe2Travel to SMTG is interest-free and has no fixed term of repayment. This loan was fully repaid in 2002.
 
  For the year ended December 31, 2001 and 2002, the Company provided Internet Access and related services amounting to S$59 and S$69 (US$40) respectively, to its former intermediate parent company.
 
  For the year ended December 31, 2001 and 2002, Safe2Travel provided travel-related services amounting to S$171 and S$191 (US$111) respectively, to the Group's former intermediate parent company and other affiliated companies.
 
  For the period May 2002 to September 2002, Pacfusion Group Holdings provided IT consultancy services amounting to S$75 (US$43) to the Group's former intermediate parent company.
 
26 SEGMENT REPORTING
 
 

In accordance with SFAS No. 131 - Disclosures about Segments of an Enterprise and Related Information, certain information should be disclosed based on the financial information management analyzes for making operating decisions and assessing performance. The Group operates in three reportable segments as each of these segments offer different products and services :

  • Internet Access and Internet Services
  • e-Commerce Services
  • Travel-related Services

     

INTERNET ACCESS AND INTERNET SERVICES ("ACCESS"). This segment includes all Internet access services such as dial-up, leased lines, broadband, value added services and all other Internet access-related services.

E-COMMERCE SERVICES ("E-COMMERCE"). This segment includes both Business-to-Consumer (B2C) and Business-to-Business (B2B) services. It also operates an Internet portal under the domain name of "www.pacific.net.sg", which focuses on e-commerce, website content and community related services, and application development services.

TRAVEL-RELATED SERVICES ("TRAVEL"). This segment includes services provided by a "brick-and-mortar" travel agent, such as air ticketing, tours, hotels and other travel-related services.

F-31

27 LICENSES
 
  The Group has obtained authorization to use the products of each licensor of software that the Group bundles in its front-end software product provided to subscribers. The particular applications included in the Company's start-up packages have, when necessary, been licensed, including Microsoft Internet Explorer from Microsoft Corporation (the license is automatically renewed for successive one-year terms), Netscape Navigator from Netscape Communications Corporation (the license is automatically renewed annually), the evaluation version of WinZip from NicoMak Computing, Inc., Adobe Acrobat Reader from Adobe Systems Incorporated (the license is valid unless terminated by licensor), mIRC by MIRC Co. Ltd and WS_FTP from Ipswitch, Inc. (the license is automatically renewed annually).
  F-35
27 LICENSES (Cont'd)
 
  Historically, any license fees charged to the Group upon enrollment of additional subscribers were generally passed through to subscribers in their start-up fees. However, the Group has increasingly waived start-up fees in Singapore due to competitive pressures and has absorbed the cost of license fees. Microsoft currently does not charge the Group a license fee with respect to the Group's distribution of Microsoft Internet Explorer; however, there can be no assurance that such arrangement will continue in the future. The Group currently intends to maintain or negotiate renewals of all relevant existing software licenses and authorizations as necessary. The Group may also want or need to license other applications in the future. Other applications included in the Group's start-up package are shareware that the Group has obtained permission to distribute or that are from the public domain and are freely distributable.
 
28 COMMON STOCK
 
  The Company completed its first and second offerings (collectively known as the "offerings") of common stock on February 5, 1999 and May 20, 1999, respectively. The Company sold an aggregate of 2,500,000 shares in the offerings and received net proceeds after offerings expenses amounting to approximately S$76,300.
 
29 STOCK OPTION PLAN
 
  The Group has three fixed stock option plans under which it may grant options to certain employees, directors, officers and consultants of the Group to subscribe for shares within the Group.
 
  The 1998 Employee Share Option Plan was established by the Company in November 1998 and became effective upon the Company's initial public offering. Options to purchase up to 1,500,000 shares were granted, of which 1,498,500 were accepted, at an exercise price equal to the initial public offering price of US$17.00 per share and no amounts applicable thereto are reflected in the consolidated statement of operations. As at December 31, 2002, options to subscribe for 171,500 shares have been exercised by employees.
 
  In November 1999, the Company established the 1999 Share Option Plan. A total of 1,761,890 shares are reserved and authorized for issuance under this plan. The exercise price is the average of the officially quoted closing price of the Company's shares on the NASDAQ's National Market System for the five trading days immediately preceding the date of grant, which was determined to be US$32.48, US$25.60, US$3.60 and US$3.09 per share for the respective four tranches. The four tranches were granted on November 10, 1999, April 25, 2000, January 10, 2001 and April 10, 2001, respectively. As of December 31, 2002, options to subscribe for an aggregate of 2,178,000 shares have been granted under this plan, of which 2,060,250 were accepted. The total number of stock options granted exceeds the number of shares reserved and authorized for issuance under this plan because stock options which had been granted but unaccepted, expired, cancelled or forfeited had been re-granted in the subsequent tranches. An aggregate of 1,461,775 stock options remains outstanding as of the aforesaid date.
 
  The vesting schedule is as follows:
 
  (i) 25% of the Options will vest and become exercisable on the first anniversary of the date of grant;
  (ii) an additional 25% of the Options will vest and become exercisable on the second anniversary of the date of grant; and
  (iii)

the remaining 50% of the Options will vest and become exercisable on the third anniversary of the date of grant.
  In August 2000, Pacfusion established the 2000 Equity Incentive Plan. Options to subscribe for up to 4,767,600 shares were granted, of which 4,457,800 were accepted, at an exercise price of US$0.59 per share. The vesting schedule is as follows:
  (iv) 25% of the options shall vest on the earlier of the date which is five years after the grant date and the first date upon which the shares of Pacfusion are listed or approved for listing (the earlier of such dates being the `Initial Vesting Date') of Pacfusion's shares;
  (v) an additional 25% of the options shall vest on the first anniversary of the Initial Vesting Date; and
  (vi) the remaining 50% of the options shall vest on the second anniversary of the Initial Vesting Date.
  F-36
29 STOCK OPTION PLAN (Cont'd)
 

Presented below is a summary of the Group's stock option activity:

  The Group has elected to use the intrinsic value method prescribed in APB No. 25 to account for options issued to employees under its stock-based compensation plans. Accordingly, the difference between the option exercise price and the quoted market price or unquoted valuation price of the Group's shares on grant date is recognized as compensation cost over the options' vesting period. Such compensation cost recognized by the Group in 2002 relating to both the 1999 Share Option Plan and 2000 Equity Incentive Plan was S$427 (US$246).
  F-37
29 STOCK OPTION PLAN (Cont'd)
 
  During the year ended December 31, 2002, two members resigned from the Board of Directors of the Company. In accordance with the terms of the relevant share option plans and their share option agreements, the Administrative Committee passed resolutions on May 28, 2002 extending the exercise periods of their unexercised share options for a period of 24 months from their respective resignation dates.
 
  The Group has accounted for this modification in accordance with FIN 44 - Accounting for Certain Transactions Involving Stock Compensation. Under FIN 44, compensation cost shall be measured as if the outstanding award was newly granted at the date of the change in status and the pro-rated deferred compensation expense arising at the new grant date based on intrinsic value method is recognized. The intrinsic value measured at the new grant day is nil and hence there is no impact on the income statement.
 
  In 2001, 48,000 options were granted to non-employees of which 43,000 were accepted. There were no options granted to non-employees in 2002. In accordance with SFAS No. 123's fair value method, for the year ended December 31, 2001, compensation costs of S$91 was recognized. For the year ended December 31, 2002, compensation cost of S$31 (US$18) was written back. Fair value was computed using the Black-Scholes Option Pricing Model.
 
  The total stock-based compensation cost recognized by the Group for the year ended December 31, 2001 and 2002 was S$1,257 and S$394 (US$227), respectively.
 
  Stock option awards granted after January 18, 2001 are variable accounted for in accordance with EITF 00-23 Issue 31. As of December 31, 2002, there are 259,975 outstanding options with an exercise price of US$3.09, which are subject to variable accounting. No compensation expense has been recorded in 2001 and 2002 in relation to these outstanding options since these options have zero intrinsic value as of the respective year-ends.
 
30 LEGAL PROCEEDINGS
 
  Except as mentioned below, the Company is not involved in any material pending legal proceedings.
 
  On December 6, 2001, a class action lawsuit ("IPO Allocation Suit") was instituted in the United States District Court for the Southern District of New York against the Company and several of the Company's former directors and officers as well as against the underwriters who handled the Company's February 5, 1999 initial public offering ("IPO"). The complaint filed with respect to the IPO Allocation Suit alleges violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 and is based primarily on the assertion that there were undisclosed commissions received by the underwriter defendants and agreements or arrangements entered into by the underwriters for additional purchases of the Company's securities in the aftermarket by selected investors at pre-determined prices. The action seeks damages in an unspecified amount. In April 2002, an amended complaint was filed against the Company. The amended complaint included, amongst others, allegations of price-manipulation in the Company's IPO as well as the its second offering conducted in May 1999.
 
  The Company has been advised by its US counsel that similar class action suits have been filed against 307 other companies that went public between 1998 and 2001 and that all such cases have been consolidated before a single judge for case management purposes. The defendants in the consolidated action filed a Motion to Dismiss the class action suit on the pleadings, that is, prior to any discovery being allowed in the case. In February 2003, the Court denied the Motion to Dismiss with respect to the Company and the individual defendants in all material aspects. Discovery will now be allowed to proceed.
 
  The Company believes that it and the individual defendants have meritorious defenses to the claims made in the complaints and intends to contest the lawsuit vigorously. However, the litigation remains at a very preliminary stage. Due to the inherent uncertainties of the lawsuit, the Company cannot accurately predict the ultimate outcome of the lawsuit. An unfavorable outcome could have a material adverse effect on the business, financial condition and results of operation of the Company in the period in which the lawsuit is resolved.
 
  The Group is or may be potentially involved in litigation incidental to its business. Although the outcome of any such litigation is not presently determinable, the resolution of such litigation is not expected to have a material adverse effect on its business. No assurances can be given with respect to the extent or outcome of any such litigation in the future.
  F-38
31 GUARANTEES
 
  As of December 31, 2002, the Company has issued the following guarantees to third parties on behalf of its subsidiaries and believes that the risk involved is minimal.
 
  (i) A corporate guarantee of S$8,300 (US$4,783) (2001: S$8,300) to a bank in respect of banking facilities extended to Safe2Travel amounting to S$8,000 (US$4,610) (2001: S$8,000) of which S$4,224 (US$2,434) (2001: S$3,918) has been utilized.
 
  (ii) Unconditional and irrevocable guarantees to Reach Internet Services (MSC) Sdn. Bhd. and Reach Communications Services (Thailand) Limited to pay the purchase consideration in the event PIM or PITH fails to pay the respective purchase consideration in relation to the acquisitions, the details thereof as set out in "Note 21 - Leases and Commitments". The purchase consideration is based on a percentage of actual revenues collected from the customers.
 
  (iii) A continuing guarantee of S$395 (US$227) in favor of a third party for lease facility up to S$502 (US$289) extended to PSL in connection with the lease of Internet equipment.
 
32 RECENT ACCOUNTING PRONOUNCEMENTS
 
  In July 2001, the FASB issued SFAS No. 143 - Accounting for Asset Retirement Obligations, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and associated asset retirement costs. This Statement applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) normal use of the asset. SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through charges to operating expense. If the obligation is settled for other than the carrying amount of the liability, we will recognize a gain or loss on settlement. We are required to adopt the provisions of SFAS No. 143 effective January 1, 2003. The Group is reviewing the provisions and impact of this standard. Due to the significant number of operating facilities that the Group maintains in Asia, and the extensive number of documents that must be reviewed and estimates that must be made to assess the effects of the Statement, the expected impact of adoption of Statement 143 on the Group's financial position or results of operations has not yet been determined.
 
  In June 2002, the FASB issued SFAS No. 146 - Accounting for Costs Associated with Exit or Disposal Activities. This Statement requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Previous guidance had required that liabilities for exit costs be recognized at the date of an entity's commitment to an exit plan. The Group is required to adopt the provisions of this Statement for any exit or disposal activities that are initiated after December 31, 2002, and does not expect that this Statement will have a material impact on its consolidated financial position or results of operations in 2003.
 
  In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45") - Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. Fin 45 requires that a liability be recorded in the guarantor's balance sheet upon issuance of a guarantee. In addition, FIN 45 requires disclosure about the guarantees that an entity has issued, including a rollover of the entity's product warranty liabilities. The disclosure provisions of FIN 45 are effective for the current year's financial statements and this information is included in "Note 31 - Guarantees" to the financial statements. The Group will apply the recognition provisions of FIN 45 prospectively to guarantees issued after December 31, 2002. The Group is currently evaluating the potential impact that the adoption of FIN 45 will have on its consolidated financial position and statement of operations.
 
  In December 2002, the FASB issued SFAS No. 148 - Accounting for Stock-Based Compensation, Transition and Disclosure. SFAS No. 148 provides alternative methods of transition for a voluntary change to fair value based method of accounting for stock-based employee compensation. SFAS No. 148 also requires disclosures of the pro forma effect of using the fair value method of accounting for employee stock-based compensation be displayed more prominently and in a tabular format. The disclosure provisions of this Standard are effective for fiscal years ending after December 15, 2002 and have been incorporated into "Note 3 - Summary of significant accounting policies" to the financial statements.
 
33 COMPARATIVE FIGURES
 
  Certain comparative figures have been reclassified to conform with current year's presentation.
  F-39
Table of contents

EXHIBIT 4.100

FRANCHISE AGREEMENT

THIS FRANCHISE AGREEMENT is made the 7th day ofFebruary 2002 by and between

(1) PACIFIC INTERNET LIMITED whose registered office is at 89 Science Park Drive # 02-05/06, The Rutherford, Singapore 118261 ("Franchisor"); and
 
(2) PACIFIC INTERNET (THAILAND) LIMITED whose registered office is at 333 Lao Peng Nguan Tower 1 Building, 28th Floor, Soi Chaypuang, Vibhavadi Rangsit Road, Ladyao, Chatuchak, Bangkok 10900, Thailand ("Franchisee")

WHEREAS:

(A)  The Franchisor is the sole licensee of the Intellectual Property (defined below) in the Territory (defined below).
 
(B) The Franchisee recognises the benefits of being identified with and licensed by the Franchisor and is desirous of acquiring from the Franchisor the exclusive right and franchise to operate the Business (defined below) in the Territory in accordance with terms of this Agreement.

NOW IT IS HEREBY AGREED as follows:

1.

DEFINITIONS

In this Agreement, unless there is something in the subject or context inconsistent therewith :
 

(a)

the following expressions bear the following meanings, namely :

"Business" means :
 

  (i) establishing and undertaking the business of local Internet access providers throughout the Territory; and
 
  (ii) other activities and businesses which are directly or indirectly for the attainment of any of the foregoing businesses;
 
  according to the System and using the Intellectual Property;
 
  "Franchised Centre" means the centre which operates the Business or any part of the Business at the Location pursuant to this Agreement;
 
  "Intellectual Property" means all or any of the following :
 
  (i) Trade Marks;
 
  (ii) Trade Name;
 
  (iii) the System;
 
  (iv) patents of which the Franchisor is patentee or licensee in the Territory and which relate to the Products, Services and/or the System;
 
  (v) copyright and design rights held by the Franchisor in any written material plans designs or other work relating to the Products, Services and/or the System; and
 
  (vi) designs whether or not registered or protected by copyright devised or acquired by the Franchisor and applied in relation to the Products, Services and/or the System.
 
  "Location" means such location or locations within the Territory as may be approved from time to time by the Franchisor;
 
  "Products" means the products sold or retailed by the Franchisor in the Business;
 
  "Services" means the services forming part of the Business, which may include the services set out in Schedule A hereto (as may from time to time be amended in writing by the Franchisor);
 
  "System" means any information of the Franchisor on the management and operation of the Business using the Intellectual Property and any necessary know-how trade secrets methods of operation insignia identifying materials methods of advertising style and character or equipment and arrangements;
 
  "Territory" means the Kingdom of Thailand;
 
  "Trade Marks" means the trade marks and/or service marks set out in Schedule B hereto (as may from time to time be amended in writing by the Franchisor); and
 
  "Trade Name" means the business name "Pacific Internet" and its corresponding logo(s) (as may be amended in writing from time to time by the Franchisor);
 
(b) any reference to a statutory provision, shall include such provision as from time to time modified or re-enacted and any regulations made in pursuance thereof as from time to time modified or re-enacted whether before or after the date of this Agreement so far as such modification or re-enactment applies or is capable of applying to any transactions entered prior to completion and (so far as liability thereunder may exist or arise) shall include also any past statutory provision or regulations (as from time to time modified or re-enacted) which such provision or regulations have directly or indirectly replaced;
 
(c) references to Recitals, Clauses, Schedules and Appendices are to recitals, clauses of and schedules and appendices to this Agreement;
 
(d) the headings are for convenience only and shall not affect the interpretation hereof;
 
(e) unless the context otherwise requires or permits, references to the singular number shall include references to the plural number and vice versa and references to natural persons shall include bodies corporate;
 
(f) for the avoidance of doubt, termination of this Agreement shall include without limitation the expiry hereof by affluxion of time;
 
(g) reference to any "agreement" or "notice" shall mean an agreement or notice in writing and "writing" includes all means of reproducing words in a tangible and permanently legible form.
 
2. GRANT OF FRANCHISE
 
2.1 For the consideration herein provided, the Franchisor hereby grants to the Franchisee an exclusive right, subject to the terms and conditions contained in this Agreement;
 
  (a) to operate the Business at the Location in accordance with the System;
 
  (b) to use solely in conjunction with the Business; the Intellectual Property and such other related or ancillary trademarks, trade names, copyrights, emblems, designs, labels, signs and symbols belonging to the Franchisor and appearing in connection with the Business or on products or services arranged or provided by the Franchisor as the Franchisor may from time to time make available to the Franchisee.
 
2.2 The Franchisor's System used in the operation of the Business is included in this license. All improvements to the System and other systems developed by, or to be developed by the Franchisor and/or its affiliates to the extent permitted by applicable law are not included in this license, but may be licensed separately by the Franchisor, in its sole and absolute discretion.
 
2.3 Upon the Franchisor's request, the Franchisee shall take reasonable steps which are required to obtain registration of the Franchisee as a registered user of the Trade Marks and the Franchisor shall use its reasonable endeavours towards registration of the same; Provided Always that such registration is necessary for the Franchisee's use of the Trade Marks and the Franchisee shall, if required by the Franchisor, enter into a registered user agreement in respect of the Trade Marks upon terms satisfactory to the Franchisor. Each such registered user agreement shall contain appropriate provisions relating to the products and/or services in respect of which the Franchisee is to be become registered as the user of the Trade Marks concerned in the Territory, the terms and conditions upon and subject to which the Trade Marks are to be used by the Franchisee, and shall be in such form as required to give effect to this clause. The Franchisee shall at the cost of the Franchisor render to the Franchisor all reasonable assistance to enable the Franchisor to obtain and/or maintain registration of the Trade Marks. In no circumstances will the Franchisee apply for registration as proprietor of any of the Trade Marks whether in the form of service marks or trade marks applications. In the event such rights at any time accrue to the Franchisee, the Franchisee will forthwith on demand do all such acts and things and execute all documents as the Franchisor shall deem necessary to vest such rights of the Franchisor.
 
3. TERM AND RENEWAL
 
3.1 This Agreement shall be deemed to have commenced on 10 May 2000 and shall remain in force for a period of ten (10) years ("Term") thereafter. Except as otherwise provided herein, this Agreement shall continue in full force and effect during the Term until the earlier of the following events:
 
  (a) the termination of this Agreement by the Franchisor by thirty (30) days' notice in writing to the Franchisee;
 
  (b) an effective resolution is passed or a binding order is made for the winding up of the Franchisee; or
 
  (c) this Agreement is terminated pursuant to Clause 11.
 
4. FEE AND EXPENSES
 
4.1 In consideration of the licence granted by the Franchisor to the Franchisee under Clause 2 of this Agreement, and of the services provided by the Franchisor to the Franchisee under Clause 5 of this Agreement, the Franchisee shall pay to the Franchisor a fee of one United States dollar (US$1)and shall further reimburse the Franchisor in the manner as provided hereinafter. Notwithstanding the foregoing, the Franchisee agrees to pay for the actual costs in respect of the airfare, accommodation and all other reasonable expenses relating thereto incurred by the Franchisor in sending its staff members to Thailand up to four times each year, for the review and observance of the Franchisee's operations.
 
4.2 All payments to be made by the Franchisee to the Franchisor under this Agreement shall be made :
 
  (a) without any demand, set-off, counterclaim or deduction whatsoever;
 
  (b) free and clear of and without any deduction or withholding on account of any tax (including VAT); and
 
  (c) in such currency and to such bank account as the Franchisor may from time to time specify.
 
4.3 If the Franchisee is required by law to make any deduction or withholding on account of any such tax (including VAT) or other amount from any sum paid or payable by the Franchisee (save for royalty payments) to the Franchisor under this Agreement, the sum payable by the Franchisee in respect of which the relevant withholding, deduction or payment is required shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment, the Franchisor receives on the due date and retains (free from any liability in respect of any such deduction, withholding or payment) a net sum equal to what it would have received and so retained had no such deduction, withholding or payment been required or made. The Thailand taxes on all payments relating to the technology transfer arrangement shall be borne by the Franchisor.
 
4.4 Any monetary obligation not paid by the Franchisee on its due date shall bear interest at a rate of 2% per annum above the prevailing London Inter Bank Offered Rate on the due date calculated on a daily rest from the date payment became due to the date of actual receipt of payment by the Franchisor inclusive. The Franchisee shall pay all the Franchisor's costs, charges and expenses directly or indirectly incurred in obtaining or otherwise enforcing payment of the same.
 
5. FRANCHISOR'S OBLIGATIONS
 
5.1 The Franchisor may provide training for such number of personnel of the Franchisee at the Franchisee's expense and on such terms and conditions as the Franchisee and the Franchisor may mutually agree. The Franchisor shall have the right to require the Franchisee's employees to attend further training courses at any time during the term of this Agreement if it reasonably considers that such further training is necessary. The time and place of any such training shall be at the absolute discretion of the Franchisor but the Franchisor shall try to accommodate the Franchisee's reasonable requirements.
 
5.2 The Franchisor may make available to the Franchisee, on terms and conditions to be mutually agreed, promotional and point-of-sale materials and advise the Franchisee on promotional programmes relating to the Business.
 
5A CONSULTANCY SERVICES
 
5A.1 Upon request of the Franchisee, the Franchisor may provide the Franchisee with consultancy or advisory or such other support services relating to the operations of the Business, in accordance with such terms and for payment of such fees as may be mutually agreed upon between the parties.
 
6. FRANCHISEE'S OPERATING OBLIGATIONS
 
6.1 The Franchisee acknowledges and agrees that every detail of the System and the Franchised Center is important to the Franchisee, the Franchisor and other franchisees in order to develop and maintain high operating standards, to increase demand for the Products and Services sold by all franchisees and to protect the Franchisor's reputation and goodwill. The Franchisee further acknowledges and agrees that it will, in a good and prudent business manner, do all things necessary to facilitate the acquiring, opening and operating of the Franchised Centre and the conduct of the Business in conformity with the System and in accordance with the aforesaid understanding and the terms and conditions hereunder.
 
6.2 The Franchisee shall utilise its best efforts in good faith to operate and develop the Business of the Franchised Centre. The Franchised Centre and the premises thereof shall, if not already established, be established and improve at the expense of the Franchisee in accordance with plans approved by the Franchisor, such approval not to be unreasonably withheld. The Franchisee shall promptly apply for and diligently do all things necessary to obtain all necessary consents for the construction works or improvements to the premises for the carrying on of the Business from all relevant authorities.
 
6.3 In order to maintain the highest standard of service to be provided by the Franchisee and the Franchisor's other franchisees operating under the System and to sustain and protect the goodwill and prestige the Business, the Trade Name and the Trade Marks enjoy with the public, the Franchisee agrees that :
 
  (a) The Franchised Centre will maintain sufficient resources and employ sufficient staff to meet all likely demand of the Products and Services from customers of the Franchisee. All the Products and Services used or provided by the Franchisee under this Agreement will be of substantially equivalent type, quantity, quality and variety as those used or provided by the Franchisor and consistent with the business image of the Business. The Franchisee shall not advertise or charge customers prices in excess of or below the prices specified by the Franchisor from time to time.
 
  (b) All the Products used, sold or distributed by the Franchisee will be supplied directly through the Franchisor or its approved nominated suppliers. The Franchisee shall sell the Products supplied to it in the same condition as that in which it receives them and will not alter or remove or tamper with them or any markings or name plates or indications of the source of origin on them or any packaging supplied save as required for compliance with applicable laws.
 
  (c) No Products to be sold by the Franchisee under this Agreement will have any of the Trade Marks imprinted thereon, attached thereto or associated therewith without the Franchisor's prior written consent unless the Products are supplied by the Franchisor with the Trade Marks already imprinted thereon or attached thereto, and any such usage with the Franchisor's consent will inure to the benefit of the Franchisor.
 
  (d) It shall at times maintain the Franchised Centre and the physical premises thereof in a first class manner and in accordance with the highest business standards of the Franchisor and it shall not undertake or allow any change or alteration in the size or appearance of the Franchised Centre without the prior written consent of the Franchisor such consent not to be unreasonably withheld.
 
  (e) The Franchisee shall maintain the equipment, whether manufactured by the Franchisor or its principal or by a source approved by the Franchisor, in excellent working condition. 
 
  (f) In order to protect the reputation of the Franchisor and to maintain satisfactory public relations, the Franchisor reserves the right to communicate with any of the Franchisee's customers at any time during the term of this Agreement to ascertain the quality of the Products sold or the Services rendered by the Franchisee and/or its employees and the Franchisee shall upon request furnish the Franchisor with such particulars of its customers as the Franchisor may reasonably require.
 
  (g) The Franchisee will not delegate any duties or obligations arising under this Agreement otherwise than may be expressly permitted under its terms. The Franchisee will not grant any sub-license of the franchise granted by Clause 2 above or any other right contained in this Agreement.
 
  (h) The Franchisee shall promptly pay all suppliers of the Business in accordance with their usual terms and conditions. Where the Franchisee has purchased goods from the Franchisor, the Franchisee shall pay for the same within thirty (30) days of the date of the relevant invoice and in the event of default of payment, the Franchisor shall be entitled to charge interest on the sum outstanding at the rate specified in the relevant invoice from the date the sum was due to the date of receipt of payment by the Franchisor.
 
  (i)  The Franchisee will not claim or represent directly or indirectly that the Products or Services supplied to the Franchisee (whether by the Franchisor or its nominated suppliers) have any characteristics or qualities or are suitable for any purposes other than those claimed or represented for them by the Franchisor from time to time and undertakes (in addition to and not in substitution for its other obligations) to indemnify and hold the Franchisor harmless from all claims and liabilities arising out of or consequent upon any unauthorised claims or representations made by the Franchisee in respect of the Products or the Services.
 
6.4 (a) The Franchisee shall not undertake any advertising and promotion in relation to the Trade Marks, Trade Name or the Business without the prior consent in writing of the Franchisor.
 
  (b) To assure the integrity and protection of the Franchisor's rights in the Trade Marks, the first usage thereof on signs, displays and all advertising and promotion of any sort which the Franchisee intends to use will be subject to the Franchisor's written consent prior to any public use, publication or display. The Franchisee will immediately cease the use of any advertising or promotional materials upon receipt of a request from the Franchisor so to do.
 
  The Franchisee will participate in and comply with the terms of any special advertising, promotion or other activity as the Franchisor may reasonably direct.
 
6.5 The Franchisee agrees to take out and maintain with a reputable insurance company an all risks insurance coverage, (including without limitation personal injury coverage, fire, burglary and public liability coverage) sufficient for the nature of the Franchisee's operation to protect against any and all claims of personal injury, death or property damage arising out of the Franchisee's operation in amounts sufficient to fully protect the Franchisor as above stated. At all times during the existence of this Agreement, the Franchisee shall have such coverage in place. The Franchisee shall deliver to the Franchisor a certified true copy of any renewal policy or policies thereof within ten (10) days of issuance. The Franchisee shall promptly pay all premiums on the insurance coverage and shall upon request furnish the Franchisor with proof of payment. All such policies shall provide for thirty (30) days minimum written notice of cancellation to the Franchisor.
 
6.6 (a) The Franchisee shall keep complete records of its business in accordance with the standard accounting methods established by the Franchisor. Such records and all supporting data shall be kept and maintained for a period of five years.
 
  (b) The Franchisee shall furnish to the Franchisor within fifteen (15) days after the end of each month a statement of its gross receipts for services for the preceding calendar month in accordance with the Franchisor's standard accounting form for reporting gross receipts and other financial information. For purpose of consolidation the Franchisor reserves the right to show all gross receipts of the Franchisee as gross receipts of the Franchisor.
 
  (c) The Franchisee shall submit to the Franchisor, in the form and on the dates to be agreed upon by the Franchisor in writing, a projected operating budget for the Franchised Centre for the following fiscal year of the Franchisor including without limitation, projected sales of Products and Services under this Agreement.
 
  (d) The Franchisee shall also arrange at the Franchisee's expense and submit to the Franchisor a copy of its audited annual financial statements and the report of its independent public accountants within 180 days after the close of the fiscal year.
 
  (e) The Franchisor or its agents shall, at all reasonable times, have the right to examine, access via modem, photocopy or audit the books and accounts of the Franchisee and to request and receive copies of purchase invoices to verify the gross receipts and other financial information as reported by the Franchisee to the Franchisor.
 
6.7 The Franchisee shall :
 
  (a) not make use other than exclusively for the purposes of the Business of any information relating to the business of the Franchisor and ensure that none of its employees makes use of such information other than for such purpose;
 
  (b) only use the Intellectual Property in connection with the Business and not register any company name or trade mark use of any business name incorporating the Trade Name or Trade Mark or incorporating any name of mark which is similar to or a colourable imitation of the Trade Name or Trade Marks; and
 
  (c) the Franchisee shall disclose, in all public records including, but not limited to, all business name registrations, and in all dealings and transactions with other persons, that it is a franchisee of the Franchisor. The Franchisee shall contract all of its obligations in its own name and not in the name of the Franchisor and in all correspondence relating directly or indirectly to the business clearly indicate that it is acting as principal.
 
6.8 The Franchisee shall :
 
  (a) obtain a signed contract of service from all persons employed by the Franchisee prior to their employment and shall disclose confidential information supplied by the Franchisor only to such persons who have previously signed such an agreement of confidentiality in the form stipulated by the Franchisor;
 
  (b) on taking on an employee at a level of management position immediately inform the Franchisor thereof; and
 
  (c) procure that the persons responsible for managing the Franchised Centre and all senior employees required by the Franchisor shall attend such further periods of training as may from time to time be reasonably required by the Franchisor and bear any travel and other expenses and the salaries of such persons.
 
6.9 (a) The Franchisee shall without delay introduce any improvement or modification to the System into the Business at the time and in the manner specified by the Franchisor in writing. The Franchisee shall make such changes in its operations as may be reasonably necessary to keep its operations up to date with the System.
 
  (b) The Franchisee shall notify the Franchisor or any improvement, or modification of or to the System which may be beneficial to the operation of the Business and shall irrevocably grant to the Franchisor and to other franchisees of the Franchisor on such terms as shall be agreed a non exclusive licence to use any such improvement or modification for a nominal sum of one United States dollar (US$ 1). The Franchisee shall not introduce any improvement or modification of or to the System without the prior written consent of the Franchisor.
 
6.10 The Franchisee shall implement and thereafter continue to operate the billing system and accounting system which have been devised by the Franchisor and which form part of the System.
 
6.11 In the event the Franchised Centre or premises shall be damaged or destroyed by fire or other casualty, the Franchisee shall at its expense insofar as the Franchised Centre or premises can reasonably by repaired or restored, repair or reconstruct the Franchised Centre or premises to at least the condition which existed just prior to the casualty within a reasonable time in light of the circumstances and in any event to the standards then currently applicable to other locations franchised or operated by the Franchisor. If the Franchised Centre or premises cannot reasonably be repaired or restored having considered all the circumstances including the amount of insurance moneys received, then the Franchisee shall consult with the Franchisor for the identification of an alternative Location provided always that in the event the Franchised Centre does not recommence operations of the Business at the new Location within six (6) months of damage or destruction of the old Franchised Centre or premises, then an event of force majeure shall, notwithstanding Clause 14.6 below, be deemed to have occurred and the Franchisor shall be entitled to terminate this Agreement by thirty (30) days' notice to the Franchisee.
 
6.12 The Franchisee shall make timely filings of all tax returns and shall pay when due all taxes levied or assessed in connection with the possession, ownership or operation of the Franchised Centre provided that the Franchisee may contest the validity or the amount of tax in accordance with applicable procedures in the Territory. The Franchisee shall use its best endeavours and efforts to ensure that there shall not be any tax sale or seizure of the Franchised Centre, the Location or any equipment.
 
6.13 The Franchisee shall :
 
  (a) ensure that the Business is effectively managed;
 
  (b) carry on the operations of the Business to the highest standards of service;
 
  (c) use its best endeavours to promote and extend the Business;
 
  (d) not do anything which may bring the Business into disrepute or may have a detrimental effect on the Business;
 
  (e) comply with all statutes, by laws and other legal requirements relating to the Business and obtain all licenses, consents and approvals (if any) that may be required;
 
  (f) permit the Franchisor and any person authorised by the Franchisor, with prior notice to be given to the Franchisee, to enter during normal business hours into the Franchised Centre or elsewhere to inspect the same and take copies of any documents relating to the Business. The Franchisee shall immediately correct any deficiencies reported by the Franchisor during the inspection of the said premises;
 
  (g) maintain and display such signs as are required from time to time by the Franchisor; and
 
  (h) comply with the terms of any default notice specifying a breach of the provisions of this Agreement and requiring the breach to be remedied so far as it may be capable of remedy.
 
7. INTELLECTUAL PROPERTY
 
7.1 The Franchisee hereby acknowledges that:-
 
  (a) the Franchisor is the sole licensee of the Intellectual Property and valuable goodwill attached thereto;
 
  (b) it will hold any additional goodwill generated by the Franchisee for the Intellectual Property or the Business as agent for the Franchisor;
 
  (c) the Franchisor's rights in the Trade Marks and to the System and the Trade Name include all configurations of the marks as indicated in all present registrations and applications as well as all configurations of the marks as indicated in future registrations and applications and shall extend to all representations of the said registrations and applications in any language and combination when used in any way as a trade or product identification or indicia of origin or sponsorship;
 
  (d) Insofar as allowed by the laws of Thailand, the Franchisor's rights are not limited to the aforesaid registrations or applications, but are additional to all other rights including common law rights which are vested in the Franchisor as a result of its long continuing, widespread and successful use of the Intellectual Property in Singapore, Thailand and elsewhere;
 
  (e) the Franchisor has by this Agreement licensed to the Franchisee the use of the Intellectual Property only in accordance with the terms and conditions of this Agreement;
 
  (f) no title to the Trade Marks or the Trade Name will pass hereunder to or through the Franchisee, and only the rights expressly granted in or pursuant to this Agreement are provided to the Franchisee;
 
  (g) the Franchisee does not have the right to use and will not use any of the Trade Marks as indicated in the present registrations and applications or as indicated in any modified representation thereof or as may be indicated in future registrations and applications either individually or any combination as part of the Franchisee's corporate name, business name or in any other way, except as specifically licensed hereunder;
 
  (h) any usage of the Intellectual Property by the Franchisee (or otherwise, even though such action is a breach of this Agreement), will enure to the benefit of the Franchisor;
 
  (i) the System and business system information which it obtains pursuant to this Agreement is in addition to any skills it and its personnel currently have and is in addition to customary or usual skills generally possessed in the business and retail community;
 
  (j) the System is a constantly evolving system and that the Franchisee may be required to make significant changes to the operation of the Business to keep its operations up to date with the System.
 
7.2 The Franchisee undertakes that it will not use and will not permit or cause the use of, the Intellectual Property except in the manner and to the extent specifically licensed to the Franchisee by this Agreement. Such use hereunder will accurately portray the Trade Marks and will not jeopardise or adversely affect the goodwill attached thereto or to the System. In the adoption of a corporation or partnership or business name, the Franchisee shall not use any of the Trade Marks, Trade Name or any translations, variations or abbreviations thereof, or any other words deemed by the Franchisor to be confusingly similar to the Trade Marks or Trade Name except for the use of "Pacific Internet" as a business name.
 
7.3 The Franchisee shall not do anything which may adversely affect the goodwill associated with the Franchisor and the Intellectual Property.
 
7.4 The Franchisee shall, at the Franchisor's expense, do all such acts and things and execute and deliver such documents as the Franchisor reasonably deems necessary to protect the Franchisor's rights in the Intellectual Property.
 
7.5 The Franchisee agrees that:-
 
  (a) As a result of this Agreement, the Franchisee or its successors will be provided by the Franchisor in confidence with documents and other materials which are restricted information and proprietary property, belonging to and exclusively for the benefit of the Franchisor and constitute valuable "trade secrets" of the Franchisor which are fully protected by the Franchisor's copyrights.
 
  (b) The Franchisee will use and permit the use of the Intellectual Property solely in connection with the Franchised Centre and for the benefit of the Franchisee and that the Franchisee will not permit, directly or indirectly, at any time, any disclosure or delivery of any document or other item concerning any of the Intellectual Property or any copies or excerpts thereof, to any person, except authorised employees of the Franchisee, or as specifically directed by the Franchisor; nor will the Franchisee copy or imitate or aid anyone else to copy or imitate same, either for the Franchisee's benefit or for the benefit of any other person, firm or corporation, as principal, agent, employee, or in any other capacity. All materials used shall correctly reflect the parties' ownership and control of the Business.
 
7.6 The grant of the franchise to the Franchisee to use the Intellectual Property is subject to the conditions and limitations set forth herein, and is granted only to the extent that the Franchisor could itself use the Intellectual Property were it not for the license being granted herein. The parties recognise that others may have acquired or attempted to acquire rights in or to colourable variations or copies of the Trade Marks. The Franchisee shall promptly notify the Franchisor if it becomes aware of it that the use of any Trade Marks pursuant to this Agreement would violate the rights of any other third party, in which case the Franchisor may require the Franchisee to adopt a trade name, service mark or trademark other than the Trade Name or any of the Trade Marks, and the Franchisee specifically acknowledges that such event shall not constitute a failure or partial failure of consideration. However, the Franchisor agrees to indemnify and hold the Franchisee harmless from and against any claims, damages, losses, costs and expenses suffered or incurred by the Franchisee and arising out of such violation.
 
7.7 The Franchisee will immediately notify the Franchisor of all circumstances coming to the attention of the Franchisee which may constitute an infringement of any of the Intellectual Property or other intellectual property of the Franchisor or may constitute passing off in respect of the Trade Name and any unregistered trademarks and shall take such reasonable action in connection therewith as the Franchisor may direct at the expense of the Franchisor to assist the Franchisor in the protection of the Intellectual Property or other intellectual property of the Franchisor. The Franchisee will, no later than fifteen (15) days after receiving notice of the same, notify the Franchisor in writing of any claim, demand or suit based upon or arising from the use of, or of any attempt by any other person, firm or corporation to use, any of the Intellectual Property or other intellectual property of the Franchisor. The Franchisee will also promptly notify the Franchisor in writing of any litigation relating to this Agreement or the Franchisee's operations hereunder instituted by the Franchisee or by any person, firm, corporation or governmental agency against the Franchisee.
 
7.8 (a) The Franchisor, at its expense, shall have the right in its sole discretion to undertake the defense or prosecution, as the case may be, of any and all claims or causes of action arising from the Franchisee's use, under and pursuant to this Agreement, of the Intellectual Property. The Franchisor shall have the option of conducting the defence or prosecution (as the case may be) in the Territory in the name of the Franchisee at the cost of the Franchisor.
 
  (b) The Franchisor, at its option, shall also have the right in its sole discretion to advise, assist or undertake the defense or prosecution, as the case may be, of any hearings or conferences before any governmental agencies or litigation directly or indirectly concerning the Intellectual Property, and the Franchisee shall promptly notify the Franchisor of any such matters in writing.
 
  (c) In the event the Franchisor, pursuant to the terms of this Clause, undertakes the defense or prosecution of any litigation, at the request of the Franchisor, the Franchisee shall execute any and all documents and render all such assistance and do such acts and things as may, in the reasonable opinion of the Franchisor or legal counsel for the Franchisor, be necessary to carry out such defense or prosecution, either in the name of the Franchisor or in the name of the Franchisee, as the Franchisor shall elect.
 
  (d) Any damage or monies recovered from third parties in any action or proceedings regarding the Intellectual Property (excluding improvements made by the Franchisee) shall belong to the Franchisor.
 
8. REPRESENTATIONS AND NON-OPERATING OBLIGATIONS
 
8.1

The Franchisee represents and warrants to the Franchisor, with the intention that the Franchisor will rely thereon in entering into this Agreement, that:-
 
  (a) The Franchisee is a corporation duly organised, in good standing, and qualified to do business under the laws of the Territory.
 
  (b) There will not be any issue of any shares by or any change in the share capital of the Franchisee or any transfer of any shares in the Franchisee other than with the prior written consent of the Franchisor.
 
  (c) The execution, delivery, consummation or performance of this Agreement does not conflict with, or constitute a material breach of any contract, agreement, mortgage, bylaw provision, lease or restriction of any nature to which the Franchisee is a party. So long as this Agreement is in effect, the Franchisee will not undertake any obligations the performance of which would constitute a material breach hereunder or would materially affect the Franchisee's performance hereunder.
 
  (d) The Franchisee has all necessary corporate power and authority to execute, deliver, consummate, and perform this Agreement, and it shall be a binding agreement upon the Franchisee and its successors and assigns when executed.
 
  (e) The Franchisee has no material liabilities, adverse claims, commitments or obligations of any nature whether accrued, unliquidated, absolute, contingent or otherwise which are not reflected as liabilities on the balance sheets of the Franchisee as contained in the financial statements or otherwise disclosed therein.
 
  (f) The Franchisee will obtain all governmental approvals necessary for the execution of this Agreement and the payments to be made by the Franchisee to the Franchisor hereunder, and shall furnish true and complete copies of such approvals upon request to the Franchisor. The Franchisee shall use its best efforts to assist the Franchisor in obtaining any rulings or approvals from any government or any agency thereof which the Franchisor believes are necessary to effectuate the intent of this Agreement.
 
  (g) There are no actions, suites, proceedings, or investigations pending, or to the knowledge of any of the officers or directors of the Franchisee, threatened in any court or before any governmental agency or institution, or any basis for any claim, action, suit, proceedings or investigation, which affects or could affect, directly or indirectly, any of the assets, properties, rights or business of the Franchisee, or the right of the Franchisee to operate and use its assets, properties or rights and carry on its business.
 
8.2 All representations and warranties of the Franchisee contained in this Agreement shall be complete, correct and accurate on the date hereof, shall remain in effect thereafter so long as this Agreement is in effect and shall survive any termination of this Agreement. The Franchisee shall inform the Franchisor in writing immediately if any of the representations and warranties of the Franchisee contained herein shall become incomplete, incorrect or inaccurate for any reason whatsoever, and the Franchisee shall immediately make efforts to cure such situation. The Franchisee's failure to immediately inform the Franchisor of such situation or to correct such situation shall be a material breach of this Agreement.
 
8.3 The Franchisee will make and maintain full, accurate and adequate records in a permanent form and pursuant to generally accepted accounting principles consistently applied, pertaining to its business, pursuant to this Agreement, which records shall be, at a minimum, those required by and shall be maintained for the period prescribed by applicable tax regulations. All such records shall be made available to the Franchisor at all reasonable times for such inspection and audit as the Franchisor deems necessary. The Franchisee hereby grants the Franchisor and its agents, designees and employees with prior notice to be given to the Franchisee access at all times during normal business hours to all such records, including without limitation invoices and any other documents of any nature relating to financial statements of the Franchisee which the Franchisor may require to be furnished and the right to inspect, test, copy, sample and audit such records at the Franchisor's expense and to observe the operations of the Franchisee at the office of the Franchisee and at the location of the Franchised Centre operated pursuant to this Agreement.
 
8.4 The Franchisee shall upon request furnish the Franchisor with copies of its most recent financial statements relating to the Business and such other statements to be delivered hereunder. These statements are and shall be prepared in accordance with generally accepted accounting principals consistently applied and are and shall be complete, accurate, correct and shall present fairly the financial condition of the Franchisee as of the dates of such statements and the results of operations for the most recent periods then ended. The Franchisee agrees that it will at all times during the term of this Agreement maintain sufficient working capital to faithfully fulfil its obligations under this Agreement.
 
8.5 The Franchisee will operate the Business in compliance with the System and all applicable ordinances, laws, regulations and other requirements of any governmental authority, including agencies thereof, and will obtain and pay for all necessary licenses, permits or consents of whatsoever kind or character, and the Franchisee will pay or cause to be paid prior to delinquency all taxes, fines, fees or assessments arising out of or in connection with the operation of its business hereunder. The Franchisee recognises that there are or may be registration and disclosure franchise laws and regulations, and the Franchisee specifically agrees (without limiting the general applications of this sub-Clause) to comply with such laws and regulations. Anything herein to the contrary notwithstanding, the Franchisee may contest the applicability of any such law or ordinance so long as the Franchisee continues to comply with, such law or ordinance pending such contest.
 
9. NON-COMPETITION
 
9.1 The Franchisee shall devote its best efforts to the conduct of the Business hereunder, and the Franchisee will not during the currency of this Agreement in the Territory and elsewhere :
 
  (a) be engaged in Internet related businesses and the provision of computer on line services in a manner and style similar to or resembling the System or use the Intellectual Property;
 
  (b) be directly or indirectly engaged or concerned in, whether as employee, proprietor, partner, director, shareholder, officer or otherwise, the conduct of any business offering the same or similar Products or Services which competes with the Business;
 
  (c) carry on for its own account either alone or in partnership or be concerned in any company engaged in any business competing with the Business;
 
  (d) solicit, interfere with or endeavour to entice away or employ in any capacity, any employee or agent of the Franchisor or of the Franchisor's other franchisees without the prior written consent of the Franchisor or such other franchisees (as the case may be);
 
  (e) assist any person, firm or company with technical advice in relation to any business competing with the Business;
 
  (f) otherwise be interested, directly or indirectly, in any business competing with the Business.
 
9.2 The restrictions aforesaid in Clause 9.1 shall continue to apply for a period of two (2) years from the expiry or earlier termination of this Agreement.
 
9.3 While the restrictions aforesaid in Clause 9.1 are considered by the parties to be reasonable in all the circumstances it is agreed that if any one or more of such restrictions shall either taken by itself or themselves together be adjudged to go beyond what is reasonable in all the circumstances for the protection of the Franchisor's legitimate interest but would be adjudged reasonable if any particular restriction or restrictions were deleted or if any part or parts of the wording thereof were deleted, restricted or limited in a particular manner then the restrictions shall apply with such deletions, restrictions or limitations, as the case may be.
 
9.4 The provisions of this Clause shall continue to be valid and binding upon the Franchisee notwithstanding the termination of this Agreement pursuant to Clause 11 below or otherwise.
 
10. INDEMNITY
 
  The Franchisee hereby indemnifies and agrees to defend and hold the Franchisor harmless from any and all claims, causes of action, fines, penalties, liabilities (including statutory and other liability under worker's compensation, professional negligence matters and other employer's liability laws), damages, suits or judgments, including costs of investigation, court costs and reasonable attorney's fees, arising as a result of, or in connection with the operation of the Business by the Franchisee pursuant to this Agreement unless the same arises substantially or materially from the Franchisor's wilful default or negligence or in connection with claims for damages as the result of injury or death of any person or damage to property sustained by the Franchisee and all other persons which either arise from or in any manner grow out of any statutory basis of liability or from an act, error, omission or neglect by the Franchisee, its agents, employees, licensees, invitees and contractors appointed by the Franchisee, and the Franchisor shall have no obligation or liability in connection therewith or arising therefrom. The Franchisor shall have the right to approve the attorney to defend any such claim or cause of action against which the Franchisor is indemnified hereby at the Franchisee's expense if such action is brought against the Franchisor.
 
11. TERMINATION
 
11.1 If the Franchisee fails to make any payment when due hereunder and the default continues for a period of thirty (30) days following written notice thereof to the Franchisee by the Franchisor, the Franchisor shall have the right to terminate this Agreement without further notice or action by the Franchisor.
 
11.2 The Franchisor shall also have the right to terminate this Agreement forthwith upon the occurrence of any one of the following:-
 
  (a) the Franchisee fails to operate and/or maintain the Franchised Centre in accordance with this Agreement and the Franchisor's reasonable instructions and to remedy such failure within thirty (30) days after receipt by the Franchisee of the Franchisor's notice in this regard;
 
  (b) conduct of the Franchisee which in reasonable opinion of the Franchisor has a detrimental effect on the operation, reputation and goodwill of the Franchisor or the Business, and the Franchisee fails to remedy the effect within thirty (30) days from receipt of the Franchisor's notice in this regard;
 
  (c) the Franchisee transfers any rights, licences, obligations contained in this Agreement other than in accordance with the terms hereof;
 
  (d) the Franchisee fails to submit to the Franchisor any of the accounting or management information required to be submitted within the stipulated time periods or, in the case of a genuine delay, within the grace period of thirty (30) days after the end of such time period.
 
  (e) the Franchisee discloses or allows disclosure of trade secrets or other confidential information relating to the Business or the System otherwise than in accordance with the terms of this Agreement;
 
  (f) the Franchisee fails to obtain prior written approval or consent of the Franchisor expressly required by this Agreement;
 
  (g) in the event of the Franchisee ceasing or threatening to cease to carry on business in the Territory or voluntarily abandons the operations of the Business (other than with the consent of the Franchisor);
 
  (h) in the event of the Franchisee going into bankruptcy or liquidation (whether voluntarily or involuntarily) or being unable to pay its debts or suffering a distress or execution to be levied on or a receiver appointed over any property used in connection with the Business or if the Franchisee makes any arrangements with its creditors;
 
  (i) in the event of any complaint to the Franchisor as to quality of service given by the Franchisee and the cause of such complaint is not rectified or remedied within thirty (30) days from receipt by the Franchisee of the Franchisor's notice;
 
  (j) without prejudice to Clause 11.1, if the Franchisee is in breach of any terms of this Agreement and the Franchisor shall have notified the Franchisee in writing of such breach and the Franchisee shall not have rectified such breach within 30 days (for the avoidance of doubt, it is expressly acknowledged that no notice to rectify a breach need be delivered to the Franchisee prior to exercise by the Franchisor of its right to immediately terminate this Agreement upon the occurrence of any other event specifically listed in this Clause 11.2);
 
  (k) in the event of any repeated breach of any of the Franchisee's obligations under this Agreement. For the purpose of this sub-Clause a repeated breach shall be interpreted as two or more breaches of any of the Franchisee's obligations in any twelve month period;
 
  (l) the inability, in the Franchisor's opinion, of the Franchisee to meet any of its debts as they mature or within such grace period as the third party creditor may grant, or occurrences similar to the foregoing;
 
  (m) the Franchisee failing to comply with any governmental laws or regulations in the Territory and, where remediable, not remedied within thirty (30) days of such default;
 
  (n) where the Franchisee owns the Location, the Franchisee transfers, sells, parts with possession, mortgages or otherwise encumbers the Location without the prior consent of the Franchisor;
 
  (o) the Franchisee commits an act which would constitute a breach of the provisions of Clause 9 of this Agreement;
 
  (p) any government or agency thereof in the Territory fails to approve the remittance out of the Territory (other than arising by default of the Franchisor) of any payment due from the Franchisee to the Franchisor hereunder (during which time the Franchisee shall deposit the payments due hereunder into a bank account designated by the Franchisor for its own benefit), and where remediable, the Franchisee fails to so remedy within thirty (30) days of such failure;
 
  (q) if any invalidation of the Trade Marks by the government of the Territory is caused by acts or omissions of the Franchisee which, if remediable, is not so remedied within thirty (30) days of such invalidation or notice of such act or omission is given (whichever is earlier), the Franchisor may, at its option, terminate this Agreement as provided herein;
 
  (r) the submission by the Franchisee of any information to the Franchisor, to any governmental authority, or to any financial institution which contains any inaccurate, incomplete or misleading statements, or omits any material fact necessary in order to make the statements made not misleading, and where remediable, is not remedied within thirty (30) days of notice of such default; or
 
  (s) to the extent permitted by law, in the event of the Franchisor ceasing for any reason whatsoever to carry on the Business or to be a licensee of the Trade Marks.
 
  Upon the occurrence of any of the events aforesaid, the Franchisor, at its option, may deliver to the Franchisee a notice of termination, and this Agreement will immediately wholly terminate.
 
11.3 The Franchisee will have the right to terminate this Agreement in the event that the Franchisor materially defaults in the performance of any term, covenant or condition provided in this Agreement, and such default continues for a period of thirty (30) days following notice thereof to the Franchisor. In any such event, the Franchisee at its option, may deliver to the Franchisor a notice of termination, and this Agreement will wholly terminate.
 
11.4 Save as provided in Clause 11.3 above, the Franchisee shall not be entitled to terminate this Agreement.
 
11.5 The termination of this Agreement (for whatever reason) shall not terminate any provision which is expressly or by implication provided to come into or continue in force after such termination and shall be without prejudice to the rights of either party against the other in respect of any antecedent breach of any of the terms and conditions of this Agreement. In the event of any termination by the Franchisor the Franchisee shall not be entitled to recover any part of the fees paid to the Franchisor including without limitation the Licence Fee.
 
12. OBLIGATIONS OF THE FRANCHISEE UPON TERMINATION
 
12.1 Upon the termination or expiration of this Agreement for any reason whatsoever:-
 
  (a)

the Franchisee's right to use in any manner whatsoever the Intellectual Property, including but not limited to the Trade Name, Trade Marks or any other mark or name associated with the Franchisor or used in connection with the operation of the Franchised Centre shall terminate forthwith. The Franchisee shall not thereafter, directly or indirectly, identify itself in any manner as a franchisee of the Franchisor or publicly identify itself as a former franchisee of the Franchisor and the Franchisee will immediately sign all the necessary forms and documents and do all the necessary acts in order to de-register the Franchisee as the registered user of the Trade Marks with the relevant authorities in the Territory. If the Franchisee fails or refuses to execute any document necessary to cause the discontinuance of the Franchisee's use of and deregistration of the Franchisee's interest in the Trade Marks, the Franchisee irrevocably appoints the Franchisor as its attorney to do so for and on behalf of the Franchisee;
  (b) the Franchisee shall forthwith cease to carry on the Business and to use the Intellectual Property (the Franchisee's licence to use which is terminated) and to sign such confirmation of cessation of use of the Intellectual Property as is required by the Franchisor;
 
  (c) the Franchisee will destroy all signs used in relation to the Business and other documents and other printed matter whatsoever relating to the System. The Franchisee shall bear all costs incurred in compliance with this Clause; and
 
  (d) the Franchisee shall return to the Franchisor:-
 
  (i) all samples and publicity promotional and advertising material used in the Business; and
 
  (ii) all originals and copies of all documents and information containing or covering in any way any part of the Intellectual Property.
 
12.2 Upon the termination of this Agreement for any reason whatsoever, the Franchisor or its nominee or designee shall have the option, exercisable within sixty (60) days after such termination becomes effective, to purchase as soon as practicable thereafter (the date of which such purchase is completed being hereinafter referred to as "the Closing Date") any or all of the following operating assets of the Franchisee relating to the Franchise under this Agreement upon the terms and conditions set out below:
 
  (a) all saleable inventory will be purchased at the original cost price provided by the Franchisor. For the purpose of this Clause, the term "saleable" is defined to mean all items of merchandise which have been paid for by and belong to the Franchisee and are in a condition proper for current sale and specifically excludes items which require reconditioning or reworking, items which are not usable or saleable through normal distribution channels, items which are obsolete, damaged, or deteriorated, and consigned merchandise; and
 
  (b) all equipment owned by the Franchisee, acquired from the Franchisor and used in the Business may be purchased by the Franchisor or its nominee or designee at the depreciated book value or, where there is an agreement, on such value or price that is mutually agreed between the Franchisor and the Franchisee.
 
12.3 In the event the Franchisor decides not to exercise its option to purchase the operating assets of the Franchisee relating to the Business, the Franchisee shall be entitled within a period of thirty (30) days from the expiry of such option to sell off its remaining inventory of the Products upon such terms and conditions as it may deem fit.
 
13. ASSIGNMENT
 
13.1 This Agreement and all rights of the Franchisor hereunder may be assigned, transferred or otherwise dealt with by the Franchisor and shall enure for the benefit of the successors and assigns of the Franchisor. This Agreement will not be assigned, transferred or otherwise dealt with by the Franchisee in whole or in part, directly or indirectly without the prior written consent of the Franchisor. Any such assignment or attempted assignment without the prior written consent of the Franchisor shall be a material breach of this Agreement. The direct or indirect sale of a controlling interest in the Franchisee shall be deemed to be an assignment.
 
13.2 If the Franchisor consents to the assignment of this Agreement, the Franchisee shall pay all costs and expenses incurred by the Franchisor associated with the request for assignment.
 
14. GENERAL
 
14.1 This Agreement is the complete and only agreement between the parties, and supersedes all prior negotiations, representations and prior written or oral understandings. No variation, modification or alteration of any of the terms of this Agreement shall be of any effect unless evidenced in writing signed by or on behalf of each of the parties hereto by a duly authorised representative.
 
14.2 This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, successors and permitted assigns.
 
14.3 Either party hereto will have the right to require specific performance of the other party.
 
14.4 The failure of either party to enforce at any time or for any period of time any provision of this Agreement will not be construed to be a waiver of such provision or of the right of such party thereafter to enforce each such provision.
 
14.5 (a) The Franchisee acknowledges that it has been advised to seek other appropriate independent advice and that the decision to enter into this Agreement has been taken solely on the basis of personal judgement and experience of the Franchisee having taken such independent advice. Accordingly, the Franchisee acknowledges that no inducement or promise express or implied had been made by the Franchisor or relied upon by the Franchisee in entering into this Agreement.
 
  (b) The Franchisee acknowledges that in giving advice to the Franchisee, assisting the Franchisee to establish the Business, recommending equipment and materials and assessing the suitability of sites for the Franchised Centre, the Franchisor has based its recommendations on experience actually obtained in practice (in Singapore) but that the Franchisor does not give any guarantee or warranty with regard to such matters or generally in connection with the sales volume, profitability or other aspects of the Business.
 
14.6 Notwithstanding anything herein to the contrary, and except in respect of payments due ereunder, the Franchisor and/or the Franchisee shall not be responsible in damages to the other for any failure or delay in performance hereunder due to:-
 
  (a) any governmental act or regulation;
 
  (b) war, civil commotion, earthquake, fire, flood or other disaster or similar event; or
 
  (c) any other event beyond such party's control;
 
  provided, however, such party shall take all steps reasonably possible to mitigate damages caused by such failure or delay. Notwithstanding the foregoing, if such failure or delay shall continue for more than one hundred and eighty (180) days, either party shall have the right at any time thereafter during the continuance of such failure or delay, to terminate this Agreement by giving thirty (30) days prior notice thereof to the other party.
 
14.7 Neither the Franchisor nor the Franchisee shall issue or cause to be issued any press release, publicity or other public statement concerning this Agreement without the prior written consent of the other party except where such disclosure is required by applicable laws or regulations including without limitation the regulations of any stock exchange.
 
14.8 If any provision of this Agreement, in whole or in part, is held by a court of competent jurisdiction to be invalid, the remainder hereof will not be affected thereby.
 
14.9 (a) The Franchisee is an independent contractor, and neither the Franchisee nor its employees shall be construed to be either legal or implied agents, servants or employees of the Franchisor and have no authority whatsoever to act for or on behalf of the Franchisor. The Franchisee will have no right or authority and will not attempt to negotiate, enter into, permit or cause its employees to negotiate or attempt to or enter into contracts or commitments of any nature in name of or on behalf of the Franchisor that purport to bind the Franchisor in any respect whatsoever.
 
  (b) The Franchisee shall control the manner and means of the operation of the Business and the Franchised Centre and exercise complete control over and responsibility for all labour relations and the conduct of the Franchisee's agents and employees, including, but not limited to, the day-to-day operations of the Franchised Centre and its employees. The Franchisee's agents and employees shall not be considered or held out to be agents or employees of the Franchisor and shall not negotiate or enter any agreement or incur any liability in the name of or on behalf of, or that purports to bind, the Franchisor.
 
  (c) The parties hereto expressly agree that nothing contained or implied in this Agreement shall constitute or be deemed to constitute a partnership between the parties nor constitute nor be deemed to constitute any party as an agent or an affiliate of the other party for any purpose whatsoever.
 
14.10 Notices, demands or other communications required or permitted to be given or made hereunder shall be in writing and delivered personally or sent by prepaid first class post with recorded delivery, or by telex, or legible telefax addressed to the intended recipient at its address set out in this Agreement or to such other address or telex and telefax number as any party may from time to time duly notify to the others. Any such notice, demand or communication shall, unless the contrary is proved, be deemed to have been duly served (if given or made by telefax or telex on the next following business day in the place of receipt or (if given or made by first class letter) 72 hours after posting and in proving the same it shall be sufficient to show in the case of a letter, that the envelope containing the same was duly addressed, correctly stamped and posted and, in the case of a telex or telefax, that such telex or telefax was duly dispatched to a current telex or telefax number of the addressee.
 
14.11 Each party to this Agreement shall bear all its own legal and other costs and expenses incurred in the preparation and execution of this Agreement provided that all stamp duties payable shall be borne by the Franchisee.
 
14.12 (a) This Agreement shall be governed by and construed in accordance with the laws of Thailand.
 
  (b) All disputes between the parties as to any matter arising out of or in connection with this Agreement shall be referred to the arbitration in London of a single arbitrator to be appointed by agreement between the parties or, if such agreement is not reached within 14 days of the date on which the name of a proposed arbitrator shall have been submitted by either party to the other, to be appointed by the Chairman of the International Chamber of Commerce and provided that such arbitration shall be conducted in accordance with its rules.
 
15. COUNTERPART
 
  This Agreement may be signed in any number of counterparts, all of which when taken together and delivered to the Franchisor and the Franchisee shall constitute one and the same instrument. Any party may enter into this Agreement by signing such counterpart.
 

SCHEDULE A

LIST OF SERVICES

INDIVIDUAL DIAL-UP SERVICE
The individual dial-up service offers users a full PPP connection to the Internet using a modem and a regular phone line. In addition to a full PPP connection, every user will be given an email account and a complimentary 1 MB disk space for their personal home page. There are 3 different access service, namely Easy Lite, Easy Plus and Easy Pro.

PREPAID SERVICES
The prepaid services consist of Easy Start and Easy Surf packages.

BUSINESS CLASS DIAL-UP SERVICE
Business class dial-up is a dial up access service that comes with a personalised corporate email address (in the form of ‘john@abc.com.th') without having to run their own mail server. Users can access the Internet through the same dial-up PPP connections as other basic analog dial-up users at the same rates. Depending on the number of free hours and user access accounts provided, the access service provided are called Corporate Group Dial-ups 5, 10, 15 and 20.

PERSONAL ISDN DIAL-UP SERVICE
Personal ISDN dial-up service gives users a full PPP connection at 64Kbps. Every personal ISDN account is also analog enabled, meaning that they can also use a regular modem and phone line to dial in to the Internet. Personal ISDN users are provided with an email account and a complimentary 1 MB disk space for their personal home page. A number of access plans with different free hours would be provided.

NETWORK ISDN DIAL-UP SERVICE
Network ISDN service is a dial-up service using ISDN. It is catered for companies who already have their internal LAN and want to be able to share a common Internet connection with minimum set up and running cost. The choice of 64Kbps or 128Kbps bandwidth is on a dial-on-demand basis. The service includes free rental of an ISDN router at the customer's premise.

LEASED LINE SERVICE
A leased line connection provides a 24-hour link to the Internet at speeds ranging from 19.2Kbps to 2Mbs. A company can use this bandwidth to set up its own website, to provide product information, corporate news, and support to users, and at the same time provide Internet facilities to its own employees. In addition, a leased line's high speed connection makes it possible to run bandwidth extensive applications such as video conferencing, live video broadcasting and many others.

IP SHARER
The IP sharer consists of dial-up account with an MPP connection of up to 4 concurrent connection.

DNS HOSTING
A domain name is an unique, personalized address that represents a given location (such as a web site) on the Internet. Domain names make it easy for visitors to find a user's web site and remember email addresses. DNS hosting refers to the ability of one system to host multiple domains. The DNS will either be used for domain parking or modification.

WEB HOSTING
Web hosting allows a customer to host their web pages on Pacific Internet's backbone, with an URL address provided (www.yourcompany.com). It could either be on Unix or NT server. A space is provided either on a shared server or dedicated servers.

SERVER COLOCATION
Server co-location refers to the placement of customer's server at Pacific Internet's premises, with a 24 hours manned and environmentally-controlled rack space, electrical power and Internet connectivity to house the server.

WEB ADVERTISING
With web advertising, customers can have their banners posted on Pacific Internet's home page and advertisements placed on their products.

WEB SECRETARY
Web secretary is a virtual online secretary, which helps a user to remember appointments, meetings, birthdays, anniversaries and sends reminders either through emails or pagers. With web secretary, one can now access schedule anytime. Besides being organised, it also helps the user to update events or happenings around the town.

MILLENIUM MANAGER
An online tool for all the user's account management including Account Manager, Email Manager, Billing Manager, Homepage Manager and Usage Manager.

FAMILY DIAL-UP SERVICE
This is similar to Singapore's Family Dial-up Service with up to five (5) supplement email account. In addition, a filtering proxy facility called CyberGuard is provided to filter undesirable content.

TIME PLUS
A value added service which allows users to carry forward their unused hours to the following month

SCHEDULE B

SERVICE MARKS

SERVICE MARK NO. CLASS SERVICE MARK DETAILS STATUS COUNTRY
316548 35 Business information provided by means of a global computer network Registered Thailand
316549 38 Telecommunications by means of a global computer network; provision of information services relating to telecommunications by means of a global computer network; advisory services relating to telecommunications by means of a global computer network; electronic mail services by means of a global computer network; provision of information services relating to electronic mail services by means of a global computer network; electronic transmission of messages and data between remote users of a global computer network; advisory services relating to electronic mail services by means of a global computer network; provision of information services relating to electronic transmission of messages and data between remote users of global computer network; advisory services relating to electronic transmission of messages and data between remote users of a global computer network; electronic data interchange services; provision of information relating to electronic data interchange services; advisory services relating to electronic data interchanges services; computer aided transmission of message and images; provision of information services relating to computer aided transmission of message and images; advisory services relating to computer aided transmission of messages and images. Registered Thailand

IN WITNESS WHEREOF, the Franchisor and the Franchisee have executed this Agreement this 7th day of February 2002.

Franchisor    
SIGNED by
TAN TONG HAI
for and on behalf of
PACIFIC INTERNET LIMITED		 )
)
)
)		 /s/ Tan Tong Hai

in the presence of

/s/ Mah Swee Keong

    
     
Franchisee    
SIGNED by
PRITHAYUTH NIVASABUTR
for and on behalf of
PACIFIC INTERNET (THAILAND) LTD
in the presence of:		 )
)
)
)
)		 /s/ Prithayuth Nivasabutr

EXHIBIT 4.101

To:

Diners Club (Singapore) Pte Ltd
7500-E Beach Road
#03-201 The Plaza
Singapore 199595

Dear Sirs

BANKER'S GUARANTEE NO. 901BG200096 FOR SGD1,000,000-00

In consideration of you having agreed to allow SAFE2TRAVEL PTE LTD of 3 Lim Teck Kim Road #02-02 Singapore Technologies Building Singapore 088394 ("SAFE2TRAVEL") to participate in the Diners Club Travel Management Programme (the "Programme"), we UNITED OVERSEAS BANK LIMITED of 80 Raffles Place UOB Plaza Singapore 048624 (hereinafter called the "Guarantor"), hereby guarantee to pay to you on demand all sums of money which are now or shall at any time be due or owing to you from SAFE2TRAVEL in relation to the Programme together with all interest, charges and costs, including legal costs occasioned by or incident to this or any other security held by or offered to you for the same indebtedness or by or to the enforcement of any such security on a full indemnity basis PROVIDED ALWAYS that the total liability enforceable against us under this Guarantee shall not exceed the aggregate sum of Singapore Dollars One Million Only (SGD1,000,000-00).

We will accept a certificate signed by any of your officers as to the amount due or owing to you from SAFE2TRAVEL as conclusive evidence that such amount is payable under this Guarantee. Partial and multiple drawings under this Guarantee are permitted.

This Guarantee shall be effective from 27th February 2002 and remain in full force for a period of one year till 26th February 2003 ("the expiry date") and is conditional upon claims hereunder being made in writing and received by us on or before the expiry date. Thereafter, this Guarantee shall cease to have any effect whatsoever whether or not it is returned to us for cancellation. In addition, this Guarantee shall not be considered as discharged, reduced or otherwise affected by any intermediate payment or satisfaction of any sum or sums of money owing as aforesaid but shall be a continuing security and shall extend to cover all or any sum or sums of money which shall for the time being constitute the balance due or owing to you from SAFE2TRAVEL in relation to the Programme.

This Guarantee shall be in addition to and shall not be in any way prejudiced or affected by any collateral or other security now or hereafter held by you for all or any part of the moneys hereby guaranteed. You may also demand payment from us, as principal debtor, for any amount due or owing to you from SAFE2TRAVEL, without first making any demand or taking any proceedings against SAFE2TRAVEL. We acknowledge that neither our liability nor this Guarantee shall be discharged or in any way affected by you granting time, indulgence or concession to, or discharging, releasing or varying the liability of SAFE2TRAVEL, or by any legal limitation, incapacity or fraud on the part of SAFE2TRAVEL, or by any act or omission which would not have discharged or affected our liability had we been a principal debtor instead of a guarantor.

You shall be entitled after any demand has been made under this Guarantee to continue dealing with SAFE2TRAVEL without thereby affecting or discharging our liability hereunder whether in respect of sums due and owing at the time of the demand or subsequent thereto.

This Guarantee is not transferable or assignable and shall be governed by and construed in accordance with the laws of the Republic of Singapore.

Dated this 27th day of February 2002.

Signed by : /s/ Wan Kok Thye /s/ Koh Gek Choo
Title : Vice President Asst Manager
 
For and on behalf of
UNITED OVERSEAS BANK LIMITED
In the presence of : /s/ Tan Peck Li, Kelly  
Title : Operation Officer  

EXHIBIT 4.102

AMENDING AGREEMENT NO. 9 TO THE WHOLESALE FORM OF AGREEMENT

Date: 10 September 2002
 
Parties:

TELSTRA CORPORATION LIMITED (ABN 33 051 775 556) having its registered office at 242 Exhibition Street, Melbourne, Victoria 3000 ("Telstra")

And

PACIFIC INTERNET (AUSTRALIA) PTY LIMITED (ABN 69 085 213 690) having its registered office at Level 1, Building 1, Southbank Boulevard, Southbank, Victoria 3006 ("Customer")
 
Recitals:
  1. Telstra and Customer are parties to a Wholesale Form of Agreement dated 28 June 2000 as amended from time to time ("WFOA").
  2. Telstra and Customer have agreed to further vary the WFOA in the manner provided in this agreement.

Operative provisions:

1 Interpretation
 
1.1 Unless the contrary intention appears, a term defined in the WFOA has the same meaning in this agreement.
 
1.2 In this agreement the following words have these meanings:
  (a) ATM Service has the meaning given it in the Telstra Wholesale ATM Service Schedule;
  (b) DSL-L2 Service has the meaning given to it in the Telstra Wholesale Broadband DSL Layer 2 Service Schedule;
  (c) DSL-L3A Service has the meaning given to it in the Telstra Wholesale Broadband DSL Layer 3 Asymmetrical Service Schedule;
  (d) DSL-L3S Service has the meaning given to it in the Telstra Wholesale Broadband DSL Layer 3 Symmetrical Service Schedule;
  (e) FlexStream tm Service; has the meaning given to it in the FlexStream Service Schedule;
  (f) CommerceStream Service has the meaning given to it in the CommerceStream Service Schedule;
  (g) Settlement Agreement means the settlement agreement attached to this Agreement as Annexure H;
  (h) SFOA Services has the meaning given to it in the SFOA Service Schedule;
  (i) Telstra ISDN 30 (OnRamp) Service has the meaning given to it in the Telstra SFOA Service Schedule; and
  (j) TWI Global Service has the meaning given it in the Telstra Wholesale Internet (TWI) Global Service Schedule.
 
1.3 This agreement is to be interpreted in accordance with clause 1 of the WFOA.
 
2 Conditions Precedent
 
2.1 This agreement, including without limitation the amendments to the WFOA, will not take effect until:
  (a) the Settlement Agreement has been executed by both Telstra and the Customer; and
  (b) the Customer has provided Telstra with a bank guarantee, issued by an Australian licensed bank and valued at AUD114,000.00 (based on the monthly value of the ATM Service and TWI Global Service), and on such other terms reasonably acceptable to Telstra.
 
3 Variation of the WFOA
 
Clauses
 
3.1 With effect from the date of this agreement, the WFOA is amended by deleting clause 2 and replacing it with the following new clause 2:
  "2 Term
This Agreement will commence on the date of execution of this Agreement and will continue until 10 September 2004 or until earlier terminated by either party under clause 14 or by agreement."
 
3.1A The parties acknowledge that the date stated on the Execution Page of the WFOA is incorrect and that the correct date of execution is 28 June 2000 ("Date of Execution"). Accordingly, the parties agree that the date stated on the Execution Page of the WFOA is amended from 28 June 1999 to 28 June 2000 and deemed to have taken effect from the Date of Execution.
 
3.2 With effect from the date of this agreement, the WFOA is amended by inserting the following new clause 5.6:
  "5.6 During the Term, the Customer must present and submit to Telstra, upon request:
  (a) its Quarterly and year to date financial results (balance sheet, profit and loss statement, and statement of cash flows) and the following financial key performance indicator results: return on net assets; return on revenue; revenue growth %; and operational efficiency; and
  (b) its audited annual Financial Accounts."
Schedules
 
3.3 With effect from the date of this agreement, the WFOA is amended by adding the following schedules:
  (a) Telstra Wholesale Internet (TWI) Global Service Schedule as set out in Annexure A;
  (b) Telstra Wholesale ATM Service Schedule as set out in Annexure B; and
  (c) Telstra SFOA Service Schedule as set out in Annexure D.
 
3.4 With effect from the date of this agreement, the WFOA is amended by:
  (a) deleting the existing Telstra Wholesale Broadband DSL Layer 2 Service Schedule and replacing it with the new Telstra Wholesale Broadband DSL Layer 2 Service Schedule as set out in Annexure C;
  (b) deleting the FlexStream tm Service Schedule and replacing it with the DSL Layer 3 Asymmetrical Service Schedule as set out in Annexure E;
  (c) deleting the CommerceStream tm Service Schedule and replacing it with the DSL Layer 3 Symmetrical Service Schedule as set out in Annexure F; and
  (d) deleting the FlexStream tm Discount Sheet and replacing it with the Discount List for Telstra Wholesale Broadband DSL Layer 3 Asymmetrical Service as set out in Annexure G.
 
3.5 With effect from the date of this agreement, Annex G of the WFOA is amended to:
  (a) incorporate the:
    (i) TWI Global Service;
    (ii) ATM Service;
    (iii) SFOA Service;
    (iv) DSL-L3A Service; and
    (v) DSL-L3S Service;
  (b) delete the:
    (i) FlexStream tm Service; and
    (ii) CommerceStream Service.
 
Effect
 
3.6 From the date of this agreement, the expression "this Agreement", wherever appearing in the WFOA is to be interpreted as a reference to the WFOA amended as provided in clause 2 of this agreement.
 
3.7 From the date of this agreement, the WFOA and this agreement are to be read together.
 
Charges
 
3.8 Subject to clause 3.7, the Charges for the TWI Global Service, ATM Service, DSL-L2 Service, and ISDN OnRamp Service (each a "WOB Service Type" and collectively the "WOB Services") are set out in the Service Schedules for the relevant WOB Service Type.
 
3.9 Where:
  (a) the Customer cancels a WOB Service Type in full so that the Customer is no longer acquiring any of that WOB Service Type; or
  (b) Telstra cancels a WOB Service Type for breach by the Customer so that the Customer is no longer acquiring any of that WOB Service Type,
the Charges for the remaining WOB Service Types will be the list price as advised by Telstra.
 
4 Confirmation
 
4.1 Subject to the amendments made to the WFOA by this agreement, all the provisions of the WFOA remain in full force and effect in accordance with their terms.
 
4.2 It is the intent of the parties that the variation of the WFOA effected by this agreement will not constitute the discharge of the pre-existing WFOA and the creation of a new WFOA, but will constitute a variation of the rights and obligations of the parties under the pre-existing WFOA.
 
5 Law and jurisdiction
 
5.1 This agreement and the transactions contemplated by it are governed by the law in force in Victoria.
 

EXECUTED as a variation to the WFOA.

EXECUTED as an agreement on the day of 10 September 2002

SIGNED by DEENA SHIFF
Name of representative (block letters)

as authorised representative for
TELSTRA CORPORATION LIMITED (ABN 33 051 775 556) in the presence of

:/s/ T Morris
Signature of witness

T MORRIS
Name of witness (block letters)

34/242 Exhibition Street
Address of witness

Business Manager
Occupation of witness
 

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/s/ Deena Shiff
Signature of representative

By executing this agreement the signatory warrants that the signatory is duly authorised to execute this agreement on behalf of
TELSTRA CORPORATION LIMITED (ABN 33 051 775 556)

SIGNED by

DENNIS J MUSCAT
Name of representative (block letters)

as authorised representative for
PACIFIC INTERNET (AUSTRALIA) PTY LIMITED (ABN 69 085 213 690) in the presence of:

/s/ Belinda Bauer
Signature of witness

BELINDA BAUER
Name of witness (block letters)

305/250 St. Kilda Road, 3006
Address of witness

Sales & Marketing Director
Occupation of witness

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/s/ Dennis J Muscat
Signature of representative

By executing this agreement the signatory warrants that the signatory is duly authorised to execute this agreement on behalf of
PACIFIC INTERNET (AUSTRALIA) PTY LIMITED (ABN 69 085 213 690)

ANNEXURE A
Telstra Wholesale Internet (TWI) Global Service Schedule (Flat Rate)
 

Addendum 1   Definitions
1.1 Defined terms
 

In this Service Schedule the following words have these meanings:

Acceptable Usage Policy means Telstra's Acceptable Usage Policy available at http://telstrawholesale.com/products/p_ip1_tg.htm as amended by Telstra from time to time.

Access Port means the point at which a Connecting Carriage Service connects to the TWI Point of Presence.

Access Port IP Address is the IP Address provided by Telstra to the Customer in accordance with paragraph 6.11.1 of Addendum 2.

Access Transmission Rate means, in respect of an Access Port, the maximum data transfer capacity (measured in bits per second) that the Access Port has been configured for by Telstra.

Additional Monthly Bandwidth Charge has the meaning given to it in paragraph 1.1.2 of Addendum 3.

Application Form means the application form for TWI which forms part of these terms and conditions.

Border Gateway Protocol or BGP means the interdomain routing protocol defined by Request For Comment - RFC 1163 issued by Lougheed and Rekhter in June 1990.

Business Hours means 9:00am to 5:00pm, Local Time on a Business Day.

Capital City TWI Global means Eastern Seaboard Capital City TWI Global and Other Capital City TWI Global.

CARF or Committed Access Rate Filtering means filtering an Access Port to limit the data transfer capacity to the Committed Access Rate.

Central Point is defined in paragraph 6.2 of Addendum 4.

Commencement Date means the date Telstra notifies the Customer that the first TWI Global Service to be supplied under this Service Schedule is ready to be activated.

Committed Access Rate means the maximum data rate to which an Access Port will be limited. The Committed Access Rate must be equal to or less than the Access Transmission Rate for the Access Port.

Connecting Carriage Service means the telecommunications service between the Customer's Premises and the TWI Point of Presence.

Customer Problem is defined in paragraph 4.5 of Addendum 4.

Customer Site Contact is defined in paragraph 4.1.3 of Addendum 2.

Domestic Networks means Internet backbone networks that can be accessed in Australia without the need for international transmission facilities such as submarine optical fibre or satellite.

DNS mean domain name system.

Early Termination Fee means the fee payable for terminating a TWI Global Service prior to the expiration of the Minimum Term.

Eastern Seaboard Capital City TWI Global means a TWI Global Service with a TWI Point of Presence listed below:

PVC means a permanent virtual circuit.

Response Time means the period of time between a Service Difficulty in TWI Global being reported to the TWI Help Desk by telephone by a Customer Site Contact and a response from Telstra acknowledging the report of the Service Difficulty.

Restoration Time means the period of time between a Service Difficulty in TWI Global being reported to the TWI Help Desk by telephone by a Customer Site Contact and, if Telstra determines the Service Difficulty is a Fault, the restoration of the service by Telstra.

Routing Policy means the rules used by Telstra from time to time to route packets.

Scheduled Outages mean those occasions when Telstra performs scheduled maintenance, upgrades or repairs to the TWI Network and all or part of TWI Global is not available at an Access Port as a result.

Service Difficulty means an issue as to the availability or quality of TWI Global.

SIR means sustained information rate which is the maximum average speed over time that data can be transmitted over a given ATM PVC/PVP.

TCP/IP means the Transmission Control Protocol/Internet Protocol in general use in accordance with good practice.

TWI CPE IP Address is the IP Address provided by Telstra to the Customer in accordance with paragraph 6.11.2 of Addendum 2.

TWI Customer Premises means the premises from which the Customer connects to an Access Port. TWI Customer Premises are Customer Premises for the purposes of the remainder of this Agreement, unless the context requires otherwise.

TWI Customer Premises Equipment or TWI CPE is defined in paragraph 3.1.2 of Addendum 2.

TWI Global Service is defined in paragraph 1.1 of Addendum 2.

TWI Help Desk means the Telstra help desk, set out in paragraph 3 of Addendum 4, for reporting Service Difficulties in TWI Global.

TWI Network means the data communication network owned and operated by Telstra and based on the TCP/IP protocol suite (using any form of transmission medium) and which provides interconnection between TWI Points of Presence and the Internet.

TWI Point of Presence means the place where a Connecting Carriage Service connects to the TWI Network
 
1.2 Interpretation
  In this Service Schedule a reference to "Addendum" is a reference to an Addendum in this Service Schedule.
 
2

Service Term
 
2.1 This Service Schedule comes into force on the date it is added to the Agreement ("Schedule Date"). Telstra will supply the TWI Global Service during the period this Service Schedule is in force.
 
2.2 Following the expiration of the Minimum Term either party may terminate this Service Schedule by 30 days written notice to the other.
 
2.3 The Customer accepts a Service on the terms and conditions set out in this Service Schedule and this Agreement for the period from the Schedule Date until the first to occur of:
  (a) termination or cancellation of the Service;
  (b) the expiry or termination of this Service Schedule; or
  (c)

the expiry or termination of this Agreement.

 
Addendum 2   Service
1 Service
 
1.1 TWI Global is an Internet connectivity service which provides Customers with connectivity to the Internet (both internationally and to Domestic Networks) on a dedicated access basis ("TWI Global Service").
 
1.2 TWI Global is available in bandwidth blocks, with 2Mbps as a minimum rate, for which a fixed charge applies independent of usage. The bandwidth to which the customer subscribes can be less than the Access Transmission Rate but may not fall below the minimum rate.
 
1.3 Where the bandwidth subscribed to is less than the Access Transmission Rate, CARF is applied to the Access Port.
 
1.4 A CARF speed of n Mbps is provisioned as n times 1,000Kbps.
 
1.5 Telstra can provision the Connecting Carriage Service in conjunction with TWI Global. The supply of the Connecting Carriage Service is not included in this Service Schedule but is available on request.
 
2 Service exclusions
 
2.1 The TWI Global Service has no access to Telstra mail DNS secondary services, Usenet browse, web proxies and caches.
 
3 Customer supplied items
 
3.1 To use the TWI Global Service, the Customer must:
  3.1.1 have a Connecting Carriage Service compatible with the Access Port;
  3.1.2 have customer premises equipment compatible with and configured to use the Connecting Carriage Service and the Access Port ("TWI Customer Premises Equipment" or "TWI CPE");
  3.1.3 provide their own IP Address blocks, and
  3.1.4 use BGP version 4 as a boundary protocol with a valid registered Autonomous System (AS) number.
 
4 Customer obligations
 
4.1 The Customer must:
  4.1.1 provide all information and assistance reasonably required by Telstra to meet its obligations under this Agreement;
  4.1.2 comply with:
    4.1.2.1 the Acceptable Usage Policy; and
    4.1.2.2 any reasonable instructions from Telstra about use of TWI Global; and
  4.1.3 ensure Telstra has up-to-date details of the contact person for each of the TWI Customer Premises ("Customer Site Contact") from which the Customer accesses TWI Global.
 
4.2 The Customer must not, and must ensure that its employees, contractors, customers and agents do not, use TWI Global for any purpose that may:
  4.2.1 result in the misuse of a third party's confidential information;
  4.2.2 constitute an infringement or the commission of an offence against any law, standard or code;
  4.2.3 result in a "virus", "worm", "trojan" or similar program being sent through TWI Global; or
  4.2.4 breach the Acceptable Usage Policy.
 
4.3 Any breach of this paragraph 4 is a material breach of this Agreement and, in addition to any other rights Telstra may have and notwithstanding clause 14 of the WFOA main terms and conditions, entitles Telstra to suspend provision of TWI Global to the Customer immediately and without notice. Any such suspension may be subject to such terms and conditions as Telstra deems appropriate.
 
5 Customer data
 
5.1 The Customer must ensure that it has all measures in place necessary to protect against:
  5.1.1 data loss and corruption;
  5.1.2 interception of data; and
  5.1.3 use of TWI Global in a manner that is unlawful or which may cause loss, liability or expense to Telstra, the Customer or any other person.
 
6 Access Port
 
Access Port attributes
6.1 Each Access Port has the following attributes:
  6.1.1 the Connecting Carriage Service to which the Access Port has been configured;
  6.1.2 Access Transmission Rate and if applicable, Committed Access Rate;
  6.1.3 Access Port IP Address;
  6.1.4 TWI CPE IP Address; and
  6.1.5 TWI Point of Presence.
 
Connecting Carriage Services and Access Transmission Rates
6.2 The Customer must nominate in its Application Form the Access Transmission Rate, the Committed Access Rate if applicable and the Connecting Carriage Service.
 
6.3

The Connecting Carriage Services, Access Transmission Rates and Committed Access Rates set out in Table 1 are supported.

6.4 The Customer can contact Telstra if it wishes to explore types of Connecting Carriage Services other than those set out in Table 1 above.
 
6.5 The Customer may apply to change the Access Transmission Rate and/or Committed Access Rates by submitting an Application Form to Telstra. If Telstra accepts the Customer's application (at Telstra's discretion), it will use its best efforts to change the Access Transmission Rate and/or Committed Access Rate in accordance with the Indicative Provisioning Lead Times in paragraph 6.19 and Table 2.
 
6.6 The Monthly Charges for the new Access Transmission Rate and/or Committed Access Rate and any relevant Upgrade Charges will apply from the date that Telstra completes the requested change.
 
Access Port IP Address and TWI CPE IP Address
6.7 Telstra grants to the Customer a non-exclusive, non-transferable licence to use the Access Port IP Address and TWI CPE IP Address in software and TWI CPE for the sole purpose of enabling that TWI CPE to access a TWI Point of Presence.
 
6.8 Telstra may revoke the Customer's licence to use the Access Port IP Address and TWI CPE IP Address, by notice to the Customer, if:
  6.8.1 the Customer breaches the licence conditions in paragraph 6.7;
  6.8.2 the Customer fails to pay any amount due to Telstra under this Agreement by the Due Date; or
  6.8.3 the Access Port IP Address and TWI CPE IP Address were provided for use with a TWI Global Service that is no longer provided to the Customer.
 
6.9 The Customer's licence to use the Access Port IP Address and TWI CPE IP Address terminates immediately on termination or the expiration of this Agreement
 
6.10 On termination or revocation of a licence to use the Access Port IP Address and TWI CPE IP Address, the Customer must immediately cease using and remove the Access Port IP Address and TWI CPE IP Address from all software and TWI CPE.
 
6.11 Telstra will inform the Customer of the Access Port IP Address and the TWI CPE IP Address in provisioning the Access Port. The Customer may only use those addresses as follows:
  6.11.1 Access Port IP Address - as the gateway IP Address for that Access Port; and
  6.11.2 TWI CPE IP Address - as the IP Address for the TWI CPE that will use the Access Port.
 
6.12 Telstra reserves the right to change the Access Port IP Address or TWI CPE IP Address by giving the Customer 5 days notice in writing of the new Access Port IP Address and/or TWI CPE IP Address.
 
6.13 If Telstra needs to change the Access Port IP Address or TWI CPE IP Address to restore the TWI Global Service, Telstra may require the Customer to make the changes immediately.
 
6.14 If the Customer is changing the TWI Point of Presence for an Access Port, then Telstra and the Customer will agree the time and date for that change and the change to the Access Port IP Address and TWI CPE IP Address.
 
TWI Point of Presence Location
6.15 The Customer must nominate in its Application Form the TWI Point of Presence at which it wants the Access Port to be located.
 
6.16 The Customer will be responsible for obtaining its own advice about the most economical TWI Point of Presence for the location of its Access Port.
 
Indicative Provisioning Lead Times
6.17 Telstra will use its best efforts to provide a TWI Global Service within the Indicative Provisioning Lead Times set out in Table 2 and paragraph 6.19.
 
6.18 Indicative Provisioning Lead Times are calculated from the date that the Customer receives a confirmation fax that its Application form has been processed.
 
6.19 Where a Connecting Carriage Service is required, Telstra will advise the Customer of the Indicative Provisioning Lead Times for the TWI Global Service.
 
6.20

Where a Connecting Carriage Service is already in place, the Indicative Provisioning Lead Times for the TWI Access Port are set out in Table 2.

7 Routing
 
Router termination
7.1 Telstra does not guarantee that multiple Access Ports at the same TWI Point of Presence will terminate on the same router.
 
Routing Policy
7.2 Telstra may change its Routing Policy at any time without notice to the Customer and without the Customer's consent.
 
Border Gateway Protocol
7.3 The Customer must use BGP for routing traffic via the Access Port.
 
Third party IP Addresses
7.4 Telstra reserves the right to refuse to route any third party IP Addresses if:
  7.4.1 Telstra has not been provided with written permission from the registered owner of those IP Addresses to route those IP Addresses via the Customer's Access Port; or
  7.4.2 the Customer has not been able to demonstrate to Telstra's reasonable satisfaction that it has the third party's permission to route those IP Addresses.
 
8 Certain provisions of the WFOA Main Terms and Conditions not applicable
 
8.1 The following provisions in the WFOA are not applicable to the TWI Global Service:
  8.1.1 Annex A (Forecasting); and
  8.1.2 Clauses 4, 5 and 6 of Annex D (Telstra Equipment and software).
 
9 First and Last Rights
 
9.1 During the Minimum Term, the Customer must not acquire or accept any offer to acquire from a carrier or carriage service provider ("Third Party Offer") any services which compete with all or any of the components of the TWI Global Service unless:
  (a) the Customer has notified Telstra in writing of the proposed charges contained in that Third Party Offer ("Third Party Notice"); and
  (b) Telstra has not issued a notice ("Matching Notice") to the Customer, within 7 business days of receiving a Third Party Notice agreeing to provide the TWI Global Service at the charges set out in the Third Party Offer.
 
9.2 A Third Party Notice given by the Customer under paragraph 9.1(a) will constitute an offer by the Customer to acquire the TWI Global Service from Telstra at the charges set out in the Third Party Notice. As the Customer is required to take from Telstra (or pay for) the Minimum Bandwidth under paragraph 1.1 of Addendum 3, the offer will relate only to specified bandwidth in excess of the Minimum Bandwidth ("Further Volume").
 
9.3 If Telstra issues a Matching Notice in accordance with 9.1(b) Telstra must supply, and Customer must acquire, the Further Volume on the terms and conditions set out in this Service Schedule for the duration of the period to which the Matching Notice relates, except that subject to paragraph 9.4, the Charges applicable to the provision of the Further Volume during that period will be the charges set out in the Matching Notice.
 
Variations in Charges
9.4 Any variations in the Charges payable by the Customer for the TWI Global Service under paragraph 9.3 will take effect on the first day of a Month.
 
Minimum Monthly Spend and Additional Monthly Charge
9.5 For the avoidance of doubt, the provisions of this paragraph 9:
  (a) will not affect the Customer's obligations to acquire (or pay for) the Minimum Bandwidth in any Month in accordance with the Minimum Monthly Spend obligations under paragraph 1.1.1 of Addendum 3;
  (b)

may affect the Additional Monthly Charge under paragraph 1.1.2 of Addendum 3.

 

Addendum 3   Charges
1A Review of Charges
 
1A.1 Subject to paragraph 1A.3 of this Addendum 3, the Charges in this Addendum 3 are valid for the Minimum Term.
 
  1AA.1 Subject to paragraph 9.3 of Addendum 2, the Customer is under no obligation to acquire Other Capital City TWI Global after the one year anniversary of the Commencement Date. If the Customer acquires and Telstra supplies Other Capital City TWI Global after the one year anniversary then, subject to paragraph 1A.3 of this Addendum 3, the Charges in this Addendum 3 will continue to apply.
 
  1AA.2 For the avoidance of doubt, paragraph 1AA.1 does not affect Customer's obligation to pay the Minimum Monthly Spend or (if applicable) the Early Termination Fee.
 
1A.2 At any time after the one year anniversary of the Commencement Date, the Customer may on written notice request a meeting with Telstra to review the Charges for the TWI Global Service. The meeting may only be requested where the Customer provides evidence to Telstra in the notice that the market price for services equivalent to the TWI Global Service are less than the Charges in this Addendum 3.
 
1A.3 If a meeting is requested under paragraph 1A.2, the parties will meet and will negotiate in good faith appropriate revisions (if any) to the Charges in this Addendum 3. If any revised Charges are agreed, they will take effect on a date to be agreed between the parties. If the parties are unable to agreed revised Charges, the Charges will remain unchanged as set out in this Addendum 3.
 
1 TWI Global bandwidth charge
 
1.1 Subject to paragraph 8, the Customer must pay Telstra in each Month a Charge for TWI Global Service bandwidth ("Monthly Charge") being the sum of:
  1.1.1 the Minimum Monthly Spend for that Month in Table 3A below; and
  1.1.2 for any bandwidth in excess of the Minimum Bandwidth an additional monthly bandwidth charge ("Additional Monthly Bandwidth Charge") of:
    1.1.2.1 $3,600 per 2Mbps for any bandwidth in respect of Eastern Seaboard Capital City TWI Global; and
    1.1.2.2 $4,400 per 2Mbps for any bandwidth in respect of Other Capital City TWI Global.
 
1.1A

For the purpose of paragraph 1.1 bandwidth will be counted towards the Minimum Bandwidth in the order in which it is acquired (first to last).
2 Reconnection Charge
 
2.1 In addition to paying all outstanding Charges, the Customer must pay Telstra a $1,000 Charge, to have an Access Port reconnected after it has been disconnected for non-payment of Charges or breach of the Agreement.
 
3 Installation Charge of Access Port
 
3.1

For each Access Port, the Customer must pay Telstra an installation Charge corresponding to the Connecting Carriage Service set out in Table 3 below:
4 Upgrade Charge
 
4.1 If, on request from the Customer, Telstra agrees to change the Access Transmission Rate or configuration of the Connecting Carriage Service, the Customer must pay Telstra an upgrade Charge of $500.
 
4.2 A change to the type of Connecting Carriage Service is not an upgrade and the Customer must pay the relevant installation Charge for the new Connecting Carriage Service.
 
5 Committed Access Rate change
 
5.1 The Customer must pay Telstra a $500 Charge, to change the Committed Access Rate for an Access Port.
 
6 TWI Global Early Termination Fee
 
6.1 Where any of the following occurs prior to the Minimum Term:
  6.1.1 the Customer cancels the TWI Global Service;
  6.1.2 the Customer terminates the Agreement;
  6.1.3 Telstra cancels the TWI Global Service for breach by the Customer; or
  6.1.4 Telstra terminates the Agreement for breach by the Customer,
the Customer must pay Telstra an Early Termination Fee calculated by aggregating the Minimum Monthly Spend of the fully unexpired Months in the Minimum Term. Notwithstanding that the TWI Global Service may be terminated during a Month, the Customer must still pay the Minimum Monthly Spend and the Additional Monthly Bandwidth Charge for that Month.
 
6.2 The parties acknowledge that the amounts payable by the Customer to Telstra under this paragraph 6 and event 5 of Table 4 are payable by way of liquidated damages and represent the parties' genuine pre-estimate of the loss caused to Telstra by the Customer's early cessation of the acquisition of TWI Global Service(s).
 
7 Administration Charges
 
7.1

The Customer must pay the administration Charges set out in Table 4 below:

8 Geographical application of Charges
 
8.1 Notwithstanding anything else in this Service Schedule, the Monthly Charge in paragraph 1 of this Addendum 3 only applies to Capital City TWI Global.
 
8.2 The Monthly Charges for TWI Global Services which are not Capital City TWI Global Services will be advised by Telstra to the Customer on application.
 
9 GST
 
9.1

The Charges set out in this Addendum 3 are exclusive of any applicable GST. The amount of GST payable by the Customer to Telstra for the Services and associated work referred to in this Addendum 3 will be calculated in accordance with the terms of the Agreement and included in the Bill which sets out the Charges payable by the Customer to Telstra for the supply of such Services and associated work.
 
Addendum 4   Service levels
1 Network Performance and availability
 
1.1 Telstra will use its best efforts to meet the:
  1.1.1 General Network Availability Level;
  1.1.2 General Network Performance Levels; and
  1.1.3 target Response Times and Restoration Times as set out in paragraphs 4, 6 and 7 below.
 
2 Service Difficulty Reporting
 
2.1 The Customer must promptly notify the TWI Help Desk of any Service Difficulty and provide any information Telstra may reasonably require to resolve the Service Difficulty.
 
3 TWI Help Desk
 
3.1 Service Difficulties can be reported 24 hours a day, seven days a week by calling the TWI Help Desk on 180 2288.
 
4 Response Times and Restoration Times
 
4.1 Telstra will use its best efforts to respond to have a Response Time of no more than 1 hour.
 
4.2 Telstra will use its best efforts to have a Restoration Time of no more than 12 hours.
 
4.3 Restoration means the elimination of the relevant Fault, whether by means of a temporary or permanent resolution to the relevant problem.
 
4.4 Telstra is not liable for failing to meeting a target Restoration Time if the failure was caused by:
  4.4.1 a fault in the TWI CPE or other equipment or software that does not form part of TWI Global;
  4.4.2 causes external to TWI Global;
  4.4.3 Force Majeure; or
  4.4.4 a Scheduled Outage.
 
4.5 Notwithstanding paragraph 4.4, if Telstra performs any work to attempt to remedy a problem in:
  4.5.1 the TWI CPE; or
  4.5.2 TWI Global resulting from the interference, negligence or wilful damage of the Customer or a breach of this Agreement by the Customer, (a "Customer Problem"), then
    (i) the Customer must pay Telstra its then current rates for performing such work; and
    (ii) Telstra may cease work at any time without incurring any liability for failing to correct the Customer Problem.
 
5 Scheduled Outages
 
5.1 Telstra will use its best efforts to give the Customer a minimum of 5 Business Days' notice of any Scheduled Outage.
 
5.2 Telstra will use its best efforts to ensure that a Scheduled Outage is performed between 9.00pm and 7.00am Local Time.
 
5.3 Telstra will use its best efforts to ensure that Scheduled Outages will not, in aggregate, exceed:
  5.3.1 seven hours per week; and
  5.3.2 fourteen hours per quarter.
 
6 General Network Availability Level
 
6.1 The general network availability level is the percentage of time an access router in the TWI Network is available to the Customer during each Month. Scheduled Outages in a month are not counted as time when the network is unavailable. ("General Network Availability Level").
 
6.2 The General Network Availability Level is measured from the central point on the TWI Network as nominated by Telstra ("Central Point"). IP packets will be sent several times an hour each day from the Central Point to each access router in the TWI Network. A record will be kept at the Central Point of the number of times an access router does not respond to the IP packet request as well as the total number of IP packets sent. At the end of each Month, having taken into account Scheduled Outages, the non-responses will be aggregated for each router and divided by the total number of packets sent to such router to calculate the percentage availability for that router.
 
6.3 Telstra will use best efforts to ensure the General Network Availability Level at each access router is no less than 99.85% for any Month.
 
7 General Network Performance Levels
 
7.1 The general network performance levels are defined by "transit delay" in milliseconds and "packet loss" ("General Network Performance Levels").
 
Transit Delay
7.2 The transit delay will be established by measuring the time taken to send an IP packet and receive an acknowledgment to that IP packet sent from the Central Point to an access router in a TWI Point of Presence or a remote end router in the USA which terminates Telstra's cable connection between Australia and the USA. The transit delay will be measured for each access router and remote end router in the TWI Network. The minimum transit delay for each access router and remote end router in each Month will be noted ("Monthly Minimum").
 
7.3 Telstra will use best efforts to ensure that :
  7.3.1 the time taken in any Month for an IP packet to travel between the Central Point and the TWI access router to which the Customer is attached at the TWI Point of Presence is no greater than twice the Monthly Minimum for that access router; and
  7.3.2 the time taken in any Month for an IP packet to travel between the Central Point and the remote end router is no greater than twice the Monthly Minimum for that remote end router.
 
Packet Loss
7.4 Packet loss will be measured by sending IP packets at random from the Central Point to each access router in the TWI Network and to each remote end router in the USA which terminates Telstra's cable connection between Australia and the USA. The IP packets will then be counted, a loss figure determined and the percentage loss calculated. These percentages will be averaged each Month to produce a Monthly average.
 
7.5

Telstra will use best efforts to ensure that the average packet loss for any Month is no greater than 3%.

 

ANNEXURE B
Telstra Wholesale ATM Service Schedule
 
Addendum 1     Definitions
1 In this Service Schedule the following words have these meanings:
 
  Access Bandwidth means the access line speed of the Interface provided or derived by limiting SIR and PIR values up to the access speed of the Physical Bandwidth expressed in Mbit/s.
 
  Act means the Telecommunications Act 1997 (Cth).
 
  ATM Service means a cell-switched data carriage service connecting intelligent end-points within Australia and internationally.
 
  A-End means the Customer-specified first Site.
 
  ATM PoP means a Telstra exchange with appropriate ATM infrastructure and capacity from which an ATM Service is provisioned.
 
  Backup PVC/PVP is a backup circuit which allows continued service operation in case of a failure or outage occurring in respect of the primary PVC/PVP.
 
  B-End means the Customer-specified second or other Site.
 
  Capital City means Adelaide, Brisbane, Canberra, Darwin, Hobart, Melbourne, Perth and Sydney.
 
 

CBD means an ATM Service provisioned from one of the ATM PoPs listed below:
  Charging PoP is defined in paragraph 3.1 of Addendum 3.
 
  Commencement Date means the date Telstra notifies the Customer that the first ATM Service to be supplied under this Service Schedule is ready to be activated.
 
  Customer Premises Access means the provision by Telstra of an ATM Service to a Customer Site.
 
  Customer Premises Equipment or CPE means any equipment installed (or to be installed) on the Customer side of the Network Boundary in connection with the provision of the ATM Service, including routers, modems, filters, cabling, data terminal equipment and software.
 
  Customer Site means premises under the control or possession of the Customer which are made available for the installation of the ATM Service.
 
 

DSL Services means Telstra Wholesale Broadband DSL:

  • Layer 2 ' previously known as L2TP;
  • Layer 2 Data ' previously known as BroadBand Xpress;
  • Layer 3 Asymmetrical ' previously known as FlexStream; and
  • Layer 3 Symmetrical ' previously known as CommerceStream.
 

ER means effective information rate and is based on the PIR, SIR, MBS, PVC/PVP Service Class and cell delay variance tolerance. The ER of an Access Bandwidth will:

  • equal the Access Bandwidth, where the Access Bandwidth is less than the Physical Bandwidth; and
  • be less than the Access Bandwidth, where the Access Bandwidth is equal to the Physical Bandwidth.
  ESA Exchange means the relevant Telstra local exchange for an Exchange Service Area.
 
  Exchange Service Area means an allocated group of telephone numbers for call charging purposes, as listed in the Public Switched Telephone Service (PSTS) Section of the SFOA.
 
  Express 4 has the meaning set out in paragraph 3.1 of Addendum 4.
 
  Express 8 has the meaning set out in paragraph 3.1 of Addendum 4.
 
  Extended Charging Zone has the meaning set out in paragraph 4.1 of Addendum 4.
 
  Fault means a service difficulty reported by the Customer to the National Wholesale Service Centre and determined by Telstra to be a problem which it is Telstra's responsibility under this Agreement to rectify.
 
  Feasibility Study means a study undertaken by Telstra to determine whether it is commercially and operationally viable to install the ATM Service at a Site.
 
  Frame Relay means Telstra's frame-switched data carriage network connecting intelligent end-points within Australia, New Zealand and the United Kingdom.
 
  Interface means the digital transmission point at the Network Boundary at either the A-End or B-End which is dedicated to an individual Customer's ATM Service.
 
  Local Call Area means the area within which a call between points would be classified as a local call according to the Public Switched Telephone Service (PSTS) section of the SFOA.
 
  MBS means the maximum burst size which is an ATM Service performance parameter defining the duration of transmission at peak rate given the PVC/PVP Service Class.
 
  Metro PoPs are defined at paragraph 3.1 of Addendum 3.
 
  Metropolitan Area, Metro Area or Metro means the Local Call Area of a Capital City.
 
  Minimum Monthly Charge is the minimum monthly aggregate charge relating to Access Bandwidth Charges and PVC/PVP Charges for a given month as set out in paragraph 14 of Addendum 3.
 
  Minimum Term means 24 months from the Commencement Date.
 
  National Wholesale Service Centre means the Telstra National Wholesale Service Centre, telephone number 180 2288.
 
  Network Boundary means the point at which:
  (a) if there is a main distribution frame in the building and the Interface is connected to the frame or fibre patch panel - on the side nearest to Telstra; or
  (b) if paragraph (a) does not apply but the line is connected to a network termination device located in, or near to, the building - the side of the device nearest to the Customer; or
  (c) if neither paragraph (a) or (b) applies - the point ascertained in accordance with section 22 of the Act.
 
  Permanent Virtual Circuit or PVC means a permanent logical association existing between two dedicated customer communicating data terminals for the exchange of data cells. PVCs will be provided in the form of permanent virtual channel connections and will be accessible at Interfaces using Vpi/Vci addresses.
 
  Permanent Virtual Path or PVP means a permanent logical association existing between two dedicated customer communicating data terminals for the exchange of data cells. PVPs will be provided in the form of permanent virtual path connections and will be accessible at Interfaces using only the Vpi address.
 
  Physical Bandwidth means the maximum access line speed at which data can be transmitted on a given Interface expressed in Mbit/s.
 
  PIR means peak information rate, which is the maximum speed at which data can be introduced into the ATM network on a given PVC/PVP.
 
  Premier has the meaning set out in paragraph 3.1 of Addendum 4.
 
  PVC/PVP Service Class has the meaning set out in paragraph 4.4 of Addendum 2.
 
  Remote Area has the meaning set out in paragraph 4.1 of Addendum 4.
 
  Regional PoPs are defined at paragraph 3.1 of Addendum 3.
 
  Repair Time means the period of time between Telstra determining that a reported failure in the normal operation of the ATM Service is a Fault and repair of the Fault by Telstra.
 
  Rural Area has the meaning set out in paragraph 4.1 of Addendum 4.
 
  Scheduled Outages means those occasions where Telstra performs scheduled maintenance upgrades or repairs to the Telstra network and all or part of an ATM Service is not available as a result.
 
  Service Assurance Package means either Premier, Express 4 or Express 8.
 
  Service Rebate has the meaning given to it by paragraph 6 of Addendum 4.
 
  Service Term means the term specified in paragraph 1 of Addendum 2.
 
  SFOA means all standard forms of agreement including pricing information formulated by Telstra (for the purposes of Part 23 of the Act) as varied by Telstra from time to time.
 
  SIR means sustained information rate which is the maximum average speed over time that data can be transmitted over a given PVC/PVP.
 
  Site means either:
  (a) an area within a Telstra exchange; or
  (b) a Customer Site.
 
  Sitelight Infrastructure refers to Telstra's SDH-based access transmission infrastructure.
 
  Telstra Premises Access means the provision of an ATM Service by Telstra to CPE which is located in a Telstra exchange.
 
  Telstra's Standard Hours of Business has the meaning set out in paragraph 13.1 of Addendum 3.
 
  Urban Area has the meaning set out in paragraph 4.1 of Addendum 4.
 
  Vci means virtual channel identifier which is a unique numerical tag defined by a 16 bit field in the ATM cell header that identifies the virtual channel over which the cell should be routed.
 
  Virtual Connection for an ATM Service means a virtual circuit connecting the ATM Service from the A-End to the B-End.
 
  Vpi means virtual path identifier which is a unique numerical tag defined by an 8 bit field in the ATM cell header that identifies the virtual path over which the cell should be routed.
 
  Wholesale ATM Technical Specification means the document called Wholesale ATM TSIS (Telstra Service Interface Specification) which will be provided to the Customer on application for the ATM Service.
 
  Zone has the meaning set out in paragraph 4.1 of Addendum 4
 
2 Definitions used in this Service Schedule have the meanings given in Addendum 1 paragraph 1 of this Service Schedule and in clause 1.1 of the Agreement.
 
3 The following provisions in the Agreement are not applicable to the ATM Service:
  (a) Paragraph 1.6 in Annex F, which relates to contact details for reporting faults.
 
4 The parties acknowledge that the rights and obligations contained in this Service Schedule are in addition to the rights and obligations contained in the Agreement
 
Addendum 2   ATM Service
1. Service Term
 
1.1 This Service Schedule comes into force on the date it is added to the Agreement ("Schedule Date"). Telstra will supply the ATM Service during the period this Service Schedule is in force.
 
1.2 Subject to any termination or extension rights the parties have under this Agreement, this Service Schedule ends 24 months from the Schedule Date ("Initial Period") unless the parties otherwise agree.
 
1.3 The parties may agree to extend the operation of this Service Schedule beyond the Initial Period until:
  (a) either party gives the other party 30 days written notice of termination; or
  (b) this Agreement or this Service Schedule is otherwise terminated.
 
1.4 The Customer accepts an Individual Service on the terms and conditions set out in this Service Schedule and this Agreement for the period from the Start Date until the first to occur of:
  (a) termination or cancellation of the Individual Service;
  (b) the expiry or termination of this Service Schedule; or
  (c) the expiry or termination of this Agreement.
 
2 Description of ATM Service
 
2.1 The ATM Service consists of:
  (a) connection from the ATM PoP to the Network Boundary at the A-End;
  (b) connection from the ATM PoP to the Network Boundary at the B-End;
  (c) one or more PVC/PVP from the A-End to the B-End;
  (d) Interfaces for the ATM Service; and
  (e) maintenance of Telstra-owned plant and facilities.
 
Access Bandwidth
2.2 Subject to paragraph 2.3, the Access Bandwidths which are available are set out in Table 1 below along with the corresponding Physical Bandwidths. The provision of a non-standard Physical Bandwidth is at Telstra's absolute discretion.
2.3 Access Bandwidth above 155Mbit/s is only available in CBD and limited locations within Metro Areas.
 
2.4 If the Customer requires an Access Bandwidth which is listed as Price on Application (POA) in Tables 3 and 4 of Addendum 3, the ATM Service will only be provided after Charges have been agreed with the Customer.
 
3 PVCs and PVPs
 
3.1 PVC/PVP speeds will be limited by the ER of the Access Bandwidth.
 
3.2 PVC/PVP speeds are based on throughput specified by the SIR nominated by the Customer and are available between 8kbit/s and 34Mbit/s.
 
3.3 PVCs/PVPs acquired under this Service Schedule cannot be used for DSL Services.
 
PVC/PVP Service Classes
3.4 There are three PVC/PVP Service Classes:
  (a) Variable Bit Rate - Non-Real Time (VBR-nrt);
  (b) Variable Bit Rate - Real Time (VBR-rt); and
  (c) Constant Bit Rate (CBR).
 
3.5 VBR-nrt and VBR-rt PVC/PVPs are characterised by SIR, PIR and MBS parameters. The PIR will be defaulted by Telstra to correspond to the lower of either the Access Bandwidth or twice the SIR. Upon request, Telstra will advise the applicable PIR, SIR and MBS.
 
3.6 For CBR PVC/PVPs, MBS will not apply and the PIR will be equal to the SIR.
 
Interworking with Frame Relay
3.7 VBR-nrt PVCs can interwork with Frame Relay at SIR speeds between 8kbit/s and 16Mbit/s. When the ATM Service is interworking with Frame Relay, the PIR will normally be set at the Frame Relay Interface rate.
 
3.8 VBR-rt and CBR PVCs/PVPs do not interwork with Frame Relay.
 
Backup PVC/PVP
3.9 The Customer may request that Telstra provide Backup PVCs/PVPs, although Telstra is under no obligation to provide Backup PVCs/PVPs.
 
3.10 Telstra will monitor traffic utilisation on Backup PVCs/PVPs and reserves the right to charge the relevant primary PVC/PVP Charge if, within any given monthly period, it is established that a Backup PVC/PVP has been used in excess of 10% of the time measured in terms of SIR utilisation.
 
3.11 Backup PVCs/PVPs must be associated with a Customer-designated primary PVC/PVP with a least one end of the Backup PVC/PVP terminating at the same Site as the primary PVC/PVP. Backup PVCs/PVPs are only available where both the A-End and B-End are within Australia.
 
4 Installation
 
4.1 When ordering an ATM Service under this Service Schedule, the Customer must use the relevant application form which is available from its Telstra Business Team Contact.
 
5 Feasibility Study
 
5.1 Telstra may undertake a Feasibility Study on any Customer order for an ATM Service.
 
5.2 If Telstra determines that it is feasible to install the ATM Service at a Site then Telstra will install the ATM Service at that Site on receiving confirmation from the Customer that it still requires the ATM Service at that Site. If Telstra determines that it is not feasible to install the ATM Service at a Site, Telstra is under no obligation to install the ATM Service at that Site.
 
5.3 If after the completion of a positive Feasibility Study the Customer cancels the order for the ATM Service to which the Feasibility Study related, Telstra may charge the Customer an early cancellation Charge as set out in paragraph 10 of Addendum 3.
 
6 Project Manager
 
6.1 Telstra will provide a project manager to assist with the installation of the ATM Service (at no cost) until the completion of installation. The Customer must also nominate its own project manager who will work with the Telstra project manager during the installation of the ATM Service.
 
7 Telstra Premises Access
 
7.1 Telstra Premises Access is only available in Telstra exchanges where the Customer has an existing Facilities Access Agreement (or facilities access arrangements under a Customer Relationship Agreement) with Telstra under which Telstra has agreed to allow CPE to be located in that exchange.
 
8 Safety at Sites
 
8.1 The Customer must, at its cost, take all safety precautions reasonably necessary to ensure the safe and proper performance by Telstra of all work at the Customer's Sites.
 
9 Indicative Provisioning Lead Times
 
9.1 The Customer will be advised of the Indicative Provisioning Lead Times for ATM Services by their Telstra Business Team Contact.
 
10 PVC/PVP installation
 
10.1 Telstra will use its reasonable endeavours to provide, modify or change PVCs or PVPs:
  (i) within five Business Days of the request by the Customer if the ATM Service has been connected at both the A-End and B-End; and
  (ii) otherwise, within the Indicative Provisioning Lead Time for the ATM Service in accordance with paragraph 9.1.
 
11 Customer Premises Equipment
 
11.1 It is the Customer's responsibility to advise Telstra of its CPE configuration so that the ATM Service may be set with compatible configurations throughout the network. If the Customer does not identify the correct configuration, the Customer will be liable to Telstra for any expenses incurred by Telstra relating to the identification of the fault and reconfiguring the ATM Service.
 
11.2 The Customer must pay any costs and expenses incurred by Telstra in replacing or repairing plant, equipment or other Telstra property that is damaged or destroyed at any time as a result of connection of CPE to a Telstra public telecommunications network or as a result of any modification to, or interference by, the CPE with any Telstra property.
 
11.3 The Customer must use equipment associated with an ATM Service which complies with all relevant ACA technical requirements.
 
11.4 Telstra will connect existing CPE to the ATM Service if:
  (a) it has been installed by a registered service provider; and
  (b) it has been installed to and continues to meet minimum technical requirements determined by the ACA.
 
12 Use with other services
 
12.1 If the Customer wishes to use the ATM Service with another Telstra product or service, or with a third party product or service, the Customer must first notify and discuss its requirements with Telstra. The Customer acknowledges that Telstra has made no representation, and has not given any undertaking or warranty, that the ATM Service will work with, or facilitate the use of, any other product or service.
 
12.2 The Customer may only resell or resupply the ATM Service as a component or element of another service supplied by the Customer.
 
13 Suspension or cancellation of the ATM Service
 
13.1 Telstra may suspend, limit or cancel an ATM Service if Telstra is unable to enter the Site to inspect, repair or maintain a Facility associated with an ATM Service provided to the Customer.
 
13.2 If a Customer terminates the provision of an ATM Service the Customer must pay an early termination Charge, in accordance with paragraph 11 of Addendum 3.
 
14 Wholesale ATM Technical Specification
 
14.1 The Customer must comply with the obligations of the "service provider" set out in the Wholesale ATM Technical Specification.
 
15 Cancellation of last Virtual Connection
 
15.1 If the Customer cancels the last Virtual Connection for an ATM Service, the ATM Service will be automatically cancelled, unless the Customer has obtained Telstra's consent to continue to acquire the ATM Service.
Addendum 3   Charges
1A Review of Charges
 
1A.1 Subject to paragraph 1A.3 of this Addendum 3, the Charges in this Addendum 3 are valid for the Minimum Term.
 
1A.2 At any time after the one year anniversary of the Commencement Date, the Customer may on written notice request a meeting with Telstra to review the Charges for the ATM Service. The meeting may only be requested where the Customer provides evidence to Telstra in the notice that the market price for services equivalent to the ATM Service are less than the Charges in this Addendum 3.
 
1A.3 If a meeting is requested under paragraph 1A.2, the parties will meet and will negotiate in good faith appropriate revisions (if any) to the Charges in this Addendum 3. If any revised Charges are agreed, they will take effect on a date to be agreed between the parties. If the parties are unable to agreed revised Charges, the Charges will remain unchanged as set out in this Addendum 3.
 
1 Charges
 
1.1 The Charges for the ATM Service are:
  (a) Installation;
  (b) Access Bandwidth;
  (c) PVC/PVP;
  (d) Backup PVC/PVP;
  (e) Network Alteration - ie adds, moves and changes;
  (f) Early Cancellation;
  (g) Early Termination;
  (h) Service Assurance; and
  (i) Additional Works.
 
1.2 Annual Charges are pro rated and billed on a monthly basis. The Customer will be billed for their total Access Bandwidth even though the Customer may not use all that bandwidth.
 
1.3 Charges stated in this Addendum are GST-exclusive.
 
2 Installation Charges
 
2.1

Subject to paragraph 13 of this Addendum 3, the Charges for installation of ATM Services (according to the Physical Bandwidth selected) are set out in Table 1 below.

3 Access Bandwidth Charging Principles
 
3.1 A Charging PoP means an ATM-enabled Telstra exchange which is used as the reference point (for charging purposes only) in determining the Access Bandwidth Annual Charge for a particular Site ("Charging PoP").
 
  Telstra's Charging PoPs are located at these exchanges:
3.2 The Annual Charge for Access Bandwidth is determined by the distance between the ESA Exchange and the Charging PoP nearest to the Site.
 
4 Access Bandwidth Annual Charges
 
4.1 The Access Bandwidth Annual Charges:
  (a) are set out in Table 3 (where the Site is located in a Telstra exchange); and
  (b) subject to paragraph 4.1A where the Site is a Customer Site are set out in Table 4;
 
4.1A

The Access Bandwidth Annual Charges within the Metro Area of Sydney, Melbourne, Perth, Adelaide, Canberra, Hobart or Brisbane where the Site is a Customer Site for certain specified Access Speeds are set out Table 4A.

5 PVC/PVP Charging Principles
 
5.1 The Annual Charges for PVCs and PVPs will be based on:
  (a) the distance between the ESA Exchanges for the A-End and the B-End;
  (b) the PVC/PVP Service Class selected; and
  (c) the SIR.
 
6 PVC Annual Charges
 
6.1

The PVC Annual Charges are set out in Tables 5, 6 and 7 below.

Table 5 - VBR-nrt PVC Annual Charges

8 Back-up PVC/PVP Charges
 
8.1 The Annual Charge for a Back-up PVC/PVP will be 10% of the Annual Charge payable for the primary PVC/PVP.
 
8.2 If the Backup PVC/PVP is used in excess of 10% of SIR utilisation within any given month, an additional Charge equal to 90% of the primary PVC/PVP Charge will be payable for that month for the Backup PVC/PVP.
 
9 Network Alteration Charges
 
9.1

The Network Alteration Charges are set out in Table 9 below.
10 Early Cancellation Charges
 
10.1

If the Customer cancels an order for the ATM Service before final installation of the ATM Service, Telstra may charge the Customer an early cancellation Charge as set in Table 10.
10.2 The parties acknowledge that the amounts payable by the Customer to Telstra under paragraph 10.1 are payable by way of liquidated damages and represent the parties genuine pre-estimate of the loss caused to Telstra by the cancellation of an ATM Service prior to final installation.
 
11 Early Termination Charges
 
11.1 If before the end of the Minimum Term:
  (a) the Customer cancels the ATM Service;
  (b) the Customer terminates the Agreement;
  (c) Telstra cancels the ATM Service for breach by the Customer; or
  (d)

Telstra terminates the Agreement for breach by the Customer,
(each a “Relevant Event” for the purposes of this paragraph 11), the Customer must pay Telstra the following sum within 30 days of the Relevant Event:

11.2 The parties acknowledge that the amounts payable by the Customer to Telstra under paragraph 11.1 are payable by way of liquidated damages and represent the parties genuine pre-estimate of the loss caused to Telstra by the early cessation of the acquisition of an ATM Service.
 
12 Service Assurance Package Annual Charges
 
12.1

The Customer must pay additional Charges for Express 4 and Express 8 for each ATM Service (on a per Interface basis) as set out in Table 11 below.

13 Additional Works Charges
 
13.1 For the purposes of this paragraph 13, Telstra's standard hours of business are 8.00am ' 5.00pm on Business Days ("Telstra's Standard Hours of Business").
 
13.2 Additional Charges apply for work requested by the Customer:
  (a) to be performed outside Telstra's Standard Hours of Business (other than work associated with Service Assurance Packages) including installation; or
  (b) for miscellaneous works associated with service activation (eg access line testing, or exchange line conditioning, and where Telstra's exchange access lines have been shown to meet the transmission performance standards); or
  (c)

a Customer Problem (as defined under paragraph 1.3 of Addendum 4),
as follows:
14 Additional Monthly Charge
 
14.1

If in any month the aggregate of the Access Bandwidth and PVC/PVP Charges (as set out in Tables 3 -8) ("Aggregate Monthly Charge") is less than the Minimum Monthly Charge for that month as set out below, the Customer must pay an additional monthly Charge equal to the difference between the Minimum Monthly Charge and the Aggregate Monthly Charge for that month.
14.2 The parties acknowledge that the Charge in paragraph 14.1 reflects a minimum spend commitment and that the Access Bandwidth Charges and PVC/PVP Charges have been agreed on the basis of, and reflect, this minimum spend commitment.
 
 
Addendum 4   Service Assurance
1 General Principles
 
1.1 Telstra's obligations under this Addendum, including meeting a Repair Time, do not extend to service difficulties caused as a result of:
  (a) any fault in equipment, software or any network not forming part of the ATM Service;
  (b) damage due to causes external to the ATM Service;
  (c) Force Majeure; or
  (d) Scheduled Outages.
 
1.2 Notwithstanding paragraph 1.1, if Telstra performs any work to attempt to remedy a problem in:
  (a) Customer Premises Equipment (unless such equipment is covered by a separate agreement with Telstra);
  (b) the ATM Service resulting from interference, negligence or wilful damage of the Customer or a breach of this Agreement by the Customer, (a "Customer Problem"), then
  (c) the Customer must pay Telstra additional works Charges for performing such work as set out in paragraph 13 of Addendum 3; and
  (d) Telstra may cease work at any time without incurring any liability for failing to correct the Customer Problem.
 
1.3 The Customer must provide Telstra with:
  (a) reasonable access to Sites and Customer Premises Equipment subject to Telstra's compliance with the Customer's usual security and access requirements; and
  (b)

other assistance reasonably requested by Telstra,

in a timeframe which will enable Telstra to meet its commitments under this Agreement. If the Customer is unable to do so, then the timeframe within which Telstra must meet its commitments under this Agreement will be extended by the amount of time which lapses before the Customer is able to provide the required assistance or access.
 
1.4 The Customer must comply with all operational procedures and methods that are determined by Telstra to be reasonably necessary for Telstra to meet the relevant target Response and Repair Times set out in this Addendum 4.
 
2 Reporting a Fault to Telstra
 
2.1 The Customer must report details of a suspected fault to the National Wholesale Service Centre, and must provide the following details:
  (a) the name of the Customer;
  (b) the ATM Service affected;
  (c) the Customer contact point(s) including site contact if site attendance is required;
  (d) contacts at both ends of the ATM Service (where appropriate);
  (e) details of the suspected fault symptoms; and
  (f) confirmation that it has already addressed the possible sources of the service difficulty.
 
2.2 Telstra will give the Customer a reference number for the suspected Fault.
 
2.3 If an on-site visit is required Telstra will arrange an appropriate appointment time with the Customer Premises Contact.
 
3 Service Assurance Packages
 
3.1

Subject to paragraphs 4 and 5 of this Addendum 4, Telstra will use its reasonable endeavours to meet the target Response and Repair Times for the Service Assurance Packages selected by the Customer for its ATM Services, as set out in Table 1 below.
3.2 Telstra's hours of business for reporting suspected Faults are 24 hours a day 7 days a week (including public holidays).
 
3.3 The target Response Times and Repair Times apply 24 hours a day, 7 days a week (including public holidays).
 
3.3 The Service Assurance Package for the ATM Service will be Premier unless Express 4 or Express 8 is available for the ATM Service and the Customer has selected and paid for Express 4 or Express 8. The Customer may change their Service Assurance Package at any time.
 
3.4 Service Assurance Packages for ATM Services cover maintenance of Telstra infrastructure provided as part of the ATM Service up to the Network Boundary. For the avoidance of doubt this includes the access component from the ATM PoP to the Network Boundary, Interfaces and the PVCs/PVPs. Maintenance of Customer Premises Equipment is not included.
 
4 Target Repair Times in Urban, Rural and Remote Areas
 
4.1 For the purposes of this Addendum 4:
  (a) Urban Area means an area with a population of 10,000 or more;
  (b) Rural Area means an area with a population of 200 or more but less than 10,000 and not an area within an Extended Charging Zone;
  (c) Remote Area means an area with a population of less than 200 or an area included in an Extended Charging Zone;
  (d) Extended Charging Zone means an area defined by an allocated group of telephone numbers, for call charging purposes, in remote regions of Australia as described in the Public Switched Telephone Service (PSTS) section of the SFOA; and
  (e) Zone means either an Urban Area, Rural Area or Remote Area.
 
4.2 The target Repair Times set out in paragraph 3 above apply to Urban Areas only and will be extended by one Business Day in Rural Areas, and by two Business Days in Remote Areas.
 
4.3 Unless otherwise agreed by Telstra and the Customer, where the A-End of an ATM Service is in a different Zone to the B-End, the target Repair Time will be as for the Zone which provides for the greater amount of target Repair Time.
 
5 Conditions applying to Express 4 and Express 8 Packages
 
5.1 The Customer may only select Express 4 for an ATM Service:
  (a) if both the A-End and the B-End of the relevant ATM Service are located in an Urban Area;
  (b) where access is on Sitelight Infrastructure or equivalent infrastructure; and
  (c) Telstra has agreed to provide Express 4 for the specified ATM Service.
 
5.2 The Customer may only select Express 8 for an ATM Service:
  (a) if both the A-End and the B-End of the relevant ATM Service are located in an Urban Area; or
  (b) Telstra has agreed to provide Express 8 for an ATM Service located in a specified Rural Area or Remote Area.
 
6 Service Rebate
 
6.1

If the Customer reports a Fault and Telstra does not meet the target Repair Time for that Fault on the ATM Service(s) concerned, or within such other times as agreed with the Customer, Telstra will provide the following Service Rebates:

6.2 To claim a Service Rebate, the Customer must:
  (a) notify the National Wholesale Service Centre or their Telstra Business Team Contact of the failure to meet a target Repair Time, within one month of the original Fault report; and
  (b) at that time, provide Telstra with the following details:
 
    (i) the Customer's name and address;
 
    (ii) the relevant Telstra account number/national number/service number;
 
    (iii) the relevant Fault reference number; and
 
    (iv) the reason for dissatisfaction.
 
6.3 In the event of any dispute about whether Telstra has met the relevant target Repair Time Telstra's decision will be final.
 
6.4 Subject to any statutory obligations which cannot be excluded, Telstra's sole liability for failing to meet the relevant target Repair Time under a Service Assurance Package is the relevant Service Rebate.
 

ANNEXURE C

Telstra Wholesale Broadband DSL Layer 2 Service Schedule
 

Addendum 1   Definitions and Interpretation

 

1

1.1

Definitions

In this Service Schedule the following words have these meanings:

Additional End User Charge has the meaning in paragraph 2A of Addendum 3.

ADSL means asymmetrical digital subscriber line technology for the transmission of digital information at high bandwidths on twisted metallic pairs, which has physical and electrical characteristics that conform with:

2 Interpretation
 
 
2.1 Paragraph 1.6 in Annex F to this Agreement, which relates to contact details for reporting Faults, is not applicable to the DSL-L2 Service.
 
2.2. A reference to a specification or standard in this Service Schedule includes that specification or standard as from time to time issued, updated or adopted by Telstra.
 
2.3 In the event of any inconsistency between this Service Schedule and any specification or standards document referenced in this Service Schedule, then this Service Schedule prevails.
 
2.4 Where any provision of this Service Schedule specifies the circumstances in which Telstra may suspend, limit or cancel the provision of the DSL-L2 Service or an Individual Service, that provision applies in addition to, and not instead of, the provisions set out in the remainder of this Agreement outside this Service Schedule.
 
2.5 A reference to a transmission rate in this Service Schedule is a reference to a maximum transmission capability and is not a guarantee that the transmission rate will be achieved. In particular, the actual data transmission rate which can be achieved is likely to be less than the maximum transmission capability because of dimensioning, overhead and other technical reasons.
 
2.6

This Service Schedule does not deal with and does not confer upon the Customer, any rights in relation to Facilities owned or operated by Telstra, under Parts 3 or 5 of Schedule 1 of the Telecommunications Act.

 


 
Addendum 2   The DSL-L2 Service
 
1 The DSL-L2 Service
 
1.1 The DSL-L2 Service is comprised of the following components:
  (a) one or more End User Accesses connected to an Aggregation Point in each State (noting that there may be more than one Aggregation Point in each State); and
  (b) one or more AGVCs per Aggregation Point. The current minimum number of AGVCs required to obtain coverage of all connected End Users in a particular State is provided in Table 1.1 of Addendum 2. As the DSL-L2 Service network evolves: 
    (i) up to 3 AGVCs may be required to maintain coverage of all connected End Users in a particular State; and
    (ii)

Telstra may notify the Customer that South Australia and the Northern Territory are no longer to be regarded as one State for the purposes of Table 1.1 of Addendum 2.
1.2 The DSL-L2 Service provides the Customer with an aggregated stream of PPP sessions via a Layer 2 Tunnelling Protocol. It allows the End User to open up to 8 PPPoE sessions or 1 PPPoA session. It does not support bridged or routed connections.
 
1.3 Subject to paragraph 1.4, the DSL-L2 Service does not include authentication, accounting or authorisation of the End User session except that Telstra will authenticate the domain name.
 
1.4 Where the Customer is provided with the Customer-Managed Wildcard MDN Feature the Customer will authenticate domain names.
 
1.5 Because of the technical configuration of the DSL-L2 Service, End User Accesses supplied to the Customer will only be linked with an AGVC supplied to the Customer, so that the End User will only be able to use the Individual Service to logon to the Customer and not other service providers acquiring the DSL-L2 Service from Telstra.
 
1.6 End User to End User configurations involving the direct connection of End Users within the same ADSL CAM or between ADSL CAMs are not supported by the DSL-L2 Service.
 
2 General
 
2.1 The Customer acknowledges that the DSL-L2 Service is available only to Wholesale Customers and warrants that it is a Wholesale Customer.
 
2.2 To the extent permitted by law, the Customer must not supply the DSL-L2 Service to a third party for resale by that third party without Telstra's prior written consent, such consent not to be unreasonably withheld.
 
ATM Service
 
2.3 The Customer must acquire either Customer Premises Access or Telstra Premises Access from Telstra in order for Telstra to deliver the DSL-L2 Service traffic from the ATM POP to the Customer. If, at the date of this Service Schedule, the Customer is acquiring an SFOA ATM Service for the carriage of DSL-L2 Service traffic from the ATM POP to the Customer, the Customer must cease using that SFOA ATM and must acquire a Wholesale ATM Service upon reasonable notice by Telstra to the Customer.
 
2.4 The Customer acknowledges that the terms on which Telstra supplies Customer Premises Access and Telstra Premises Access (including Charges) are described in the ATM Service Schedule.
 
Use of AGVCs
 
2.5 AGVCs supplied as part of the DSL-L2, DSL-L3A or DSL-L3S Services may be used to aggregate DSL-L2, DSL-3A and/or DSL-L3S Service data traffic.
 
2.6 Subject to paragraph 2.5, the Customer will be required to acquire AGVCs to receive the DSL-L2 Service from Telstra under this Service Schedule, which AGVCs may not be AGVCs supplied with, or used in the supply by Telstra of, another Telstra Wholesale Service.
 
Load Sharing
 
2.7 For technical or operational reasons, Telstra may, on reasonable notice, require the Customer to implement Load Sharing.
 
2.8 The Customer must comply with Telstra's configuration instructions in relation to Load Sharing.
 
Qualified Pairs
 
2.9 The Customer acknowledges that Telstra can only supply an Individual Service over a Qualified Pair where Telstra supplies operational standard telephone services over the same Qualified Pair and accordingly:
  (a) the Customer warrants to Telstra that the End User to whom the Customer provides services using the Individual Service over a Qualified Pair is the same End User to whom Telstra or a reseller of Telstra supplies a standard telephone service using that Qualified Pair;
  (b) Telstra will only provide the Individual Service to the Customer for so long as the End User referred to in paragraph 2.9(a) continues to acquire that standard telephone service from Telstra or a reseller of Telstra using that Qualified Pair; and
  (c) where the End User ceases to acquire a standard telephone service from Telstra or a reseller of Telstra using that Qualified Pair, Telstra will terminate the provision of the Individual Service over that Qualified Pair.
 
Monitoring Services
 
2.10 The Customer:
  (a) acknowledges that in some instances, such as where the End User is acquiring a Monitoring Service, additional CPE such as central splitters and network termination devices will have to be installed by the Customer at its own cost before Telstra will provide an Individual Service in respect of that End User, in order to maintain continued supply of security and similar services to the End User. This will also apply where a Monitoring Service is supplied subsequent to an Individual Service being supplied to that End User; and
  (b) warrants that where such additional CPE is required, the additional CPE will be installed prior to the provision of the Individual Service by Telstra.
 
Installation of Individual Services
 
2.11 In respect of each Individual Service:
  (a) the Customer warrants that it has obtained the End User's written acknowledgment that the installation and operation of the Individual Service may cause temporary disruption in the standard telephone services received by the End User or a Monitoring Service;
  (b) the Customer warrants that it has obtained the End User's written acknowledgement that the installation and operation of a Monitoring Service may cause temporary disruption to an Individual Service;
  (c) the Customer warrants that it has obtained the End User's written acknowledgment that the installation and operation of an Individual Service may mean that Incompatible Products will not be supplied to the End User using the Qualified Pair;
  (d) the Customer warrants that it has obtained the End User's written acknowledgement that any provider of a Monitoring Service used by an End User has been notified that:
    (i) installation and operation of an Individual Service may cause temporary disruption in the standard telephone services or a Monitoring Service received by an End User; and
    (ii) installation of CPE such as central splitters and network termination devices may be required under paragraph 2.10(a) of this Addendum.
  (e) the Customer releases Telstra from all liability to the End User or the Customer, and indemnifies Telstra against all costs, expenses, liability, loss or damage incurred or suffered by Telstra in conjunction with any claims, actions or proceedings against Telstra (including third party claims or claims by an End User) arising out of the following (to the extent that the liability is caused by the provision or cancellation of the DSL-L2 Service):
    (i) disruption in the PSTN services or Monitoring Services;
    (ii) cancellation of the Individual Service;
    (iii) suspension of the provision of the Individual Service to particular IP Addresses;
    (iv) cancellation of, or refusals to provide, all Incompatible Products; and
    (v) possible breaches of the Telecommunications (Customer Service Guarantee) Standard in respect of that End User.
 
Service Configuration and Supply
 
2.12 The Customer is responsible for dimensioning and sizing all AGVCs.
 
2.13 The Customer agrees and acknowledges that the DSL-L2 Service is an "Internet-grade" product only, which means that successful data transport using the DSL-L2 Service is not guaranteed.
 
2.14 Telstra is responsible for supplying and integrating the components of the DSL-L2 Service, and while it will endeavour to meet the Customer's requests in relation to the DSL-L2 Service (including AGVCs and the Multiple Domain Name Feature), the Customer acknowledges that there may be technical, structural, architectural, provisioning or other constraints affecting Telstra's ability to do so. The Customer acknowledges that the availability or performance of the DSL-L2 Service and components of the DSL-L2 Service may vary, and an Individual Service may not be provided, depending on the available capacity of, the geographic and technical capability of, or other technical matters affecting, the relevant Telstra networks at the time at which a request for DSL-L2 Service is made or the time at which the DSL-L2 Service is delivered.
 
ADSL Material Licence
 
2.15 Telstra may from time to time provide the Customer with coverage maps indicating general availability of the DSL-L2 Service. Telstra may also provide other specified materials relating to the DSL-L2 Service. Use by the Customer of those maps and other specified materials will be at the discretion of Telstra and subject to the ADSL Material Licence terms and conditions set out in Addendum 5.
 
Transfer of End User Accesses
 
2.16 The Customer may transfer an End User Access between the DSL-L2 Service, DSL-L3A Service and DSL-L3S Service, subject to:
  (a) Telstra's prior approval;
  (b) compliance with the Service Schedule for the Service to which the End User Access is transferred; and
  (c) payment of any fee applying to such a move (which fee, in relation to transfer of an End User from or to the DSL-L2 Service, is set out in paragraph 4 of Addendum 3 of this Service Schedule).
 
Interception
 
2.17

The Customer must comply with its interception obligations under the Telecommunications Act 1989 in relation to the DSL-L2 Service.

 


 
3 Service Qualification
 
3.1 Service Qualification is a desktop analysis carried out by Telstra to determine various matters relating to aspects of the Pairs connecting End Users to the Telstra Data Network. This desktop analysis is based on information available in Telstra systems. These matters include:
  (a) line loss;
  (b) infrastructure availability;
  (c) Technology Blockers;
  (d) adjacent interference; and
  (e) Incompatible Products.
 
3.2 Telstra will make available to the Customer, via the Internet, a tool which will enable the Customer to carry out Limited Service Qualification of Pairs.
 
3.3 Where the Customer requests that Telstra perform a feasibility study for the provision of an Individual Service (in the absence of an Order), Telstra will carry out Service Qualification of Pairs, and will charge the Customer in accordance with paragraph 5 of Addendum 3 for doing so.
 
3.4 The Customer acknowledges that:
  (a) Service Qualification and Limited Service Qualification are desk studies carried out on the basis of information available to Telstra, and the results of the desk studies do not conclusively demonstrate that a Pair is suitable for the provision of the Individual Service;
  (b) Telstra is under no obligation to provide a Individual Service over a Pair, or to undertake any network modifications, rearrangements or harmonisation, if an Individual Service requested by a Customer does not pass Service Qualification;
  (c) the provision of the Individual Service over a Pair will prevent the supply by Telstra or other service providers of Incompatible Products to the relevant End User over that Pair, and that the Customer is responsible and liable to the End User in respect of that inability to supply Incompatible Products; and
  (d) where an End User is acquiring Incompatible Products over a Pair, Telstra will not provide the Individual Service to the Customer over that Pair.
 
4 Non-Telstra Equipment
 
4.1 For the avoidance of doubt, the DSL-L2 Service does not include the provision of cabling or equipment beyond the Network Boundary at the End User's Premises or at or beyond the point of interconnect at the ATM POP.
 
4.2 The Customer is wholly responsible for the Non-Telstra Equipment and any liability arising from the use of the Non-Telstra Equipment by any person.
 
4.3 The Customer must ensure that all services provided by it to an End User by means of the DSL-L2 Service and all Non-Telstra Equipment connected to the DSL-L2 Service complies with the following requirements:
  (a) all relevant ACA technical standards; and
  (b) ACIF S043.2:2001 Requirements for Customer Equipment for connection to a metallic local loop interface of a Telecommunications Network-Broadband.
 
4.4 The Customer must ensure that Non Telstra Equipment connected to the DSL-L2 Service:
  (a) meets the specifications and requirements of the Service Provider Technical Document and the End User Technical Documents;
  (b) at the End User side of the Network Boundary only, has passed Telstra's interoperability tests. The list of equipment that has passed these tests is at http://telstra.com.au/adsl/equipmnt.htm; and
  (c) is labelled with the ACA telecommunications compliance mark (A-tick as shown below).
5 Third Party IP Addresses
 
5.1 The Customer must provide Telstra with the registered IP Addresses to be used in routing DSL-L2 Service traffic to Non-Telstra Equipment.
 
5.2 The Customer warrants that:
  (a) it is the registered owner, or it has written permission from the registered owner, to use the registered IP Addresses provided under paragraph 5.1; and
  (b) the IP Addresses to be used do not fall within the Telstra IP Address Ranges.
 
5.3 Telstra may investigate the correctness of the warranties in paragraph 5.2, and if it does so, the Customer must provide Telstra with evidence of the correctness of the warranties.
 
5.4 If there is a breach of the warranties in paragraph 5.2, or if Telstra is investigating the correctness of those warranties, Telstra may:
  (a) refuse to route DSL-L2 Service traffic;
  (b) suspend the provision of an Individual Service; or
  (c) issue a temporary IP Address for use in routing traffic.
 
5.5 In addition to Telstra's rights under this Agreement, and without prejudice to any other right, claim or action it may have against the Customer, Telstra may terminate the provision of an Individual Service or the DSL-L2 Service where in Telstra's reasonable opinion the Customer has breached any or all of the warranties in paragraph 5.2.
 
5.6 The Customer must pay any reasonable costs incurred by Telstra in exercising its rights under paragraph 5.4 or paragraph 5.5.
 
5.7 The Customer releases Telstra from all liability to the End User or the Customer, and indemnifies Telstra against all costs, expenses, liability, loss or damage incurred or suffered by Telstra in connection with any claims, actions or proceedings against Telstra (including third party claims and claims by an End User) arising out of the allocation of registered or unregistered IP Addresses, or any of the functions undertaken by the Customer's RADIUS server.
 
6 Multiple Domain Name Feature
 
6.1 Upon application by the Customer, Telstra will provide Customer with:
  (a) the Telstra-managed MDN Feature; or
  (b) the Partially Telstra-managed MDN Feature; or
  (c) subject to paragraph 6.3, the Customer-managed Wildcard MDN Feature.
 
  The Customer may be provided with both the Telstra-managed MDN Feature and the Partially Telstra-managed MDN Feature or a DSL-L2 Service (but neither can be provided with the Customer-managed Wildcard MDN Feature).
 
6.2 Where the Customer is provided with either the Telstra-managed MDN Feature or a Partially Telstra-managed MDN Feature (or both):
  (a) the domain names the Customer provides to Telstra must be registered and unique within Telstra's systems;
  (b) the Customer may provide up to 20 domain names to Telstra for a DSL-L2 Service (if both the Telstra-managed MDN Feature and Partially Telstra-managed MDN Feature are provided the total limit is 20 domain names). In the case of the Partially Telstra-managed MDN Feature there is no limit on the number of sub-domain names;
  (c) each domain name must be associated with a single LNS IP Address;
  (d) Telstra will authenticate domain names; and
  (e) the Customer manages the allocation of user names and in the case of the Partially Telstra-managed MDN Feature, the Customer also manages the allocation of sub-domain names.
 
6.3 The Customer acknowledges and agrees that the number of DSL-L2 Services that may be provided with a Customer-managed Wildcard MDN Feature is limited by the capacity of the DSL-L2 Service network. On request from the Customer Telstra will advise the Customer whether there is sufficient capacity for the Customer to be provided with a Customer-managed Wildcard MDN Feature. Where the Customer has been advised that there is sufficient capacity the Customer may apply for a Customer-managed Wildcard MDN Feature.
 
6.4 Where the Customer is provided with a Customer-managed Wildcard MDN Feature:
  (a) the Customer must manage the allocation of user names, domain names (and if relevant sub-domain names);
  (b) Telstra does not provide authentication of domain names;
  (c) there is no limit on the number of domain names or sub-domain names; and
  (d) the domain names:
    (i) may be registered or unregistered but the Customer must not use a domain name that is registered by another party; and
    (ii) must be unique to the DSL-L2 Service (ie different to those used to route traffic on other Telstra Services).
 
6.5 Where the Customer is provided with a MDN Feature the full domain name string (ie user name, domain name and topleveldomain and as appropriate sub-domain name) must be no more than 50 characters.
 
6.6 The Customer agrees and acknowledges that where it is provided with the MDN Feature it must comply with (at its own cost):
  (a) the relevant End User Technical Documents and Service Provider Technical Documents; and
  (b) Telstra's configuration instruction.
 
6.7 The Customer releases Telstra from all liability to the End User or the Customer, and indemnifies Telstra, and indemnifies Telstra against all costs, expenses, liability, loss or damage incurred or suffered by Telstra in connection with any claims, actions or proceedings against Telstra (including third party claims and claims by a End User) arising out of the allocation or management of user names, domain names and sub-domain names.

 
7 Term
 
7.1 This Service Schedule comes into force on the date it is added to the Agreement ("Schedule Date"). Telstra will supply the DSL-L2 Service during the period this Service Schedule is in force.
 
7.2 Subject to any termination or extension rights the parties have under this Agreement, this Service Schedule ends 2 years from the Schedule Date ("Initial Period") unless the parties otherwise agree.
 
7.3 The parties may agree to extend the operation of this Service Schedule beyond the Initial Period until:
  (a) either party gives the other party 30 days written notice of termination; or
  (b) this Agreement or this Service Schedule is otherwise terminated.
 
7.4 Subject to paragraph 7.5, the Customer accepts an Individual Service on the terms and conditions set out in this Service Schedule and this Agreement for the period from the Start Date until the first to occur of:
  (a) termination or cancellation of the Individual Service;
  (b) the expiry or termination of this Service Schedule; or
  (c) the expiry or termination of this Agreement in accordance with clause 2 of this Agreement.
 
7.5 Telstra may cease to supply an Individual Service to the Customer upon 3 months prior written notice to the Customer which notice may only be given after the expiry of the period of 12 months after the Start Date. Telstra will use reasonable endeavours to provide as much notice to the Customer as possible (but no less than 3 months notice) of its intention to cease the supply of an Individual Service to a Customer.

 
8 Connection
 
8.1 Subject to an Individual Service passing Service Qualification, Telstra will use its reasonable endeavours to connect that Individual Service by the Arranged Connection Date. Telstra will notify the Customer when the connection has been effected. Telstra will not be liable for any inconvenience, loss or damage suffered by the Customer or an End User if Telstra does not connect the Individual Service by the Arranged Connection Date.
 
8.2 Where an End User also acquires a Monitoring Service, the Customer must advise the provider of the Monitoring Service prior to any disconnection or potential disruption of an End User's standard telephone services caused by or on behalf of the Customer in providing services to the End User, including any such disconnection or disruption arising out of the installation and maintenance of CPE.
 
9

Indicative Provisioning Lead Times

Table 9 of Addendum 2 sets out Indicative Provisioning Lead Times applicable to components of the DSL-L2 Service, which are subject to, among other things, the provisioning of the associated ATM Service and the availability of network infrastructure.
10 Access to premises
 
10.1 Where relevant, the Customer must, and must procure that each End User does:
  (a) not interfere with the normal operation of the DSL-L2 Service or any Facility or make either unsafe;
  (b) procure safe access by Telstra to the End User Premises:
    (i) to inspect or test a Facility which may be causing interference or danger; and
    (ii) as required by Telstra in connection with the provision, maintenance and repair of the DSL-L2 Service or any Facility;
  (c) ensure that Telstra is provided with sufficient and timely access to each End User Premises and the Telstra Equipment to enable Telstra to provide the DSL-L2 Service in accordance with Telstra's obligations under this Agreement; and
 
10.2 If the Customer does not own, control or have access to the End User Premises, it must:
  (a) procure for Telstra all such access to the End User Premises as may be required by Telstra under this Addendum; and
  (b) indemnify Telstra against a claim by the owner or occupier of the End User Premises, or any other person, in relation to Telstra's entry onto those premises.

 
11 Provision of Forecasts
 
11.1 At least 10 Business Days before the start of each Quarter the Customer must provide forecasts in relation to the DSL-L2 Service setting out the number of End User Accesses the Customer expects to maintain in the Quarter in each State in the format of the Form of Forecast at Attachment 1.
Addendum 3   Charges
 
1 General

The pricing structure for the DSL-L2 Service is as follows:
  (a) Charges for End User Accesses;
  (b) Charges for Aggregating Virtual Circuits;
  (c) Charges for the MDN Feature; and
  (d) miscellaneous Charges.
 
2 End User Accesses
 
2.1 The pricing structure for End User Accesses is as follows:
  (a) an installation Charge of $90 per End User Access; and
  (b) a monthly Charge based on:
    (i) the ADSL line transmission rate selected by the Customer; and
    (ii) the location of the End User Access with respect to the Aggregation Point Charging POP in the same State as that End User Access.
 
2.2 For the purposes of paragraph 2 and paragraph 2A.7 of Addendum 3:
  (a) Metro Charges apply where End User Accesses are located within the Local Call Area of the Aggregation Point Charging POP in the same State as those End User Accesses; and
  (b) Regional 1 Charges apply where End User Accesses are located outside the Local Call Area of the Aggregation Point Charging POP in the same State as those End User Accesses, but within 165km of that Aggregation Point Charging POP; and
  (c) Regional 2 Charges apply where End User Accesses are located both outside the Local Call Area of the Aggregation Point Charging POP in the same State as those End User Accesses and more than 165km from that Aggregation Point Charging POP.
 
2.3

Subject to paragraph 2A, the monthly Charges for End User Accesses are set out in Table 2.3 of Addendum 3.
2.4 Subject to paragraph 2A, the Customer acknowledges and agrees that the monthly Charges for End User Accesses are determined by reference to the Minimum Number of End User Accesses and on the expectation that the Customer will achieve the Minimum Number of End User Accesses.
2A Changes to End User Access Charge and Additional End User Access Charge
 
2A.1 Telstra may within 30 days of the Nine-Month Anniversary give the Customer a notice specifying the actual number of End User Accesses in operation as at the Nine-Month Anniversary.
 
2A.2 If Telstra does not give the Customer notice in accordance with paragraph 2A.1, the Customer will continue to be billed the monthly Charges for End User Accesses set out in Table 2.3 of Addendum 3 and paragraph 2.9 will not apply.
 
2A.3

The Customer must within 10 days of the date of Telstra's notice under paragraph 2A.1 advise Telstra in writing whether it elects to:

(a)  continue to be Billed the Charges for End User Accesses set out in Table 2.3 of Addendum 3; or

(b)  be Billed the Charges for End User Accesses set out in either:

    (i) Part A; or
    (ii) Part B, of

Attachment 2.
 
2A.4 The Customer may only elect to be Billed the Charges for End User Accesses set out in Part A of Attachment 2 if the number of End User Accesses specified in Telstra's notice under paragraph 2A.1 is not less than 4,000.
 
2A.5 If Telstra does not receive written notice of the Customer's election within the period specified in paragraph 2A.3, the Customer will be taken to have made the election set out in paragraph 2A.3(a).
 
2A.6 Customer's election is final and may only be changed with the written consent of Telstra.
 
2A.7 If Customer makes an election in accordance with 2A.3(b), the new monthly Charges for End User Accesses will apply from the beginning of the first month following the date the notice of election is received by Telstra.
 
2A.8

Paragraph 2A.9 only applies in:

(a)  the Second Year; and

(b)  if the Customer has made the election set out in paragraph 2A.3(a) (including by default pursuant to paragraph 2A.5)
 
2A.9 If the Customer does not achieve the Minimum Number of End User Accesses at the end of each Quarter, the Customer must pay the following Additional End User Access Charge:
    Y = 3 * ((10,000 - A) * $38.76)
    where
    A = the Actual Number of End User Accesses as at the end of the relevant Quarter.
 
3 Aggregating Virtual Circuits
 
3.1 The monthly Charge for an Aggregating Virtual Circuit is determined by reference to the distance between the relevant Aggregation Point Charging POP for the State in which the Customer has End User Accesses and the ATM Charging POP for the ATM Service associated with that AGVC.
 
3.2 For the purposes of this paragraph 3, an interstate AGVC is one where the Aggregation Point Charging POP and the ATM Charging POP are in different states ("Interstate AGVC").
 
3.3

Subject to paragraph 3.4 below, the monthly Charges for AGVCs are set out in Table 3.3 of Addendum 3.
3.4

If a Customer has implemented Load Sharing in a State, the Customer's first two Load Sharing AGVCs (with a combined size of 32Mb/s or less) in that State will be charged as if they comprise a single AGVC whose size is the sum of the two Load Sharing AGVCs. For example, two 4Mb/s Load Sharing AGVCs will be charged as if the Customer has one 8Mb/s AGVC. Any additional AGVCs in that State will be charged at the individual rates specified in Table 3.3 of Addendum 3.

4 Charges for the MDN Feature

4.1 The monthly Charges for the MDN Feature are set out in Table 4A of Addendum 3.

5 Miscellaneous Charges

6 Service Outage Rebate
 
6.1

Notwithstanding paragraphs 2.13 and 2.14 of Addendum 2, Telstra will credit to the Customer a rebate for Monthly Service Outages in accordance with Table 6.1 of Addendum 3 ("Service Outage Rebate"). The Customer acknowledges and agrees that Telstra's determination of the amount of any Service Outage Rebate is final.
 
6.2

The Average End User Access Charge is the average monthly Charge for End User Accesses payable by the Customer for all DSL-L2, DSL-L3A and DSL-L3S Services under this Agreement, calculated as at the last day of the relevant calendar month.

    Example calculation of Average End User Access Charge
    If the Customer has a total of 1,000 Individual Services in respect of DSL-L2, DSL-L3A and DSL-L3S Services as at the last day of the month and the total monthly Charges for End User Accesses payable by the Customer for those services for that month is $75,500, then the Average End User Access Charge would be $75.50.
     
6.3

Without need for claim by the Customer, Telstra will aggregate all Service Outage Rebates in respect of the DSL-L2, DSL-L3A and DSL-L3S Services and make a single credit to the Customer's next monthly Bill. For the avoidance of doubt, the next monthly Bill means the first monthly Bill after Telstra has calculated all Service Outage Rebates.

Example calculation of Service Outage Rebate
If the Customer has a total of 1000 Individual Services in respect of DSL-L2 Services as at the last day of the month and:

  • 250 Individual Services have Monthly Service Outages of 6 hours or less
  • 300 Individual Services have Monthly Service Outages of between 6 hours and 20.5 hours;
  • 250 Individual Services have Monthly Service Outages of between 20.5 hours and 42.5 hours;
  • 200 Individual Services have Monthly Service Outages of greater than 42.5 hours; and
  • the Average End User Charge is $75.50,

the Service Outage Rebate is calculated as:
300 x $7.55 (ie 10% of $75.50) $2,265.00
250 x $15.10 (ie 20% of $75.50) $3,775.00
200 x $37.75 (ie 50% of $75.50) $7,550.00
Total Service Outage Rebate $13,590.00

This total amount will be aggregated with any Service Outage Rebates payable for that month in respect of the DSL-L3A Service and the DSL-L3S Service and will be credited as a single amount on the Customer’s monthly Bill for the following month.
 
6.4 Telstra's obligation to credit to the Customer Service Outage Rebates under paragraph 5.1 of Addendum 3 is subject to the Customer:
  (a) maintaining AGVC connections to two IGRs in each State (where available) throughout the relevant calendar month; and
  (b) paying all amounts payable under this Agreement for DSL-L2 Services by the Due Date.
 
7 DSL-L2 Early Termination Fee
 
7.1 Where any of the following occurs during the Minimum Term:
  (a) the Customer cancels the DSL-L2 Service;
  (b) the Customer terminates the Agreement;
  (c) Telstra cancels the DSL-L2 Service for breach by the Customer; or
  (d) Telstra terminates the Agreement for breach by the Customer,
 

the Customer must pay Telstra an Early Termination Fee calculated as follows:

    Y = A x $36.15 x 10,000
    Where A = number of fully unexpired Months in the Minimum Term;
7.2 The parties acknowledge that the amounts payable by the Customer to Telstra under this paragraph 7 are payable by way of liquidated damages and represent the parties' genuine pre-estimate of the loss caused to Telstra by the Customer's early cessation of the acquisition of the DSL-L2 Service.
 
8 GST
 
  The Charges set out in this Addendum 3 are exclusive of any applicable GST. The amount of GST payable by the Customer to Telstra for the DSL-L2 Service and associated work referred to in this Addendum 3 will be calculated in accordance with the terms of this Agreement and included in the Bill which sets out the Charges payable by the Customer to Telstra for the supply of such Services and associated work.
 
Addendum 4    Service Assurance
 
1 Exclusions
 
1.1 Telstra's obligations under this Addendum do not extend to Faults caused as a result of:
  (a) any fault in equipment, software or any network not forming part of the DSL-L2 Service;
  (b) damage due to causes external to the DSL-L2 Service;
  (c) interference;
  (d) Force Majeure; and
  (e) Planned Outages.
 
1.2 The Customer acknowledges that:
  (a) compliance with the Industry Code Unconditioned Local Loop Service - Network Deployment Rules, registered by the ACA under section 117 of the Telecommunications Act 1997, may not completely eliminate interference; and
  (b) faults in cable and other faults in the copper network may result in interruptions to the provision of the DSL-L2 Service, in which event the Customer agrees to do everything reasonably necessary to enable Telstra to resolve those faults.
 
1.3 Telstra will not provide Fault restoration under this Service Schedule where the Fault is in a network or cabling owned, controlled or maintained by any person other than Telstra.
 
2 Reporting to Telstra
 
2.1 The Customer must report the details of the suspected Fault to the Telstra Fault Desk (National Wholesale Service Centre, telephone 1802 288 or such other numbers as Telstra may advise).
 
2.2 The Telstra Fault Desk number is available 24 hours a day, seven days a week and should only be used for reporting of Faults by the Customer. The number is not to be supplied by Customers to End Users. Where End Users contact Telstra directly, then the fee specified in paragraph 5 of Addendum 3 will apply.
 
2.3 When reporting a suspected Fault the Customer must provide the following information:
  (a) details of the Individual Service and/or the standard telephone service over which the Individual Service is provided:
 
    (i) identify the full national number;
    (ii) identify the type of service; and
    (iii) confirm the location of the affected service.
  (b) contact and Fault details:
 
    (i) name of Customer;
    (ii) identify contacts for the Customer and the End User (where appropriate) including site contact if site attendance is required;
    (iii) give details of the Fault symptoms; and
    (iv) confirm that the Customer has already addressed the possible sources of the suspected Fault, including communication with the End User to establish that the End User is connected to the Individual Service and/or the standard telephone service over which the Individual Service is provided.
2.4 Telstra will advise the Customer of a Fault reference number.
 
2.5 The Customer should record the Telstra issued Fault reference number for future reference.
 
2.6 Where an on-site visit is required, Telstra will arrange an appropriate appointment time with the Customer Premises Contact.
 
2.7 Telstra's hours of business for reporting Faults are 24 hours per day. Where a Fault report is lodged Fault restoration work will be undertaken in accordance with paragraph 3 of this Addendum.
 
2.8 Where Telstra attends an End User Premises in response to a Fault report and the Fault is found to be in the Non-Telstra Equipment, Telstra will charge a fee for the incorrect call out as specified in paragraph 5 of Addendum 3.
 
2.9 If Telstra must gain access to an End User Premises to restore the Individual Service the Response Time and Repair Time will be subject to the provision of entry to the premises.
 
2.10 On completion of Individual Service restoration activities Telstra will contact the Customer to confirm that the Individual Service has been completely and satisfactorily restored. The Customer acknowledges and agrees that Telstra may repair a Fault on a temporary basis and that any temporary repair may require a subsequent Planned Outage to repair the Service or Individual Service on a permanent basis.
 
2.11

If the Customer wishes to escalate the Fault, as a result of either the Response Time or the Repair Time having been exceeded, the Customer should contact the Telstra Business Team Contact.
 
3 Target Response Times and Repair Times
 
3.1 Telstra will use reasonable endeavours to meet the target Response Times and Repair Times set out in this paragraph 3 in relation to the DSL-L2 Service.
 
3.2 For the purposes of this paragraph 3:
  (a) Urban Areas are urban areas with a population of greater than 10,000;
  (b) Rural Areas are areas with a population of between 200 and 10,000 but which are not within Telstra's Extended Charging Zones; and
  (c) Remote Areas are areas with a population of less than 200 or areas included in a Telstra Extended Charging Zone.
Target Response Times and Repair Times for Faults in End User Accesses
 
3.3 The target Response and Repair Times for Faults in End User Accesses apply during the following hours of coverage only:- from 8.00am to 5.00pm, Monday to Friday (excluding public holidays in the place where work is required to rectify a Fault). They are:
  (a) Response Time for all areas: 8 hours (within the hours of coverage) after Telstra receives a Fault report;
  (b) Repair Time for Urban Areas: at the end of the first full Business Day after Telstra receives a Fault report;
  (c) Repair Time for Rural Areas: at the end of the second full Business Day after receipt of a Fault report; and
  (d) Repair Time for Remote Areas: at the end of the third full Business Day after Telstra receives a Fault report.
 
      Example calculation of Response and Repair Times for End User Accesses
If a Fault report in an Urban Area is received on Friday at 2.00 pm, the target Response Time will be Monday at 1.00 pm being 8 hours (during the hours of coverage) after receipt of the Fault report. The target Repair Time will be Monday at 5.00 pm being the end of the first full Business Day after receipt of the Fault report.
 
Target Response Times and Repair Times for Faults in the Telstra Data Network
 
3.4 The hours of coverage for Faults in the Telstra Data Network are 24 hours a day, 7 days a week including public holidays. The target Response and Repair times are:
  (a) Response Time for all areas: 1 hour after Telstra receives a Fault report;
  (b) Repair Time for Urban Areas: 12 hours after Telstra receives a Fault report;
  (c) Repair Time for Rural Areas: the end of the first full Business Day plus 12 hours after Telstra receives a Fault report; and
  (d) Repair Time for Remote Areas: the end of the second full Business Day plus 12 hours after Telstra receives a Fault report.
 
      Example calculation of Response and Repair Times for Telstra Data Network
If a Fault report in an Urban Area is received on Friday at 2.00pm, the target Response Time will be Friday at 3.00pm being 1 hour after receipt of the Fault report. The target Repair Time will be Saturday at 2.00am being 12 hours after receipt of the Fault report.

 
Addendum 5   ADSL Material Licence Conditions for Use of ADSL Material supplied by Telstra
 
1 Terms
The terms and conditions in this Addendum 5 are the terms and conditions on which the Customer may use and reproduce the Material.
 
2

Definitions

Licence Term means the term of this Service Schedule, or such other term as Telstra may advise the Customer in writing.

Material means ADSL coverage maps (“Maps”) and other written material specifically provided by Telstra to the Customer in relation to the DSL-L2 Service.

Purpose means the use and reproduction in presentations and materials, including on the Internet to support the supply of the Customer’s services to End Users.
 
3 Licence
  Telstra grants to the Customer a non-exclusive licence to use and reproduce the Material for the Licence Term solely for the Purpose ("Licence").
 
4 Charges
  Telstra will not charge the Customer a fee to reproduce the Material.
 
5 Copyright
  The Material is protected by copyright law and international copyright treaties, as well as other intellectual property laws and treaties. The Customer acknowledges that Telstra owns all intellectual property rights in the Material, including copyright. Telstra retains all rights not expressly granted under this Licence.
 
6 Termination of ADSL Material Licence
  The Licence will terminate upon expiration of the Licence Term. Upon termination, the Customer must immediately cease using and reproducing the Material and delete all copies of the Material, including copies on any Internet sites.
 
7 Customer obligations
 
7.1 The Customer agrees to only use and reproduce the Material for the Purpose.
 
7.2 The Customer agrees not to assign, transfer, licence, sub-licence or otherwise deal with the rights granted under this Licence.
 
7.3 The Customer may only use and reproduce the Material in full. The Customer may not use or reproduce parts of, or extracts from, the Material.
 
7.4 The Customer may not use or reproduce the Material in any manner which is unlawful or in any way prejudicial to the interests of Telstra or the DSL-L2 Service.
 
7.5 The Customer must include the following copyright notice on all copies of the Material, "(c) Telstra Corporation Limited [current year]"
 
7.6

The Customer must include the following statements positioned immediately under each representation of a Map:

  • This Map is a guide only.
  • You should make your own enquiries before relying on or entering into any transaction based on the content of this Map.
8 Branding
  Except where Telstra specifically prohibits it, the Customer may place the Customer's logo or branding on the Material. For the avoidance of doubt, this paragraph 8 constitutes prior written consent as required by clause 8.2 of this main terms and conditions of this Agreement, entitling the Customer to brand and hold out the Material as being its own in accordance with the terms of this Addendum 5.
 


ANNEXURE D
Telstra SFOA Service Schedule

Addendum 1   General
 
1 Definitions
 
1.1 In this SFOA Schedule, the following words have these meanings unless the contrary intention appears:
 
  Actual Monthly Spend has the meaning given to it in the WFOA/SFOA Price List: Telstra ISDN (30) OnRamp Service.
 
  ISDN means Telstra's Public Switched Integrated Services Digital Network.
 
  ISDN OnRamp Service means the Telstra ISDN 30 (OnRamp) Service (which comes in 10, 20 or 30 channel increments), as described in the Telstra Public Switched Integrated Services Digital Network Section of the SFOA.
 
  ISDN Rebate means an amount calculated in accordance with paragraph 4 of Addendum 3 and applying to eligible ISDN OnRamp Services.
 
  Minimum Monthly Spend has the meaning given to it in the WFOA/SFOA. Price List: Telstra ISDN (30) OnRamp Service.
 
  OnRamp Minimum Term means 24 months from the Schedule Date.
 
  Schedule Date means the date that this Service Schedule is added to the Agreement.
 
  SFOA means all standard forms of agreement including pricing information formulated by Telstra for the purposes of Part 23 of the Telecommunications Act 1997 as varied by Telstra from time to time.
 
 

SFOA Services means the following services and products as described in the SFOA from time to time:

  • ISDN OnRamp Service.
     
1.2 Terms and conditions used in this SFOA Schedule which are not defined in clause 1 of this SFOA Schedule or in clause 1.1 of the Agreement have the meanings given in the SFOA.
 
1.3 To the extent that there is any inconsistency between the clauses of the Agreement and the SFOA, the provisions of this Agreement prevail.
 
2 Incorporation of SFOA
 
2.1 Telstra will provide and the Customer accepts each Service ordered under this SFOA Schedule in accordance with the Agreement and the SFOA (as amended by the Agreement and this SFOA Schedule).
 
2.2 For the avoidance of doubt clause 11 of the General Terms and Conditions of the SFOA (which deals with limitation of liability) does not apply to the provision of Services under this Agreement
 
2.3 Clause 10.1 of the of the General Terms and Conditions of the SFOA may be subject to the payment of early termination charges, if any, in accordance with Addendum 3 to this SFOA Schedule.
 
2.4 Telstra varies the SFOA from time to time. The SFOA as varied will continue to be incorporated into this SFOA Schedule. It is the responsibility of the Customer to ensure it is aware of changes made to the SFOA from time to time. If Telstra varies the SFOA and the Customer continues to acquire the Service after the effective date of such variation, the Customer is deemed to have accepted the variation and waives any claim that it has not agreed to the variation.
 
2.5 When ordering a Service under this SFOA Schedule, the Customer must use the relevant product specific application form which is available from its Telstra Business Manager.
 
3 Term of Supply
 
3.1 Following the expiration of the OnRamp Minimum Term either party may terminate this Service Schedule by 30 days written notice to the other.
 
3.2 The Customer accepts an SFOA Service on the terms and conditions set out in this Service Schedule and this Agreement for the period from the Schedule Date until the first to occur of:
  (a) termination or cancellation of the Service;
  (b) the expiry or termination of this Service Schedule; or
  (c) the expiry or termination of this Agreement.
 
Addendum 2   Description
 
1 The Services under this Telstra Wholesale Product Schedule are the SFOA Services as ordered by the Customer from time to time.
 
2 The Customer may only resell or resupply the SFOA Services as a component or element of another service supplied by the Customer.
 
3 The descriptions of the SFOA Services are as set out in the SFOA.
 
Addendum 3   Charges
 
1 Charges
 
1.1 The Charges for the SFOA Services are as set out in the SFOA subject to the variations set out in the attached price list, if any, (the "WFOA/SFOA Price List").
 
1.2 Annual Charges are pro-rated and billed on a monthly basis.
 
1.3 Charges stated in this Service Schedule are GST-exclusive.
 
WFOA/SFOA Price List: Telstra ISDN 30 (OnRamp) Service
 
1 Definitions
  (a) Actual Monthly Spend is the aggregate of the Annual Access Charges paid (or payable) by the Customer in the relevant month for the ISDN OnRamp Services less the associated ISDN Rebate for those Charges.
  (b) Minimum Monthly Spend means the greater of:
 
    (i) $100,000;
    (ii) the average Actual Monthly Spend during three consecutive months; and
    (iii) such other sum as agreed between the parties.
  (c) Maximum ISDN Rebate has the meaning given to it in paragraph 4 of this Price List.
  (d) Rebate Cap has the meaning given to it in paragraph 4 of this Price List.
2. General
All Charges for the ISDN OnRamp Service are as set out in the SFOA except the ISDN OnRamp Service Annual Access Charges which are set out in this Price List.
 
3 Annual Access Charges for the ISDN OnRamp Service

The Annual Access Charges for the ISDN OnRamp Service are set out in Table 1 below:
 
4 ISDN Rebate
 
4.1 Telstra will credit to the Customer an ISDN Rebate being the lesser of:
  (a) 10% of the monthly pro-rated Annual Access Charge for ISDN OnRamp Services supplied to the Customer calculated as at the last day of the relevant month; and
  (b) the Maximum ISDN Rebate,
 
  on the Customer's next monthly Bill. For the avoidance of doubt, the next monthly Bill means the first monthly Bill after Telstra has calculated the ISDN Rebate.
 
4.2

For the purposes of this paragraph 4, the Maximum ISDN Rebate, is 10% of the relevant monthly Rebate Cap set out below.
 
5 Minimum Month Spend on ISDN OnRamp Services
 
5.1 If in any month the Actual Monthly Spend for ISDN OnRamp Services is less than the Minimum Monthly Spend, the Customer must pay Telstra an additional Charge, equal to the difference between the Minimum Monthly Spend and the Actual Monthly Spend. This additional Charge will appear on the Customer's next monthly Bill. For the avoidance of doubt, the next monthly Bill means the first monthly Bill after Telstra has calculated the additional Charge.
 
6 Early Termination Charges
 
6.1 Where any of the following occurs during the OnRamp Minimum Term:
  (a) the Customer cancels the ISDN OnRamp Service;
  (b) the Customer terminates the Agreement;
  (c) Telstra cancels the ISDN OnRamp Service for breach by the Customer; or
  (d) Telstra terminates the Agreement for breach by the Customer,
 
 

the Customer must pay Telstra an Early Termination Fee calculated as follows:

    Y = A x Minimum Monthly Spend (as at the date of cancellation or termination)
    Where:
    A = number of the fully unexpired months in the OnRamp Minimum Term

 
  Notwithstanding that the ISDN OnRamp Service may be terminated during a month, the Customer must still pay the pro rata Annual Access Charges for that month in accordance with this Price List.
 
6.2 The parties acknowledge that the amounts payable by the Customer to Telstra under this paragraph 6 are payable by way of liquidated damages and represent the parties' genuine pre-estimate of the loss caused to Telstra by the Customer's early cessation of the acquisition of the ISDN OnRamp Service.
 
Addendum 4   Service Assurance
 
The Service Assurance provisions of the SFOA apply
 
ANNEXURE E
Telstra Wholesale Broadband DSL Layer 3 Asymmetrical Service Schedule
 
Addendum 1    Definitions and Interpretation
 

1

1.1

Definitions

In this Service Schedule the following words have these meanings:

ADSL means asymmetrical digital subscriber line technology for the transmission of digital information at high bandwidths on twisted metallic pairs, which has physical and electrical characteristics that conform with:

  1. the most recent version of Telstra Document IP 1149 "The Telstra ADSL Network - Listing requirements for CPE " (Issue 3 or subsequent), available from http://www.telstra.com.au/adsl/docs/inter_op_cpe3.pdf as updated from time to time;
  2. ANSI Specification T.413, "Network and Customer Installation Interfaces - ADSL. Metallic Interface, (Issue 2)";
  3. ITU-T G.992.1 (7/99) Asymmetrical Digital Subscriber Line (ADSL) Transceivers; and
  4. ITU-T G.992.2 (7/99) Asymmetrical Digital Subscriber Line (ADSL) Transceivers.

ADSL CAM means a Telstra customer access module within which ADSL multiplexing equipment is located.

ADSL Material Licence means the terms and conditions contained in Addendum 5 of this Service Schedule.

Aggregation Point means a point nominated by Telstra in the Telstra network where End User Access traffic is collected together for placement onto one or more Aggregating Virtual Circuits being an IGR or, for those States where IGRs are not installed, an IPSN.

Aggregation Point Charging POP means a point in the Telstra network which is used as a reference point (for charging purposes only) in determining the monthly Charges for End User Accesses and AGVCs. As at the date of this Service Schedule, Telstra's Aggregation Point Charging POPs are located at the exchanges listed in Table 1.1A of Addendum 1.
 
 

ATM Service means a Telstra public (switched) data service which is described as an "ATM" service.

ATM Service Schedule means the Wholesale ATM Service Schedule or, if the Customer is obtaining ATM Services from Telstra other than by means of the Wholesale ATM Service Schedule, the ATM Section of the SFOA.

Authenticating Virtual Circuit or AVC means a virtual circuit with an indicative maximum transmission speed used for handling the following types of information:

  1. authentication information used to verify user names and passwords;
  2. authorisation information used to control the supply of an Individual Service; or
  3. accounting information used in the billing of an Individual Service.

Average End User Access Charge means a charge calculated in accordance with paragraph 7.2 of Addendum 3.

Capital City means Sydney, Canberra, Melbourne, Hobart, Adelaide, Perth, Darwin and Brisbane.

Customer Site means premises under the control or possession of the Customer which are made available for the installation of an ATM Service associated with the DSL-L3A Service. For the avoidance of doubt a Telstra exchange cannot be regarded as Customer Site.

Customer Premises Access means the provision by Telstra of an ATM Service to a Customer Site.

Customer Premises Equipment or CPE means any equipment installed or to be installed on the End User side of the Network Boundary in connection with the provision of the DSL-L3A Service to the Customer, including without limitation routers, modems, splitters, filters, wiring and client software.

DSL-L2 Service or DSL Layer 2 Service means the service acquired under the Telstra Wholesale Broadband DSL Layer 2 Service Schedule to this Agreement.

DSL-L3A Service or DSL Layer 3 Asymmetrical Service means the Telstra Wholesale Broadband DSL Layer 3 Asymmetrical Service described in paragraph 1.1 of Addendum 2. This service was formerly known as FlexStream tm.

DSL-L3S Service or DSL Layer 3 Symmetrical Service means the service (supplied using ADSL) acquired under the Telstra Wholesale Broadband DSL Layer 3 Symmetrical Service Schedule to this Agreement. This service was formerly known as CommerceStream.

DSL Network Component means an ADSL CAM, IPSN, IGR or SMC.

End User Access means a single virtual circuit for the provision of ADSL over a Qualified Pair between the Network Boundary and the Telstra nominated Aggregation Point, but excludes the provision of Non Telstra Equipment and Customer Premises Equipment.

End User Technical Documents means the most recent version of each of the Telstra documents DC.030 Telstra Service Interface Specification for ADSL Access, End User Interface (Issue 4.6 or subsequent) and IP 1149 The Telstra ADSL Network - Listing Requirements for CPE (Issue 3 or subsequent). Both documents are available from the Telstra website http://telstra.com.au/adsl/equipmnt.htm and are updated by Telstra from time to time.

Enhanced Feature means an optional additional feature offered or intended to be offered under this Service Schedule in conjunction with the DSL-L3A Service. Examples of Enhanced Features are Service Provider Allocation of IP Addresses, the RID Feature, the Exclusivity Feature and the Multiple Domain Name Feature, which are described in paragraphs 7 to 10 of Addendum 2.

Excluded Service Outage means a service interruption affecting a DSL Network Component caused by:

  1. any fault in equipment, software or a network component (other than a DSL Network Component), including any fault on the End User's PSTN line, the AGVC or the ATM Service connecting the Customer to the ATM POP;
  2. any fault in any line card forming part of an ADSL CAM;
  3. damage due to causes external to the DSL-L3A Service;
  4. interference;
  5. suspension of DSL-L3A Services under this Agreement for any reason;
  6. Force Majeure; or
  7. Planned Outages.

Exclusivity Feature means the Enhanced Feature defined in paragraph 9.1 of Addendum 2.

Extended Charging Zone has the meaning set out in the Public Switched Telephone Service Section of the SFOA (available at www.telstra.com.au/sfoa).

Fault means a failure in the normal operation of the DSL-L3A Service or an Individual Service which is determined by Telstra to be Telstra's responsibility under this Agreement to rectify.

IGR means an IP gateway router which aggregates traffic from one or more IPSNs for placement onto one or more Aggregating Virtual Circuits.

Incompatible Product means a product listed in the Telstra document Telstra Wholesale Broadband DSL Layer 3 Asymmetrical, DSL Layer 3 Symmetrical, DSL Layer 2 & DSL Layer 2 Data ' Incompatible Products available from Telstra upon request.

IP Addresses means the Internet addressing standard which describes the address of all devices physically located within the global Internet.

IPSN means an Internet Protocol Services Node which aggregates traffic from multiple ADSL CAMs for delivery to an IGR or, where the IPSN is not connected to an IGR, for placement onto one or more Aggregating Virtual Circuits.

Limited Service Qualification means the Internet-based analysis of Pairs connecting End Users to the Telstra Data Network which may be carried out by the Customer.

Load Sharing means two AGVCs (of equal size) connected to the two IGRs in a State.

Local Call Area means the area within which a call between 2 points would be classified as a local call according to the Public Switched Telephone Service Section of the SFOA (available at www.telstra.com.au/sfoa).

Metropolitan Area, Metro Area or Metro means the Local Call Area of a Capital City.

Monitoring Service means a service for the monitoring of End User Premises which uses the Securitel Service or other communications services to transmit information from End User Premises to the provider of the Monitoring Service.

Monthly Service Outages means the sum of all Outage Periods in respect of an Individual Service during a calendar month as determined by Telstra.

Multiple Domain Name Feature or MDN Feature means the Enhanced Feature which enables the Customer to provision multiple domain names to End Users, and which may be provided by the Telstra-managed MDN Feature or Partially Telstra-managed MDN Feature.

Network Boundary means in relation to a Pair that enters a building on an End User Premises:

  1. if there is a main distribution frame in the building and the Pair is connected to the frame - a two wire point on the side of the frame nearest to Telstra; or
  2. if paragraph (a) does not apply but the line is connected to a network termination device located in, on or within close proximity to, the building - the side of the device nearest to the End User; or
  3. if neither paragraph (a) nor (b) applies - the point ascertained in accordance with section 22 of the Telecommunications Act.

Outage Period means the period commencing when a Total Service Outage or Partial Service Outage (as the case may be) begins and ending when End Users affected by the service disruption are able to reconnect End User sessions.

Pair means a single twisted metallic pair between an End User Premises and an ADSL CAM.

Partial Service Outage means a service disruption affecting a DSL Network Component which results in the termination of >5 per cent but <100 per cent of End User sessions concurrently connected through that DSL Network Component as measured by Telstra (not including Excluded Service Outages).

Partially Telstra-managed MDN Feature is where the Customer manages the allocation of user names, sub-domain names and domain names and Telstra manages the authentication of domain names. The full domain name string is of the type "UserName@SubDomainName.UniqueDomainName.TopLevelDomain".

Planned Outage means those periods where interruption of the DSL-L3A Service or Individual Service has been planned and Telstra has notified the Customer in advance.

PSTN means a public switched phone network.

Qualified Pair means a Pair which passes Service Qualification and over which the End User is acquiring a standard telephone service supplied by Telstra either directly or through a reseller.

RADIUS stands for remote authentication dial-in user service. RADIUS is a protocol for handling authentication (verifying user names and passwords), authorisation (control of services) and accounting for End Users.

Repair Time means the period of time between a reported failure in the normal operation of a Service or Individual Service being reported to the Telstra Fault Desk by a Customer Premises Contact and repair of the Fault by Telstra on a permanent or temporary basis.

Response Time means the period of time between a failure in the normal operation of a Service or an Individual Service being reported to the Telstra Fault Desk by a Customer Premises Contact and the earlier of:

  1. a response from Telstra advising that the Fault has been identified by remote diagnosis and that work has begun to repair the Fault; or
  2. the attendance of a Telstra representative at a site to commence the repair of the Fault.

RID Feature means the Enhanced Feature defined in paragraph 8.1 of Addendum 2.

Securitel Service means a Securitel service supplied by Telstra under the Leased Digital Services section of the SFOA (available at www.telstra.com.au/sfoa).

Service Outage Rebate means an amount calculated in accordance with paragraph 7.1 of Addendum 3.

Service Provider Allocation of IP Addresses or SPAIA Feature means the Enhanced Feature defined in paragraph 7.1 of Addendum 2.

Service Provider Technical Document means the most recent version of the Telstra Document DC.032 Technical Reference for ADSL Access, Service Provider Interface (Issue 2.3 or subsequent) available from Telstra upon request.

Service Qualification means the desktop analysis carried out by Telstra as described in paragraph 3.1 of Addendum 2.

SFOA means the standard forms of agreement including pricing information formulated by Telstra for the purposes of Part 23 of the Telecommunications Act 1997 as varied by Telstra from time to time (available at www.telstra.com.au/sfoa).

SFOA ATM Service means an ATM Service provided by Telstra under the terms of the ATM Section of the SFOA.

SMC means the Service Management Centre which hosts the RADIUS proxy used for authentication for the DSL-L3A Service.

State means a state or territory of the Commonwealth of Australia and includes the Australian Capital Territory and the Northern Territory. However for the purposes of paragraph 1.1(b) in Addendum 2, South Australia and the Northern Territory are together regarded as one state (until Telstra notifies the Customer otherwise).

Technology Blockers means any systems or electronic devices that do not provide for a continuous metallic loop between the Network Boundary and the ADSL CAM. Examples include matching transformers and pair gain systems.

Telstra Data Network means the Telstra network used to transmit information by means of ATM Services.

Telstra Fault Desk means the fault reporting bureau, the telephone number of which the Customer should use to report all Faults as set out in paragraph 2.1 of Addendum 4.

Telstra IP Address Ranges means Telstra's IP address ranges 172.30.0.0/16 and 172.31.0.0/16 - and as from time to time amended by Telstra.

Telstra-managed MDN Feature is where the Customer manages the allocation of user names and domain names and Telstra manages the authentication of domain names. The full domain name string is of the type "UserName@UniqueDomainName.TopLevelDomain".

Telstra Premises Access means the provision of an ATM Service by Telstra to the Customer's equipment which is located in a Telstra exchange.

Total Service Outage means a total failure of a DSL Network Component (not including Excluded Service Outages).

Wholesale ATM Service means an ATM Service supplied by Telstra under the Wholesale ATM Service Schedule to this Agreement.
 
2 Interpretation
 
2.1 Paragraph 1.6 in Annex F to this Agreement, which relates to contact details for reporting Faults, is not applicable to the DSL-L3A Service.
 
2.2 A reference to a specification or standard in this Service Schedule includes that specification or standard as from time to time issued, updated or adopted by Telstra.
 
2.3 In the event of any inconsistency between this Service Schedule and any specification or standards document referenced in this Service Schedule, then this Service Schedule prevails.
 
2.4 Where any provision of this Service Schedule specifies the circumstances in which Telstra may suspend, limit or cancel the provision of the DSL-L3A Service or an Individual Service, that provision applies in addition to, and not instead of, the provisions set out in the remainder of this Agreement outside this Service Schedule.
 
2.5 A reference to a transmission rate in this Service Schedule is a reference to a maximum transmission capability and is not a guarantee that the transmission rate will be achieved. In particular, the actual data transmission rate which can be achieved is likely to be less than the maximum transmission capability because of dimensioning, overhead and other technical reasons.
 
2.6 This Service Schedule does not deal with and does not confer upon the Customer, any rights in relation to Facilities owned or operated by Telstra, under Parts 3 or 5 of Schedule 1 of the Telecommunications Act.
Addendum 2   The DSL-L3A Service
 
1 The DSL-L3A Service
 
1.1 The DSL-L3A Service is comprised of the following components:
 
  (a) one or more End User Accesses in a State;
 
  (b) one or more AGVCs which connect to all End User Accesses within a particular State; and
 
  (c) a national Authenticating Virtual Circuit (which is not required where all the Customer's End Users are all connected with bridged or routed connections).
 

Service Diagram ' Telstra Premises Access Example
(for illustrative purposes only)
 
Service Diagram ' Customer Premises Access Example
(for illustrative purposes only)
 
Service Diagram Charging Example
(for illustrative purposes only)
2 General
 
2.1 The Customer acknowledges that the DSL-L3A Service is available only to Wholesale Customers and warrants that it is a Wholesale Customer.
 
2.2 To the extent permitted by law, the Customer must not supply the DSL-L3A Service to a third party for resale by that third party without Telstra's prior written consent, such consent not to be unreasonably withheld.
 
ATM Service
2.3 The Customer must acquire either Customer Premises Access or Telstra Premises Access from Telstra in order for Telstra to deliver the DSL-L3A Service traffic from the ATM POP to the Customer. If, at the date of this Service Schedule, the Customer is acquiring an SFOA ATM Service for the carriage of DSL-L3A Service traffic from the ATM POP to the Customer, the Customer must cease using that SFOA ATM Service by 30 July 2002 and must acquire a Wholesale ATM Service upon reasonable notice by Telstra to the Customer.
 
2.4 The Customer acknowledges that the terms on which Telstra supplies Customer Premises Access and Telstra Premises Access (including Charges) are described in the ATM Service Schedule.
 
Use of AGVCs
2.5 AGVCs supplied as part of the DSL-L2 DSL-L3A DSL-L3S Services may be used to aggregate DSL-L3S, DSL-L2 and/or DSL-L3A Service data traffic.
 
2.6 Subject to paragraph 2.5, AGVCs supplied with DSL-L3A Service may not be used with another Telstra Wholesale Service.
 
Load Sharing
2.7 For technical or operational reasons, Telstra may, on reasonable notice, require the Customer to implement Load Sharing.
 
2.8 The Customer must comply with Telstra's configuration instructions in relation to Load Sharing.
 
Qualified Pairs
2.9 The Customer acknowledges that Telstra can only supply an Individual Service over a Qualified Pair where Telstra supplies operational standard telephone services over the same Qualified Pair and accordingly:
 
  (a) the Customer warrants to Telstra that the End User to whom the Customer provides services using the Individual Service over a Qualified Pair is the same End User to whom Telstra or a reseller of Telstra supplies a standard telephone service using that Qualified Pair;
 
  (b) Telstra will only provide the Individual Service to the Customer for so long as the End User referred to in paragraph 2.9(a) continues to acquire that standard telephone service from Telstra or a reseller of Telstra using that Qualified Pair; and
 
  (c) where the End User ceases to acquire a standard telephone service from Telstra or a reseller of Telstra using that Qualified Pair, Telstra will terminate the provision of the Individual Service over that Qualified Pair.
 
Monitoring Services
2.10 The Customer:
 
  (a) acknowledges that in some instances, such as where the End User is acquiring a Monitoring Service, additional CPE such as central splitters and network termination devices will have to be installed by the Customer at its own cost before Telstra will provide an Individual Service in respect of that End User, in order to maintain continued supply of security and similar services to the End User. This will also apply where a Monitoring Service is supplied subsequent to an Individual Service being supplied to that End User; and
 
  (b) warrants that where such additional CPE is required, the additional CPE will be installed prior to the provision of the Individual Service by Telstra.
 
Installation of Individual Services
2.11 In respect of each Individual Service:
 
  (a) the Customer warrants that it has obtained the End User's written acknowledgment that the installation and operation of the Individual Service may cause temporary disruption in the standard telephone services received by the End User or a Monitoring Service;
 
  (b) the Customer warrants that it has obtained the End User's written acknowledgement that the installation and operation of a Monitoring Service may cause temporary disruption to an Individual Service;
 
  (c) the Customer warrants that it has obtained the End User's written acknowledgment that the installation and operation of an Individual Service may mean that Incompatible Products will not be supplied to the End User using the Qualified Pair;
 
  (d) the Customer warrants that it has obtained the End User's written acknowledgement that any provider of a Monitoring Service used by an End User has been notified that:
    (i) installation and operation of an Individual Service may cause temporary disruption in the standard telephone services or a Monitoring Service received by an End User; and
    (ii) installation of CPE such as central splitters and network termination devices may be required under paragraph 2.10(a) of this Addendum.
 
  (e) the Customer releases Telstra from all liability to the End User or the Customer, and indemnifies Telstra against all costs, expenses, liability, loss or damage incurred or suffered by Telstra in connection with any claims, actions or proceedings against Telstra (including third party claims or claims by an End User) arising out of the following (to the extent that the liability is caused by the provision or cancellation of the DSL-L3A Service):
    (i) disruption in the PSTN services or Monitoring Services;
    (ii) cancellation of the Individual Service;
    (iii) suspension of the provision of the Individual Service to particular IP Addresses;
    (iv) cancellation of, or refusals to provide, all Incompatible Products; and
    (v) possible breaches of the Telecommunications (Customer Service Guarantee) Standard in respect of that End User.
 
Service Configuration and Supply
2.12 The Customer is responsible for dimensioning and sizing all AGVCs and the Authenticating Virtual Circuit for its requirements.
 
2.13 The Customer agrees and acknowledges that it the DSL-L3A Service is an "Internet-grade" product only, which means that successful data transport using the DSL-L3A Service is not guaranteed.
 
2.14 Telstra is responsible for supplying and integrating the components of the DSL-L3A Service, and while it will endeavour to meet the Customer's requests in relation to the DSL-L3A Service (including AGVCs and the Enhanced Features), the Customer acknowledges that there may be technical, structural, architectural, provisioning or other constraints affecting Telstra's ability to do so. The Customer acknowledges that the availability or performance of the DSL-L3A Service and components of the DSL-L3A Service may vary, and an Individual Service may not be provided, depending on the available capacity of, the geographic and technical capability of, or other technical matters affecting, the relevant Telstra networks at the time at which a request for DSL-L3A Service is made or the time at which the DSL-L3A Service is delivered.
 
ADSL Material Licence
2.15 Telstra may from time to time provide the Customer with coverage maps indicating general availability of the DSL-L3A Service. Telstra may also provide other specified materials relating to the DSL-L3A Service. Use by the Customer of those maps and other specified materials will be at the discretion of Telstra and subject to the ADSL Material Licence terms and conditions set out in Addendum 5.
 
Transfer of End User Accesses
2.16 The Customer may transfer an End User Access between the DSL-L3A Service, DSL-L3S Service and DSL-L2 Service, subject to:
 
  (a) Telstra's prior approval;
 
  (b) compliance with the Service Schedule for the Service to which the End User Access is transferred; and
 
  (c) payment of any fee applying to such a move (which fee, in relation to transfer of an End User from or to the DSL-L3A Service, is set out in paragraph 4 of Addendum 3 of this Service Schedule).
 
Interception
2.17

The Customer must comply with its interception obligations under the Telecommunications Act 1997 in relation to the DSL-L3A Service.
 
3 Service Qualification
 
3.1 Service Qualification is a desktop analysis carried out by Telstra to determine various matters relating to aspects of the Pairs connecting End Users to the Telstra Data Network. This desktop analysis is based on information available in Telstra systems. These matters include:
 
  (a) line loss;
 
  (b) infrastructure availability;
 
  (c) Technology Blockers;
 
  (d) adjacent interference; and
 
  (e) Incompatible Products.
 
3.2 Telstra will make available to the Customer, via the Internet, a tool which will enable the Customer to carry out Limited Service Qualification of Pairs.
 
3.3. Where the Customer requests that Telstra perform Service Qualification on an Individual Service (in the absence of an Order), Telstra will charge the Customer in accordance with paragraph 4 of Addendum 3 for doing so.
 
3.4 The Customer acknowledges that:
 
  (a) Service Qualification and Limited Service Qualification are desk studies carried out on the basis of information available to Telstra, and the results of the desk studies do not conclusively demonstrate that a Pair is suitable for the provision of the Individual Service;
 
  (b) Telstra is under no obligation to provide a Individual Service over a Pair, or to undertake any network modifications, rearrangements or harmonisation, if an Individual Service requested by a Customer does not pass Service Qualification;
 
  (c) the provision of the Individual Service over a Pair will prevent the supply by Telstra or other service providers of Incompatible Products to the relevant End User over that Pair, and that the Customer is responsible and liable to the End User in respect of that inability to supply Incompatible Products; and
 
  (d)

where an End User is acquiring Incompatible Products over a Pair, Telstra will not provide the Individual Service to the Customer over that Pair.

 
4 Non-Telstra Equipment
 
4.1 For the avoidance of doubt, the DSL-L3A Service does not include the provision of cabling or equipment beyond the Network Boundary at the End User's Premises or at or beyond the point of interconnect at the ATM POP.
 
4.2 The Customer is wholly responsible for the Non-Telstra Equipment and any liability arising from the use of the Non-Telstra Equipment by any person.
 
4.3 The Customer must ensure that all services provided by it to an End User by means of the DSL-L3A Service and all Non-Telstra Equipment connected to the DSL-L3A Service complies with the following requirements:
 
  (a) all relevant ACA technical standards; and
 
  (b) A/ACIF S043.2:2001 Requirements for Customer Equipment for connection to a metallic local loop interface of a Telecommunications Network-Broadband.
 
4.4 The Customer must ensure that Non-Telstra Equipment connected to the DSL-L3A Service:
 
  (a) meets the specifications and requirements of the Service Provider Technical Document and the End User Technical Documents.
 
  (b) at the End User side of the Network Boundary only, has passed Telstra's interoperability tests. The list of equipment that has passed these tests is at http://telstra.com.au/adsl/equipmnt.htm; and
 
  (c) is labelled with the ACA telecommunications compliance mark (A-tick as shown below).
 
5 Third Party IP Addresses
 
5.1 The Customer must provide Telstra with the registered or unregistered IP Addresses to be used in routing DSL-L3A Service traffic.
 
5.2 The Customer warrants that:
 
  (a) it is the registered owner, or it has written permission from the registered owner, to use the registered IP Addresses provided under paragraph 5.1;
 
  (b) the IP Addresses to be used do not fall within the Telstra IP Address Ranges; and
 
  (c) in the case of unregistered IP Addresses, it is the owner or has the written permission of the owner to use the unregistered IP Addresses.
 
5.3 Telstra may investigate the correctness of the warranties in paragraph 5.2, and if it does so, the Customer must provide Telstra with evidence of the correctness of the warranties.
 
5.4 If there is a breach of the warranties in paragraph 5.2, or if Telstra is investigating the correctness of those warranties, Telstra may:
 
  (a) refuse to route DSL-L3A Service traffic;
 
  (b) suspend the provision of an Individual Service; or
 
  (c) issue a temporary IP Address for use in routing traffic.
 
5.5 In addition to Telstra's rights under this Agreement, and without prejudice to any other right, claim or action it may have against the Customer, Telstra may terminate the provision of an Individual Service or the DSL-L3A Service where, in Telstra's reasonable opinion, the Customer has breached any or all of the warranties in paragraph 5.2.
 
5.6 The Customer must pay any reasonable costs incurred by Telstra in exercising its rights under paragraph 5.4 or paragraph 5.5.
 
5.7 The Customer releases Telstra from all liability to the End User or the Customer, and indemnifies Telstra against all costs, expenses, liability, loss or damage incurred or suffered by Telstra in connection with any claims, actions or proceedings against Telstra (including third party claims and claims by an End User) arising out of the allocation of registered or unregistered IP Addresses, or any of the functions undertaken by the Customer's RADIUS server.
 
6 DSL-L3A Service Enhanced Features
 
6.1 The Customer may elect to receive one or more Enhanced Features in conjunction with the DSL-L3A Service.
 
6.2 In relation to the Enhanced Features, the Customer agrees and acknowledges that it must comply with (at its own cost):
 
  (a) the relevant End User Technical Documents and Service Provider Technical Document; and
 
  (b) Telstra's configuration instructions.
 
7 Service Provider Allocation of IP Addresses ("SPAIA")
 
7.1 The Customer may apply for an Enhanced Feature designed to allow the Customer to allocate their own private IP Addresses to End Users ("Service Provider Allocation of IP Addresses" or "SPAIA Feature").
 
7.2 The Customer agrees and acknowledges that the SPAIA Feature is not available where End Users are connected via bridged or routed connections.
 
7.3 The Customer agrees and acknowledges that, where the SPAIA Feature is enabled:
 
  (a) Telstra does not allocate IP Addresses to End Users;
 
  (b) the SPAIA Feature will apply to all End User Accesses connected using PPPoE or PPPoA;
 
  (c) the Customer is responsible for the allocation of unique IP Addresses to End Users; and
 
  (d) Telstra is not responsible for any inconvenience, loss or damage suffered by the Customer or an End User in relation to the allocation of IP Addresses.
 
8 RID Feature
 
8.1 Upon application by the Customer, Telstra will provide an Enhanced Feature designed to allow the Customer to terminate or cause the termination of an End User session using RADIUS initiated disconnect ("RID Feature").
 
8.2 To acquire the RID Feature, the Customer must, at its own cost:
 
  (a) have developed or otherwise obtained disconnector software that can generate a RID Feature message in the format and containing the information required by Telstra and conforming with the Service Provider Technical Document ("RID Message");
 
  (b) configure the Non-Telstra Equipment to use the RID Feature in accordance with the Service Provider Technical Document and the directions given by Telstra to the Customer from time to time; and
 
  (c) have obtained the right to use and modify the third party software as described in the Service Provider Technical Document.
 
8.3 The Customer warrants that it:
 
  (a) has the right to disconnect or cause the disconnection of an End User ADSL service (supplied by the Customer to the End User using an Individual Service) pursuant to the agreement between the Customer and the End User under which the Customer provides that ADSL service to the End User; and
 
  (b) will only use the RID Feature where the warranty in paragraph 8.3(a) is true.
 
8.4 In addition to Telstra's rights under this Agreement, and without prejudice to any other right, claim or action it may have against the Customer, Telstra may disable the RID Feature temporarily or permanently without notice where, in Telstra's reasonable opinion, the Customer has breached any or all of the warranties in paragraph 8.3.
 
8.5 The Customer must pay any reasonable costs incurred by Telstra in exercising its rights under paragraph 8.4.
 
8.6 To use the RID Feature, the Customer sends a RID Message to Telstra. Telstra will use its reasonable efforts to act on the Customer's behalf and in accordance with the RID Message by disconnecting the End User session on the Individual Service. If Telstra disconnects an End User session following receipt of a RID Message, Telstra will advise the Customer of the disconnection by sending an "accounting stop" message in accordance with the procedure set out in the Service Provider Technical Document. However, Telstra does not guarantee that it will successfully disconnect an End User session or respond to all RID Messages sent by the Customer.
 
8.7 In disconnecting or causing the disconnection or attempting to disconnect an End User's connection to the Individual Service, Telstra is acting on the instructions of and on behalf of the Customer. The Customer releases Telstra from all liability to the End User or the Customer, and indemnifies Telstra against all costs, expenses, liability, loss or damage incurred or suffered by Telstra in connection with any claims, actions or proceedings against Telstra arising out of the disconnection, attempted disconnection or failed disconnection of the Individual Service provided to an End User.
 
8.8 To avoid doubt, disconnection of an End User session using the RID Feature does not change or affect the Customer's obligations to pay Charges in respect of the relevant End User Access.
 
9 Exclusivity Feature
 
9.1 Upon application by the Customer, Telstra will provide an Enhanced Feature designed to ensure that an End User Access supplied to the Customer will only be linked with an AGVC supplied to the Customer, so that the End User will only be able to use the Individual Service to logon on to the Customer ("Exclusivity Feature").
 
9.2 The Customer agrees and acknowledges that the Exclusivity Feature is not available where End Users are connected via bridged or routed connections.
 
9.3 In addition to Telstra's rights under this Agreement, and without prejudice to any other right, claim or action it may have against the Customer, Telstra may disable the Exclusivity Feature temporarily or permanently without notice where Telstra reasonably believes it necessary to comply with any Intervening Legislation, an industry code or industry standard with which Telstra is bound or chooses to comply.
 
10 Multiple Domain Name Feature
 
10.1 Upon application by the Customer Telstra will provide the Customer with the Telstra-managed MDN Feature or Partially Telstra-managed MDN Feature (or both).
 
10.2 The Customer agrees and acknowledges that the MDN Feature is not available where End Users are connected via bridged or routed connections.
 
10.3 Where the Customer is provided with the MDN Feature:
 
  (a) the domain name the Customer provides to Telstra must be registered and unique within Telstra's systems;
 
  (b) the Customer may provide up to 20 domain names to Telstra for the DSL-L3A Service. If both the Telstra-managed MDN Feature and Partially Telstra-managed MDN Feature are provided the total limit is 20 domain names. In the case of the Partially-managed MDN Feature there is no limit on the number of sub-domain names;
 
  (c) the full domain name string (ie user name, domain name topleveldomain and as appropriate sub-domain name) must be no more than 50 characters;
 
  (d) Telstra manages the authentication of domain names; and
 
  (e) the Customer manages the allocation of user names (and in the case of the Partially Telstra-managed MDN Feature, the Customer also manages the allocation of sub-domain names).
 
10.4 The Customer releases Telstra from all liability to the End User or the Customer, and indemnifies Telstra against all costs, expenses, liability, loss or damage incurred or suffered by Telstra in connection with any claims, actions or proceedings against Telstra (including third party claims and claims by an End User) arising out of the allocation or management of user names, domain names and sub-domain names.
 
11 Term
 
11.1 This Service Schedule comes into force on the date it is added to the Agreement ("Schedule Date"). Telstra will supply the DSL-L3A Service during the period this Service Schedule is in force.
 
11.2 Subject to any termination or extension rights the parties have under this Agreement, this Service Schedule ends 2 years from the Schedule Date ("Initial Period") unless the parties otherwise agree.
 
11.3 The parties may agree to extend the operation of this Service Schedule beyond the Initial Period until:
 
  (a) either party gives the other party 30 days written notice of termination; or
 
  (b) this Agreement or this Service Schedule is otherwise terminated.
 
11.4 Subject to paragraph 11.5, the Customer accepts an Individual Service on the terms and conditions set out in this Service Schedule and this Agreement for the period from the Start Date until the first to occur of:
 
  (a) termination or cancellation of the Individual Service;
 
  (b) the expiry or termination of this Service Schedule; or
 
  (c) the expiry or termination of this Agreement in accordance with clause 2 of this Agreement.
 
11.5 Telstra may cease to supply an Individual Service to the Customer upon 3 months prior written notice to the Customer which notice may only be given after the expiry of the period of 12 months after the Start Date. Telstra will use reasonable endeavours to provide as much notice to the Customer as possible (but no less than 3 months notice) of its intention to cease the supply of an Individual Service to a Customer.
 
12 Connection
 
12.1 Subject to an Individual Service passing Service Qualification, Telstra will use its reasonable endeavours to connect that Individual Service by the Arranged Connection Date. Telstra will notify the Customer when the connection has been effected. Telstra will not be liable for any inconvenience, loss or damage suffered by the Customer or an End User if Telstra does not connect the Individual Service by the Arranged Connection Date.
 
12.2 Where an End User also acquires a Monitoring Service, the Customer must advise the provider of the Monitoring Service prior to any disconnection or potential disruption of an End User's standard telephone services caused by or on behalf of the Customer in providing services to the End User, including any such disconnection or disruption arising out of the installation and maintenance of CPE.
 
13

Indicative Provisioning Lead Times

Table 13 of Addendum 2 sets out Indicative Provisioning Lead Times applicable to components of the DSL-L3A Service, which are subject to, among other things, the provisioning of the associated ATM Service and the availability of network infrastructure.
14 Access to premises
 
14.1 Where relevant, the Customer must, and must procure that each End User does:
 
  (a) not interfere with the normal operation of the DSL-L3A Service or any Facility or make either unsafe;
 
  (b) procure safe access by Telstra to the End User Premises:
    (i) to inspect or test a Facility which may be causing interference or danger; and
    (ii) as required by Telstra in connection with the provision, maintenance and repair of the DSL-L3A Service or any Facility;
 
  (c) ensure that Telstra is provided with sufficient and timely access to each End User Premises and the Telstra Equipment to enable Telstra to provide the DSL-L3A Service in accordance with Telstra's obligations under this Agreement; and
 
14.2 If the Customer does not own, control or have access to the End User Premises, it must:
 
  (a) procure for Telstra all such access to the End User Premises as may be required by Telstra under this Addendum; and
 
  (b) indemnify Telstra against a claim by the owner or occupier of the End User Premises, or any other person, in relation to Telstra's entry onto those premises.
 
15 Forecasts
 
15.1 The Customer must supply forecasts for the DSL-L3A Service in the form required by Telstra from time to time.
 
Addendum 3  Charges
 
1 General
 
  The pricing structure for the DSL-L3A Service is as follows:
 
  (a) Charges for End User Accesses;
 
  (b) Charges for Aggregating Virtual Circuits;
 
  (c) Charges for Authenticating Virtual Circuits, if required;
 
  (d) Charges for Enhanced Features; and
 
  (e) miscellaneous Charges.
 
End User Accesses
2.1 The pricing structure for End User Accesses is as follows:
 
  (a) an installation Charge of $90 per End User Access; and
 
  (b) a monthly Charge based on:
    (i) the ADSL line transmission rate selected by the Customer; and
    (ii) the location of the End User Access with respect to the Aggregation Point Charging POP in the same State as that End User Access.
 
2.2 For the purposes of this paragraph 2:
 
  (a) Metro Charges apply where End User Accesses are located within the Local Call Area of the Aggregation Point Charging POP in the same State as those End User Accesses; and
 
  (b) Regional 1 Charges apply where End User Accesses are located outside the Local Call Area of the Aggregation Point Charging POP in the same State as those End User Accesses, but within 165km of that Aggregation Point Charging POP; and
 
  (c) Regional 2 Charges apply where End User Accesses are located both outside the Local Call Area of the Aggregation Point Charging POP in the same State as those End User Accesses and more than 165km from that Aggregation Point Charging POP.
 
2.3

Subject to paragraph 2.4, the monthly Charges for End User Accesses are set out in Table 2.3 of Addendum 3.

2.4 If an End User Access is transferred from the Customer's DSL-L3A Service to the Customer's DSL-L2 Service before 1 September 2002, the monthly Charges for that End User Access for the period from 1 June 2002 to the date the transfer takes place ("relevant period") will be calculated in accordance with Table 2.3 of Addendum 3 of the Telstra Wholesale Broadband DSL Layer 2 Service Schedule; as if the End User Access was in fact a DSL-L2 End User Access for the relevant period.
 
2.5 Telstra will credit the Customer's Bill(s) as necessary to give effect to paragraph 2.4. Customer acknowledges and agrees that Telstra will not be taken to be in breach of this Agreement merely because Charges for End User Accesses payable in accordance with paragraph 2.4 were Billed at first instance in accordance with paragraph 2.3 of this Addendum 3.
 
3 Aggregating Virtual Circuits
 
3.1 The monthly Charge for an Aggregating Virtual Circuit is determined by reference to the distance between the relevant Aggregation Point Charging POP for the State in which the Customer has End User Accesses and the ATM Charging POP for the ATM Service associated with that AGVC.
 
3.2 For the purposes of this paragraph 3, an interstate AGVC is one where the Aggregation Point Charging POP and the ATM Charging POP are in different States ("Interstate AGVCs")
 
3.3 Subject to paragraph 3.4 below, the monthly Charges for AGVCs are set out in Table 3.3 of Addendum 3 below:
3.4 If a Customer has implemented Load Sharing in a State, the Customer's first two Load Sharing AGVCs (with a combined size of 32Mb/s or less) in that State will be charged as if they comprise a single AGVC whose size is the sum of the two Load Sharing AGVCs. For example, two 4Mb/s Load Sharing AGVCs will be charged as if the Customer has one 8Mb/s AGVC. Any additional AGVCs in that State will be charged at the individual rates specified in Table 3.3 of Addendum 3.
 
4

Miscellaneous Charges

The miscellaneous Charges are set out in Tables 4.1A and 4.1B of Addendum 3.
5 Authenticating Virtual Circuit
 
  The Charge for each 64kb/s Authenticating Virtual Circuit is $100 per month.
 
6   

Enhanced Features

The monthly Charges in Table 6 of Addendum 3 apply for the Enhanced Features:
 
7 Service Outage Rebate
 
7.1 Notwithstanding paragraphs 2.13 and 2.14 of Addendum 2, Telstra will credit to the Customer a rebate for Monthly Service Outages in accordance with Table 7 of Addendum 3 ("Service Outage Rebate"). The Customer acknowledges and agrees that Telstra's determination of the amount of any Service Outage Rebate is final.
7.2

The Average End User Access Charge is the average monthly Charge for End User Accesses payable by the Customer in respect of the relevant calendar month for all DSL-L2, DSL-L3A and DSL-L3S Services under this Agreement, calculated as at the last day of the relevant calendar month.

    Example calculation of Average End User Access Charge
    If the Customer has a total of 1,000 Individual Services in respect of DSL-L2, DSL-L3A and DSL-L3S Services as at the last day of the month and the total monthly Charges for End User Accesses payable by the Customer for those services in respect of that calendar $75,500, then the Average End User Access Charge would be $75.50.
7.3

Without need for claim by the Customer, Telstra will aggregate all Service Outage Rebates in respect of the DSL-L2, DSL-L3A and DSL-L3S Services and make a single credit to the Customer's next monthly Bill. For the avoidance of doubt, the next monthly Bill means the first monthly Bill after Telstra has calculated all Service Outage Rebates.

Example calculation of Service Outage Rebate
If the Customer has a total of 1000 Individual Services in respect of DSL-L3A Services as at the last day of the month and

  • 250 Individual Services have Monthly Service Outages of 6 hours or less
  • 300 Individual Services have Monthly Service Outages of between 6 hours and 20.5 hours;
  • 250 Individual Services have Monthly Service Outages of between 20.5 hours and 42.5 hours;
  • 200 Individual Services have Monthly Service Outages of greater than 42.5 hours; and
  • the Average End User Charge is $75.50,

the Service Outage Rebate is calculated as:
300 x $7.55 (ie 10% of $75.50)       $2,265.00
250 x $15.10 (ie 20% of $75.50)     $3,775.00
200 x $37.75 (ie 50% of $75.50)     $7,550.00
Total Service Outage Rebate     $13,590.00

This total amount will be aggregated with any Service Outage Rebates payable for that month in respect of the DSL-L2 Service and the DSL-L3S Service and will be credited as a single amount on the Customer’s monthly Bill for the following month.


 
7.4 Telstra's obligation to credit to the Customer Srevice Outrage Rebates under paragraph 7.1 is subject to the Customer:
 
  (a) maintaining AGVC connections to towo IGRs in each State (where available) throughout the relevant calendar month; and
 
  (b) paying all amounts payable under this Agreement for DSL-L3A Services by the Due Date.
 
8. GST
 
 

The Charges set out in this Addendum 3 are exclusive of any applicable GST. The amount of GST payable by the Customer to Telstra fo the DSL-L3A Service and associated work referred to in this Addendum 3 will be calculated in accordance with the terms of this Agreement and included in the Bill which sets out the Charges payable by the Customer to Telstra for the supply of such Services and associated work.

 
Addendum 4   Service Assurance
 
1 Exclusions
 
1.1 Telstra's obligations under this Addendum do not extend to Faults caused as a result of:
 
  (a) any fault in equipment, software or any network not forming part of the DSL-L3A Service;
 
  (b) damage due to causes external to the DSL-L3A Service;
 
  (c) interference;
 
  (d) Force Majeure; and
 
  (e) Planned Outages.
 
1.2 The Customer acknowledges that:
 
  (a) compliance with the Industry Code Unconditioned Local Loop Service - Network Deployment Rules, registered by the ACA under section 117 of the Telecommunications Act 1997, may not completely eliminate interference; and
 
  (b) faults in cable and other faults in the copper network may result in interruptions to the provision of the DSL-L3A Service, in which event the Customer agrees to do everything reasonably necessary to enable Telstra to resolve those faults.
 
1.3 Telstra will not provide Fault restoration under this Service Schedule where the Fault is in a network or cabling owned, controlled or maintained by any person other than Telstra.
 
2 Reporting to Telstra
 
2.1 The Customer must report the details of the suspected Fault to , the Telstra Fault Desk (the National Wholesale Service Centre, telephone 1802 288 or such other numbers as Telstra may advise).
 
2.2 The Telstra Fault Desk number is available 24 hours a day, seven days a week and should only be used for reporting of Faults by the Customer. The number is not to be supplied by Customers to End Users. Where End Users contact Telstra directly, then the fee specified in paragraph 4 of Addendum 3 will apply.
 
2.3 When reporting a suspected Fault the Customer must provide the following information:
 
  (a) details of the Individual Service and/or the standard telephone service over which the Individual Service is provided:
    (i) identify the full national number;
    (ii) identify the type of service; and
    (iii) confirm the location of the affected service.
 
  (b) contact and Fault details:
    (i) name of Customer;
    (ii) identify contacts for the Customer and the End User (where appropriate) including site contact if site attendance is required;
    (iii) give details of the Fault symptoms; and
    (iv) confirm that the Customer has already addressed the possible sources of the suspected Fault, including communication with the End User to establish that the End User is connected to the Individual Service and/or the standard telephone service over which the Individual Service is provided.
 
2.4 Telstra will advise the Customer of a Fault reference number.
 
2.5 The Customer should record the Telstra issued Fault reference number for future reference.
 
2.6 Where an on-site visit is required, Telstra will arrange an appropriate appointment time with the Customer Premises Contact.
 
2.7 Telstra's hours of business for reporting Faults are 24 hours per day. Where a Fault report is lodged Fault restoration work will be undertaken in accordance with paragraph 3 of this Addendum.
 
2.8 Where Telstra attends an End User Premises in response to a Fault report and the Fault is found to be in the Non-Telstra Equipment, Telstra will charge a fee for the incorrect call out as specified in paragraph 4 of Addendum 3.
 
2.9 If Telstra must gain access to an End User Premises to restore the Individual Service the Response Time and Repair Time will be subject to the provision of entry to the premises.
 
2.10 On completion of Individual Service restoration activities Telstra will contact the Customer to confirm that the Individual Service has been completely and satisfactorily restored. The Customer acknowledges and agrees that Telstra may repair a Fault on a temporary or permanent basis and that any temporary repair may require a subsequent Planned Outage to repair the Service or Individual Service on a permanent basis.
 
2.11 If the Customer wishes to escalate the Fault, as a result of either the Response Time or the Repair Time having been exceeded, the Customer should contact the Telstra Business Team Contact.
 
3 Target Response Times and Repair Times
 
3.1 Telstra will use reasonable endeavours to meet the target Response Times and Repair Times set out in this paragraph 3 in relation to the DSL-L3A Service.
 
3.2 For the purposes of this paragraph 3:
 
  (a) Urban Areas are urban areas with a population of greater than 10,000;
 
  (b) Rural Areas are areas with a population of between 200 and 10,000 but which are not within Telstra's Extended Charging Zones; and
 
  (c) Remote Areas are areas with a population of less than 200 or areas included in a Telstra Extended Charging Zone.
 
Target Response and Repair Times for Faults in End User Accesses
3.3 The target Response and Repair Times for Faults in End User Accesses apply during the following hours of coverage only:- 8.00am to 5.00pm, Monday to Friday (excluding public holidays in the place where the work is required to rectify a Fault). They are:
 
  (a) Response Time for all areas: 8 hours (within the hours of coverage) after Telstra receives a Fault report;
 
  (b) Repair Time for Urban Areas: at the end of the first full Business Day after Telstra receives a Fault report;
 
  (c) Repair Time for Rural Areas: at the end of the second full Business Day after receipt of a Fault report; and
 
  (d) Repair Time for Remote Areas: at the end of the third full Business Day after Telstra receives a Fault report.
 
    Example calculation of Response and Repair Times for End User Accesses
If a Fault report in an Urban Area is received on Friday at 2.00pm, the target Response Time will be Monday at 1.00pm being 8 hours (during the hours of coverage) after receipt of the Fault report. The target Repair Time will be Monday at 5.00pm being the end of the first full Business Day after receipt of the Fault report.
 
Target Response Times and Repair Times for Faults in the Telstra Data Network
3.4 The hours of coverage for Faults in the Telstra Data Network are 24 hours a day, 7 days a week including public holidays. The target Response and Repair times are:
 
  (a) Response Time for all areas: 1 hour after Telstra receives a Fault report;
 
  (b) Repair Time for Urban Areas: 12 hours after Telstra receives a Fault report;
 
  (c) Repair Time for Rural Areas: the end of the first full Business Day plus 12 hours after Telstra receives a Fault report; and
 
  (d) Repair Time for Remote Areas: the end of the second full Business Day plus 12 hours after Telstra receives a Fault report.
 
    Example calculation of Response and Repair Times for Telstra Data Network(a)
If a Fault report in an Urban Area is received on Friday at 2.00pm, the target Response Time will be Friday at 3.00pm being 1 hour after receipt of the Fault report. The target Repair Time will be Saturday at 2.00am being 12 hours after receipt of the Fault report.
 
Addendum 5   ADSL Material Licence Conditions for Use of ADSL Material supplied by Telstra
 
1

Terms

The terms and conditions in this Addendum 5 are the terms and conditions on which the Customer may use and reproduce the Material.
   
2

Definitions

Licence Term means the term of this Service Schedule, or such other term as Telstra may advise the Customer in writing.

Material means ADSL coverage maps (“Maps”) and other written material specifically provided by Telstra to the Customer in relation to the DSL-L3A Service.

Purpose means the use and reproduction of the Material in presentations and other formats, including on the Internet to support the supply of the Customer’s services to End Users.
 
3

Licence

Telstra grants to the Customer a non-exclusive licence to use and reproduce the Material for the Licence Term solely for the Purpose ("Licence").
 
4

Charges

Telstra will not charge the Customer a fee to reproduce the Material.

 
5

Copyright

The Material is protected by copyright law and international copyright treaties, as well as other intellectual property laws and treaties. The Customer acknowledges that Telstra owns all intellectual property rights in the Material, including copyright. Telstra retains all rights not expressly granted under this Licence.
 
6

Termination of ADSL Material Licence

The Licence will terminate upon expiration of the Licence Term. Upon termination, the Customer must immediately cease using and reproducing the Material and delete all copies of the Material, including copies on any Internet sites.
 
7 Customer obligations

 
7.1 The Customer agrees to only use and reproduce the Material for the Purpose.
 
7.2 The Customer agrees not to assign, transfer, licence, sub-licence or otherwise deal with the rights granted under this Licence.
 
7.3 The Customer may only use and reproduce the Material in full. The Customer may not use or reproduce parts of, or extracts from, the Material.
 
7.4 The Customer may not use or reproduce the Material in any manner which is unlawful or in any way prejudicial to the interests of Telstra or the DSL-L3A Service.
 
7.5 The Customer must include the following copyright notice on all copies of the Material, "(c) Telstra Corporation Limited 2002"
 
7.6

The Customer must include the following statements positioned immediately under each representation of a Map:

  • This Map is a guide only.
  • You should make your own enquiries before relying on or entering into any transaction based on the content of this Map.
     
8

Branding

Except where Telstra specifically prohibits it, the Customer may place the Customer's logo or branding on the Material. For the avoidance of doubt, this paragraph 8 constitutes prior written consent as required by clause 8.2 of the main terms and conditions of this Agreement, entitling the Customer to brand and hold out the Material as being its own in accordance with the terms of this Addendum 5.

 

ANNEXURE F
Telstra Wholesale Broadband DSL Layer 3 Symmetrical Service Schedule
 
Addendum 1   Definitions and Interpretation
 

1

1.2 

Definitions

In this Service Schedule the following words have these meanings:

ADSL means asymmetrical digital subscriber line technology for the transmission of digital information at high bandwidths on twisted metallic pairs, which has physical and electrical characteristics that conform with:

  1. Telstra Document IP 1149 The Telstra ADSL Network - Listing requirements for CPE (Issue 3 or subsequent) available from http://www.telstra.com.au/adsl/docs/inter_op_cpe3.pdf as updated from time to time;
  2. ANSI Specification T.413, Network and Customer Installation Interfaces - ADSL. Metallic Interface (Issue 2);
  3. ITU-T G.992.1 (7/99) Asymmetrical Digital Subscriber Line (ADSL) Transceivers; and
  4. ITU-T G.992.2 (7/99) Asymmetrical Digital Subscriber Line (ADSL) Transceivers.

ADSL CAM means a Telstra customer access module within which ADSL multiplexing equipment is located.

ADSL Material Licence means the terms and conditions contained in Addendum 5 of this Service Schedule.

Aggregation Point means a point nominated by Telstra in the Telstra network where End User Access traffic is collected together for placement onto one or more Aggregating Virtual Circuits being an IGR or, for those States where IGRs are not installed, an IPSN.

Aggregation Point Charging POP means a point in the Telstra network which is used as a reference point (for charging purposes only) in determining the monthly Charges for End User Accesses and AGVCs. As at the date of this Service Schedule, Telstra’s Aggregation Point Charging POPs are located at the exchanges listed in Table 1.1A of Addendum 1.

 

ATM Service means a Telstra public (switched) data service which is described as an “ATM” service.

ATM Service Schedule means the Wholesale ATM Service Schedule or, if the Customer is obtaining ATM Services from Telstra other than by means of the Wholesale ATM Service Schedule, the ATM Section of the SFOA.

Authenticating Virtual Circuit or AVC means a virtual circuit with an indicative maximum transmission speed used for handling the following types of information:

  1. authentication information used to verify user names and passwords;
  2. authorisation information used to control the supply of an Individual Service; or
  3. accounting information used in the billing of an Individual Service.

Average End User Access Charge means a charge calculated in accordance with paragraph 7.2 of Addendum 3.

Capital City means Sydney, Canberra, Melbourne, Hobart, Adelaide, Perth, Darwin and Brisbane.

Customer Site means premises under the control or possession of the Customer which are made available for the installation of an ATM Service associated with the DSL-L3S Service. For the avoidance of doubt a Telstra exchange cannot be regarded as Customer Site.

Customer Premises Access means the provision by Telstra of an ATM Service to a Customer Site.

Customer Premises Equipment or CPE means any equipment installed or to be installed on the End User side of the Network Boundary in connection with the provision of the DSL-L3S Service to the Customer, including without limitation routers, modems, splitters, filters, wiring and client software.

DSL-L2 Service or DSL Layer 2 Service means the service acquired under the Telstra Wholesale Broadband DSL Layer 2 Service Schedule to this Agreement.

DSL-L3A Service or DSL Layer 3 Asymmetrical Service means the service acquired under the Telstra Wholesale Broadband DSL Layer 3 Asymmetrical Service Schedule to this Agreement. This service was formerly known as FlexStream™.

DSL-L3S Service or DSL Layer 3 Symmetrical Service means the Telstra Wholesale Broadband DSL Layer 3 Symmetrical Service described in paragraph 1.1 of Addendum 2. This service was formerly known as CommerceStreamâ.

DSL Network Component means an ADSL CAM, IPSN, IGR or SMC.

End User Access means a single virtual circuit for the provision of ADSL line transmission rates of up to 512kb/s upstream and up to 512kb/s downstream over a Qualified Pair between the Network Boundary and the Telstra nominated Aggregation Point, but excludes the provision of Non-Telstra Equipment and Customer Premises Equipment.

End User Technical Documents means the most recent version of each of the Telstra documents DC.030 Telstra Service Interface Specification for ADSL Access, End User Interface (Issue 4.6 or subsequent) and IP 1149 The Telstra ADSL Network - Listing Requirements for CPE (Issue 3 or subsequent). Both documents are available from the Telstra website http://telstra.com.au/adsl/equipmnt.htm and are updated by Telstra from time to time.

Enhanced Feature means an optional additional feature offered or intended to be offered under this Service Schedule in conjunction with the DSL-L3S Service. Examples of Enhanced Features are Service Provider Allocation of IP Addresses, the RID Feature, the Exclusivity Feature and the Multiple Domain Name Feature, which are described in paragraphs 7 to 10 of Addendum 2.

Excluded Service Outage means a service interruption affecting a DSL Network Component caused by:

  1. any fault in equipment, software or a network component (other than a DSL Network Component), including any fault on the End User’s PSTN line, the AGVC or the ATM Service connecting the Customer to the ATM POP;
  2. any fault in any line card forming part of an ADSL CAM;
  3. damage due to causes external to the DSL-L3S Service;
  4. interference;
  5. suspension of DSL-L3S Services under this Agreement for any reason;
  6. Force Majeure; or
  7. Planned Outages.

Exclusivity Feature means the Enhanced Feature defined in paragraph 9.1 of Addendum 2.

Extended Charging Zone has the meaning set out in the Public Switched Telephone Service Section of the SFOA (available at www.telstra.com.au/sfoa).

Fault means a failure in the normal operation of the DSL-L3S Service or an Individual Service which is determined by Telstra to be Telstra’s responsibility under this Agreement to rectify.

IGR means an IP gateway router which aggregates traffic from one or more IPSNs for placement onto one or more Aggregating Virtual Circuits.

Incompatible Product means a product listed in the Telstra document called Telstra Wholesale Broadband DSL Layer 3 Asymmetrical, DSL Layer 3 Symmetrical, DSL Layer 2 & DSL Layer 2 Data - Incompatible Products available from Telstra upon request.

IP Addresses means the Internet addressing standard which describes the address of all devices physically located within the global Internet.

IPSN means an Internet Protocol Services Node which aggregates traffic from multiple ADSL CAMs for delivery to an IGR or, where the IPSN is not connected to an IGR, for placement onto one or more Aggregating Virtual Circuits.

Limited Service Qualification means the Internet-based analysis of Pairs connecting End Users to the Telstra Data Network which may be carried out by the Customer.

Load Sharing means two AGVCs (of equal size) connected to the two IGRs in a State.

Local Call Area means the area within which a call between 2 points would be classified as a local call according to the Public Switched Telephone Service Section of the SFOA (available at www.telstra.com.au/sfoa).

Monitoring Service means a service for the monitoring of End User Premises which uses the Securitel Service or other communications services to transmit information from End User Premises to the provider of the Monitoring Service.

Monthly Service Outages means the sum of all Outage Periods in respect of an Individual Service during a calendar month as determined by Telstra.

Multiple Domain Name Feature or MDN Feature is an Enhanced Feature which enables the Customer to provision multiple domain names to End Users, and which may be provided by the Telstra-managed MDN Feature or Partially Telstra-managed MDN Feature.

Network Boundary means in relation to a Pair that enters a building on an End User Premises:

  1. if there is a main distribution frame in the building and the Pair is connected to the frame - a two wire point on the side of the frame nearest to Telstra; or
  2. if paragraph (a) does not apply but the line is connected to a network termination device located in, on or within close proximity to, the building - the side of the device nearest to the End User; or
  3. if neither paragraph (a) nor (b) applies - the point ascertained in accordance with section 22 of the Telecommunications Act.

Outage Period means the period commencing when a Total Service Outage or Partial Service Outage (as the case may be) begins and ending when End Users affected by the service disruption are able to reconnect End User sessions.

Pair means a single twisted metallic pair between an End User Premises and an ADSL CAM.

Partial Service Outage means a service disruption affecting a DSL Network Component which results in the termination of >5 per cent but <100 per cent of End User sessions concurrently connected through that DSL Network Component as measured by Telstra (not including Excluded Service Outages).

Partially Telstra-managed MDN Feature is where the Customer manages the allocation of user names, sub-domain names and domain names and Telstra manages the authentication of domain names. The domain name string is of the type “UserName@SubDomainName.UniqueDomainName.TopLevelDomain”.

Planned Outage means those periods where interruption of the DSL-L3S Service or Individual Service has been planned and Telstra has notified the Customer in advance.

PSTN means a public switched telephone network.

Qualified Pair means a Pair which passes Service Qualification and over which the End User is acquiring a standard telephone service supplied by Telstra either directly or through a reseller.

RADIUS stands for remote authentication dial-in user service. RADIUS is a protocol for handling authentication (verifying user names and passwords), authorisation (control of services) and accounting for End Users.

Repair Time means the period of time between a reported failure in the normal operation of a Service or Individual Service being reported to the Telstra Fault Desk by a Customer Premises Contact and repair of the Fault by Telstra on a permanent or temporary basis.

Response Time means the period of time between a failure in the normal operation of a Service or Individual Service being reported to the Telstra Fault Desk by a Customer Premises Contact and the earlier of:

  1. a response from Telstra advising that the Fault has been identified by remote diagnostics and that work has begun to repair the Fault or that a site visit is required to repair the Fault; or
  2. the attendance of a Telstra representative at a site to commence the repair of the Fault.

RID Feature means the Enhanced Feature defined in paragraph 8.1 of Addendum 2.

Securitel Service means a Securitel service supplied by Telstra under the Leased Digital Services section of the SFOA (available at www.telstra.com.au/sfoa).

Service Outage Rebate means an amount calculated in accordance with paragraph 7.1 of Addendum 3.

Service Provider Allocation of IP Addresses or SPAIA Feature means the Enhanced Feature defined in paragraph 7.1 of Addendum 2.

Service Provider Technical Document means the most recent version of the Telstra Document DC.032 Technical Reference for ADSL Access, Service Provider Interface (Issue 2.3 or subsequent) available from Telstra upon request.

Service Qualification means the desktop analysis carried out by Telstra as described in paragraph 3.1 of Addendum 2.

SFOA means the standard forms of agreement including pricing information formulated by Telstra for the purposes of Part 23 of the Telecommunications Act 1997 as varied by Telstra from time to time (available at www.telstra.com.au/sfoa).

SFOA ATM Service means an ATM Service provided by Telstra under the terms of the ATM Section of the SFOA.

SMC means the Service Management Centre which hosts the RADIUS proxy used for authentication for the DSL-L3S Service.

State means a state or territory of the Commonwealth of Australia and includes the Australian Capital Territory and the Northern Territory. .However for the purposes of paragraph 1.1(b) in Addendum 2, South Australia and the Northern Territory are together regarded as one state (until Telstra notifies the Customer otherwise).

Technology Blockers means any systems or electronic devices that do not provide for a continuous metallic loop between the Network Boundary and the ADSL CAM. Examples include matching transformers and pair gain systems.

Telstra Data Network means the Telstra network used to transmit information by means of ATM Services.

Telstra Fault Desk means the fault reporting bureau, the telephone number of which the Customer should use to report all Faults as set out in paragraph 2.1 of Addendum 4.

Telstra IP Address Ranges means Telstra's IP address ranges 172.30.0.0/16 and 172.31.0.0/16 - and as from time to time amended by Telstra.

Telstra-managed MDN Feature is where the Customer manages the allocation of user names and domain names and Telstra manages the authentication of domain names. The domain name string is of the type UserName@UniqueDomainName.TopLevelDomain”.

Telstra Premises Access means the provision of an ATM Service by Telstra to the Customer’s equipment which is located in a Telstra exchange.

Total Service Outage means a total failure of a DSL Network Component (not including Excluded Service Outages).

Wholesale ATM Service means an ATM Service supplied by Telstra under the Wholesale ATM Service Schedule to this Agreement.
 
2 Interpretation
 
2.1 Paragraph 1.6 in Annex F to this Agreement, which relates to contact details for reporting Faults, is not applicable to the DSL-L3S Service.
 
2.2 A reference to a specification or standard in this Service Schedule includes that specification or standard as from time to time issued, updated or adopted by Telstra.
 
2.3 In the event of any inconsistency between this Service Schedule and any specification or standards document referenced in this Service Schedule, then this Service Schedule prevails.
 
2.4 Where any provision of this Service Schedule specifies the circumstances in which Telstra may suspend, limit or cancel the provision of the DSL-L3S Service or an Individual Service, that provision applies in addition to, and not instead of, the provisions set out in the remainder of this Agreement outside this Service Schedule.
 
2.5 A reference to a transmission rate in this Service Schedule is a reference to a maximum transmission capability and is not a guarantee that the transmission rate will be achieved or that the downstream or upstream transmission rates achieved will be symmetrical. In particular, the actual data transmission rate which can be achieved is likely to be less than the maximum transmission capability because of dimensioning, overhead and other technical reasons.
 
2.6 This Service Schedule does not deal with and does not confer upon the Customer, any rights in relation to Facilities owned or operated by Telstra, under Parts 3 or 5 of Schedule 1 of the Telecommunications Act.
 
Addendum 2   The DSL-L3S Service
 
1 The DSL-L3S Service
 
1.1 The DSL-L3S Service is comprised of the following components:
  (a) one or more End User Accesses in a State;
  (b) one or more AGVCs which connect to all End User Accesses within a particular State; and
  (c) a national Authenticating Virtual Circuit (which is not required where all the Customer's End Users are all connected with bridged or routed connections).
 
1.2

Subject to paragraph 2.5 of Addendum 1, DSL-L3 Services provides End User Accesses which are configured symmetrically (using ADSL) at an ADSL line transmission rate of up to 512 kb/s upstream and up to 512 kb/s downstream.

Service Diagram – Telstra Premises Access Example (for illustrative purposes only)

Service Diagram – Customer Premises Access Example (for illustrative purposes only)

Service Diagram Charging Example (for illustrative purposes only)

 
2 General
 
2.1 The Customer acknowledges that the DSL-L3S Service is available only to Wholesale Customers and warrants that it is a Wholesale Customer.
 
2.2 To the extent permitted by law, the Customer must not supply the DSL-L3S Service to a third party for resale by that third party without Telstra's prior written consent, such consent not to be unreasonably withheld.
 
ATM Service
2.3 The Customer must acquire either Customer Premises Access or Telstra Premises Access from Telstra in order for Telstra to deliver the DSL-L3S Service traffic from the ATM POP to the Customer. If, at the date of this Service Schedule, the Customer is acquiring an SFOA ATM Service for the carriage of DSL-L3S Service traffic from the ATM POP to the Customer, the Customer must cease using that SFOA ATM Service by 30 July 2002 and must acquire a Wholesale ATM Service.
 
2.4 The Customer acknowledges that the terms on which Telstra supplies Customer Premises Access and Telstra Premises Access (including Charges) are described in the ATM Service Schedule.
 
Use of AGVCs
2.5 AGVCs supplied as part of the DSL-L3S, DSL-L2 or DSL-L3A Services may be used to aggregate DSL-L3A, DSL-L2 and/or DSL-L3S Service data traffic.
 
2.6 Subject to paragraph 2.5 above, AGVCs supplied as part of the DSL-L3S Service must only be used for the DSL-L3S Service and not with any other Telstra Wholesale Service.
 
Load Sharing
2.7 For technical or operational reasons, Telstra may, on reasonable notice, require the Customer to implement Load Sharing.
 
2.8 The Customer must comply with Telstra's configuration instructions in relation to Load Sharing.
 
Qualified Pairs
2.9 The Customer acknowledges that Telstra can only supply an Individual Service over a Qualified Pair where Telstra supplies operational standard telephone services over the same Qualified Pair and accordingly:
  (a) the Customer warrants to Telstra that the End User to whom the Customer provides services using the Individual Service over a Qualified Pair is the same End User to whom Telstra or a reseller of Telstra supplies a standard telephone service using that Qualified Pair;
  (b) Telstra will only provide the Individual Service to the Customer for so long as the End User referred to in paragraph 2.9(a) continues to acquire that standard telephone service from Telstra or a reseller of Telstra using that Qualified Pair; and
  (c) where the End User ceases to acquire a standard telephone service from Telstra or a reseller of Telstra using that Qualified Pair, Telstra will terminate the provision of the Individual Service over that Qualified Pair.
 
Monitoring Services
2.10 The Customer:
  (a) acknowledges that in some instances, such as where the End User is acquiring a Monitoring Service, additional CPE such as central splitters and network termination devices will have to be installed by the Customer at its own cost before Telstra will provide an Individual Service in respect of that End User, in order to maintain continued supply of security and similar services to the End User. This will also apply where a Monitoring Service is supplied subsequent to an Individual Service being supplied to that End User; and
  (b) warrants that where such additional CPE is required, the additional CPE will be installed prior to the provision of the Individual Service by Telstra.
 
Installation of Individual Services
2.11 In respect of each Individual Service:
  (a) the Customer warrants that it has obtained the End User's written acknowledgment that the installation and operation of the Individual Service may cause temporary disruption in the standard telephone services received by the End User or a Monitoring Service;
  (b) the Customer warrants that it has obtained the End User's written acknowledgement that the installation and operation of a Monitoring Service may cause temporary disruption to an Individual Service;
  (c) the Customer warrants that it has obtained the End User's written acknowledgment that the installation and operation of an Individual Service may mean that Incompatible Products will not be supplied to the End User using the Qualified Pair;
  (d) the Customer warrants that it has obtained the End User's written acknowledgement that any provider of a Monitoring Service used by an End User has been notified that:
    (i) installation and operation of an Individual Service may cause temporary disruption in the standard telephone services or a Monitoring Service received by an End User; and
    (ii) installation of CPE such as central splitters and network termination devices may be required under paragraph 2.10(a) of this Addendum.
 
  (e) the Customer releases Telstra from all liability to the End User or the Customer, and indemnifies Telstra against all costs, expenses, liability, loss or damage incurred or suffered by Telstra in connection with any claims, actions or proceedings against Telstra (including third party claims or claims by an End User) arising out of the following (to the extent that the liability is caused by the provision or cancellation of the DSL-L3S Service):
    (i) disruption in the PSTN services or Monitoring Services;
    (ii) cancellation of the Individual Service;
    (iii) suspension of the provision of the Individual Service to particular IP Addresses;
    (iv) cancellation of, or refusals to provide, all Incompatible Products; and
    (v) possible breaches of the Telecommunications (Customer Service Guarantee) Standard in respect of that End User.
 
Service Configuration and Supply
2.12 The Customer is responsible for dimensioning and sizing all AGVCs and the Authenticating Virtual Circuit for its requirements.
 
2.13 The Customer agrees and acknowledges that it the DSL-L3S Service is an "Internet-grade" product only, which means that successful data transport using the DSL-L3S Service is not guaranteed.
 
2.14 Telstra is responsible for supplying and integrating the components of the DSL-L3S Service, and while it will endeavour to meet the Customer's requests in relation to the DSL-L3S Service (including AGVCs and the Enhanced Features), the Customer acknowledges that there may be technical, structural, architectural, provisioning or other constraints affecting Telstra's ability to do so. The Customer acknowledges that the availability or performance of the DSL-L3S Service and components of the DSL-L3S Service may vary, and an Individual Service may not be provided, depending on the available capacity of, the geographic and technical capability of, or other technical matters affecting, the relevant Telstra networks at the time at which a request for DSL-L3S Service is made or the time at which the DSL-L3S Service is delivered.
 
ADSL Material Licence
2.15 Telstra may from time to time provide the Customer with coverage maps indicating general availability of the DSL-L3S Service. Telstra may also provide other specified materials relating to the DSL-L3S Service. Use by the Customer of those maps and other specified materials will be at the discretion of Telstra and subject to the ADSL Material Licence terms and conditions set out in Addendum 5.
 
Transfer of End User Accesses
2.16 The Customer may transfer an End User Access between the DSL-L3A Service, DSL-L3S Service and DSL-L2 Service, subject to:
  (a) Telstra's prior approval;
  (b) compliance with the Service Schedule for the Service to which the End User Access is transferred; and
  (c) payment of any fee applying to such a move (which fee, in relation to transfer of an End User from or to the DSL-L3S Service, is set out in paragraph 4 of Addendum 3 of this Service Schedule).
 
Interception
2.17 The Customer must comply with its interception obligations under the Telecommunications Act 1997 in relation to the DSL-L3S Service.
 
3 Service Qualification
 
3.1 Service Qualification is a desktop analysis carried out by Telstra to determine various matters relating to aspects of the Pairs connecting End Users to the Telstra Data Network. This desktop analysis is based on information available in Telstra systems. These matters include:
  (a) line loss;
  (b) infrastructure availability;
  (c) Technology Blockers;
  (d) adjacent interference; and
  (e) Incompatible Products.
 
3.2 Telstra will make available to the Customer, via the Internet, a tool which will enable the Customer to carry out Limited Service Qualification of Pairs.
 
3.3 Where the Customer requests that Telstra perform a feasibility study for the provision of an Individual Service (in the absence of an Order), Telstra will carry out Service Qualification of Pairs, and will charge the Customer in accordance with paragraph 4 of Addendum 3 for doing so.
 
3.4 The Customer acknowledges that:
  (a) Service Qualification and Limited Service Qualification are desk studies carried out on the basis of information available to Telstra, and the results of the desk studies do not conclusively demonstrate that a Pair is suitable for the provision of the Individual Service;
  (b) Telstra is under no obligation to provide a Individual Service over a Pair, or to undertake any network modifications, rearrangements or harmonisation, if an Individual Service requested by a Customer does not pass Service Qualification;
  (c) the provision of the Individual Service over a Pair will prevent the supply by Telstra or other service providers of Incompatible Products to the relevant End User over that Pair, and that the Customer is responsible and liable to the End User in respect of that inability to supply Incompatible Products; and
  (d) where an End User is acquiring Incompatible Products over a Pair, Telstra will not provide the Individual Service to the Customer over that Pair.
 
4 Non-Telstra Equipment

 
4.1 For the avoidance of doubt, the DSL-L3S Service does not include the provision of cabling or equipment beyond the Network Boundary at the End User's Premises or at or beyond the point of interconnect at the ATM POP.
 
4.2 The Customer is wholly responsible for the Non-Telstra Equipment and any liability arising from the use of the Non-Telstra Equipment by any person.
 
4.3 The Customer must ensure that all services provided by it to an End User by means of the DSL-L3S Service and all Non-Telstra Equipment connected to the DSL-L3S Service complies with the following requirements:
  (a) all relevant ACA technical standards; and
  (b) ACIF S043.2:2001 Requirements for Customer Equipment for connection to a metallic local loop interface of a Telecommunications Network-Broadband.
 
4.4 The Customer must ensure that Non-Telstra Equipment connected to the DSL-L3S Service:
  (a) meets the specifications and requirements of the Service Provider Technical Document and the End User Technical Documents.
 
  (b) at the End User side of the Network Boundary only, has passed Telstra's interoperability tests. The list of equipment that has passed these tests is at http://telstra.com.au/adsl/equipmnt.htm; and
  (c)

is labelled with the ACA telecommunications compliance mark (A-tick as shown below).
5 Third Party IP Addresses
 
5.1 The Customer must provide Telstra with the registered or unregistered IP Addresses to be used in routing DSL-L3S Service traffic.
 
5.2 The Customer warrants that:
  (a) it is the registered owner, or it has written permission from the registered owner, to use the registered IP Addresses provided under paragraph 5.1;
  (b) the IP Addresses to be used do not fall within the Telstra IP Address Ranges; and
  (c) the owner to use the unregistered IP Addresses in the case of unregistered IP Addresses, it is the owner or has the written permission of
5.3 Telstra may investigate the correctness of the warranties in paragraph 5.2, and if it does so, the Customer must provide Telstra with evidence of the correctness of the warranties.
 
5.4 If there is a breach of the warranties in paragraph 5.2, or if Telstra is investigating the correctness of those warranties, Telstra may:
  (a) refuse to route DSL-L3S Service traffic;
  (b) suspend the provision of an Individual Service; or
  (c) issue a temporary IP Address for use in routing traffic.
 
5.5 In addition to Telstra's rights under this Agreement, and without prejudice to any other right, claim or action it may have against the Customer, Telstra may terminate the provision of an Individual Service or the DSL-L3S Service where, in Telstra's reasonable opinion, the Customer has breached any or all of the warranties in paragraph 5.2.
 
5.6 The Customer must pay any reasonable costs incurred by Telstra in exercising its rights under paragraph 5.4 or paragraph 5.5.
 
5.7 The Customer releases Telstra from all liability to the End User or the Customer, and indemnifies Telstra against all costs, expenses, liability, loss or damage incurred or suffered by Telstra in connection with any claims, actions or proceedings against Telstra (including third party claims and claims by an End User) arising out of the allocation of registered or unregistered IP Addresses, or any of the functions undertaken by the Customer's RADIUS server.
 
6 DSL-L3S Service Enhanced Features
 
6.1 The Customer may elect to receive one or more Enhanced Features in conjunction with the DSL-L3S Service.
 
6.2 In relation to the Enhanced Features, the Customer agrees and acknowledges that it must comply with (at its own cost):
  (a) the relevant End User Technical Documents and Service Provider Technical Document; and
  (b) Telstra's configuration instructions.
 
7 Service Provider Allocation of IP Addresses ("SPAIA")
 
7.1 The Customer may apply for an Enhanced Feature designed to allow the Customer to allocate their own IP Addresses to End Users ("Service Provider Allocation of IP Addresses" or "SPAIA Feature").
 
7.2 The Customer agrees and acknowledges that the SPAIA Feature is not available where End Users are connected via bridged or routed connections.
 
7.3 The Customer agrees and acknowledges that, where the SPAIA Feature is enabled:
  (a) Telstra does not allocate IP Addresses to End Users;
  (b) the SPAIA Feature will apply to all End User Accesses connected using PPPoE or PPPoA;
  (c) the Customer is responsible for the allocation of unique IP Addresses to End Users; and
  (d) Telstra is not responsible for any inconvenience, loss or damage suffered by the Customer or an End User in relation to the allocation of IP Addresses.
 
8 RID Feature
 
8.1 Upon application by the Customer, Telstra will provide an Enhanced Feature designed to allow the Customer to terminate or cause the termination of an End User session using RADIUS initiated disconnect ("RID Feature").
 
8.2 To acquire the RID Feature, the Customer must, at its own cost:
  (a) have developed or otherwise obtained disconnector software that can generate a RID Feature message in the format and containing the information required by Telstra and conforming with the Service Provider Technical Document ("RID Message");
  (b) configure the Non-Telstra Equipment to use the RID Feature in accordance with the Service Provider Technical Document and the directions given by Telstra to the Customer from time to time; and
  (c) have obtained the right to use and modify the third party software as described in the Service Provider Technical Document.
 
8.3 The Customer warrants that it:
  (a) has the right to disconnect or cause the disconnection of an End User ADSL service (supplied by the Customer to the End User using an Individual Service) pursuant to the agreement between the Customer and the End User under which the Customer provides that ADSL service to the End User; and
  (b) will only use the RID Feature where the warranty in paragraph 8.3(a) is true.
 
8.4 In addition to Telstra's rights under this Agreement, and without prejudice to any other right, claim or action it may have against the Customer, Telstra may disable the RID Feature temporarily or permanently without notice where, in Telstra's reasonable opinion, the Customer has breached any or all of the warranties in paragraph 8.3.
 
8.5 The Customer must pay any reasonable costs incurred by Telstra in exercising its rights under paragraph 8.4.
 
8.6 To use the RID Feature, the Customer sends a RID Message to Telstra. Telstra will use its reasonable efforts to act on the Customer's behalf and in accordance with the RID Message by disconnecting the End User session on the Individual Service. If Telstra disconnects an End User session following receipt of a RID Message, Telstra will advise the Customer of the disconnection by sending an "accounting stop" message in accordance with the procedure set out in the Service Provider Technical Document. However, Telstra does not guarantee that it will successfully disconnect an End User session or respond to all RID Messages sent by the Customer.
 
8.7 In disconnecting or causing the disconnection or attempting to disconnect an End User's connection to the Individual Service, Telstra is acting on the instructions of and on behalf of the Customer. The Customer releases Telstra from all liability to the End User or the Customer, and indemnifies Telstra against all costs, expenses, liability, loss or damage incurred or suffered by Telstra in connection with any claims, actions or proceedings against Telstra arising out of the disconnection, attempted disconnection or failed disconnection of the Individual Service provided to an End User.
 
8.8 To avoid doubt, disconnection of an End User session using the RID Feature does not change or affect the Customer's obligations to pay Charges in respect of the relevant End User Access.
 
9 Upon application Exclusivity Feature
 
9.1 by the Customer, Telstra will provide an Enhanced Feature designed to ensure that an End User Access supplied to the Customer will only be linked with an AGVC supplied to the Customer, so that the End User will only be able to use the Individual Service to logon on to the Customer ("Exclusivity Feature").
 
9.2 The Customer agrees and acknowledges that the Exclusivity Feature is not available where End Users are connected via bridged or routed connections.
 
9.3 In addition to Telstra's rights under this Agreement, and without prejudice to any other right, claim or action it may have against the Customer, Telstra may disable the Exclusivity Feature temporarily or permanently without notice where Telstra reasonably believes it necessary to comply with any Intervening Legislation, an industry code or industry standard with which Telstra is bound or chooses to comply.
 
10 Multiple Domain Name Feature
 
10.1 Upon application by the Customer Telstra will provide the Customer with the Telstra-managed MDN Feature or the Partially Telstra-managed MDN Feature (or both).
 
10.2 The Customer agrees and acknowledges that the MDN Feature is not available where End Users are connected via bridged or routed connections.
 
10.3 Where the Customer is provided with the MDN Feature:
  (a) the domain names the Customer provides to Telstra must be registered and unique within Telstra's systems;
  (b) the Customer may provide up to 20 domain names to Telstra for the DSL-L3S Service. If both the Telstra-managed MDN Feature and Partially Telstra-managed MDN Feature are provided the total limit is 20 domain names. In the case of the Partially Telstra-managed MDN Feature there is no limit on the number of sub-domain names;
  (c) the full domain name string (ie user name, domain name, top level domain and as appropriate sub-domain name) must be no more than 50 characters;
  (d) Telstra authenticates domain names; and
  (e) the Customer manages the allocation of user names (and in the case of the Partially Telstra-managed MDN Feature, the Customer also manages the allocation of sub-domain names).
 
10.4 The Customer releases Telstra from all liability to the End User or the Customer, and indemnifies Telstra against all costs, expenses, liability, loss or damage incurred or suffered by Telstra in connection with any claims, actions or proceedings against Telstra (including third party claims and claims by an End User) arising out of the allocation or management of user names, domain names and sub-domain names.
 
11 Term
 
11.1 This Service Schedule comes in to force on the date it is added to the Agreement ("Schedule Date"). Telstra will supply the DSL-L3S Service during the period this Service Schedule is in force.
 
11.2 Subject to any termination or extension rights the parties have under this Agreement, this Service Schedule ends 2 years from the Schedule Date ("Initial Period") unless the parties otherwise agree.
 
11.3 The parties may agree to extend the operation of this Service Schedule beyond the Initial Period until:
  (a) either party gives to the other party 30 days written notice of termination; or
  (b) this Agreement or this Service Schedule is otherwise terminated.
 
11.4 Subject to paragraph 11.5, the Customer accepts an Individual Service on the terms and conditions set out in this Service Schedule and this Agreement for the period from the Start Date until the first to occur of:
  (a) termination or cancellation of the Individual Service; or
  (b) the expiry or termination of this Agreement in accordance with clause 2 of this Agreement.
 
11.5 Telstra may cease to supply an Individual Service to the Customer upon 3 months prior written notice to the Customer which notice may only be given after the expiry of the period of 12 months after the Start Date. Telstra will use reasonable endeavours to provide as much notice to the Customer as possible (but no less than 3 months notice) of its intention to cease the supply of an Individual Service to a Customer.
 
12 Connection
 
12.1 Subject to an Individual Service passing Service Qualification, Telstra will use its reasonable endeavours to connect that Individual Service by the Arranged Connection Date. Telstra will notify the Customer when the connection has been effected. Telstra will not be liable for any inconvenience, loss or damage suffered by the Customer or an End User if Telstra does not connect the Individual Service by the Arranged Connection Date.
 
12.2 Where an End User also acquires a Monitoring Service, the Customer must advise the provider of the Monitoring Service prior to any disconnection or potential disruption of an End User's standard telephone services caused by or on behalf of the Customer in providing services to the End User, including any such disconnection or disruption arising out of the installation and maintenance of CPE.
 
13

Indicative Provisioning Lead Times

Table 13 of Addendum 2 sets out Indicative Provisioning Lead Times applicable to components of the DSL-L3S Service, which are subject to, among other things, the provisioning of the associated ATM Service and the availability of network infrastructure.
14 Access to premises
 
14.1 Where relevant, the Customer must, and must procure that each End User does:
  (a) not interfere with the normal operation of the DSL-L3S Service or any Facility or make either unsafe;
  (b) procure safe access by Telstra to the End User Premises:
    (i) to inspect or test a Facility which may be causing interference or danger; and
    (ii) as required by Telstra in connection with the provision, maintenance and repair of the DSL-L3S Service or any Facility;
  (c) ensure that Telstra is provided with sufficient and timely access to each End User Premises and the Telstra Equipment to enable Telstra to provide the DSL-L3S Service in accordance with Telstra's obligations under this Agreement; and
 
14.2 If the Customer does not own, control or have access to the End User Premises, it must:
  (a) procure for Telstra all such access to the End User Premises as may be required by Telstra under this Addendum; and
  (b) indemnify Telstra against a claim by the owner or occupier of the End User Premises, or any other person, in relation to Telstra's entry onto those premises.
 
15 Forecasts
 
  (a) The Customer must supply forecasts for the DSL-L3S Service in the form required by Telstra from time to time.
 
Addendum 3   Charges

 
1 General
 
  The pricing structure for the DSL-L3S Service is as follows:
  (a) Charges for End User Accesses;
  (b) Charges for Aggregating Virtual Circuits;
  (c) Charges for Authenticating Virtual Circuits, if required;
  (d) Charges for Enhanced Features; and
  (e) miscellaneous Charges.
 
2 End User Accesses
 
2.1 The pricing structure for End User Accesses is as follows:
  (a) an installation charge of $90 per End User Access; and
  (b) a monthly Charge per End User Access based on the location of the End User Access with respect to the Aggregation Point Charging POP in the same State as that End User Access
2.2 For the purposes of this paragraph 2 of Addendum 3:
  (a) Metro Charges apply where End User Accesses are located within the Local Call Area of the Aggregation Point Charging POP in the same State as those End User Accesses;
  (b) Regional 1 Charges apply where End User Accesses are located outside the Local Call Area of the Aggregation Point Charging POP in the same State as those End User Accesses, but within 165km of that Aggregation Point Charging POP; and
  (c) Regional 2 Charges apply where End User Accesses are located both outside the Local Call Area of the Aggregation Point Charging POP in the same State as those End User Accesses and more than 165km from that Aggregation Point Charging POP.
 
2.3 The monthly Charges for End User Accesses are set out in Table 2.3 of Addendum 3.
3 Aggregating Virtual Circuits
 
3.1 Subject to paragraph 3.3 below, the monthly Charge for an Aggregating Virtual Circuit is set out in Table 3.3 of Addendum 3 and is determined by reference to the distance between the relevant Aggregation Point Charging POP for the State in which the Customer has End User Accesses and the ATM Charging POP for the ATM Service associated with that AGVC.
 
3.2 For the purposes of this paragraph 3, an interstate AGVC is one where the Aggregation Point Charging POP and the ATM Charging POP are in different States ("Interstate AGVCs").
 
3.3 If the Customer has implemented Load Sharing in a State, the Customer's first two Load Sharing AGVCs (with a combined capacity of 32Mb/s or less) in that State will be charged as if they comprise a single AGVC whose size is the sum of the two Load Sharing AGVCs. For example, two 4Mb/s Load Sharing AGVCs will be charged as if the Customer had one 8Mb/s AGVC. Any additional AGVCs in that State will be charged at the individual rates specified below.
4   Miscellaneous Charges
 
5 Authenticating Virtual Circuit
 
  The Charge for each 64kb/s Authenticating Virtual Circuit is $100 per month.
 
6

Enhanced Features

The monthly Charges in Table 6 of Addendum 3 apply for the Enhanced Features.

7 Service Outage Rebate
 
7.1 Notwithstanding paragraphs 2.13 and 2.14 of Addendum 2, Telstra will credit to the Customer a rebate for Monthly Service Outages in accordance with Table 7 of Addendum 3 ("Service Outage Rebate"). The Customer acknowledges and agrees that Telstra's determination of the amount of any Service Outage Rebate is final.
7.2 The Average End User Access Charge is the average monthly Charge for End User Accesses payable by the Customer in respect of the relevant calendar month for all DSL-L2, DSL-L3A and DSL-L3S Services under this Agreement, calculated as at the last day of the relevant calendar month.
 
   

Example calculation of Average End User Access ChargeIf the Customer has a total of 1,000 Individual Services in respect of DSL-L2, DSL-L3A and DSL-L3S Services as at the last day of the month and the total monthly Charges for End User Accesses payable by the Customer for those services in respect of that calendar month is $75,500, then the Average End User Access Charge would be $75.50.
 
7.3

Without need for claim by the Customer, Telstra will aggregate all Service Outage Rebates in respect of the DSL-L2, DSL-L3A and DSL-L3S Services and make a single credit to the Customer's next monthly Bill. For the avoidance of doubt, the next monthly Bill means the first monthly Bill after Telstra has calculated all Service Outage Rebates.

    Example calculation of Service Outage Rebate
    If the Customer has a total of 1000 Individual Services in respect of DSL-L3S Services as at the last day of the month and:

    • 250 Individual Services have Monthly Service Outages of 6 hours or less;
    • 300 Individual Services have Monthly Service Outages of between 6 hours and 20.5 hours;
    • 250 Individual Services have Monthly Service Outages of between 20.5 hours and 42.5 hours;
    • 200 Individual Services have Monthly Service Outages of greater than 42.5 hours; and
    • the Average End User Charge is $75.50.

    the Service Outage Rebate is calculated as:
    300 x $7.55 (ie 10% of $75.50)     $2,265.00
    250 x $15.10 (ie 20% of $75.50)   $3,775.00
    200 x $37.75 (ie 50% of $75.50)   $7,550.00
    Total Service Outage Rebate   $13,590.00

    This total amount will be aggregated with any Service Outage Rebates payable for that month in respect of the DSL-L2 Service and the DSL-L3A Service and will be credited as a single amount on the Customer’s monthly Bill for the following month.

7.4 Telstra's obligation to credit to the Customer Service Outage Rebates under paragraph 7.1 is subject to the Customer:
  (a) maintaining AGVC connections to two IGRs in each State (where available) throughout the relevant calendar month; and
  (b) paying all amounts payable under this Agreement for DSL-L3S Services by the Due Date.
 
8 GST
 
 

The Charges set out in this Addendum 3 are exclusive of any applicable GST. The amount of GST payable by the Customer to Telstra for the DSL-L3S Service and associated work referred to in this Addendum 3 will be calculated in accordance with the terms of this Agreement and included in the Bill which sets out the Charges payable by the Customer to Telstra for the supply of such Services and associated work.

 
Addendum 4  Service Assurance
 
1. Exclusions
 
1.1 Telstra's obligations under this Addendum do not extend to Faults caused as a result of:
  (a) any fault in equipment, software or any network not forming part of the DSL-L3S Service;
  (b) damage due to causes external to the DSL-L3S Service;
  (c) interference;
  (d) Force Majeure; and
  (e) Planned Outages.
 
1.2 The Customer acknowledges that:
  (a) compliance with the Industry Code Unconditioned Local Loop Service - Network Deployment Rules, registered by the ACA under section 117 of the Telecommunications Act 1997, may not completely eliminate interference; and
  (b) faults in cable and other faults in the copper network may result in interruptions to the provision of the DSL-L3S Service, in which event the Customer agrees to do everything reasonably necessary to enable Telstra to resolve those faults.
 
1.3 Telstra will not provide Fault restoration under this Service Schedule where the Fault is in a network or cabling owned, controlled or maintained by any person other than Telstra.
 
2 Reporting to Telstra
 
2.1 The Customer must report the details of the suspected Fault to the Telstra Fault Desk (the National Wholesale Service Centre, telephone 1802 288 (or such other numbers as Telstra may advise).
 
2.2 This Telstra Fault Desk number is available 24 hours a day, seven days a week and should only be used for reporting of Faults by the Customer. The number is not to be supplied by Customers to End Users. Where End Users contact Telstra directly, then the fee specified in paragraph 4 of Addendum 3 will apply.
 
2.3 When reporting a suspected Fault the Customer must provide the following information:
  (a) details of the Individual Service and/or the standard telephone service over which the Individual Service is provided:
    (i) identify the full national number;
    (ii) identify the type of service; and
    (iii) confirm the location of the affected service.
 
  (b) contact and Fault details:
    (i) name of Customer;
    (ii) identify contacts for the Customer and the End User (where appropriate) including site contact if site attendance is required;
    (iii) give details of the Fault symptoms; and
    (iv) confirm that the Customer has already addressed the possible sources of the suspected Fault, including communication with the End User to establish that the End User is connected to the Individual Service and/or the standard telephone service over which the Individual Service is provided.
 
2.4 Telstra will advise the Customer of a Fault reference number.
 
2.5 The Customer should record the Telstra issued Fault reference number for future reference.
 
2.6 Where an on-site visit is required, Telstra will arrange an appropriate appointment time with the Customer Premises Contact.
 
2.7 Telstra's hours of business for reporting Faults are 24 hours per day. Where a Fault report is lodged Fault restoration work will be undertaken in accordance with paragraph 3 of this Addendum.
 
2.8 Where Telstra attends an End User Premises in response to a Fault report and the Fault is found to be in the Non-Telstra Equipment, Telstra will charge a fee for the incorrect call out as specified in paragraph 4 of Addendum 3.
 
2.9 If Telstra must gain access to an End User Premises to restore the Individual Service the Response Time and Repair Time will be subject to the provision of entry to the premises.
 
2.10 On completion of Individual Service restoration activities Telstra will contact the Customer to confirm that the Individual Service has been completely and satisfactorily restored. The Customer acknowledges and agrees that Telstra may repair a Fault on a temporary or permanent basis and that any temporary repair may require a subsequent Planned Outage to repair the Service or Individual Service on a permanent basis.
 
2.11 If the Customer wishes to escalate the Fault, as a result of either the Response Time or the Repair Time having been exceeded, the Customer should contact the Telstra Business Team Contact.
 
3 Target Response Times and Repair Times
 
3.1 Telstra will use reasonable endeavours to meet the target Response Times and Repair Times set out in this paragraph 3 in relation to the DSL-L3S Service.
 
3.2 For the purposes of this paragraph 3:
  (a) Urban Areas are urban areas with a population of greater than 10,000;
  (b) Rural Areas are areas with a population of between 200 and 10,000 but which are not within Telstra's Extended Charging Zones; and
  (c) Remote Areas are areas with a population of less than 200 or areas included in a Telstra Extended Charging Zone.
 
Target Response Times and Repair Times for Faults in End User Accesses
3.3 The target Response and Repair Times for Faults in End User Accesses apply during the following hours of coverage only:- from 8.00am to 5.00pm, Monday to Friday (excluding public holidays in the place with work is required to rectify a Fault). They are:
  (a) Response Time for all areas: 8 hours (within the hours of coverage) after Telstra receives a Fault report;
  (b) Repair Time for Urban Areas: at the end of the first full Business Day after Telstra receives a Fault report;
  (c) Repair Time for Rural Areas: at the end of the second full Business Day after receipt of a Fault report; and
  (d)

Repair Time for Remote Areas: at the end of the third full Business Day after Telstra receives a Fault report.

Example calculation of Response and Repair Times for End User Accesses
If a Fault report in an Urban Area is received on Friday at 2.00 pm, the target Response Time will be Monday at 1.00 pm being 8 hours (during the hours of coverage) after receipt of the Fault report. The target Repair Time will be Monday at 5.00 pm being the end of the first full Business Day after receipt of the Fault report.
Target Response Times and Repair Times for Faults in the Telstra Data Network
3.4 The hours of coverage for Faults in the Telstra Data Network are 24 hours a day, 7 days a week including public holidays. The target Response and Repair times are
  (a) Response Time for all areas: 1 hour after Telstra receives a Fault report;
  (b) Repair Time for Urban Areas: 12 hours after Telstra receives a Fault report;
  (c) Repair Time for Rural Areas: the end of the first full Business Day plus 12 hours after Telstra receives a Fault report; and
  (d)

Repair Time for Remote Areas: the end of the second full Business Day plus 12 hours after Telstra receives a Fault report.

Example calculation of Response and Repair Times for Telstra Data Network
If a Fault report in an Urban Area is received on Friday at 2.00pm, the target Response Time will be Friday at 3.00pm being 1 hour after receipt of the Fault report. The target Repair Time will be Saturday at 2.00am being 12 hours after receipt of the Fault report.
 
Addendum 5   ADSL Material Licence Conditions for Use of ADSL Material supplied by Telstra
 
1

Terms

The terms and conditions in this Addendum 5 are the terms and conditions on which the Customer may use and reproduce the Material.
 
2

Definitions

Licence Term means the term of this Service Schedule, or such other term as Telstra may advise the Customer in writing.

Material means ADSL coverage maps (“Maps”) and other written material specifically provided by Telstra to the Customer in relation to the DSL-L3S Service.

Purpose means the use and reproduction of the Material in presentations and other formats, including on the Internet to support the supply of the Customer’s services to End Users.
 
3 Licence

Telstra grants to the Customer a non-exclusive licence to use and reproduce the Material for the Licence Term solely for the Purpose ("Licence").
 

4

Charges

Telstra will not charge the Customer a fee to reproduce the Material.

 
5

Copyright

The Material is protected by copyright law and international copyright treaties, as well as other intellectual property laws and treaties. The Customer acknowledges that Telstra owns all intellectual property rights in the Material, including copyright. Telstra retains all rights not expressly granted under this Licence.
 
6

Termination of ADSL Material Licence

The Licence will terminate upon expiration of the Licence Term. Upon termination, the Customer must immediately cease using and reproducing the Material and delete all copies of the Material, including copies on any Internet sites.
 
7 Customer obligations
 
7.1 The Customer agrees to only use and reproduce the Material for the Purpose.
 
7.2 The Customer agrees not to assign, transfer, licence, sub-licence or otherwise deal with the rights granted under this Licence.
 
7.3 The Customer may only use and reproduce the Material in full. The Customer may not use or reproduce parts of, or extracts from, the Material.
 
7.4 The Customer may not use or reproduce the Material in any manner which is unlawful or in any way prejudicial to the interests of Telstra or the DSL-L3S Service.
 
7.5 The Customer must include the following copyright notice on all copies of the Material, "(c) Telstra Corporation Limited 2002"
7.6

The Customer must include the following statements positioned immediately under each representation of a Map:

  • This Map is a guide only.
  • You should make your own enquiries before relying on or entering into any transaction based on the content of this Map.
8

Branding

Except where Telstra specifically prohibits it, the Customer may place the Customer's logo or branding on the Material. For the avoidance of doubt, this paragraph 8 constitutes prior written consent as required by clause 8.2 of the main terms and conditions of this Agreement, entitling the Customer to brand and hold out the Material as being its own in accordance with the terms of this Addendum 5.

 

ANNEXURE G
Discount List for Telstra Wholesale Broadband DSL Layer 3 Asymmetrical Service
 

ANNEXURE H
Settlement Agreement

EXHIBIT 4.103

Confidential

SALE AND PURCHASE OF BUSINESS AGREEMENT

DATE 11/11/2002

PARTIES

  1. Reach Internet Services Pte Ltd, a company incorporated in Singapore and having its registered office at 80 Raffles Place 33-01 UOB Plaza 1, SINGAPORE (Seller) 
     
  2. Pacific Internet Limited, a company incorporated in Singapore and having its registered office at 89 Science Park Drive #02-05/06 The Rutherford, SINGAPORE 118261 (Buyer)

THE PARTIES AGREE

1. DICTIONARY & INTERPRETATION
The Dictionary in Schedule 2:
(a) defines capitalised terms used in this agreement; and
(b) sets out the rules of interpretation that apply to this agreement.
2. SALE AND PURCHASE OF THE BUSINESS
2.1 Sale of Business Assets
The Seller must sell the Business Assets to the Buyer and the Buyer must buy them:
(a) for the Purchase Price; and
(b) free of Security Interests
2.2 Purchase Price
(a) In consideration for the sale of the Business Assets, the Buyer must pay to the Seller:
  (i) S$53,019 on the date of this agreement;
  (ii) S$229,749 on the first Business Day three months after 11 November 2002, less the total amount of the Prepayments listed in the Statement described in clause 3.1(c);
  (iii)  S$282,768 on the first Business Day six months after 11 November 2002;
  (iv) S$282,768 on the first Business Day nine months after 11 November 2002; and
  (v) S$282,768 on the first Business Day 12 months after 11 November 2002.
(b) The Buyer must pay interest on any overdue amount, calculated daily at the Interest Rate, from the date payment is due until the date that the Buyer pays in full the relevant overdue amount and any interest accrued on that amount.
2.3 Title and Risk
All right, title and interest in the Business Assets and risk in the Business Assets passes to the Buyer on the date of this agreement.
3. OBLIGATIONS ON THE DATE OF THIS AGREEMENT
3.1 Seller's Obligations
On the date of this agreement, the Seller must give to the Buyer:
(a)  possession: full and unrestricted possession of all the Business Assets;
(b) business records: copies of any Business Records reasonably requested by the Buyer and not required to be retained by the Seller under the laws of any relevant jurisdiction, including without limitation:
  (i) a complete and accurate list of all Customers as at 30 October 2002, setting out inter alia, the personal and contact particulars of each Customer as available and set forth in Schedule 4;
  (ii)  all original Customer Contracts; and
  (iii) a complete and accurate list of all Receivables;
(c) Statement: a complete and accurate list of the total actual amount of payments (if any) made by each Customer to the Seller in respect of services to be rendered after the date of this agreement by the Buyer under the relevant Customer Contract (Prepayments);
(d) approvals: copies of all requisite corporate approvals required for the Seller's entry into this agreement and any agreements in connection with this agreement;
(e) Master Deed of Assignment: one duly executed original of the Master Deed of Assignment in Schedule 5; and
(f) Third Party Providers: a list of all the Third Party Providers, including a description of all specific services provided by each Third Party Provider under the Customer Contracts, as available and set forth in Schedule 6.               
3.2 Buyer's Obligations
On the date of this agreement, the Buyer must give to the Seller:
(a) approvals: copies of all requisite corporate approvals required for the Buyer's entry into this agreement and any agreements in connection with this agreement; and
(b) Master Deed of Assignment: one duly executed original of the Master Deed of Assignment in Schedule 5.
4. CONDUCT AFTER THE DATE OF THIS AGREEMENT
4.1 Right to use Licensed IP Addresses and AS Number
(a) Subject to the Buyer's compliance with clause 4.1(b), the Seller must for a period of six months after the date of this agreement, reasonably cooperate with the Buyer to allow the Buyer the unrestricted use of those domain names, Licensed IP Addresses and Autonomous System Numbers that relate to the Business (Identifiers) on a non-transferable basis solely for the purpose of providing the services of the Business to the Buyer's existing and future customers in the Territory.
(b) The Buyer must use the Identifiers lawfully and not in any manner inconsistent with internet protocol network operation and administration best practice and in accordance with any reasonable instruction or direction by the Seller having direct bearing on the Seller's own use of the Identifiers for network administration and operation, including without limitation peering with other networks.
(c) The Buyer must migrate all the customers and networks of the Business to domain names, Internet Protocol addresses and Autonomous System numbers other than the Identifiers in an orderly manner within the six month period referred to in clause 4.1(a).
(d) Despite clause 4.1(f) but subject to the Buyer's compliance with clause 4.1(b), for a period of 30 days or such other periods as the parties may mutually agree upon after the end of the Seller's obligation to co-operate under clause 4.1(a), the Seller must provide at the Buyer's request and expense all support that the Buyer may reasonably require to allow the migration of the Business to domain names, Licensed IP Addresses and Autonomous System numbers other than the Identifiers.
(e) Despite any request of the Buyer, the Seller has no obligation to deploy resources or incur expenses that the Seller would not ordinarily have to deploy or incur unless the Buyer first agrees to pay the Seller's reasonable costs within 30 days after receipt of an invoice from the Seller.
(f) The Seller's obligation to co-operate under clauses 4.1(a) and (d) ends on the first to occur of:
  (i)  the Buyer's failure to comply with its obligations under this clause 4.1;
  (ii) termination of this agreement; or
  (iii) the end of the six month period referred to in clause 4.1(a).
4.2 Adjustments of Purchase Price
(a)

Documentation

On or before 31 December 2003 where available or when earliest available, the Buyer must deliver to the Seller a statement setting out the Revenue in respect of each calendar month from 1 November 2002 to 30 November 2003, and any other information reasonably required by the Seller in order to determine comprehensively and accurately the Revenue in each of those calendar months.

(b) The Buyer must use best efforts in accordance with the Buyer's normal debt collection procedures to collect all outstanding amounts arising from invoices issued for services rendered to Customers from 11 November 2002 to 10 November 2003. At the Seller's reasonable request, the Buyer must provide the Seller with documentary evidence that the Buyer had complied with this clause 4.2(b).
(c) Subject to clause 4.2(e), if 25% of the Revenue for the period from 1 December 2002 to 31 October 2003 inclusive plus 16.67% of the Revenue in November 2002 plus 8.33% of the Revenue in November 2003 (First Adjustment Amount) exceeds S$1,131,072 , such surplus hereinafter known as “Additional Revenue”, then on or before 7 January 2004, the Buyer must pay to the Seller the Additional Revenue by electronic transfer in S$ and to the bank account nominated by the Seller in writing, or as otherwise instructed by the Seller from time to time.
(d) Subject to clause 4.2(e), if the First Adjustment Amount is less than S$1,131,072, such shortfall hereinafter known as “Excess Payment”, then on or before 7 January 2004, the Seller must provide or procure its Affiliate to provide to the Buyer the Excess Payment by electronic transfer in S$ and to the bank account nominated by the Buyer from time to time.
(e) Any calculation of the First Adjustment Amount under clauses 4.2(c) and 4.2(d) shall not take into account any Revenue that the Buyer decided not to take up under clause 4.7(b).
(f) The Seller must pay interest on any overdue amount due to the Buyer under this agreement, calculated daily at the Interest Rate, from the date payment is due until the date that the Seller pays in full the relevant overdue amount and any interest accrued on that amount.
(g) On 30 April 2004, the Buyer must deliver to the Seller a statement (Second Adjustment Statement) setting out further Revenue arising from all invoices issued for services rendered to Customers under the Customer Contracts in the period from 1 November 2002 until 30 November 2003 inclusive and received by the Buyer in the period from 1 December 2003 until 31 March 2004, and any other information reasonably required by the Seller in order to determine comprehensively and accurately the Revenue in each of those calendar months.
(h) On 7 May 2004, the Buyer must forward to the Seller 25% of the total amount of Revenue listed in the Second Adjustment Statement in respect of invoices rendered in the period from 1 December 2002 to 31 October 2003 inclusive plus 16.67% of the Revenue listed in the Second Adjustment Statement in respect of invoices rendered in November 2002 plus 8.33% of the Revenue listed in the Second Adjustment Statement in respect of invoices rendered in November 2003, by electronic transfer in S$ and to the bank account nominated by the Seller in writing, or as otherwise instructed by the Seller from time to time.
4.3 Seller's Right to Verify Revenue
(a)  The Buyer must maintain complete and accurate books and records in respect of the Revenues of the Business (Accounts) for 20 months after the date of this agreement.
(b) The Seller may at any time by giving three Business Days written notice to the Buyer, require the Buyer to provide access to the Accounts at the premises of the Buyer during usual business hours on a Business Day, for the purpose of auditing, checking and copying them.
(c) If the Seller's audit under clause 4.3(b) shows that the Buyer has issued an incorrect statement under clause 4.2(a) or (g), then the Buyer and the Seller must fulfil their obligations under clause 4.2 in accordance with the correct statement, and the Buyer must immediately pay to the Seller the reasonable costs incurred by the Seller in auditing the Buyer's accounts under clause 4.3(b).
(d)  If the Seller and the Buyer cannot agree on the result of the Seller's audit under clause 4.3(b) within 30 days after the date of the audit, then either the Buyer or the Seller may by giving written notice to the other party refer the dispute to compulsory arbitration to be conducted in English in the Republic of Singapore in accordance with the Arbitration Rules of the Singapore International Arbitration Centre in force from time to time.
4.4 Receivables
(a) Seller's entitlement: The Seller:
  (i) is entitled to the Receivables; and
  (ii) authorises the Buyer to collect the Receivables on its behalf for the period of three months after the date of this agreement.
(b)  Seller's obligations regarding Receivables: The Seller must reasonably co-operate with the Buyer to provide all reasonable assistance and necessary information to enable the Buyer to collect the Receivables on the Seller's behalf.
(c) collection by Buyer: The Buyer must follow its normal internal debt collection procedures to collect the Receivables on behalf of the Seller, including without limitation calling and writing to the relevant Customer to request payment of that Customer's Receivable. The Seller does not authorise the Buyer to instruct any third party, including without limitation any lawyer or debt collection agency, to collect any of the Receivables. The Buyer is in no way liable to the Seller for failing to recover any of the Receivables to be collected under this clause 4.4.  
(d) monthly accounting: The Buyer must:
  (i)  on a monthly basis, account in writing to the Seller for Receivables collected by it and pay those amounts to the Seller; and
  (ii)  provide to the Seller information about the collection of Receivables that the Seller reasonably requests.
(e)  treatment of receipts: The Buyer must treat an amount that it receives from a debtor or on account of a debtor of the Business:
  (i)  as a payment of a specific Receivable, if it is readily identified with that Receivable;
  (ii)  as a payment of a specific debt to the Buyer, if it is readily identified with that debt;
  (iii) if the amount is not readily identified with a Receivable or a debt to the Buyer and is received within 30 days after the Buyer sends an invoice to the debtor and such debtor is not more than 30 days late (60 days after invoice) with its payments, then as payment of the oldest Receivable; or
  (iv) if the amount is not readily identified with a Receivable or a debt to the Buyer and such debtor is more than 30 days late (60 days after invoice) in its payments, as payment of both Receivables and debt owing to the Buyer in the proportion determined in accordance with the ratio of the total amount of Receivables outstanding to the total amount of debt owing to the Buyer as at the date that the payment is received.
(f) indemnity: The Seller indemnifies the Buyer against all penalties, claims, expenses, demands, liabilities, losses and damages that the Buyer may incur arising directly from or in connection with the Buyer collecting the Receivables on behalf of the Seller, other than claims solely attributable to the Buyer's gross negligence or wilful default.
4.5 Acknowledgment
(a)  The Buyer acknowledges that neither the Seller nor any of its Affiliates, employees or agents has made any representation, warranty or guarantee regarding, or any assessment of the likelihood of:
  (i) the Customer Contracts continuing beyond the date of this agreement; or
  (ii)  the revenue generated or to be generated from any of the Customer Contracts after the date of this agreement.
(b)  The Seller's only responsibilities in respect of:
  (i) the transfer of Customer Contracts are set out in clauses 4.1 and 4.6; and
  (ii) Third Party Provider Contracts are set out in clauses 3.1(f) and 4.7.
4.6 Customer Communications
(a)  Within 5 Business Days after the date of this agreement, the Seller and the Buyer must send to each Customer a letter in substantially the form of the letter in Schedule 3.
(b)  The Seller must reasonably co-operate with the Buyer to develop and implement an effective strategy (Migration Strategy) for notifying Customers of the transfer of the Customer Contracts to the Buyer and for the migration of the Customers to the Buyer's network and operating systems.
(c)  The Buyer indemnifies the Seller against any claim, loss, liability, cost or expense that the Seller pays or is liable for arising directly from or in respect of any communication between the Buyer and a Customer, other than: (i) the letter in Schedule 3; or (ii) in pursuance of the Migration Strategy.
4.7 Third Party Providers
(a) Subject to clause 4.7(d), the Seller must retain the Third Party Provider Contracts for the benefit of the Buyer for a period of five months after the date of this agreement, save for such Third Party Provider Contracts that apply and relate to the Seller's premises located at the International Business Park, which the Seller is entitled to terminate on 31 January 2003.
(b) Subject to clause 4.7(d), the Buyer must reimburse the Seller for all Third Party Provider fees and charges incurred by the Seller under the Third Party Provider Contracts for fees and charges covering services provided after 11 November 2002, for which the Seller has provided supporting documentation, including without limitation, copies of all invoices from the Third Party Providers, which can be clearly identified as incurred in relation to the provision of services to the Customers under the Customer Contracts, provided always that if any Third Party Provider does not appear in Schedule 6 or if such Third Party Provider appears in Schedule 6 but the specific service provided by such Third Party Provider does not appear in Schedule 6, the Buyer shall not need to reimburse the Seller for the fees and charges of that Third Party Provider which do not appear in Schedule 6 or the fees and charges in relation to that specific service which such Third Party Provider provides, which do not appear in Schedule 6, as the case may be, but the Customer to which that Third Party Provider or that specific service relates will not be assigned to the Buyer so that the Buyer will not receive a share in the Revenue from that Customer. For the avoidance of doubt, save for the aforesaid fees and charges to be reimbursed by the Buyer to the Seller, the Seller shall remain responsible for the due performance of all the Seller's obligations under the Third Party Provider Contracts, including without limitation, the obligation to pay any penalty charges.
(c) The Buyer indemnifies the Seller against any claim, loss, liability, cost or expense, including without limitation any fee or charge, arising from the Third Party Provider Contracts which is attributable directly to any acts of Customers or the Buyer during the period of five months after the date of this agreement.
(d) The Buyer may at any time by giving 35 days written notice terminate the obligations of the Seller under clause 4.7(a) and of the Buyer under clause 4.7(b) in respect of a particular Third Party Provider Contract.
(e) The obligations of the Seller under clause 4.7(a) and of the Buyer under clause 4.7(b) continue in respect of the remaining Third Party Provider Contracts, if any, that the Seller has not terminated under clause 4.7(d).
4.8 No material change in Customer Contracts
The Buyer must not materially change the terms and conditions of the Customer Contracts from the terms and conditions as at the date of this agreement.
4.9 Payment Procedures
Each party agrees that notwithstanding anything to the contrary in this agreement, any invoices to be issued to the other party under this agreement and any payments to be made to the other party under this agreement shall be issued or made, as the case may be, in the Territory.
5. WARRANTIES
5.1 Seller's Warranties
(a)  The Seller represents and warrants to the Buyer in the Territory that as at the date of this agreement, each of the Seller's Warranties set forth in Schedule 7 is true, subject only to specific qualifications made in the Disclosure Letter.
(b)   The Seller acknowledges that the Buyer has entered into this agreement in reliance on the Seller's Warranties.
(c)  Except for the Seller's Warranties, and to the extent permitted by law, the Seller makes no warranty or representation, express or implied, with respect to the Business, the Business Assets, the Licensed IP Addresses or Autonomous System Numbers, including any warranty of merchantability or fitness for particular purpose, and all such warranties and representations are expressly disclaimed.
(d)  Each of the Seller's Warranties must be construed independently and is not limited by reference to another Seller's Warranty.
5.2 Buyer's Warranties
(a) The Buyer represents and warrants to the Seller as at the date of this agreement that:
  (i) the Buyer has all Authorisations necessary for the Buyer to own and operate the Business Assets, conduct the Business, and perform all its obligations under this agreement;
  (ii) the execution and delivery of, and the performance by the Buyer of its obligations under, this agreement will not result in a breach of any law, rules, regulations, or ordinances in the Territory;
  (iii)  the Buyer has full power and authority to enter into and perform this agreement and this agreement constitutes valid and binding obligations on the Buyer in accordance with its terms;
  (iv)  the Buyer has taken all corporate and other action necessary to authorize the execution and performance by it of the transactions contemplated by this agreement and to render this agreement legally valid and binding on and enforceable against it; and
  (v) the execution and delivery of, and the performance by the Buyer of its obligations under, this agreement will not result in a breach of, or constitute a default under any provision of the memorandum or articles of association of, the Buyer or any agreement, contract, document or instrument to which the Buyer is a party or by which the Buyer is bound.
5.3 Acknowledgment of Buyer
The Buyer acknowledges that:
(a)  the Buyer has relied entirely on its own enquiries in relation to its purchase of the Business Assets from the Seller and that no warranties have been made by the Seller or the Seller's officers or advisers other than those referred to in this clause 5; and
(b)  the Buyer has the responsibility, risk and expense of transferring all Customer Contracts, and Customers that are to be transferred under this agreement.
6. CONFIDENTIALITY
A party may not disclose the provisions of this agreement or the terms of sale of the Business Assets to any person except:
 (a)  as a media announcement in the form agreed between the Buyer and the Seller;
(b) in accordance with the rules or requirements of a recognised stock exchange;
(c) after getting the written consent of the other party;
(d)  to its officers, employees and professional advisers; or
(e)  as required by an applicable law, after first consulting with the other party about the form and content of the disclosure,
and must use its best endeavours to ensure all permitted disclosures are kept confidential, other than in the case of a media announcement or a disclosure to a recognised stock exchange.
7. TAX, COSTS AND EXPENSES
7.1 Tax
Except to the extent otherwise provided in this agreement, the Buyer must pay any Tax arising from the execution, delivery and performance of this agreement and each agreement or document entered into or signed under this agreement.
7.2  Costs and expenses
Each party must pay its own costs and expenses of negotiating, preparing, signing, delivering and registering this agreement and any other agreement or document entered into or signed under this agreement.
7.3 Costs of performance
Each party must bear the costs and expenses of performing its obligations under this agreement, unless otherwise provided in this agreement.
8. INDEMNITY
8.1 Buyer's Indemnity
Unless otherwise stated in this agreement and subject to clause 8.3, the Buyer indemnifies the Seller against any claim, loss, liability, cost or expense that occurs on or after the date of this agreement and arises directly or indirectly from:
(a)  any Buyer's Warranty;
(b)  any breach of the Buyer's obligations under this agreement; or
(c) the Buyer's conduct of the Business after the date of this agreement, including without limitation any claim made by a Customer.
8.2 Seller's Indemnity
Unless otherwise stated in this agreement and subject to clause 8.3, the Seller indemnifies the Buyer against any claim, loss, liability, cost or expense that occurs on or after the date of this agreement and arises directly or indirectly from:
(a) any Seller's Warranty;
(b) any breach of the Seller's obligations under this agreement; or
(c) the Seller's conduct of the Business before the date of this agreement, including without limitation any claim made by a Customer.
8.3 Limitation of Liability
Save and except for the Purchase Price, a party's maximum aggregate liability to the other party under this agreement or in respect of the performance of this agreement is limited to an aggregate amount of S$176,730 provided that nothing in this clause 8.3 limits a party's liability for death or personal injury resulting from that party's negligence.
9. GENERAL
9.1 Notices
(a) A notice or other communication given under this agreement including, but not limited to, a request, demand, consent or approval, to or by a party to this agreement:
  (i)  must be in legible writing and in English;
  (ii) 

must be addressed to the addressee at the address or facsimile number set out below or to any other address or facsimile number a party notifies to the others under this clause:
  (iii) must be signed by an authorized officer of the sender; and
  (iv) is deemed to be received by the addressee in accordance with clause 9.1(b).
(b)  Without limiting any other means by which a party may be able to prove that a notice has been received by another party, a notice is deemed to be received:
  (i) if sent by hand, when delivered to the addressee;
  (ii) if by post, 3 Business Days after and including the date of postage; or
  (iii)  if by facsimile transmission, on receipt by the sender of an acknowledgment or transmission report generated by the machine from which the facsimile was sent,
  but if the delivery or receipt is on a day which is not a Business Day or is after 4.00 pm (addressee's time) it is deemed to be received at 9.00 am on the following Business Day.
(c)  A facsimile transmission is regarded as legible unless the addressee telephones the sender within 2 hours after the transmission is received or regarded as received under clause 9.1(b)(iii) and informs the sender that it is not legible.
(d) In this clause 9.1, a reference to an addressee includes a reference to an addressee's officers, agents or authorised representatives.
9.2  Governing law
(a)  This agreement is governed by the laws of the Territory.
(b) Each party irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of the Territory.
9.3  Exercise of rights
A party may exercise a right, power or remedy at its discretion, and separately or concurrently with another right, power or remedy. A single or partial exercise of a right, power or remedy by a party does not prevent a further exercise of that or of any other right, power or remedy.
9.4 Legal advice and allocation of risk
Each party acknowledges that it has received legal advice or had the opportunity to receive legal advice about this agreement. The parties acknowledge that the allocation of risks and liabilities in this agreement reflects their intentions and is a fair and proper commercial bargain.
9.5 Invalidity
(a) If a provision of this agreement or a right or remedy of a party under this agreement is invalid or unenforceable in a particular jurisdiction:
  (i)  it is read down or severed in that jurisdiction only to the extent of the invalidity or unenforceability; and
  (ii) it does not affect the validity or enforceability of that provision in another jurisdiction or the remaining provisions in any jurisdiction.
(b) This clause 9.5 is not limited by any other provision of this agreement in relation to severability, prohibition or enforceability.
9.6 Waiver and variation
A provision or a right under this agreement may not be waived except in writing signed by the party granting the waiver, or varied except in writing signed by the parties.
9.7 Cumulative rights
The rights and remedies of a party under this agreement do not exclude any other right or remedy provided by law.
9.8 Non-merger
The conditions, provisions and Warranties in this agreement do not merge or terminate.
9.9 Further assurances
Each party must do all things necessary to give full effect to this agreement and the transactions contemplated by this agreement.
9.10 Entire agreement
This agreement and the Master Services Agreement constitute the entire agreement of the parties about its subject matter and supersedes any previous understandings or agreements on that subject matter.
9.11 Third party rights
  (a) The Seller has entered into this agreement for its own benefit and for the benefit of Reach Global Services Limited, and the Buyer acknowledges that Reach Global Services Limited can enforce any of the Seller's rights under this agreement.
  (b) Subject to clause 9.11(a), only the parties have or are intended to have a right or remedy under this agreement or obtain a benefit under it.
9.12 Assignment
(a) Either party may at any time assign this agreement, or transfer the benefit of this agreement or a right or remedy under it, to any of its Affiliates.
(b) Subject to clause 9.12(a), a party may not assign this agreement or otherwise transfer the benefit of this agreement or a right or remedy under it, without the other party's prior written consent.
9.13 Counterparts
This agreement may be signed in any number of counterparts and all those counterparts together make one instrument.

SIGNED as an agreement.

DATE 11/11/02

Signed by REACH INTERNET SERVICES PTE LTD:

 

/s/ Sean Brennan

 

/s/ Robert Kenny

Signature of witness

 

 

Signature of Authorised Representative

Sean Brennan

 

Robert Kenny

Name of witness (print)

 

Name of Authorised Representative
(print)

DATE 11/11/02

Signed by PACIFIC INTERNET LIMITED:

 

/s/ Loh Pao Yen

 

/s/ Tan Tong Hai

Signature of witness

 

 

Signature of Authorised Representative

Loh Pao Yen

 

Tan Tong Hai

Name of witness (print)

 

Name of Authorised Representative
(print)

 

 

 

 

SCHEDULE 1

BUSINESS ASSETS AND EXCLUDED ASSETS

PART 1 – BUSINESS ASSETS

Business Assets

  1. Customer Contracts;
     
  2. The equipment of the Business owned by the Seller and located in the premises of the Customers, including without limitation routers.


PART 2 - EXCLUDED ASSETS

  1. Cash, including, but not limited to, funds held with a bank or financial institution to the credit of the Seller and cash on hand as at the Date of Completion;
     
  2. the Receivables; and
  3. any other debts owed to Seller.

SCHEDULE 2

DICTIONARY

1.  In this agreement:

Affiliate of a party means an entity that directly or indirectly controls, is controlled by, or is under common control with, that party and in the case of the Seller, also includes Reach Communications Services (Thailand) Limited, Reach Internet Services (MSC) Sdn Bhd, TeleWeb Networks (India) Pvt Ltd, Reach Networks (Philippines) Inc., and Taihan Reach Limited.

Authorisation includes:
(a)  a consent, registration, filing, agreement, notice of non‑objection, notarisation, certificate, licence, approval, permit, authority or exemption from, by or with a Government Agency; and
(b)  in relation to anything which a Government Agency may prohibit or restrict within a specific period, the expiry of that period without intervention or action.

Business means the business of the operation of a retail Internet Service Provider providing access services to the Customers and carried on by the Seller in the Territory.

Business Assets means the assets used in or forming part of the Business as listed in Part 1 of Schedule 1, but excludes the Excluded Assets listed in Part 2 of Schedule 1.

Business Records means in relation to the Business:
(a)  supplier lists;
(b)  computer programmes, data bases, software and negatives;
(c)  originals or copies of ledgers, journals and books of account; and
(d)  all other documents and records about the Business or the Business Assets.

Business Day means a day on which banks are open for business in a place where any action is to be performed and in the event of any payment to be made or notice to be given between two places, then in each case in the place of receipt.

Buyer's Warranties means the Buyer's representations and warranties set out in clause 5.2.

Customer means a person who has subscribed for services from the Seller under the Business as at the date of this agreement.

Customer Contract means each of the written and unwritten agreements with a Customer in the list provided by the Seller under clause 3.1(b)(i), specifying the terms and conditions, including the price, for the provision of services to the Customer under the Business.

Disclosure Letter means the letter from the Seller dated the date of this agreement, delivered to the Buyer before the signing of this agreement and containing disclosures about the Seller's Warranties.

Excluded Records means those Business Records that the Seller is required by law to retain.

Government Agency means a government or governmental, semi‑governmental, administrative, fiscal or judicial body, department, commission, authority, tribunal, agency or entity whether foreign, federal, state, territorial or local.

Identifiers means the domain names, Licensed IP Addresses and Autonomous System numbers that relate to the Business.

Insolvency Event means the occurrence of any one or more of the following events in relation to any person:
(a) a liquidator or provisional liquidator is appointed;
(b) an administrator is appointed to any of its assets;
(c) it enters into an arrangement or composition with one or more of its creditors, or an assignment for the benefit of one or more of its creditors;
(d) it is insolvent as disclosed in its accounts, or otherwise states that it is insolvent, or it is presumed to be insolvent under an applicable law;
(e) it is taken to have failed to comply with a statutory demand as a result of legislation relating to insolvency in the Territory;
(f) it ceases to carry on business or threatens to do so; or
(g) anything occurs under the law of any jurisdiction that has a substantially similar effect to any of the above paragraphs of this definition.

Interest Rate means the prime lending rate set by the Development Bank of Singapore for loans made in the Territory, plus 2 percent.

Licensed IP Addresses means the Internet Protocol address blocks that relate to the Business.

Master Deed of Assignment means the master deed of assignment in Schedule 5.

Purchase Price means the amount payable by the Buyer under clause 2.2, as adjusted under clause 4.2.

Receivable means any amount payable under a Customer Contract in respect of the services rendered for the period before 11 November 2002 that is unpaid as at the date of this agreement.

Revenue means such fees and charges invoiced to each Customer under the Customer Contract and collected from such Customer.

Security Interest means a right, interest, power or arrangement in relation to an asset that provides security for the payment or satisfaction of a debt, obligation or liability including without limitation under a bill of sale, mortgage, charge, lien, pledge, trust, power, deposit, hypothecation or arrangement for retention of title, and includes an agreement to grant or create any of those things.

Seller's Warranties means the representations and warranties set out in Schedule 7.

Tax means a tax, levy, charge, impost, fee, deduction, withholding or duty of any nature, including, without limitation, stamp and transaction duty or any goods and services tax, value added tax or consumption tax, which is imposed or collected by a Government Agency except where the context requires otherwise. This includes, but is not limited to, any interest, fine, penalty, charge, fee or other amount imposed in addition to those amounts.

Territory means the Republic of Singapore.

Third Party Provider means each of the telecommunications providers providing circuits between premises of customers and premises of the Business.

Third Party Provider Contract means each contract between the Seller and a Third Party Provider relating solely to the service provided to a Customer under the Customer Contract.

S$ means the lawful currency of the Republic of Singapore.
2. Interpretation
(a) In this agreement unless the context otherwise requires:
  (i) words importing the singular include the plural and vice versa;
  (ii) words that are gender neutral or gender specific include each gender;
  (iii) other parts of speech and grammatical forms of a word or phrase defined in this agreement have a corresponding meaning;
  (iv) an expression importing a natural person includes a company, partnership, joint venture, association, corporation or other body corporate and a Government Agency;
  (v) a reference to a thing (including, but not limited to, a chose-in-action or other right) includes a part of that thing;
  (vi) a reference to a clause, party, schedule or attachment is a reference to a clause of this agreement, and a party, schedule or attachment to, this agreement and a reference to this agreement includes a schedule and attachment to this agreement;
  (vii) a reference to this agreement includes this dictionary;
  (viii) a reference to a law includes a constitutional provision, treaty, decree, convention, statute, regulation, ordinance, by‑law judgment, rule of common law or equity or a rule of an applicable stock exchange and is a reference to that law as amended, consolidated or replaced;
  (ix) a reference to a document includes all amendments or supplements to that document, or replacements or novations of it;
  (x) a reference to a party to a document includes that party's successors and permitted assigns; and
  (xi) a reference to an agreement, other than this agreement, includes an undertaking, deed, agreement or legally enforceable arrangement or understanding, whether or not in writing.
(b) If the day on or by which something must be done is not a Business Day, that thing must be done on or by the preceding Business Day.
(c) Headings are for convenience only and do not affect the interpretation of this agreement.
(d) This agreement may not be construed adversely to a party only because that party prepared this agreement.

SCHEDULE 3

CUSTOMER LETTER

Clause 4.6

Reach Internet Services Pte Ltd

[insert customer name]

Dear [name]

In order to align its business with changing market conditions, REACH has recently revised its business strategy from having a strong wholesale focus with some retail business to having an exclusive wholesale focus. We believe that, in this way, our wholesale customers (other carriers and service providers) will be better able to serve their end customers at the retail level.

As a result of that changed strategy, REACH's retail ISP business in Singapore has been acquired by Pacific Internet Limited. This means that the Internet access services provided by REACH will now be provided by Pacific Internet.

REACH values its customers and is keen to ensure they are not disadvantaged as a result of its withdrawal from the retail market. Accordingly, Pacific Internet will continue to provide the Internet access services in accordance with the customer terms and conditions signed between you and REACH, including the price of the services. Additionally, Pacific Internet has committed to taking over all REACH's existing Internet access customer accounts in Singapore, including your account.

If you are happy to continue to take the Internet service from Pacific Internet, you need do nothing - your continued use of the Internet service after 9 December 2002 will be deemed to be acceptance of the transfer (novation) of your customer contract to Pacific Internet. The transfer will result in Pacific Internet assuming all of REACH's rights and obligations and Pacific Internet will have legal responsibility for the provision of the service to you. The transfer will be deemed to take effect from 11 November 2002, and as from that date you should direct any comments or queries you may have regarding the service to [insert title and contact details of contact person for Pacific Internet].

However, if you do not wish to take the Internet service from Pacific Internet, you can cancel your contract by giving us written notice on or before 9 December 2002. You have been a valued customer of REACH and there will be no early termination or cancellation payments applied to cancellation of this contract if that is your choice.

I trust the above is clear but, if you have any questions or require further clarification, I invite you to please call our Customer Service Hotline on 6876 9099. We will work with you to help ensure a smooth transition to Pacific Internet or your new service provider, whichever course of action you decide to take.

Thank you for allowing us to be of service to you.

Yours faithfully

 

David Bowers
Country Manager

SCHEDULE 4

CUSTOMER LIST AS AT 30 OCTOBER 2002

Clause 3.1(b)

SCHEDULE 5

MASTER DEED OF ASSIGNMENT

THIS MASTER DEED OF ASSIGNMENT is made        the day of          2002

BETWEEN:

  1. Reach Internet Services Pte Ltd of 80 Raffles Place 33-01 UOB Plaza 1, Singapore (Assignor); and
     
  2.  Pacific Internet Limited of 89 Science Park Drive, #02-05/06 The Rutherford, Singapore 118261 (Assignee)

(hereinafter, each of the Assignor and the Assignee shall be individually referred to as a “Party” and collectively referred to as the “Parties”).

WHEREAS:

  1. By a sale and purchase of business agreement dated                  2002 and made between the parties hereto (the “Sale of Business Agreement”), it was agreed, inter alia, that the Assignor shall transfer the Business Assets (as defined in the Sale of Business Agreement) to the Assignee on terms and conditions as stated in the Sale of Business Agreement.
     
  2. This Deed is made pursuant to the Sale of Business Agreement.

NOW IT IS HEREBY AGREED AS FOLLOWS:

  1. Pursuant to the Sale of Business Agreement, the Assignor as legal and beneficial owner assigns to the Assignee absolutely all its rights title and interest in all the Business Assets with effect from the date of signing of the Sale of Business Agreement.
     
  2. Unless the context otherwise requires, any term used in this Deed which is defined in the Sale of Business Agreement and is not specifically defined in this Deed shall have the meaning attributed to it in the Sale of Business Agreement.
     
  3. This Deed shall be binding on and shall enure for the benefit of each Party's successors and assigns and personal representatives (as the case may be).
     
  4. This Deed shall not be altered, changed or supplemented unless the same is made in writing and signed by the Parties hereto.
     
  5. This Deed shall be governed by and construed in accordance with the laws of the Republic of Singapore and the Parties agree to submit to the non-exclusive jurisdiction of the courts of the Republic of Singapore.

 

[The remainder of this page has been intentionally left blank]

IN WITNESS WHEREOF this Deed has been executed as a Deed on the day and year first abovewritten.

The Common Seal of )
Reach Internet Services Pte Ltd )
was hereunto affixed )
in the presence of: )

 

Director  
Director/Secretary  

 

The Common Seal of )
Pacific Internet Limited )
was hereunto affixed )
in the presence of: )

 

Director  
Director/Secretary  

SCHEDULE 6

LIST OF ALL THIRD PARTY PROVIDERS AND ALL SPECIFIC SERVICES PROVIDED BY THEM

Clause 3.1(f)

SingTel BBD maintenance

Singapore Telecommunications

SingTel 512 kps Bizlink

Singapore Telecommunications

SingTel 155M Megalink Port

Singapore Telecommunications

SingTel 2M Megalink UBR PVC

Singapore Telecommunications

SingTel 155M Megalink UBR PVC

Singapore Telecommunications

SingTel ADSL Line rental

Singapore Telecommunications

Toshiba Data -Netopia ADSL router

Router supplier, one off, as required by customer. Therefore, may be variable each month, as per customer requirements.

SingTel Local Loop for Customers

Singapore Telecommunications

PCCW Management Charge for VPN Services

PCCW

I-Pass Network Usage   

iPass

SCHEDULE 7

SELLER'S WARRANTIES

1. THE SELLER
1.1 The Seller:
(a) is duly incorporated and validly exists under the law of its place of incorporation;
(b) has full corporate power and authority to own the Business Assets; and
(c) is able to pay its debts as and when they fall due.
1.2 No Insolvency Event has affected or is likely, in the knowledge of the Seller, to affect the Seller.
2. DUE AUTHORISATION
2.1 The execution and delivery of this agreement has been properly authorised by all necessary corporate action of the Seller and the Seller has full corporate power and lawful authority to execute and deliver this agreement and to consummate and perform or cause to be performed its obligations under this agreement and all other documents required hereunder to be executed.
2.2 This agreement and all other documents required hereunder to be executed constitute legal, valid and binding obligations of the Seller enforceable in accordance with its terms by appropriate legal remedy and/or equitable remedy
2.3 The Seller has obtained and maintained all necessary or desirable licences (including statutory licences) and consents, permits or authorisations required for the proper carrying on of the Business in all its aspects.
3. ACCURACY OF INFORMATION
3.1 To the best of the Seller's knowledge, all of the information provided to the Buyer by the Seller prior to execution of this agreement and at the time of execution of this agreement is true and accurate in all material respects.
3.2 So far as the Seller is aware, all of the facts set out in the recitals and in each of the schedules are true and accurate in all material respects.
4. BUSINESS AND BUSINESS ASSETS
4.1 The Seller:
(a) is the legal and beneficial owner of the Business Assets (save for equipment) free from any Security Interest;
(b) has good and marketable title to the Business Assets (save for equipment) free from any Security Interest; and
(c) has not entered into an agreement or other arrangement to give or create any Security Interest over the Business Assets (save for equipment) and no claim has been made by any person to be entitled to any interest of that kind.
4.2 To the best of the Seller's knowledge, the Business is conducted and the Business Assets are used in accordance with all applicable laws. The conduct of the Business and the use of the Business Assets in the Business by the Seller do not contravene any laws and no allegation of any contravention of any applicable laws is known to the Seller.
4.3 To the best of the Seller's knowledge, no notice has been served on the Seller by any government authority or agency which might materially impair, prevent or otherwise interfere with the Buyer's use of, or proprietary rights in, any of the Business Assets.
5. CUSTOMER CONTRACTS
5.1 To the best of the Seller's knowledge, each of the Customer Contracts is valid, binding and enforceable against the parties to it except that the Seller makes no warranty as to whether all Customer Contracts can be produced.
5.2 To the best of the Seller's knowledge, none of the Customer Contracts contain any onerous, unusual or other provision material for disclosure to a prudent intending Buyer of the Business Assets.
5.3 To the best of the Seller's knowledge, the Seller has not made any offers, tenders or quotations which are still outstanding and capable of giving rise to a contract by the unilateral act of a third party which would adversely affect the Buyer.
5.4 To the best of the Seller's knowledge, the Seller has not entered into any arrangements, discussions or unwritten agreements with any Customer or given any waivers to any Customer which:
(a) may adversely affect the performance of the Customer Contracts; or
(b) has modified, varied or amended any terms and conditions of the Customer Contracts
5.5 The Customer Contracts are capable of being assigned and transferred from the Seller to the Buyer and in the event that consent is required from any Customers, the Seller shall use best endeavours to procure the same.
6. LITIGATION
6.1 Except for debt collection proceedings in the ordinary course of the Business, the Seller is not involved in any litigation or arbitration proceedings relating to the Business or Business Assets and so far as the Seller is aware, there are no facts likely to give rise to any such proceedings.
6.2 No claim has been made against the Seller for an amount exceeding S$50,000 in connection with any defective product or services supplied by it in the course of carrying on the Business.
6.3 The operations of the Business are not subject to any unsatisfied judgment or any order, award or decision handed down in any litigation or arbitration proceedings.

EXHIBIT 4.104

Confidential

SALE AND PURCHASE OF BUSINESS AGREEMENT

DATE 11/11/02

PARTIES

  1. Reach Communications Services (Thailand) Limited, a company incorporated in Thailand and having its registered office at 16th Floor, CAT Telecom Tower No 72, Trok Wat Muang Kae, Charoenkrung Road, Bangrak, Bangkok, THAILAND (Seller)
     
  2. World Net & Services Co., Ltd, a company incorporated in Thailand and having its registered office at 333 Lao Peng Nguan Building Tower 1 Building, 28th Floor, Soi, Chay Puang, Vibhavadi Rangsit Road, Kwaeng Ladyao, Khet Chatuchak, Bangkok THAILAND (Buyer)
     
  3. Pacific Internet Limited, a company incorporated in Singapore and having its registered office at 89 Science Park Drive #02-05/06 The Rutherford, SINGAPORE 118261 (Guarantor)
THE PARTIES AGREE
1 DICTIONARY & INTERPRETATION
 
The Dictionary in Schedule 2:
 
  (a) defines capitalised terms used in this agreement; and
 
  (b) sets out the rules of interpretation that apply to this agreement.
 
2 SALE AND PURCHASE OF THE BUSINESS
 
2.1 Sale of Business Assets
 
The Seller must sell the Business Assets to the Buyer and the Buyer must buy them:
 
  (a) for the Purchase Price; and
 
  (b) free of Security Interests.
 
2.2 Purchase Price
 
  (a) In consideration for the sale of the Business Assets, the Buyer must pay to the Seller 16.67% of the Revenue in respect of November 2002 plus 25% of Revenue in respect of each of the 11 calendar months from 1 December 2002 to 31 October 2003 plus 8.33% of the Revenue in respect of November 2003.
 
  (b) Within fifteen (15) Business Days after the end of each of the thirteen (13) calendar months after 1 November 2002 (Periodic Invoice Statement Due Date), the Buyer must deliver to the Seller a statement setting out the amounts from invoices issued by the Buyer to the Customers under the Customer Contracts for services rendered in respect of that calendar month and any other information reasonably required by the Seller in order to determine full compliance by the Buyer with this clause 2.2.
 
  (c) Within thirty (30) Business Days after each Periodic Invoice Statement Due Date, the Buyer must:
 
    (i) deliver to the Seller a statement setting out the Revenue in respect of that calendar month (Periodic Revenue Statement);
 
    (ii) pay 16.67% of the total amount of Revenue listed in the Periodic Revenue Statement for November 2002 to the Seller in Baht by electronic transfer to the bank account nominated by the Seller in writing, or as otherwise instructed by the Seller from time to time;
 
    (iii) pay 25% of the total amount of Revenue listed in the relevant Periodic Revenue Statement for each of the calendar months from 1 December 2002 to 31 October 2003 to the Seller in Baht by electronic transfer to the bank account nominated by the Seller in writing, or as otherwise instructed by the Seller from time to time; and
 
    (iv) pay 8.33% of the total amount of Revenue listed in the Periodic Revenue Statement for November 2003 to the Seller in Baht by electronic transfer to the bank account nominated by the Seller in writing, or as otherwise instructed by the Seller from time to time.
 
  (d) The Buyer must pay interest on any overdue amount, calculated daily at the Interest Rate, from the date payment is due until the date that the Buyer pays in full the relevant overdue amount and any interest accrued on that amount.
 
  (e) If the Buyer has not delivered to the Seller a Periodic Revenue Statement in respect of a particular calendar month within forty five (45) Business Days after the end of that calendar month, then without prejudice to any other right or remedy of the Seller under this agreement including without limitation the right to interest for overdue amounts under clause 2.2(d):
 
    (i) the Buyer must immediately pay to the Seller 25% of the Revenue for the last calendar month in respect of which the Buyer delivered to the Seller a Periodic Revenue Statement;
 
    (ii) if the Buyer subsequently determines that 25% of the Revenue is more than the amount paid by the Buyer to the Seller under clause 2.2(e)(i), then the Buyer must immediately pay to the Seller the difference between those amounts; and
 
    (iii) if the Buyer subsequently determines that 25% of the Revenue is less than the amount paid by the Buyer to the Seller under clause 2.2(e)(i), then the Seller must immediately pay to the Buyer the difference between those amounts.
 
  (f) If the Seller gives the Buyer at least three (3) Business Day notice that it wishes to inspect the accounts of the Business, then on the Business Day specified by the Seller, the Buyer must allow an authorised representative of the Seller to inspect the accounts of the Business for the relevant calendar month to determine the Revenue for that calendar month, and the determination of the Seller's authorised representative will, in the absence of manifest error, be final and binding.
 
  (g) If the Buyer reduces the amount payable by a Customer under a Customer Contract by more than 20% compared to the amount payable by that Customer as at the date of this agreement, then Revenue in respect of that Customer Contract upon collection by the Buyer from that Customer means 80% of the amount payable by that Customer under that Customer Contract as at the date of this agreement, otherwise Revenue means all the actual amounts payable by the Customer under each Customer Contract and duly invoiced to such Customer and duly collected by the Buyer from that Customer.
 
  (h) On 30 April 2004, the Buyer must deliver to the Seller a statement (Second Adjustment Statement) setting out further Revenue arising from all invoices issued for services rendered to Customers under the Customer Contracts in the period from 1 November 2002 until 30 November 2003 inclusive and received by the Buyer in the period from 1 December 2003 until 31 March 2004, and any other information reasonably required by the Seller in order to determine comprehensively and accurately the Revenue in each of those calendar months.
 
  (i) On 7 May 2004, the Buyer must forward to the Seller 25% of the total amount of Revenue listed in the Second Adjustment Statement in respect of invoices rendered in the period from 1 December 2002 to 31 October 2003 inclusive plus 16.67% of the Revenue listed in the Second Adjustment Statement in respect of invoices rendered in November 2002 plus 8.33% of the Revenue listed in the Second Adjustment Statement in respect of invoices rendered in November 2003, by electronic transfer in Baht and to the bank account nominated by the Seller in writing, or as otherwise instructed by the Seller from time to time.
 
  (j) On 30 November 2002, the Seller must forward to the Buyer the total amount of the Prepayments listed in the Statement described in clause 3.1(c) by electronic transfer in Baht and to the bank account nominated by the Buyer in writing, or as otherwise instructed by the Buyer from time to time.
 
2.2 Title and Risk
 
All right, title and interest in the Business Assets and risk in the Business Assets passes to the Buyer on the date of this agreement.
 
3 OBLIGATIONS ON THE DATE OF THIS AGREEMENT
 
3.1 Seller's Obligations
 
On the date of this agreement, the Seller must give to the Buyer:
 
  (a) possession: full and unrestricted possession of all the Business Assets;
 
  (b) business records: copies of any Business Records reasonably requested by the Buyer and not required to be retained by the Seller under the laws of any relevant jurisdiction, including without limitation:
 
    (i) a complete and accurate list of all Customers as at 30 October 2002, setting out inter alia, the personal and contact particulars of each Customer as available and set forth in Schedule 4;
 
    (ii) all original Customer Contracts; and
 
    (iii) a complete and accurate list of all Receivables;
 
  (c) Statement: a complete and accurate list of the total actual amount of payments (if any) made by each Customer to the Seller in respect of services to be rendered after the date of this agreement by the Buyer under the relevant Customer Contract (Prepayments);
 
  (d) approvals: copies of all requisite corporate approvals required for the Seller's entry into this agreement and any agreements in connection with this agreement;
 
  (e) Master Deed of Assignment: one duly executed original of the Master Deed of Assignment in Schedule 5; and
 
  (f) Third Party Providers: a list of all the Third Party Providers, including a description of all specific services provided by each Third Party Provider under the Customer Contracts, as available and set forth in Schedule 6.
 
3.2 Buyer's Obligations
 
On the date of this agreement, the Buyer must give to the Seller:
 
  (a) approvals: copies of all requisite corporate approvals required for the Buyer's entry into this agreement and any agreements in connection with this agreement; and
 
  (b) Master Deed of Assignment: one duly executed original of the Master Deed of Assignment in Schedule 5.
 
4 CONDUCT AFTER THE DATE OF THIS AGREEMENT
 
4.1 Right to use Licensed IP Addresses and AS Number
 
  (a) Subject to the Buyer's compliance with clause 4.1(b), the Seller must for a period of six months after the date of this agreement, reasonably cooperate with the Buyer to allow the Buyer the unrestricted use of those domain names, Licensed IP Addresses and Autonomous System Numbers that relate to the Business (Identifiers) on a non-transferable basis solely for the purpose of providing the services of the Business to the Buyer's existing and future customers in the Territory.
 
  (b) The Buyer must use the Identifiers lawfully and not in any manner inconsistent with internet protocol network operation and administration best practice and in accordance with any reasonable instruction or direction by the Seller having direct bearing on the Seller's own use of the Identifiers for network administration and operation, including without limitation peering with other networks.
 
  (c) The Buyer must migrate all the customers and networks of the Business to domain names, Internet Protocol addresses and Autonomous System numbers other than the Identifiers in an orderly manner within the six month period referred to in clause 4.1(a).
 
  (d) Despite clause 4.1(f) but subject to the Buyer's compliance with clause 4.1(b), for a period of 30 days or such other periods as the parties may mutually agree upon after the end of the Seller's obligation to co-operate under clause 4.1(a), the Seller must provide at the Buyer's request and expense all support that the Buyer may reasonably require to allow the migration of the Business to domain names, Licensed IP Addresses and Autonomous System numbers other than the Identifiers.
 
  (e) Despite any request of the Buyer, the Seller has no obligation to deploy resources or incur expenses that the Seller would not ordinarily have to deploy or incur unless the Buyer first agrees to pay the Seller's reasonable costs within 30 days after receipt of an invoice from the Seller.
 
  (f) The Seller's obligation to co-operate under clauses 4.1(a) and (d) ends on the first to occur of:
 
    (i) the Buyer's failure to comply with its obligations under this clause 4.1;
 
    (ii) termination of this agreement; or
 
    (iii) the end of the six month period referred to in clause 4.1(a).
 
4.2 Collection of outstanding amounts
 
  (a) The Buyer must use best efforts in accordance with the Buyer's normal debt collection procedures to collect all outstanding amounts arising from invoices issued for services rendered to Customers from 11 November 2002 to 10 November 2003 (Revenue Period). At the Seller's reasonable request, the Buyer must provide the Seller with documentary evidence that the Buyer has complied with this clause 4.2(a).
 
  (b) Any calculation of Revenue during the Revenue Period under clause 2.2 shall not take into account any Revenue that the Buyer decided not to take up under clause 4.7(b).
 
4.3 Seller's Right to Verify Revenue
 
  (a) The Buyer must maintain complete and accurate books and records in respect of the Revenues of the Business (Accounts) for 20 months after the date of this agreement.
 
  (b) The Seller may at any time by giving three Business Days written notice to the Buyer, require the Buyer to provide access to the Accounts at the premises of the Buyer during usual business hours on a Business Day, for the purpose of auditing, checking and copying them.
 
  (c) If the Seller gives the Buyer at least three Business Days written notice that it wishes to inspect the accounts of the Business, then on the Business Day specified by the Seller, the Buyer must allow an authorised representative of the Seller to inspect the accounts of the Business for the relevant calendar month to determine the Revenue for that calendar month
 
  (d) If the Seller's audit under clause 4.3(b) shows that the Buyer has issued an incorrect statement under clause 2.2, then the Buyer and the Seller must fulfil their obligations under clause 2.2 in accordance with the correct statement, and the Buyer must immediately pay to the Seller the reasonable costs incurred by the Seller in auditing the Buyer's accounts under clause 4.3(b).
 
  (e) If the Seller and the Buyer cannot agree on the result of the Seller's audit under clause 4.3(b) within 30 days after the date of the audit, then either the Buyer or the Seller may by giving written notice to the other party refer the dispute to compulsory arbitration to be conducted in English in the Republic of Singapore in accordance with the Arbitration Rules of the Singapore International Arbitration Centre in force from time to time.
 
4.4 Receivables
 
  (a) Seller's entitlement: The Seller:
 
    (i) is entitled to the Receivables; and
 
    (ii) authorises the Buyer to collect the Receivables on its behalf for the period of three months after the date of this agreement.
 
  (b) Seller's obligations regarding Receivables: The Seller must reasonably co-operate with the Buyer to provide all reasonable assistance and necessary information to enable the Buyer to collect the Receivables on the Seller's behalf.
 
  (c) collection by Buyer: The Buyer must follow its normal internal debt collection procedures to collect the Receivables on behalf of the Seller, including without limitation calling and writing to the relevant Customer to request payment of that Customer's Receivable. The Seller does not authorise the Buyer to instruct any third party, including without limitation any lawyer or debt collection agency, to collect any of the Receivables. The Buyer is in no way liable to the Seller for failing to recover any of the Receivables to be collected under this clause 4.4.
 
  (d) monthly accounting: The Buyer must:
 
    (i) on a monthly basis, account in writing to the Seller for Receivables collected by it and any amount retained under clause 4.4(f), and pay those Receivables, less any amount retained under clause 4.4(f), to the Seller; and
 
    (ii) provide to the Seller information about the collection of Receivables that the Seller reasonably requests.
 
  (e) treatment of receipts: The Buyer must treat an amount that it receives from a debtor or on account of a debtor of the Business:
 
    (i) as a payment of a specific Receivable, if it is readily identified with that Receivable;
 
    (ii) as a payment of a specific debt to the Buyer, if it is readily identified with that debt;
 
    (iii) if the amount is not readily identified with a Receivable or a debt to the Buyer and is received within 30 days after the Buyer sends an invoice to the debtor and such debtor is not more than 30 days late (60 days after invoice) with its payments, then as payment of the oldest Receivable; or
 
    (iv) if the amount is not readily identified with a Receivable or a debt to the Buyer and such debtor is more than 30 days late (60 days after invoice) in its payments, as payment of both Receivables and debt owing to the Buyer in the proportion determined in accordance with the ratio of the total amount of Receivables outstanding to the total amount of debt owing to the Buyer as at the date that the payment is received.
 
  (f) payment to Buyer: If after using reasonable efforts to collect a Receivable in accordance with clause 4.4(c), a Receivable is more than 120 days outstanding on the date that the Buyer collects the Receivable, then in consideration for collecting that Receivable, the Buyer is entitled to retain 5% of that Receivable when the Buyer pays the Receivable to the Seller under clause 4.4(d)(i).
 
  (g) indemnity: The Seller indemnifies the Buyer against all penalties, claims, expenses, demands, liabilities, losses and damages that the Buyer may incur arising directly from or in connection with the Buyer collecting the Receivables on behalf of the Seller, other than claims solely attributable to the Buyer's gross negligence or wilful default.
 
4.5 Acknowledgment
 
  (a) The Buyer and the Guarantor each acknowledges that neither the Seller nor any of its Affiliates, employees or agents has made any representation, warranty or guarantee regarding, or any assessment of the likelihood of:
 
    (i) the Customer Contracts continuing beyond the date of this agreement; or
 
    (ii) the revenue generated or to be generated from any of the Customer Contracts after the date of this agreement.
 
  (b) The Seller's only responsibilities in respect of:
 
    (i) the transfer of Customer Contracts are set out in clauses 4.1 and 4.6; and
 
    (ii) Third Party Provider Contracts are set out in clauses 3.1(f) and 4.7.
 
4.6 Customer Communications
 
  (a) Within 5 Business Days after the date of this agreement, the Seller and the Buyer must send to each Customer a letter in substantially the form of the letter in Schedule 3, as the case may be.
 
  (b) The Seller must reasonably co-operate with the Buyer to develop and implement an effective strategy (Migration Strategy) for notifying Customers of the transfer of the Customer Contracts to the Buyer and for the migration of the Customers to the Buyer's network and operating systems.
 
  (c) The Buyer indemnifies the Seller against any claim, loss, liability, cost or expense that the Seller pays or is liable for arising directly from or in respect of any communication between the Buyer and a Customer, other than: (i) the letter in Schedule 3; or (ii) in pursuance of the Migration Strategy.
 
4.7 Third Party Providers
 
  (a) Subject to clause 4.7(d), the Seller must retain the Third Party Provider Contracts for the benefit of the Buyer for a period of five months after the date of this agreement.
 
  (b) Subject to clause 4.7(d), the Buyer must reimburse the Seller for all Third Party Provider fees and charges incurred by the Seller under the Third Party Provider Contracts for fees and charges covering services provided after 11 November 2002, for which the Seller has provided supporting documentation, including without limitation, copies of all invoices from the Third Party Providers, which can be clearly identified as incurred in relation to the provision of services to the Customers under the Customer Contracts, provided always that if any Third Party Provider does not appear in Schedule 6 or if such Third Party Provider appears in Schedule 6 but the specific service provided by such Third Party Provider does not appear in Schedule 6, the Buyer shall not need to reimburse the Seller for the fees and charges of that Third Party Provider which do not appear in Schedule 6 or the fees and charges in relation to that specific service which such Third Party Provider provides, which do not appear in Schedule 6, as the case may be, but the Customer to which that Third Party Provider or that specific service relates will not be assigned to the Buyer so that the Buyer will not receive a share in the Revenue from that Customer. For the avoidance of doubt, save for the aforesaid fees and charges to be reimbursed by the Buyer to the Seller, the Seller shall remain responsible for the due performance of all the Seller's obligations under the Third Party Provider Contracts, including without limitation, the obligation to pay any penalty charges.
 
  (c) The Buyer indemnifies the Seller against any claim, loss, liability, cost or expense, including without limitation any fee or charge, arising from the Third Party Provider Contracts which is attributable directly to any acts of Customers or the Buyer during the period of five months after the date of this agreement.
 
  (d) The Buyer may at any time by giving 35 days written notice terminate the obligations of the Seller under clause 4.7(a) and of the Buyer under clause 4.7(b) in respect of a particular Third Party Provider Contract.
 
  (e) The obligations of the Seller under clause 4.7(a) and of the Buyer under clause 4.7(b) continue in respect of the remaining Third Party Provider Contracts, if any, that the Seller has not terminated under clause 4.7(d).
 
4.8 No material change in Customer Contracts
 
The Buyer must not materially change the terms and conditions of the Customer Contracts from the terms and conditions as at the date of this agreement.
 
4.9 Payment Procedures
 
Each party agrees that notwithstanding anything to the contrary in this agreement, any invoices to be issued to the other party under this agreement and any payments to be made to the other party under this agreement shall be issued or made, as the case may be, in the Territory.
 
5 WARRANTIES
 
5.1 Seller's Warranties
 
  (a) The Seller represents and warrants to the Buyer in the Territory that as at the date of this agreement, each of the Seller's Warranties set forth in Schedule 7 is true, subject only to specific qualifications made in the Disclosure Letter.
 
  (b) The Seller acknowledges that the Buyer has entered into this agreement in reliance on the Seller's Warranties.
 
  (c) Except for the Seller's Warranties, and to the extent permitted by law, the Seller makes no warranty or representation, express or implied, with respect to the Business, the Business Assets, the Licensed IP Addresses or Autonomous System Numbers, including any warranty of merchantability or fitness for particular purpose, and all such warranties and representations are expressly disclaimed.
 
  (d) Each of the Seller's Warranties must be construed independently and is not limited by reference to another Seller's Warranty.
 
5.2 Buyer's Warranties
 
  (a) The Buyer represents and warrants to the Seller as at the date of this agreement that:
 
    (i) the Buyer has all Authorisations necessary for the Buyer to own and operate the Business Assets, conduct the Business, and perform all its obligations under this agreement;
 
    (ii) the execution and delivery of, and the performance by the Buyer of its obligations under, this agreement will not result in a breach of any law, rules, regulations, or ordinances in the Territory;
 
    (iii) the Buyer has full power and authority to enter into and perform this agreement and this agreement constitutes valid and binding obligations on the Buyer in accordance with its terms;
 
    (iv) the Buyer has taken all corporate and other action necessary to authorize the execution and performance by it of the transactions contemplated by this agreement and to render this agreement legally valid and binding on and enforceable against it; and
 
    (v) the execution and delivery of, and the performance by the Buyer of its obligations under, this agreement will not result in a breach of, or constitute a default under any provision of the memorandum or articles of association of, the Buyer or any agreement, contract, document or instrument to which the Buyer is a party or by which the Buyer is bound.
 
5.3 Acknowledgment of Buyer
 
The Buyer and the Guarantor each acknowledges that:
 
  (a) the Buyer has relied entirely on its own enquiries in relation to its purchase of the Business Assets from the Seller and that no warranties have been made by the Seller or the Seller's officers or advisers other than those referred to in this clause 5; and
 
  (b) the Buyer has the responsibility, risk and expense of transferring all Customer Contracts, and Customers that are to be transferred under this agreement.
 
6 CONFIDENTIALITY
 
A party may not disclose the provisions of this agreement or the terms of sale of the Business Assets to any person except:
 
  (a) as a media announcement in the form agreed between the Buyer and the Seller;
 
  (b) in accordance with the rules or requirements of a recognised stock exchange;
 
  (c) after getting the written consent of the other party;
 
  (d) to its officers, employees and professional advisers; or
 
  (e) as required by an applicable law, after first consulting with the other party about the form and content of the disclosure,
 
and must use its best endeavours to ensure all permitted disclosures are kept confidential, other than in the case of a media announcement or a disclosure to a recognised stock exchange.
 
7 TAX, COSTS AND EXPENSES
 
7.1 Tax
 
Except to the extent otherwise provided in this agreement, the Buyer must pay any Tax arising from the execution, delivery and performance of this agreement and each agreement or document entered into or signed under this agreement.
 
7.2 Costs and expenses
 
Each party must pay its own costs and expenses of negotiating, preparing, signing, delivering and registering this agreement and any other agreement or document entered into or signed under this agreement.
 
7.3 Costs of performance
 
Each party must bear the costs and expenses of performing its obligations under this agreement, unless otherwise provided in this agreement.
 
8 INDEMNITY
 
8.1 Buyer's Indemnity
 
Unless otherwise stated in this agreement and subject to clause 8.3, the Buyer indemnifies the Seller against any claim, loss, liability, cost or expense that occurs on or after the date of this agreement and arises directly or indirectly from:
 
  (a) any Buyer's Warranty;
 
  (b) any breach of the Buyer's obligations under this agreement; or
 
  (c) the Buyer's conduct of the Business after the date of this agreement, including without limitation any claim made by a Customer.
 
8.2 Seller's Indemnity
 
Unless otherwise stated in this agreement and subject to clause 8.3, the Seller indemnifies the Buyer against any claim, loss, liability, cost or expense that occurs on or after the date of this agreement and arises directly or indirectly from:
 
  (a) any Seller's Warranty;
 
  (b) any breach of the Seller's obligations under this agreement; or
 
  (c) the Seller's conduct of the Business before the date of this agreement, including without limitation any claim made by a Customer.
 
8.3 Limitation of Liability
 
Save and except for the Purchase Price, a party's maximum aggregate liability to the other party under this agreement or in respect of the performance of this agreement is limited to an aggregate amount of THB3,034,271 provided that nothing in this clause 8.3 limits a party's liability for death or personal injury resulting from that party's negligence.
 
9 GUARANTEE AND INDEMNITY
 
9.1 Guarantee
 
  (a) The Guarantor unconditionally and irrevocably guarantees to the Seller the performance of the Buyer's obligations to pay the Purchase Price under clause 2.2, as adjusted under clause 4.2, and to reimburse the Seller under clause 4.7(b).
 
  (b) Without limiting the Guarantor's obligations under clause 9.1(a), if the Buyer does not pay part or the whole of the Purchase Price when due under clause 2.2, or as adjusted under clause 4.2, the Guarantor must immediately on demand from the Seller pay the outstanding amount of the Purchase Price, including any interest accruing under clause 2.2(d) or 4.2(f), to the Seller.
 
  (c) Without limiting the Guarantor's obligations under clause 9.1(a) or (b), if the Buyer fails to perform any of its obligations under clause 2.2(d) or 4.7(b) in full and on time, the Guarantor must immediately on demand by the Seller ensure that those obligations are performed in full.
 
9.2 Indemnity
 
  (a) If any part of the Guaranteed Money is or becomes irrecoverable or unenforceable for any reason, the Guarantor must immediately, unconditionally and irrevocably pay to the Seller an amount equal to the amount of the claim, loss, liability, cost or expense in relation to the failure of the Buyer to pay the Guaranteed Money.
 
  (b) The Guarantor indemnifies the Seller against any claim, loss, liability, cost or expense that the Seller pays or is liable for in relation to the failure of the Buyer to perform an obligation under this agreement, any indemnity given by the Buyer under this agreement, any failure to pay any part of the Guaranteed Money (including if that amount is or becomes irrecoverable or unenforceable for any reason), or any failure of the Guarantor to cause the Buyer to perform an obligation under this agreement. The limit of liability arising under this indemnity in clause 9.2(b) shall not exceed THB2,160,000. For the avoidance of doubt, this limit of liability does not apply to the Guaranteed Money.
 
9.3 Extent of guarantee and indemnity
 
Clauses 9.1 and 9.2 apply and the obligations of the Guarantor remain unaffected despite:
 
  (a) an increase in the amount of the Guaranteed Money;
 
  (b) an amendment to this agreement;
 
  (c) a rule of law to the contrary, save that if the Guarantor complying with this Guarantee causes the Guarantor to breach a rule of law, it shall not be required to do so;
 
  (d) an Insolvency Event affecting any person, or the death of any person; or
 
  (e) the occurrence of any other thing that might otherwise release, discharge or otherwise affect the obligations of the Guarantor under this agreement.
 
9.4 Continuing guarantee and indemnity
 
This clause 9 is a continuing obligation of the Guarantor, despite a settlement of account or the occurrence of any other thing, and remains fully effective until the Guaranteed Money has been paid in full.
 
10 GENERAL
 
10.1 Notices
 
  (a) A notice or other communication given under this agreement including, but not limited to, a request, demand, consent or approval, to or by a party to this agreement:
 
    (i) must be in legible writing and in English;
 
    (ii) must be addressed to the addressee at the address or facsimile number set out below or to any other address or facsimile number a party notifies to the others under this clause:
 
    A. if to the Seller:
Address: 18th Floor, Telecom House,
3 Gloucester Road, Wan Chai,
HONG KONG
Attention: Mr Jerry Koleth
Facsimile: +852 - 2962 5881
 
    B. if to the Buyer:
Address: 89 Science Park Drive,
#02-05/06 The Rutherford,
SINGAPORE 118261
Attention: Mr David Seng
Facsimile: +65-6774 1677
 
    (iii) must be signed by an authorized officer of the sender; and
 
    (iv) is deemed to be received by the addressee in accordance with clause 10.1(b).
 
  (b) Without limiting any other means by which a party may be able to prove that a notice has been received by another party, a notice is deemed to be received:
 
    (i) if sent by hand, when delivered to the addressee;
 
    (ii) if by post, 3 Business Days after and including the date of postage; or
 
    (iii) if by facsimile transmission, on receipt by the sender of an acknowledgment or transmission report generated by the machine from which the facsimile was sent,
 
    but if the delivery or receipt is on a day which is not a Business Day or is after 4.00 pm (addressee's time) it is deemed to be received at 9.00 am on the following Business Day.
 
  (c) A facsimile transmission is regarded as legible unless the addressee telephones the sender within 2 hours after the transmission is received or regarded as received under clause 10.1(b)(iii) and informs the sender that it is not legible.
 
  (d) In this clause 10.1, a reference to an addressee includes a reference to an addressee's officers, agents or authorised representatives.
 
10.2 Governing law
 
  (a) This agreement is governed by the laws of the Territory.
 
  (b) Each party irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of the Territory.
 
10.3 Exercise of rights
 
A party may exercise a right, power or remedy at its discretion, and separately or concurrently with another right, power or remedy. A single or partial exercise of a right, power or remedy by a party does not prevent a further exercise of that or of any other right, power or remedy.
 
10.4 Legal advice and allocation of risk
 
Each party acknowledges that it has received legal advice or had the opportunity to receive legal advice about this agreement. The parties acknowledge that the allocation of risks and liabilities in this agreement reflects their intentions and is a fair and proper commercial bargain.
 
10.5 Invalidity
 
  (a) If a provision of this agreement or a right or remedy of a party under this agreement is invalid or unenforceable in a particular jurisdiction:
 
    (i) it is read down or severed in that jurisdiction only to the extent of the invalidity or unenforceability; and
 
    (ii) it does not affect the validity or enforceability of that provision in another jurisdiction or the remaining provisions in any jurisdiction.
 
  (b) This clause 10.5 is not limited by any other provision of this agreement in relation to severability, prohibition or enforceability.
 
10.6 Waiver and variation
 
A provision or a right under this agreement may not be waived except in writing signed by the party granting the waiver, or varied except in writing signed by the parties.
 
10.7 Cumulative rights
 
The rights and remedies of a party under this agreement do not exclude any other right or remedy provided by law.
 
10.8 Non-merger
 
The conditions, provisions and Warranties in this agreement do not merge or terminate.
 
10.9 Further assurances
 
Each party must do all things necessary to give full effect to this agreement and the transactions contemplated by this agreement.
 
10.1 Entire agreement
 
This agreement and the Master Services Agreement constitute the entire agreement of the parties about its subject matter and supersedes any previous understandings or agreements on that subject matter.
 
10.11 Third party rights
 
  (a) The Seller has entered into this agreement for its own benefit and for the benefit of Reach Global Services Limited, and the Buyer and the Guarantor each acknowledges that Reach Global Services Limited can enforce any of the Seller's rights under this agreement, including without limitation under the guarantee in clause 9.
 
  (b) Subject to clause 10.11(a), only the parties have or are intended to have a right or remedy under this agreement or obtain a benefit under it.
 
10.12 Assignment
 
  (a) Either party may at any time assign this agreement, or transfer the benefit of this agreement or a right or remedy under it, to any of its Affiliates.
 
  (b) Subject to clause 10.12(a), a party may not assign this agreement or otherwise transfer the benefit of this agreement or a right or remedy under it, without the other party's prior written consent.
 
10.13 Counterparts
 
This agreement may be signed in any number of counterparts and all those counterparts together make one instrument.
 

 

SIGNED as an agreement.

DATE 11/11/02

Signed by REACH INTERNET SERVICES PTE LTD:

 

/s/ Sean Brennan

 

/s/ Robert Kenny

Signature of witness

 

 

Signature of Authorised Representative

Sean Brennan

 

Robert Kenny

Name of witness (print)

 

Name of Authorised Representative
(print)

 

 

 

DATE 11/11/02

Signed by WORLD NET & SERVICES CO. LTD:

 

/s/ Amporn Thaisuntud

 

/s/ Prithayuth Nivasabutr

Signature of witness

 

 

Signature of Authorised Representative

Amporn Thaisuntud

 

Prithayuth Nivasabutr

Name of witness (print)

 

Name of Authorised Representative
(print)

 

 

 

DATE 11/11/02

Signed by PACIFIC INTERNET LIMITED:

 

/s/ Loh Pao Yen

 

/s/ Tan Tong Hai

Signature of witness

 

 

Signature of Authorised Representative

Loh Pao Yen

 

Tan Tong Hai

Name of witness (print)

 

Name of Authorised Representative
(print)

 

 

 

 

SCHEDULE 1

BUSINESS ASSETS AND EXCLUDED ASSETS

PART 1 – BUSINESS ASSETS

Business Assets

  1. Customer Contracts;
     
  2. The equipment of the Business owned by the Seller and located in the premises of the Customers, including without limitation routers.


PART 2 - EXCLUDED ASSETS

C. Cash, including, but not limited to, funds held with a bank or financial institution to the credit of the Seller and cash on hand as at the Date of Completion;
D. the Receivables; and
E.
  1. any other debts owed to Seller.

SCHEDULE 2

DICTIONARY
1.  In this agreement:

Affiliate of a party means an entity that directly or indirectly controls, is controlled by, or is under common control with, that party and in the case of the Seller, also includes Reach Internet Services (MSC) Sdn Bhd, TeleWeb Networks (India) Pvt Ltd, Reach Networks (Philippines) Inc., and Taihan Reach Limited.

Authorisation includes:
(a)  a consent, registration, filing, agreement, notice of non-objection, notarisation, certificate, licence, approval, permit, authority or exemption from, by or with a Government Agency; and
(b)  in relation to anything which a Government Agency may prohibit or restrict within a specific period, the expiry of that period without intervention or action.

Business means the business of the operation of a retail Internet Service Provider providing access services to the Customers and carried on by the Seller in the Territory.

Business Assets means the assets used in or forming part of the Business as listed in Part 1 of Schedule 1, but excludes the Excluded Assets listed in Part 2 of Schedule 1.

Business Records means in relation to the Business:
(a)  supplier lists;
(b)  computer programmes, data bases, software and negatives;
(c)  originals or copies of ledgers, journals and books of account; and
(d)  all other documents and records about the Business or the Business Assets.

Business Day means a day on which banks are open for business in a place where any action is to be performed and in the event of any payment to be made or notice to be given between two places, then in each case in the place of receipt.

Buyer's Warranties means the Buyer's representations and warranties set out in clause 5.2.

Customer means a person who has subscribed for services from the Seller under the Business as at the date of this agreement.

Customer Contract means each of the written and unwritten agreements with a Customer in the list provided by the Seller under clause 3.1(b)(i), specifying the terms and conditions, including the price, for the provision of services to the Customer under the Business.

Disclosure Letter means the letter from the Seller dated the date of this agreement, delivered to the Buyer before the signing of this agreement and containing disclosures about the Seller's Warranties.

Excluded Records means those Business Records that the Seller is required by law to retain.

Government Agency means a government or governmental, semi-governmental, administrative, fiscal or judicial body, department, commission, authority, tribunal, agency or entity whether foreign, federal, state, territorial or local.

Guaranteed Money means all monetary liabilities of the Buyer to the Seller under or in relation to the obligation:

(a) to pay the Purchase Price under clause 2.2, as adjusted under clause 4.2; and

(b) to reimburse the Seller under clause 4.7(b).

Identifiers means the domain names, Licensed IP Addresses and Autonomous System numbers that relate to the Business.

Insolvency Event means the occurrence of any one or more of the following events in relation to any person:
(a) a liquidator or provisional liquidator is appointed;
(b) an administrator is appointed to any of its assets;
(c) it enters into an arrangement or composition with one or more of its creditors, or an assignment for the benefit of one or more of its creditors;
(d) it is insolvent as disclosed in its accounts, or otherwise states that it is insolvent, or it is presumed to be insolvent under an applicable law;
(e) it is taken to have failed to comply with a statutory demand as a result of legislation relating to insolvency in the Territory;
(f) it ceases to carry on business or threatens to do so; or
(g) anything occurs under the law of any jurisdiction that has a substantially similar effect to any of the above paragraphs of this definition.

Interest Rate means the minimum lending rate set by the Bangkok Bank Public Company Limited for loans made in the Territory, plus 2 percent.

Licensed IP Addresses means the Internet Protocol address blocks that relate to the Business.

Master Deed of Assignment means the master deed of assignment in Schedule 5.

Purchase Price means the amount payable by the Buyer under clause 2.2.

Receivable means any amount payable under a Customer Contract in respect of the services rendered for the period before 11 November 2002 that is unpaid as at the date of this agreement.

Revenue means such fees and charges invoiced to each Customer under the Customer Contract and collected from such Customer.

Security Interest means a right, interest, power or arrangement in relation to an asset that provides security for the payment or satisfaction of a debt, obligation or liability including without limitation under a bill of sale, mortgage, charge, lien, pledge, trust, power, deposit, hypothecation or arrangement for retention of title, and includes an agreement to grant or create any of those things.

Seller's Warranties means the representations and warranties set out in Schedule 7.

Tax means a tax, levy, charge, impost, fee, deduction, withholding or duty of any nature, including, without limitation, stamp and transaction duty or any goods and services tax, value added tax or consumption tax, which is imposed or collected by a Government Agency except where the context requires otherwise. This includes, but is not limited to, any interest, fine, penalty, charge, fee or other amount imposed in addition to those amounts.

Territory means the Kingdom of Thailand.

THB and Baht each means the lawful currency of the Kingdom of Thailand.

Third Party Provider means each of the telecommunications providers providing circuits between premises of customers and premises of the Business.

Third Party Provider Contract means each contract between the Seller and a Third Party Provider relating solely to the service provided to a Customer under the Customer Contract.
2. Interpretation
(a) In this agreement unless the context otherwise requires:
  (i) words importing the singular include the plural and vice versa;
  (ii) words that are gender neutral or gender specific include each gender;
  (iii) other parts of speech and grammatical forms of a word or phrase defined in this agreement have a corresponding meaning;
  (iv) an expression importing a natural person includes a company, partnership, joint venture, association, corporation or other body corporate and a Government Agency;
  (v) a reference to a thing (including, but not limited to, a chose-in-action or other right) includes a part of that thing;
  (vi) a reference to a clause, party, schedule or attachment is a reference to a clause of this agreement, and a party, schedule or attachment to, this agreement and a reference to this agreement includes a schedule and attachment to this agreement;
  (vii) a reference to this agreement includes this dictionary;
  (viii) a reference to a law includes a constitutional provision, treaty, decree, convention, statute, regulation, ordinance, by‑law judgment, rule of common law or equity or a rule of an applicable stock exchange and is a reference to that law as amended, consolidated or replaced;
  (ix) a reference to a document includes all amendments or supplements to that document, or replacements or novations of it;
  (x) a reference to a party to a document includes that party's successors and permitted assigns; and
  (xi) a reference to an agreement, other than this agreement, includes an undertaking, deed, agreement or legally enforceable arrangement or understanding, whether or not in writing.
(b) If the day on or by which something must be done is not a Business Day, that thing must be done on or by the preceding Business Day.
(c) Headings are for convenience only and do not affect the interpretation of this agreement.
(d) This agreement may not be construed adversely to a party only because that party prepared this agreement.

SCHEDULE 3

CUSTOMER LETTER

Clause 4.6

REACH Communications Services (Thailand) Limited

[insert customer name]

Dear [name]

REACH has strengthened its focus on the wholesale market and has agreed with Pacific Internet Limited ("PI") that they will continue to provide the Internet access services to you in accordance with the customer terms and conditions signed between you and REACH, including the price of the services. Additionally, PI has committed to taking over your Internet access customer account.

If you are happy to continue to take the Internet service from PI, you need do nothing - your continued use of the Internet service after 6 December 2002 will be deemed to be acceptance of the transfer (novation) of your customer contract to PI. The transfer will result in PI assuming all of REACH's rights and obligations and PI will have legal responsibility for the provision of the service to you. The transfer will be deemed to take effect from 11 November 2002, and as from that date you should direct any comments or queries you may have regarding the service to REACH Customer Support at 0-2637-3333 or PI Customer Support at 0-2 [insert contact number].

However, if you do not wish to take the Internet service from PI, you may cancel your contract with REACH by giving us written notice on or before 6 December 2002. You have been a valued customer of REACH and, as such, there will be no early termination or cancellation payments applied to cancellation of this contract if that is your choice.

If you have any questions or require further clarification, I invite you to please call your REACH Customer Support at 0-2637-3333 or PI Customer Support at 0-2[insert contact number]. We will work with you to help ensure a smooth transition to PI or your new service provider, whichever course of action you decide to take.
Thank you for allowing us to be of service to you.

Yours faithfully

Prawit Ittimakin
Chief Executive Officer
Reach Communications Services (Thailand) Limited

SCHEDULE 4

CUSTOMER LIST AS AT 30 OCTOBER 2002

Clause 3.1(b)

SCHEDULE 5

MASTER DEED OF ASSIGNMENT

THIS MASTER DEED OF ASSIGNMENT is made        the day of          2002

BETWEEN:

  1. Reach Communications Services (Thailand) Limited of 16th Floor, CAT Telecom Tower No 72, Trok Wat Muang Kae, Charoenkrung Road, Bangrak, Bangkok, Thailand (Assignor); and
  2. World Net & Services Co., Ltd of [insert address], Thailand (Assignee)

(hereinafter, each of the Assignor and the Assignee shall be individually referred to as a "Party" and collectively referred to as the "Parties").

WHEREAS:

  1. By a sale and purchase of business agreement dated                  2002 and made between the parties hereto (the "Sale of Business Agreement"), it was agreed, inter alia, that the Assignor shall transfer the Business Assets (as defined in the Sale of Business Agreement) to the Assignee on terms and conditions as stated in the Sale of Business Agreement.
     
  2. This Deed is made pursuant to the Sale of Business Agreement.

NOW IT IS HEREBY AGREED AS FOLLOWS:

  1. Pursuant to the Sale of Business Agreement, the Assignor as legal and beneficial owner assigns to the Assignee absolutely all its rights title and interest in all the Business Assets with effect from the date of signing of the Sale of Business Agreement.
     
  2. Unless the context otherwise requires, any term used in this Deed which is defined in the Sale of Business Agreement and is not specifically defined in this Deed shall have the meaning attributed to it in the Sale of Business Agreement.
     
  3. This Deed shall be binding on and shall enure for the benefit of each Party's successors and assigns and personal representatives (as the case may be).
     
  4. This Deed shall not be altered, changed or supplemented unless the same is made in writing and signed by the Parties hereto.
     
  5. This Deed shall be governed by and construed in accordance with the laws of the Kingdom of Thailand and the Parties agree to submit to the non-exclusive jurisdiction of the courts of the Kingdom of Thailand

 

[The remainder of this page has been intentionally left blank]

IN WITNESS WHEREOF this Deed has been executed as a Deed on the day and year first abovewritten.

The Common Seal of )
Reach Communications Services (Thailand) Limited )
was hereunto affixed )
in the presence of: )

 

Director
  		 
Director/Secretary  

 

The Common Seal of )
World Net & Services Co., Ltd )
was hereunto affixed )
in the presence of: )

 

Director
  		 
Director/Secretary  

SCHEDULE 6

LIST OF ALL THIRD PARTY PROVIDERS AND ALL SPECIFIC SERVICES PROVIDED BY THEM

Clause 3.1(f)

Local loop monthly charges (from customer site to local PoP site) Datanet; CAT; TA; UIH; UBT; TOT
Local loop monthly charges (from local PoP site to CAT or TA) CAT; TOT; UBT
Trunking access TA
Roaming iPass services for local customers Ipass
Hardware rental Shoshi OA


SCHEDULE 7

SELLER'S WARRANTIES

1. THE SELLER
1.1 The Seller:
(a) is duly incorporated and validly exists under the law of its place of incorporation;
(b) has full corporate power and authority to own the Business Assets; and
(c) is able to pay its debts as and when they fall due.
1.2 No Insolvency Event has affected or is likely, in the knowledge of the Seller, to affect the Seller.
2. DUE AUTHORISATION
2.1 The execution and delivery of this agreement has been properly authorised by all necessary corporate action of the Seller and the Seller has full corporate power and lawful authority to execute and deliver this agreement and to consummate and perform or cause to be performed its obligations under this agreement and all other documents required hereunder to be executed.
2.2 This agreement and all other documents required hereunder to be executed constitute legal, valid and binding obligations of the Seller enforceable in accordance with its terms by appropriate legal remedy and/or equitable remedy
2.3 The Seller has obtained and maintained all necessary or desirable licences (including statutory licences) and consents, permits or authorisations required for the proper carrying on of the Business in all its aspects.
3. ACCURACY OF INFORMATION
3.1 To the best of the Seller's knowledge, all of the information provided to the Buyer by the Seller prior to execution of this agreement and at the time of execution of this agreement is true and accurate in all material respects.
3.2 So far as the Seller is aware, all of the facts set out in the recitals and in each of the schedules are true and accurate in all material respects.
4. BUSINESS AND BUSINESS ASSETS
4.1 The Seller:
(a) is the legal and beneficial owner of the Business Assets (save for equipment) free from any Security Interest;
(b) has good and marketable title to the Business Assets (save for equipment) free from any Security Interest; and
(c) has not entered into an agreement or other arrangement to give or create any Security Interest over the Business Assets (save for equipment) and no claim has been made by any person to be entitled to any interest of that kind.
4.2 To the best of the Seller's knowledge, the Business is conducted and the Business Assets are used in accordance with all applicable laws. The conduct of the Business and the use of the Business Assets in the Business by the Seller do not contravene any laws and no allegation of any contravention of any applicable laws is known to the Seller.
4.3 To the best of the Seller's knowledge, no notice has been served on the Seller by any government authority or agency which might materially impair, prevent or otherwise interfere with the Buyer's use of, or proprietary rights in, any of the Business Assets.
5. CUSTOMER CONTRACTS
5.1 To the best of the Seller's knowledge, each of the Customer Contracts is valid, binding and enforceable against the parties to it except that the Seller makes no warranty as to whether all Customer Contracts can be produced.
5.2 To the best of the Seller's knowledge, none of the Customer Contracts contain any onerous, unusual or other provision material for disclosure to a prudent intending Buyer of the Business Assets.
5.3 To the best of the Seller's knowledge, the Seller has not made any offers, tenders or quotations which are still outstanding and capable of giving rise to a contract by the unilateral act of a third party which would adversely affect the Buyer.
5.4 To the best of the Seller's knowledge, the Seller has not entered into any arrangements, discussions or unwritten agreements with any Customer or given any waivers to any Customer which:
(a) may adversely affect the performance of the Customer Contracts; or
(b) has modified, varied or amended any terms and conditions of the Customer Contracts
5.5 The Customer Contracts are capable of being assigned and transferred from the Seller to the Buyer and in the event that consent is required from any Customers, the Seller shall use best endeavours to procure the same.
6. LITIGATION
6.1 Except for debt collection proceedings in the ordinary course of the Business, the Seller is not involved in any litigation or arbitration proceedings relating to the Business or Business Assets and so far as the Seller is aware, there are no facts likely to give rise to any such proceedings.
6.2 No claim has been made against the Seller for an amount exceeding THB433,055 in connection with any defective product or services supplied by it in the course of carrying on the Business.
6.3 The operations of the Business are not subject to any unsatisfied judgment or any order, award or decision handed down in any litigation or arbitration proceedings.

 

EXHIBIT 4.105

Confidential

SALE AND PURCHASE OF BUSINESS AGREEMENT
DATE 11 Nov 2002
 
PARTIES
1 Reach Internet Services (MSC) Sdn Bhd, a company incorporated in Malaysia and having its registered office at Level 49, Tower 2, Petronas Twin Tower, Kuala Lumpur City Centre, 50088, Kuala Lumpur, MALAYSIA (Seller)
2 Pacific Internet (Malaysia) Sdn Bhd, a company incorporated in Malaysia and having its registered office at Level 36 Menara Maxis, Kuala Lumpur City Centre, 50088, Kuala Lumpur, MALAYSIA (Buyer)
3 Pacific Internet Limited, a company incorporated in Singapore and having its registered office at 89 Science Park Drive #02-05/06 The Rutherford, SINGAPORE 118261 (Guarantor)
 
THE PARTIES AGREE
 
1 DICTIONARY & INTERPRETATION
  The Dictionary in Schedule 2:
  (a) defines capitalised terms used in this agreement; and
  (b) sets out the rules of interpretation that apply to this agreement.
 
2 SALE AND PURCHASE OF THE BUSINESS
2.1 Sale of Business Assets
  The Seller must sell the Business Assets to the Buyer and the Buyer must buy them:
  (a) for the Purchase Price; and
  (b) free of Security Interests.
2.2 Purchase Price
  (a) In consideration for the sale of the Business Assets, the Buyer must pay to the Seller:
    (i) RM76,000 on the first Business Day three months after 11 November 2002, less the total amount of the Prepayments listed in the Statement described in clause 3.1(c);
    (ii) RM76,000 on the first Business Day six months after 11 November 2002;
    (iii) RM76,000 on the first Business Day nine months after 11 November 2002; and
    (iv) RM76,000 on the first Business Day 12 months after 11 November 2002.
  (b) The Buyer must pay interest on any overdue amount, calculated daily at the Interest Rate, from the date payment is due until the date that the Buyer pays in full the relevant overdue amount and any interest accrued on that amount.
2.3 Title and Risk
  All right, title and interest in the Business Assets and risk in the Business Assets passes to the Buyer on the date of this agreement.
 
3 OBLIGATIONS ON THE DATE OF THIS AGREEMENT
3.1 Seller's Obligations
  On the date of this agreement, the Seller must give to the Buyer:
  (a) possession: full and unrestricted possession of all the Business Assets;
  (b) business records: copies of any Business Records reasonably requested by the Buyer and not required to be retained by the Seller under the laws of any relevant jurisdiction, including without limitation:
    (i) a complete and accurate list of all Customers as at 30 October 2002, setting out inter alia, the personal and contact particulars of each Customer as available and set forth in Schedule 4;
    (ii) all original Customer Contracts; and
    (iii) a complete and accurate list of all Receivables;
  (c) Statement: a complete and accurate list of the total actual amount of payments (if any) made by each Customer to the Seller in respect of services to be rendered after the date of this agreement by the Buyer under the relevant Customer Contract (Prepayments);
  (d) approvals: copies of all requisite corporate approvals required for the Seller's entry into this agreement and any agreements in connection with this agreement;
  (e) Master Deed of Assignment: one duly executed original of the Master Deed of Assignment in Schedule 5; and
  (f) Third Party Providers: a list of all the Third Party Providers, including a description of all specific services provided by each Third Party Provider under the Customer Contracts, as available and set forth in Schedule 6.
3.2 Buyer's Obligations
  On the date of this agreement, the Buyer must give to the Seller:
  (a) approvals: copies of all requisite corporate approvals required for the Buyer's entry into this agreement and any agreements in connection with this agreement; and
  (b) Master Deed of Assignment: one duly executed original of the Master Deed of Assignment in Schedule 5.
 
4 CONDUCT AFTER THE DATE OF THIS AGREEMENT
4.1 Right to use Licensed IP Addresses and AS Number
  (a) Subject to the Buyer's compliance with clause 4.1(b), the Seller must for a period of six months after the date of this agreement, reasonably cooperate with the Buyer to allow the Buyer the unrestricted use of those domain names, Licensed IP Addresses and Autonomous System Numbers that relate to the Business (Identifiers) on a non-transferable basis solely for the purpose of providing the services of the Business to the Buyer's existing and future customers in the Territory.
  (b) The Buyer must use the Identifiers lawfully and not in any manner inconsistent with internet protocol network operation and administration best practice and in accordance with any reasonable instruction or direction by the Seller having direct bearing on the Seller's own use of the Identifiers for network administration and operation, including without limitation peering with other networks.
  (c) The Buyer must migrate all the customers and networks of the Business to domain names, Internet Protocol addresses and Autonomous System numbers other than the Identifiers in an orderly manner within the six month period referred to in clause 4.1(a).
  (d) Despite clause 4.1(f) but subject to the Buyer's compliance with clause 4.1(b), for a period of 30 days or such other periods as the parties may mutually agree upon after the end of the Seller's obligation to co-operate under clause 4.1(a), the Seller must provide at the Buyer's request and expense all support that the Buyer may reasonably require to allow the migration of the Business to domain names, Licensed IP Addresses and Autonomous System numbers other than the Identifiers.
  (e) Despite any request of the Buyer, the Seller has no obligation to deploy resources or incur expenses that the Seller would not ordinarily have to deploy or incur unless the Buyer first agrees to pay the Seller's reasonable costs within 30 days after receipt of an invoice from the Seller.
  (f) The Seller's obligation to co-operate under clauses 4.1(a) and (d) ends on the first to occur of:
    (i) the Buyer's failure to comply with its obligations under this clause 4.1;
    (ii) termination of this agreement; or
    (iii) the end of the six month period referred to in clause 4.1(a).
4.2 Adjustments of Purchase Price
  (a) Documentation
    On or before 31 December 2003 where available or when earliest available, the Buyer must deliver to the Seller a statement setting out the Revenue in respect of each calendar month from 1 November 2002 to 30 November 2003, and any other information reasonably required by the Seller in order to determine comprehensively and accurately the Revenue in each of those calendar months.
  (b) The Buyer must use best efforts in accordance with the Buyer's normal debt collection procedures to collect all outstanding amounts arising from invoices issued for services rendered to Customers from 11 November 2002 to 10 November 2003. At the Seller's reasonable request, the Buyer must provide the Seller with documentary evidence that the Buyer had complied with this clause 4.2(b).
  (c) Subject to clause 4.2(e), if 25% of the Revenue for the period from 1 December 2002 to 31 October 2003 inclusive plus 16.67% of the Revenue in November 2002 plus 8.33% of the Revenue in November 2003 (First Adjustment Amount) exceeds RM304,000, such surplus hereinafter known as "Additional Revenue", then on or before 7 January 2004, the Buyer must pay to the Seller the Additional Revenue by electronic transfer in RM and to the bank account nominated by the Seller in writing, or as otherwise instructed by the Seller from time to time.
  (d) Subject to clause 4.2(e), if the First Adjustment Amount is less than RM304,000, such shortfall hereinafter known as "Excess Payment", then on or before 7 January 2004, the Seller must provide or procure its Affiliate to provide to the Buyer the Excess Payment by electronic transfer in RM and to the bank account nominated by the Buyer from time to time.
  (e) Any calculation of the First Adjustment Amount under clauses 4.2(c) and 4.2(d) shall not take into account any Revenue that the Buyer decided not to take up under clause 4.7(b).
  (f) The Seller must pay interest on any overdue amount due to the Buyer under this agreement, calculated daily at the Interest Rate, from the date payment is due until the date that the Seller pays in full the relevant overdue amount and any interest accrued on that amount.
  (g) On 30 April 2004, the Buyer must deliver to the Seller a statement (Second Adjustment Statement) setting out further Revenue arising from all invoices issued for services rendered to Customers under the Customer Contracts in the period from 1 November 2002 until 30 November 2003 inclusive and received by the Buyer in the period from 1 December 2003 until 31 March 2004, and any other information reasonably required by the Seller in order to determine comprehensively and accurately the Revenue in each of those calendar months.
  (h) On 7 May 2004, the Buyer must forward to the Seller 25% of the total amount of Revenue listed in the Second Adjustment Statement in respect of invoices rendered in the period from 1 December 2002 to 31 October 2003 inclusive plus 16.67% of the Revenue listed in the Second Adjustment Statement in respect of invoices rendered in November 2002 plus 8.33% of the Revenue listed in the Second Adjustment Statement in respect of invoices rendered in November 2003, by electronic transfer in RM and to the bank account nominated by the Seller in writing, or as otherwise instructed by the Seller from time to time.
4.3 Seller's Right to Verify Revenue
  (a) The Buyer must maintain complete and accurate books and records in respect of the Revenues of the Business (Accounts) for 20 months after the date of this agreement.
  (b) The Seller may at any time by giving three Business Days written notice to the Buyer, require the Buyer to provide access to the Accounts at the premises of the Buyer during usual business hours on a Business Day, for the purpose of auditing, checking and copying them.
  (c) If the Seller's audit under clause 4.3(b) shows that the Buyer has issued an incorrect statement under clause 4.2(a) or (g), then the Buyer and the Seller must fulfil their obligations under clause 4.2 in accordance with the correct statement, and the Buyer must immediately pay to the Seller the reasonable costs incurred by the Seller in auditing the Buyer's accounts under clause 4.3(b).
  (d) If the Seller and the Buyer cannot agree on the result of the Seller's audit under clause 4.3(b) within 30 days after the date of the audit, then either the Buyer or the Seller may by giving written notice to the other party refer the dispute to compulsory arbitration to be conducted in English in the Republic of Singapore in accordance with the Arbitration Rules of the Singapore International Arbitration Centre in force from time to time.
4.4 Receivables
  (a) The Seller is entitled to the Receivables.
  (b) The Buyer must treat an amount that it receives from a debtor or on account of a debtor of the Business:
    (i) as a payment of a specific Receivable, if it is readily identified with that Receivable;
    (ii) as a payment of a specific debt to the Buyer, if it is readily identified with that debt;
    (iii) if the amount is not readily identified with a Receivable or a debt to the Buyer and is received within 30 days after the Buyer sends an invoice to the debtor and such debtor is not more than 30 days late (60 days after invoice) with its payments, then as payment of the oldest Receivable; or
    (iv) if the amount is not readily identified with a Receivable or a debt to the Buyer and such debtor is more than 30 days late (60 days after invoice) in its payments, as payment of both Receivables and debt owing to the Buyer in the proportion determined in accordance with the ratio of the total amount of Receivables outstanding to the total amount of debt owing to the Buyer as at the date that the payment is received.
4.5 Acknowledgment
  (a) The Buyer and the Guarantor each acknowledges that neither the Seller nor any of its Affiliates, employees or agents has made any representation, warranty or guarantee regarding, or any assessment of the likelihood of:
    (i) the Customer Contracts continuing beyond the date of this agreement; or
    (ii) the revenue generated or to be generated from any of the Customer Contracts after the date of this agreement.
  (b) The Seller's only responsibilities in respect of:
    (i) the transfer of Customer Contracts are set out in clauses 4.1 and 4.6; and
    (ii) Third Party Provider Contracts are set out in clauses 3.1(f) and 4.7.
4.6 Customer Communications
  (a) Within 5 Business Days after the date of this agreement, the Seller and the Buyer must send to each Customer a letter in substantially the form of one of the letters in Schedule 3, as the case may be.
  (b) The Seller must reasonably co-operate with the Buyer to develop and implement an effective strategy (Migration Strategy) for notifying Customers of the transfer of the Customer Contracts to the Buyer and for the migration of the Customers to the Buyer's network and operating systems.
  (c) The Buyer indemnifies the Seller against any claim, loss, liability, cost or expense that the Seller pays or is liable for arising directly from or in respect of any communication between the Buyer and a Customer, other than: (i) the letters in Schedule 3; or (ii) in pursuance of the Migration Strategy.
4.7 Third Party Providers
  (a) Subject to clause 4.7(d), the Seller must retain the Third Party Provider Contracts for the benefit of the Buyer for a period of five months after the date of this agreement.
  (b) Subject to clause 4.7(d), the Buyer must reimburse the Seller for all Third Party Provider fees and charges incurred by the Seller under the Third Party Provider Contracts for fees and charges covering services provided after 11 November 2002, for which the Seller has provided supporting documentation, including without limitation, copies of all invoices from the Third Party Providers, which can be clearly identified as incurred in relation to the provision of services to the Customers under the Customer Contracts, provided always that if any Third Party Provider does not appear in Schedule 6 or if such Third Party Provider appears in Schedule 6 but the specific service provided by such Third Party Provider does not appear in Schedule 6, the Buyer shall not need to reimburse the Seller for the fees and charges of that Third Party Provider which do not appear in Schedule 6 or the fees and charges in relation to that specific service which such Third Party Provider provides, which do not appear in Schedule 6, as the case may be, but the Customer to which that Third Party Provider or that specific service relates will not be assigned to the Buyer so that the Buyer will not receive a share in the Revenue from that Customer. For the avoidance of doubt, save for the aforesaid fees and charges to be reimbursed by the Buyer to the Seller, the Seller shall remain responsible for the due performance of all the Seller's obligations under the Third Party Provider Contracts, including without limitation, the obligation to pay any penalty charges.
  (c) The Buyer indemnifies the Seller against any claim, loss, liability, cost or expense, including without limitation any fee or charge, arising from the Third Party Provider Contracts which is attributable directly to any acts of Customers or the Buyer during the period of five months after the date of this agreement.
  (d) The Buyer may at any time by giving 35 days written notice terminate the obligations of the Seller under clause 4.7(a) and of the Buyer under clause 4.7(b) in respect of a particular Third Party Provider Contract.
  (e) The obligations of the Seller under clause 4.7(a) and of the Buyer under clause 4.7(b) continue in respect of the remaining Third Party Provider Contracts, if any, that the Seller has not terminated under clause 4.7(d).
4.8 No material change in Customer Contracts
  The Buyer must not materially change the terms and conditions of the Customer Contracts from the terms and conditions as at the date of this agreement.
4.9 Payment Procedures
  Each party agrees that notwithstanding anything to the contrary in this agreement, any invoices to be issued to the other party under this agreement and any payments to be made to the other party under this agreement shall be issued or made, as the case may be, in the Territory.
 
5 WARRANTIES
5.1 Seller's Warranties
  (a) The Seller represents and warrants to the Buyer in the Territory that as at the date of this agreement, each of the Seller's Warranties set forth in Schedule 7 is true, subject only to specific qualifications made in the Disclosure Letter.
  (b) The Seller acknowledges that the Buyer has entered into this agreement in reliance on the Seller's Warranties.
  (c) Except for the Seller's Warranties, and to the extent permitted by law, the Seller makes no warranty or representation, express or implied, with respect to the Business, the Business Assets, the Licensed IP Addresses or Autonomous System Numbers, including any warranty of merchantability or fitness for particular purpose, and all such warranties and representations are expressly disclaimed.
  (d) Each of the Seller's Warranties must be construed independently and is not limited by reference to another Seller's Warranty.
5.2 Buyer's Warranties
  (a) The Buyer represents and warrants to the Seller as at the date of this agreement that:
    (i) the Buyer has all Authorisations necessary for the Buyer to own and operate the Business Assets, conduct the Business, and perform all its obligations under this agreement;
    (ii) the execution and delivery of, and the performance by the Buyer of its obligations under, this agreement will not result in a breach of any law, rules, regulations, or ordinances in the Territory;
    (iii) the Buyer has full power and authority to enter into and perform this agreement and this agreement constitutes valid and binding obligations on the Buyer in accordance with its terms;
    (iv) the Buyer has taken all corporate and other action necessary to authorize the execution and performance by it of the transactions contemplated by this agreement and to render this agreement legally valid and binding on and enforceable against it; and
    (v) the execution and delivery of, and the performance by the Buyer of its obligations under, this agreement will not result in a breach of, or constitute a default under any provision of the memorandum or articles of association of, the Buyer or any agreement, contract, document or instrument to which the Buyer is a party or by which the Buyer is bound.
5.3 Acknowledgment of Buyer
  The Buyer and the Guarantor each acknowledges that:
  (a) the Buyer has relied entirely on its own enquiries in relation to its purchase of the Business Assets from the Seller and that no warranties have been made by the Seller or the Seller's officers or advisers other than those referred to in this clause 5; and
  (b) the Buyer has the responsibility, risk and expense of transferring all Customer Contracts, and Customers that are to be transferred under this agreement.
 
6 CONFIDENTIALITY
  A party may not disclose the provisions of this agreement or the terms of sale of the Business Assets to any person except:
  (a) as a media announcement in the form agreed between the Buyer and the Seller;
  (b) in accordance with the rules or requirements of a recognised stock exchange;
  (c) after getting the written consent of the other party;
  (d) to its officers, employees and professional advisers; or
  (e) as required by an applicable law, after first consulting with the other party about the form and content of the disclosure,
  and must use its best endeavours to ensure all permitted disclosures are kept confidential, other than in the case of a media announcement or a disclosure to a recognised stock exchange.
 
7 TAX, COSTS AND EXPENSES
7.1 Tax
  Except to the extent otherwise provided in this agreement, the Buyer must pay any Tax arising from the execution, delivery and performance of this agreement and each agreement or document entered into or signed under this agreement.
7.2 Costs and expenses
  Each party must pay its own costs and expenses of negotiating, preparing, signing, delivering and registering this agreement and any other agreement or document entered into or signed under this agreement.
7.3 Costs of performance
  Each party must bear the costs and expenses of performing its obligations under this agreement, unless otherwise provided in this agreement.
 
8 INDEMNITY
8.1 Buyer's Indemnity
  Unless otherwise stated in this agreement and subject to clause 8.3, the Buyer indemnifies the Seller against any claim, loss, liability, cost or expense that occurs on or after the date of this agreement and arises directly or indirectly from:
  (a) any Buyer's Warranty;
  (b) any breach of the Buyer's obligations under this agreement; or
  (c) the Buyer's conduct of the Business after the date of this agreement, including without limitation any claim made by a Customer.
8.2 Seller's Indemnity
  Unless otherwise stated in this agreement and subject to clause 8.3, the Seller indemnifies the Buyer against any claim, loss, liability, cost or expense that occurs on or after the date of this agreement and arises directly or indirectly from:
  (a) any Seller's Warranty;
  (b) any breach of the Seller's obligations under this agreement; or
  (c) the Seller's conduct of the Business before the date of this agreement, including without limitation any claim made by a Customer.
8.3 Limitation of Liability
  Save and except for the Purchase Price, a party's maximum aggregate liability to the other party under this agreement or in respect of the performance of this agreement is limited to an aggregate amount of RM190,000 provided that nothing in this clause 8.3 limits a party's liability for death or personal injury resulting from that party's negligence.
 
9 GUARANTEE AND INDEMNITY
9.1 Guarantee
  (a) The Guarantor unconditionally and irrevocably guarantees to the Seller the performance of the Buyer's obligations to pay the Purchase Price under clause 2.2, as adjusted under clause 4.2, and to reimburse the Seller under clause 4.7(b).
  (b) Without limiting the Guarantor's obligations under clause 9.1(a), if the Buyer does not pay part or the whole of the Purchase Price when due under clause 2.2, or as adjusted under clause 4.2, the Guarantor must immediately on demand from the Seller pay the outstanding amount of the Purchase Price, including any interest accruing under clause 2.2(b) or 4.2(f), to the Seller.
  (c) Without limiting the Guarantor's obligations under clause 9.1(a) or (b), if the Buyer fails to perform any of its obligations under clause 2.2(b) or 4.7(b) in full and on time, the Guarantor must immediately on demand by the Seller ensure that those obligations are performed in full.
9.2 Indemnity
  (a) If any part of the Guaranteed Money is or becomes irrecoverable or unenforceable for any reason, the Guarantor must immediately, unconditionally and irrevocably pay to the Seller an amount equal to the amount of the claim, loss, liability, cost or expense in relation to the failure of the Buyer to pay the Guaranteed Money.
  (b) The Guarantor indemnifies the Seller against any claim, loss, liability, cost or expense that the Seller pays or is liable for in relation to the failure of the Buyer to perform an obligation under this agreement, any indemnity given by the Buyer under this agreement, any failure to pay any part of the Guaranteed Money (including if that amount is or becomes irrecoverable or unenforceable for any reason), or any failure of the Guarantor to cause the Buyer to perform an obligation under this agreement. The limit of liability arising under this indemnity in clause 9.2(b) shall not exceed RM190,000. For the avoidance of doubt, this limit of liability does not apply to the Guaranteed Money.
9.3 Extent of guarantee and indemnity
  Clauses 9.1 and 9.2 apply and the obligations of the Guarantor remain unaffected despite:
  (a) an increase in the amount of the Guaranteed Money;
  (b) an amendment to this agreement;
  (c) a rule of law to the contrary, save that if the Guarantor complying with this Guarantee causes the Guarantor to breach a rule of law, it shall not be required to do so;
  (d) an Insolvency Event affecting any person, or the death of any person; or
  (e) the occurrence of any other thing that might otherwise release, discharge or otherwise affect the obligations of the Guarantor under this agreement.
9.4 Continuing guarantee and indemnity
  (a) This clause 9 is a continuing obligation of the Guarantor, despite a settlement of account or the occurrence of any other thing, and remains fully effective until the Guaranteed Money has been paid in full.
 
10 GENERAL
10.1 Notices
  (a) A notice or other communication given under this agreement including, but not limited to, a request, demand, consent or approval, to or by a party to this agreement:
    (i) must be in legible writing and in English;
    (ii) must be addressed to the addressee at the address or facsimile number set out below or to any other address or facsimile number a party notifies to the others under this clause:
     

A. if to the Seller:
Address: 18th Floor, Telecom House,
3 Gloucester Road, Wan Chai,
HONG KONG
Attention: Mr Jerry Koleth
Facsimile: +852 - 2962 5881

B. if to the Buyer:
Address: 89 Science Park Drive,
#02-05/06 The Rutherford,
SINGAPORE 118261
Attention: Mr David Seng
Facsimile: +65-6774 1677
    (iii) must be signed by an authorized officer of the sender; and
    (iv) is deemed to be received by the addressee in accordance with clause 10.1(b).
  (b) Without limiting any other means by which a party may be able to prove that a notice has been received by another party, a notice is deemed to be received:
    (i) if sent by hand, when delivered to the addressee;
    (ii) if by post, 3 Business Days after and including the date of postage; or
    (iii) if by facsimile transmission, on receipt by the sender of an acknowledgment or transmission report generated by the machine from which the facsimile was sent,
      but if the delivery or receipt is on a day which is not a Business Day or is after 4.00 pm (addressee's time) it is deemed to be received at 9.00 am on the following Business Day.
  (c) A facsimile transmission is regarded as legible unless the addressee telephones the sender within 2 hours after the transmission is received or regarded as received under clause 10.1(b)(iii) and informs the sender that it is not legible.
  (d) In this clause 10.1, a reference to an addressee includes a reference to an addressee's officers, agents or authorised representatives.
10.2 Governing law
  (a) This agreement is governed by the laws of the Territory.
  (b) Each party irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of the Territory.
10.3 Exercise of rights
  A party may exercise a right, power or remedy at its discretion, and separately or concurrently with another right, power or remedy. A single or partial exercise of a right, power or remedy by a party does not prevent a further exercise of that or of any other right, power or remedy.
10.4 Legal advice and allocation of risk
  Each party acknowledges that it has received legal advice or had the opportunity to receive legal advice about this agreement. The parties acknowledge that the allocation of risks and liabilities in this agreement reflects their intentions and is a fair and proper commercial bargain.
10.5 Invalidity
  (a) If a provision of this agreement or a right or remedy of a party under this agreement is invalid or unenforceable in a particular jurisdiction:
    (i) it is read down or severed in that jurisdiction only to the extent of the invalidity or unenforceability; and
    (ii) it does not affect the validity or enforceability of that provision in another jurisdiction or the remaining provisions in any jurisdiction.
  (b) This clause 10.5 is not limited by any other provision of this agreement in relation to severability, prohibition or enforceability.
10.6 Waiver and variation
  A provision or a right under this agreement may not be waived except in writing signed by the party granting the waiver, or varied except in writing signed by the parties.
10.7 Cumulative rights
  The rights and remedies of a party under this agreement do not exclude any other right or remedy provided by law.
10.8 Non-merger
  The conditions, provisions and Warranties in this agreement do not merge or terminate.
10.9 Further assurances
  Each party must do all things necessary to give full effect to this agreement and the transactions contemplated by this agreement.
10.10 Entire agreement
  This agreement and the Master Services Agreement constitute the entire agreement of the parties about its subject matter and supersedes any previous understandings or agreements on that subject matter.
10.11 Third party rights
  (a) The Seller has entered into this agreement for its own benefit and for the benefit of Reach Global Services Limited, and the Buyer and the Guarantor each acknowledges that Reach Global Services Limited can enforce any of the Seller's rights under this agreement, including without limitation under the guarantee in clause 9.
  (b) Subject to clause 10.11(a), only the parties have or are intended to have a right or remedy under this agreement or obtain a benefit under it.
10.12 Assignment
  (a) Either party may at any time assign this agreement, or transfer the benefit of this agreement or a right or remedy under it, to any of its Affiliates.
  (b) Subject to clause 10.12(a), a party may not assign this agreement or otherwise transfer the benefit of this agreement or a right or remedy under it, without the other party's prior written consent.
10.13 Counterparts
  This agreement may be signed in any number of counterparts and all those counterparts together make one instrument.

SIGNED as an agreement.

DATE 11 Nov 2002

Signed by REACH INTERNET
SERVICES (MSC) SDN BHD:		    

 

/s/ Sean Brennan

  

 

/s/ Raja P Kanthan
Signature of witness   Signature of Authorised Representative

 

Sean Brennan

  

 

Raja P Kanthan
Name of witness (print)   Name of Authorised Representative(print)
     
Signed by PACIFIC INTERNET
(MALAYSIA) SDN BHD:		    

 

/s/ Loh Pao Yen

  

 

/s/ Lim Hock Koon
Signature of witness   Signature of Authorised Representative

 

Loh Pao Yen

  

 

Lim Hock Koon
Name of witness (print)   Name of Authorised Representative(print)
     
DATE 11 Nov 2002    
     
Signed by PACIFIC INTERNET LIMITED:    

 

/s/ Loh Pao Yen

  

 

/s/ Tan Tong Hai
Signature of witness   Signature of Authorised Representative

 

Loh Pao Yen

  

 

Tan Tong Hai
Name of witness (print)   Name of Authorised Representative(print)

 

DATE 11 Nov 2002

    

SCHEDULE 1
BUSINESS ASSETS AND EXCLUDED ASSETS
 

PART 1 - BUSINESS ASSETS

 
Business Assets
 
A. Customer Contracts;
B. The equipment of the Business owned by the Seller and located in the premises of the Customers, including without limitation routers.
 
PART 2 - EXCLUDED ASSETS
D. Cash, including, but not limited to, funds held with a bank or financial institution to the credit of the Seller and cash on hand as at the Date of Completion;
E. the Receivables; and
F. any other debts owed to Seller.

SCHEDULE 2

DICTIONARY
 
1 In this agreement:
 
Affiliate of a party means an entity that directly or indirectly controls, is controlled by, or is under common control with, that party and in the case of the Seller, also includes Reach Communications Services (Thailand) Limited, TeleWeb Networks (India) Pvt Ltd, Reach Networks (Philippines) Inc., and Taihan Reach Limited.
 
Authorisation includes:
  (a) a consent, registration, filing, agreement, notice of non?objection, notarisation, certificate, licence, approval, permit, authority or exemption from, by or with a Government Agency; and
  (b) in relation to anything which a Government Agency may prohibit or restrict within a specific period, the expiry of that period without intervention or action.
 

Business means the business of the operation of a retail Internet Service Provider providing access services to the Customers and carried on by the Seller in the Territory.

Business Assets means the assets used in or forming part of the Business as listed in Part 1 of Schedule 1, but excludes the Excluded Assets listed in Part 2 of Schedule 1.

Business Records means in relation to the Business:
  (a) supplier lists;
  (b) computer programmes, data bases, software and negatives;
  (c) originals or copies of ledgers, journals and books of account; and
  (d) all other documents and records about the Business or the Business Assets.
 

Business Day means a day on which banks are open for business in a place where any action is to be performed and in the event of any payment to be made or notice to be given between two places, then in each case in the place of receipt.

Buyer's Warranties means the Buyer's representations and warranties set out in clause 5.2.
Customer means a person who has subscribed for services from the Seller under the Business as at the date of this agreement.

Customer Contract means each of the written and unwritten agreements with a Customer in the list provided by the Seller under clause 3.1(b)(i), specifying the terms and conditions, including the price, for the provision of services to the Customer under the Business.

Disclosure Letter means the letter from the Seller dated the date of this agreement, delivered to the Buyer before the signing of this agreement and containing disclosures about the Seller's Warranties.

Excluded Records means those Business Records that the Seller is required by law to retain.

Government Agency means a government or governmental, semi?governmental, administrative, fiscal or judicial body, department, commission, authority, tribunal, agency or entity whether foreign, federal, state, territorial or local.

Guaranteed Money means all monetary liabilities of the Buyer to the Seller under or in relation to the obligation:
  (a) to pay the Purchase Price under clause 2.2, as adjusted under clause 4.2; and
  (b) to reimburse the Seller under clause 4.7(b).

Identifiers means the domain names, Licensed IP Addresses and Autonomous System numbers that relate to the Business.

Insolvency Event means the occurrence of any one or more of the following events in relation to any person:
  (a) a liquidator or provisional liquidator is appointed;
  (b) an administrator is appointed to any of its assets;
  (c) it enters into an arrangement or composition with one or more of its creditors, or an assignment for the benefit of one or more of its creditors;
  (d) it is insolvent as disclosed in its accounts, or otherwise states that it is insolvent, or it is presumed to be insolvent under an applicable law;
  (e) it is taken to have failed to comply with a statutory demand as a result of legislation relating to insolvency in the Territory;
  (f) it ceases to carry on business or threatens to do so; or
  (g) anything occurs under the law of any jurisdiction that has a substantially similar effect to any of the above paragraphs of this definition.
 
Interest Rate means the Kuala Lumpur Inter-Bank Offer Rate (KLIBOR) for one month set by Malayan Banking Berhad for loans made in the Territory, plus 2 percent.

Licensed IP Addresses means the Internet Protocol address blocks used in the Business.

Master Deed of Assignment means the master deed of assignment in Schedule 5.

Purchase Price means the amount payable by the Buyer under clause 2.2, as adjusted under clause 4.2.

Receivable means any amount payable under a Customer Contract in respect of the services rendered for the period before 11 November 2002 that is unpaid as at the date of this agreement.

Revenue means such fees and charges invoiced to each Customer under the Customer Contract and collected from such Customer.

RM means the lawful currency of Malaysia.

Security Interest means a right, interest, power or arrangement in relation to an asset that provides security for the payment or satisfaction of a debt, obligation or liability including without limitation under a bill of sale, mortgage, charge, lien, pledge, trust, power, deposit, hypothecation or arrangement for retention of title, and includes an agreement to grant or create any of those things.

Seller's Warranties means the representations and warranties set out in Schedule 7.

Tax means a tax, levy, charge, impost, fee, deduction, withholding or duty of any nature, including, without limitation, stamp and transaction duty or any goods and services tax, value added tax or consumption tax, which is imposed or collected by a Government Agency except where the context requires otherwise. This includes, but is not limited to, any interest, fine, penalty, charge, fee or other amount imposed in addition to those amounts.

Territory means Malaysia.

Third Party Provider means each of the telecommunications providers providing circuits between premises of customers and premises of the Business.

Third Party Provider Contract means each contract between the Seller and a Third Party Provider relating solely to the service provided to a Customer under the Customer Contract.
 
2 Interpretation
  (a) In this agreement unless the context otherwise requires:
    (i) words importing the singular include the plural and vice versa;
    (ii) words that are gender neutral or gender specific include each gender;
    (iii) other parts of speech and grammatical forms of a word or phrase defined in this agreement have a corresponding meaning;
    (iv) an expression importing a natural person includes a company, partnership, joint venture, association, corporation or other body corporate and a Government Agency;
    (v) a reference to a thing (including, but not limited to, a chose-in-action or other right) includes a part of that thing;
    (vi) a reference to a clause, party, schedule or attachment is a reference to a clause of this agreement, and a party, schedule or attachment to, this agreement and a reference to this agreement includes a schedule and attachment to this agreement;
    (vii) a reference to this agreement includes this dictionary;
    (viii) a reference to a law includes a constitutional provision, treaty, decree, convention, statute, regulation, ordinance, by?law judgment, rule of common law or equity or a rule of an applicable stock exchange and is a reference to that law as amended, consolidated or replaced;
    (ix) a reference to a document includes all amendments or supplements to that document, or replacements or novations of it;
    (x) a reference to a party to a document includes that party's successors and permitted assigns; and
    (xi) a reference to an agreement, other than this agreement, includes an undertaking, deed, agreement or legally enforceable arrangement or understanding, whether or not in writing.
  (b) If the day on or by which something must be done is not a Business Day, that thing must be done on or by the preceding Business Day.
  (c) Headings are for convenience only and do not affect the interpretation of this agreement.
  (d) This agreement may not be construed adversely to a party only because that party prepared this agreement.

SCHEDULE 3

CUSTOMER LETTERS

CLAUSE 4.6

Reach Internet Service (MSC) Sdn Bhd
 

[insert customer name]

Dear [name]

In order to align its business with changing market conditions, REACH has recently revised its business strategy from having a strong wholesale focus with some retail business to having an exclusive wholesale focus. We believe that, in this way, our wholesale customers (other carriers and service providers) will be better able to serve their end customers at the retail level.

As a result of that changed strategy, REACH's ISP business in Malaysia has been acquired by Pacific Internet. This means that the Internet access services provided by REACH will now be provided by Pacific Internet.

REACH values its customers and is keen to ensure they are not disadvantaged as a result of its withdrawal from the retail market. Accordingly, Pacific Internet will continue to provide the Internet access services in accordance with the customer terms and conditions signed between you and REACH, including the price of the services. Additionally, Pacific Internet has committed to taking over all REACH's existing Internet access customer accounts in Malaysia, including your account.

If you are happy to continue to take the Internet service from Pacific Internet, you need do nothing - your continued use of the Internet service after 9 December 2002 will be deemed to be acceptance of the transfer (novation) of your customer contract to Pacific Internet. The transfer will result in Pacific Internet assuming all of REACH's rights and obligations and Pacific Internet will have legal responsibility for the provision of the service to you. The transfer will be deemed to take effect from 11 November 2002, and as from that date you should direct any comments or queries you may have regarding the service to [insert title and contact details of contact person for Pacific Internet].

However, if you do not wish to take the Internet service from Pacific Internet, you can cancel your contract by giving us written notice on or before 9 December 2002. You have been a valued customer of REACH and there will be no early termination or cancellation payments applied to cancellation of this contract if that is your choice.

I trust the above is clear but, if you have any questions or require further clarification, I invite you to please call your Service Manager, Kenny Chin on (03) 7490 1186 or 7490 0555. Your Service Manager will work with you to help ensure a smooth transition to Pacific Internet or your new service provider, whichever course of action you decide to take.

Thank you for allowing us to be of service to you.

Yours faithfully


Syed Najib
Country Head

 

Reach Internet Service (MSC) Sdn Bhd
 

[insert Reseller name]

Dear [name]

In order to align its business with changing market conditions, REACH has recently revised its business strategy from having a strong wholesale focus with some retail business to having an exclusive wholesale focus. We believe that, in this way, our wholesale customers (other carriers and service providers) will be better able to serve their end customers at the retail level.

As a result of that changed strategy, REACH's ISP business in Malaysia has been acquired by Pacific Internet. This means that the Internet access services provided by REACH will now be provided by Pacific Internet Limited, the leading ISP in Asia-Pacific. We have chosen to work with Pacific Internet because of their excellent service level and reliability.

REACH values its resellers and is keen to ensure they are not disadvantaged as a result of its withdrawal from the retail market. Accordingly, Pacific Internet will continue to provide the Internet access services in accordance with the reseller's terms and conditions signed between you and REACH, including the price of the services. Additionally, Pacific Internet has committed to taking over all REACH's existing Internet access customer accounts in Malaysia, including your account.

If you are happy to continue to take the Internet service from Pacific Internet, you need do nothing - your continued effort in reselling the services after 9 December 2002 will be deemed to be acceptance of the transfer (novation) of your reseller contract to Pacific Internet. The transfer will result in Pacific Internet assuming all of REACH's rights and obligations and Pacific Internet will have legal responsibility for the provision of the service to you. The transfer will be deemed to take effect from 11 November 2002, and as from that date you should direct any comments or queries you may have regarding the service to [insert title and contact details of contact person for Pacific Internet].

However, if you do not wish to resell the Internet service from Pacific Internet, you can cancel your reseller contract by giving us 30 days written notice on or before 9 December 2002. You have been a valued reseller of REACH and we appreciated your contribution and effort in our partnership. There will be no early termination or cancellation payments applied to cancellation of this contract if that is your choice.

I trust the above is clear but, if you have any questions or require further clarification, I invite you to please call your Service Manager, Kenny Chin on (03) 7490 1186 or 7490 0555. Your Service Manager will work with you to help ensure a smooth transition to Pacific Internet or your new service provider, whichever course of action you decide to take.

Thank you for allowing us to be of service to you.

Yours faithfully



Syed Najib
Country Head

SCHEDULE 4

CUSTOMER LIST AS AT 30 OCTOBER 2002

CLAUSE 3.1(b)

 
 

SCHEDULE 5

MASTER DEED OF ASSIGNMENT

 
THIS MASTER DEED OF ASSIGNMENT is made the         day of          2002
 
BETWEEN:
 
1 Reach Internet Services (MSC) Sdn Bhd of Level 49, Tower 2, Petronas Twin Tower, Kuala Lumpur City Centre, 50088, Kuala Lumpur, Malaysia (Assignor); and
2 Pacific Internet (Malaysia) Sdn Bhd of [insert address], Malaysia (Assignee)

 

(hereinafter, each of the Assignor and the Assignee shall be individually referred to as a "Party" and collectively referred to as the "Parties").
 
WHEREAS:
 
A. By a sale and purchase of business agreement dated ____ 2002 and made between the parties hereto (the "Sale of Business Agreement"), it was agreed, inter alia, that the Assignor shall transfer the Business Assets (as defined in the Sale of Business Agreement) to the Assignee on terms and conditions as stated in the Sale of Business Agreement.
B. This Deed is made pursuant to the Sale of Business Agreement.
 
NOW IT IS HEREBY AGREED AS FOLLOWS:
1 Pursuant to the Sale of Business Agreement, the Assignor as legal and beneficial owner assigns to the Assignee absolutely all its rights title and interest in all the Business Assets with effect from the date of signing of the Sale of Business Agreement.
2 Unless the context otherwise requires, any term used in this Deed which is defined in the Sale of Business Agreement and is not specifically defined in this Deed shall have the meaning attributed to it in the Sale of Business Agreement.
3 This Deed shall be binding on and shall enure for the benefit of each Party's successors and assigns and personal representatives (as the case may be).
4 This Deed shall not be altered, changed or supplemented unless the same is made in writing and signed by the Parties hereto.
5 This Deed shall be governed by and construed in accordance with the laws of Malaysia and the Parties agree to submit to the non-exclusive jurisdiction of the courts of Malaysia.
 

IN WITNESS WHEREOF this Deed has been executed as a Deed on the day and year first abovewritten.

The Common Seal of
Reach Internet Services (MSC) Sdn Bhd  
was hereunto affixed
in the presence of:-

Director

Director/Secretary

 )
)
)
)		  
     
     
The Common Seal of
Pacific Internet (Malaysia) Sdn Bhd
was hereunto affixed
in the presence of:-

Director

Director/Secretary

 )
)
)
)		  
     

SCHEDULE 6

LIST OF ALL THIRD PARTY PROVIDERS AND ALL SPECIFIC SERVICES PROVIDED BY THEM


CLAUSE 3.1(f)

 
Local loop cost Telekom Malaysia Berhad
ISDN cost Telekom Malaysia Berhad
PSTN cost Telekom Malaysia Berhad
Channelised E1 local loop cost Telekom Malaysia Berhad
Domestic IP Transit Maxis Broadband Sdn Bhd & Maxis Collections Sdn Bhd

SCHEDULE 7

SELLER'S WARRANTIES
 
1 THE SELLER
1.1 The Seller:
  (a) is duly incorporated and validly exists under the law of its place of incorporation;
  (b) has full corporate power and authority to own the Business Assets; and
  (c) is able to pay its debts as and when they fall due.
1.2 No Insolvency Event has affected or is likely, in the knowledge of the Seller, to affect the Seller.
 
2 DUE AUTHORISATION
2.1 The execution and delivery of this agreement has been properly authorised by all necessary corporate action of the Seller and the Seller has full corporate power and lawful authority to execute and deliver this agreement and to consummate and perform or cause to be performed its obligations under this agreement and all other documents required hereunder to be executed.
2.2 This agreement and all other documents required hereunder to be executed constitute legal, valid and binding obligations of the Seller enforceable in accordance with its terms by appropriate legal remedy and/or equitable remedy.
2.3 The Seller has obtained and maintained all necessary or desirable licences (including statutory licences) and consents, permits or authorisations required for the proper carrying on of the Business in all its aspects.
 
3 ACCURACY OF INFORMATION
3.1 To the best of the Seller's knowledge, all of the information provided to the Buyer by the Seller prior to execution of this agreement and at the time of execution of this agreement is true and accurate in all material respects.
3.2 So far as the Seller is aware, all of the facts set out in the recitals and in each of the schedules are true and accurate in all material respects.
 
4 BUSINESS AND BUSINESS ASSETS
4.1 The Seller:
  (a) is the legal and beneficial owner of the Business Assets (save for equipment) free from any Security Interest;
  (b) has good and marketable title to the Business Assets (save for equipment) free from any Security Interest; and
  (c) has not entered into an agreement or other arrangement to give or create any Security Interest over the Business Assets (save for equipment) and no claim has been made by any person to be entitled to any interest of that kind.
4.2 To the best of the Seller's knowledge, the Business is conducted and the Business Assets are used in accordance with all applicable laws. The conduct of the Business and the use of the Business Assets in the Business by the Seller do not contravene any laws and no allegation of any contravention of any applicable laws is known to the Seller.
4.3 To the best of the Seller's knowledge, no notice has been served on the Seller by any government authority or agency which might materially impair, prevent or otherwise interfere with the Buyer's use of, or proprietary rights in, any of the Business Assets.
 
5 CUSTOMER CONTRACTS
5.1 To the best of the Seller's knowledge, each of the Customer Contracts is valid, binding and enforceable against the parties to it except that the Seller makes no warranty as to whether all Customer Contracts can be produced.
5.2 To the best of the Seller's knowledge, none of the Customer Contracts contain any onerous, unusual or other provision material for disclosure to a prudent intending Buyer of the Business Assets.
5.3 To the best of the Seller's knowledge, the Seller has not made any offers, tenders or quotations which are still outstanding and capable of giving rise to a contract by the unilateral act of a third party which would adversely affect the Buyer.
5.4 To the best of the Seller's knowledge, the Seller has not entered into any arrangements, discussions or unwritten agreements with any Customer or given any waivers to any Customer which:
  (a) may adversely affect the performance of the Customer Contracts; or
  (b) has modified, varied or amended any terms and conditions of the Customer Contracts.
5.5 The Customer Contracts are capable of being assigned and transferred from the Seller to the Buyer and in the event that consent is required from any Customers, the Seller shall use best endeavours to procure the same.
 
6 LITIGATION
6.1 Except for debt collection proceedings in the ordinary course of the Business, the Seller is not involved in any litigation or arbitration proceedings relating to the Business or Business Assets and so far as the Seller is aware, there are no facts likely to give rise to any such proceedings.
6.2 No claim has been made against the Seller for an amount exceeding RM37,950 in connection with any defective product or services supplied by it in the course of carrying on the Business.
6.3 The operations of the Business are not subject to any unsatisfied judgment or any order, award or decision handed down in any litigation or arbitration proceedings.

EXHIBIT 4.106

Confidential

MASTER SERVICES AGREEMENT

DATE 11 November 2002

PARTIES
 
1 Reach Global Services Limited, a company incorporated in Hong Kong and having its registered office at 18th Floor, Telecom House, 3 Gloucester Road, Wan Chai, HONG KONG (REACH)
2 Pacific Internet Limited, a company incorporated in Singapore and having its registered office at 89 Science Park Drive #02-05/06 The Rutherford, SINGAPORE 118261 (Buyer)
 
BACKGROUND
 
A. Reach Internet Services Pte Ltd and the Buyer have entered into an agreement for the sale and purchase of an ISP business in Singapore (Singapore Agreement). Reach Communications Services (Thailand) Limited and World Net & Services Co., Ltd (PacNet-TH) have entered into an agreement for the sale and purchase of an ISP business in Thailand (Thailand Agreement). Reach Internet Services (MSC) Sdn Bhd and Pacific Internet (Malaysia) Sdn. Bhd. (PacNet-MY) have entered into an agreement for the sale and purchase of an ISP business in Malaysia (Malaysia Agreement). The Buyer is the guarantor under the Malaysia Agreement and the Thailand Agreement.
B. The Buyers Group wishes to acquire wholesale bandwidth services from the Service Providers in order to operate the Singapore Business, the Thailand Business, the Malaysia Business, and any other business operated by a Buyer Affiliate from time to time.
C. This agreement sets out the terms and conditions on which REACH will provide and procure each Service Provider to provide to the relevant Buyer Affiliate, and the Buyer will acquire and procure each Buyer Affiliate to acquire from the relevant Service Provider, wholesale bandwidth services from time to time.
 
In consideration for the mutual promises contained in this agreement,
 
THE PARTIES AGREE
 
1 ACQUISITION AND PROVISION OF BANDWIDTH SERVICES
  (a) The Buyer must ensure that the Buyers Group acquires wholesale bandwidth services from the Service Providers such that:
    (i) the total volume of data acquired requires interconnection at a capacity of at least 720 Mbps, such aggregate volume to be achieved by periodic acquisitions over a two year period commencing from the date of this agreement; and
    (ii) each contract for the acquisition of wholesale bandwidth services is for a term of at least 12 months, (Minimum Commitment).
  (b) Save as expressly provided herein to the contrary, REACH must ensure that each Service Provider provides and the Buyer must ensure that each Buyer Affiliate acquires the wholesale bandwidth services referred to in clause 1(a) in accordance with the GIA Service Terms (incorporating the REACH General Terms) in Attachment 1.
  (c) For the avoidance of doubt, REACH and the Buyer acknowledge that:
    (i) any Buyer Affiliate may acquire wholesale bandwidth services from any Service Provider nominated by REACH to provide those services to that Buyer Affiliate;
    (ii) the Buyers Group may acquire any quantity of wholesale bandwidth services per month from the Service Providers, as long as the aggregate volume of wholesale bandwidth services acquired by the Buyers Group within the two year period from the date of this agreement is at least 720 Mbps; and
    (iii) each and every contract for the acquisition of wholesale bandwidth services in any quantity by the Buyer or any Buyer Affiliate from any Service Provider for a term of at least 12 months, entered into within two years after the date of this agreement, constitutes part of the Minimum Commitment, including without limitation, any contract entered into before the date of this agreement for the provision of wholesale bandwidth services after the date of this agreement.
 
2 MARKET PRICE AND MODE OF PAYMENT
  (a) Subject to clauses 2(b) and 2(c), the price for the wholesale bandwidth services acquired by the Buyers Group from the Service Providers under clause 1 is calculated as follows:
    (i) at the time of entering a contract with a Service Provider, the Buyer or the relevant Buyer Affiliate must obtain three quotes from established Tier 1 alternative service providers who are independent from the Buyer, such as without limitation, SingTel, WorldCom, Asia Global Crossing, AT&T, Sprint, Qwest, Teleglobe and Telstra, based on equivalent capacity and substantially similar quality and service level standards as that to be provided under the contract by that Service Provider; and
    (ii) the price on an after tax basis for the wholesale bandwidth services contract between the Buyer or that Buyer Affiliate and that Service Provider is the lowest of the three quotes on an after tax basis referred to in clause 2(a)(i) unless clause 2(d)(ii) applies, wherein this clause 2(a)(ii) shall be replaced by clause 2(d)(ii)(A).
  (b) If the Buyer or the Buyer Affiliate referred to in clause 2(a)(i) has used its best endeavours to obtain the three quotes required under clause 2(a)(i), but has been unable to do so, then notwithstanding clause 2(a) and subject to clause 2(c), the price for the wholesale bandwidth services acquired under clause 1 is calculated as follows:
    (i) at the time of entering a contract with a Service Provider, the Buyer or the relevant Buyer Affiliate must obtain two quotes from established Tier 1 alternative service providers who are independent from the Buyer, such as without limitation, SingTel, WorldCom, Asia Global Crossing, AT&T, Sprint, Qwest, Teleglobe and Telstra, based on equivalent capacity and substantially similar quality and service level standards as that to be provided under the contract by that Service Provider; and
    (ii) the price on an after tax basis for the wholesale bandwidth services contract between the Buyer or that Buyer Affiliate and that Service Provider is the lower of the two quotes on an after tax basis referred to in clause 2(b)(i) unless clause 2(d)(ii) applies, wherein this clause 2(b)(ii) shall be replaced by clause 2(d)(ii)(B).
  (c) If the Buyer or the Buyer Affiliate referred to in clause 2(a)(i) has used its best endeavours to obtain the three quotes required under clause 2(a)(i) and the two quotes required under clause 2(b)(i), but has been unable to do so, then notwithstanding clauses 2(a) and 2(b), the price for the wholesale bandwidth services acquired under clause 1 is calculated as follows:
    (i) at the time of entering a contract with a Service Provider, the Buyer or the relevant Buyer Affiliate must obtain one quote from established Tier 1 alternative service providers who are independent from the Buyer, such as without limitation, SingTel, WorldCom, Asia Global Crossing, AT&T, Sprint, Qwest, Teleglobe and Telstra, based on equivalent capacity and substantially similar quality and service level standards as that to be provided under the contract by that Service Provider; and
    (ii) the price on an after tax basis for the wholesale bandwidth services contract between the Buyer or that Buyer Affiliate and that Service Provider is the same as that quote on an after tax basis referred to in clause 2(c)(i) unless clause 2(d)(ii) applies, wherein this clause 2(c)(ii) shall be replaced by clause 2(d)(ii)(C).
  (d) Contracting Parties
    The parties agree as follows:
    (i) notwithstanding anything herein to the contrary, in the event that the Service Providers and the Buyers Group have operating entities incorporated in the territory in which the wholesale bandwidth services is to be provided, Reach shall nominate the relevant operating entity within the Service Providers which is incorporated in that territory and the Buyer shall nominate the relevant operating entity within the Buyer's Group which is incorporated in that territory to enter into an agreement for the purchase of the wholesale bandwidth services and all invoices to be issued and all payments to be made pursuant to any such purchase shall be issued and made, as the case may be, in the territory in which the wholesale bandwidth services is to be provided;
    (ii) notwithstanding anything herein to the contrary, in the event that Reach or its Affiliates is not incorporated in the territory in which the wholesale bandwidth services is to be provided, clauses 2(a)(ii), 2(b)(ii) and 2(c)(ii) shall be replaced by clauses 2(d)(ii)A, 2(d)(ii)B and 2(d)(ii)C respectively. Except that if this Clause 2(d)(ii) applies, the Seller shall be entitled to reject the order and it shall not count towards the Minimum Commitment:
    A. the price for the wholesale bandwidth services to be subscribed for by the Buyer or that Buyer Affiliate from that Service Provider, when aggregated together with all applicable taxes, including all sums to be paid by the Buyer or that Buyer Affiliate under clause 5.1, which the Buyer or that Buyer Affiliate is required to pay in connection with the wholesale bandwidth services to be purchased ("Buyer's Taxes"), shall be equivalent to the lowest of the three quotes referred to in clause 2(a)(i) after aggregating all applicable taxes payable by the Buyer or that Buyer Affiliate in connection with that quote; or
    B. the price for the wholesale bandwidth services to be subscribed for by the Buyer or that Buyer Affiliate from that Service Provider, when aggregated together with the Buyer's Taxes, shall be equivalent to the lower of the two quotes after aggregating all applicable taxes payable by the Buyer or that Buyer Affiliate in connection with that quote; or
    C. the price for the wholesale bandwidth services to be subscribed for by the Buyer or that Buyer Affiliate from that Service Provider, when aggregated together with the Buyer's Taxes, shall be equivalent to that quote after aggregating all applicable taxes payable by the Buyer or that Buyer Affiliate in connection with that quote.
  (e) Subject to clause 2(d), the price for the wholesale bandwidth services acquired by the Buyers Group from the Service Providers under clause 1 must be paid in accordance with and the provision of the service will be in accordance with the GIA Service Terms (incorporating REACH General Terms) in Attachment 1.
 
3 WARRANTIES
3.1 REACH Warranty
  REACH represents and warrants to the Buyer that each Service Provider is an Affiliate of REACH and REACH is able to procure each Service Provider to be bound by the obligations of REACH in this agreement.
3.2 Buyer Warranty
  The Buyer represents and warrants to REACH that each Buyer Affiliate is an Affiliate of the Buyer and the Buyer is able to procure each Buyer Affiliate to be bound by the obligations of the Buyer in this agreement.
 
4 CONFIDENTIALITY
  A party may not disclose the provisions of this agreement or the terms of the provision of services to any person except:
  (a) as a media announcement in the form agreed between REACH and the Buyer;
  (b) in accordance with the rules or requirements of a recognised stock exchange;
  (c) after getting the written consent of the other parties;
  (d) to its officers, employees and professional advisers; or
  (e) as required by an applicable law, after first consulting with the other parties about the form and content of the disclosure,
  and must use its best endeavours to ensure all permitted disclosures are kept confidential, other than in the case of a media announcement or a disclosure to a recognised stock exchange.
 
5 TAX, COSTS AND EXPENSES
5.1 Tax
  Except to the extent otherwise provided in this agreement, the Buyer must pay any Tax arising from the execution, delivery and performance of this agreement and each agreement or document entered into or signed under this agreement.
5.2 Costs and expenses
  Each party must pay its own costs and expenses of negotiating, preparing, signing, delivering and registering this agreement and any other agreement or document entered into or signed under this agreement.
5.3 Costs of performance
  Each party must bear the costs and expenses of performing its obligations under this agreement, unless otherwise provided in this agreement.
 
6 GENERAL
6.1 Notices
  (a) A notice or other communication given under this agreement including, but not limited to, a request, demand, consent or approval, to or by a party to this agreement:
    (i) must be in legible writing and in English;
    (ii) must be addressed to the addressee at the address or facsimile number set out below or to any other address or facsimile number a party notifies to the others under this clause:
     

A. if to the Buyers Group:
Address: 89 Science Park Drive,
#02-05/06 The Rutherford,
SINGAPORE 118261
Attention: Mr David Seng
Facsimile: +65-6774 1677

B. if to REACH:
Address: 18th Floor, Telecom House,
3 Gloucester Road, Wan Chai,
HONG KONG
Attention: Mr Jerry Koleth
Facsimile: +852- 2962 5881
    (iii) must be signed by an authorized officer of the sender; and
    (iv) is deemed to be received by the addressee in accordance with clause 6.1(b).
  (b) Without limiting any other means by which a party may be able to prove that a notice has been received by another party, a notice is deemed to be received:
    (i) if sent by hand, when delivered to the addressee;
    (ii) if by post, 3 Business Days after and including the date of postage; or
    (iii) if by facsimile transmission, on receipt by the sender of an acknowledgment or transmission report generated by the machine from which the facsimile was sent,
    but if the delivery or receipt is on a day which is not a Business Day or is after 4.00 pm (addressee's time) it is deemed to be received at 9.00 am on the following Business Day.
  (c) A facsimile transmission is regarded as legible unless the addressee telephones the sender within 2 hours after the transmission is received or regarded as received under clause 6.1(b)(iii) and informs the sender that it is not legible.
  (d) In this clause 6.1, a reference to an addressee includes a reference to an addressee's officers, agents or authorised representatives.
6.2 Governing law
  (a) This agreement is governed by the law of the Republic of Singapore.
  (b) Each party irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of the Republic of Singapore.
6.3 Exercise of rights
  A party may exercise a right, power or remedy at its discretion, and separately or concurrently with another right, power or remedy. A single or partial exercise of a right, power or remedy by a party does not prevent a further exercise of that or of any other right, power or remedy.
6.4 Legal advice and allocation of risk
  The parties acknowledge that they have received legal advice or had the opportunity to receive legal advice about this agreement and the allocation of risks and liabilities in this agreement reflects their intentions and is a fair and proper commercial bargain.
6.5 Invalidity
  (a) If a provision of this agreement or a right or remedy of a party under this agreement is invalid or unenforceable in a particular jurisdiction:
    (i) it is read down or severed in that jurisdiction only to the extent of the invalidity or unenforceability; and
    (ii) it does not affect the validity or enforceability of that provision in another jurisdiction or the remaining provisions in any jurisdiction.
  (b) This clause 6.5 is not limited by any other provision of this agreement in relation to severability, prohibition or enforceability.
6.6 Waiver and variation
  A provision or a right under this agreement may not be waived except in writing signed by the party granting the waiver, or varied except in writing signed by the parties.
6.7 Cumulative rights
  The rights and remedies of a party under this agreement do not exclude any other right or remedy provided by law.
6.8 Non-merger
  The conditions, provisions and Warranties in this agreement do not merge or terminate.
6.9 Further assurances
  Each party must do all things necessary to give full effect to this agreement and the transactions contemplated by this agreement.
6.1 Entire agreement
  This agreement, the Thailand Agreement, the Singapore Agreement and the Malaysia Agreement constitute the entire agreement of the parties about their subject matters and supersede any previous understandings or agreements on those subject matters.
6.11 Third party rights
  Only the Buyers Group and the Service Providers have or are intended to have a right or remedy under this agreement or obtain a benefit under it.
6.12 Assignment
  A party may not assign this agreement or otherwise transfer the benefit of this agreement or a right or remedy under it, without first getting the written consent of the other parties.
6.13 Counterparts
  This agreement may be signed in any number of counterparts and all those counterparts together make one instrument.
 
7 DEFINITIONS
  Affiliate of a party means an entity that directly or indirectly controls, is controlled by, or is under common control with, that party and in the case of REACH, also includes Reach Communications Services (Thailand) Limited, TeleWeb Networks (India) Pvt Ltd, Reach Networks (Philippines) Inc., and Taihan Reach Limited.

Buyer Affiliate means PacNet-TH, PacNet-MY, Pacific Supernet Limited, Pacific Internet (Australia) Pty. Limited, Pacific Internet India Private Limited and Primeworld Digital Sistems, Inc., and/or any other Affiliate of the Buyer nominated by the Buyer.

Buyers Group means the Buyer and all of the Buyer Affiliates collectively.

Government Agency means a government or governmental, semi-governmental, administrative, fiscal or judicial body, department, commission, authority, tribunal, agency or entity whether foreign, federal, state, territorial or local.

Insolvency Event means the occurrence of any one or more of the following events in relation to any person:

  1. a liquidator or provisional liquidator is appointed;
  2. an administrator is appointed to any of its assets;
  3. it enters into an arrangement or composition with one or more of its creditors, or an assignment for the benefit of one or more of its creditors;
  4. it is insolvent as disclosed in its accounts, or otherwise states that it is insolvent, or it is presumed to be insolvent under an applicable law;
  5. it is taken to have failed to comply with a statutory demand as a result of legislation relating to insolvency in the jurisdiction of its incorporation;
  6. it ceases to carry on business or threatens to do so; or
  7. anything occurs under the law of any jurisdiction that has a substantially similar effect to any of the above paragraphs of this definition.

GIA Service Terms means the standard terms and conditions, and service level assurance, attached to this agreement as Attachment 1. Any amendments to such terms and conditions shall be subject to mutual consent by both parties.

Malaysia Business means the business of the operation of a retail Internet Service Provider caried on by PacNet-MY in Malayisa.

Service Provider means REACH and/or any Affiliate of REACH nominated by REACH in writing from time to time.

Singapore Business means the business of the operation of a retail Internet Service Provider caried on by the Buyer in Singapore.

Thailand Business means the business of the operation of a retail Internet Service Provider caried on by PacNet-TH in Thailand.

Tax means a tax, levy, charge, impost, fee, deduction, withholding or duty of any nature, including, without limitation, stamp and transaction duty or any goods and services tax, value added tax or consumption tax, which is imposed or collected by a Government Agency except where the context requires otherwise. This includes, but is not limited to, any interest, fine, penalty, charge, fee or other amount imposed in addition to those amounts.
 
 
8 INTERPRETATION
  (a) In this agreement unless the context otherwise requires:
    (i) words importing the singular include the plural and vice versa;
    (ii) words that are gender neutral or gender specific include each gender;
    (iii) other parts of speech and grammatical forms of a word or phrase defined in this agreement have a corresponding meaning;
    (iv) an expression importing a natural person includes a company, partnership, joint venture, association, corporation or other body corporate and a Government Agency;
    (v) a reference to a thing (including, but not limited to, a chose-in-action or other right) includes a part of that thing;
    (vi) a reference to a clause, party, schedule or attachment is a reference to a clause of this agreement, and a party, schedule or attachment to, this agreement and a reference to this agreement includes a schedule and attachment to this agreement;
    (vii) a reference to this agreement includes this clause 8;
    (viii) a reference to a law includes a constitutional provision, treaty, decree, convention, statute, regulation, ordinance, by?law judgment, rule of common law or equity or a rule of an applicable stock exchange and is a reference to that law as amended, consolidated or replaced;
    (ix) a reference to a document includes all amendments or supplements to that document, or replacements or novations of it;
    (x) a reference to a party to a document includes that party's successors and permitted assigns;
    (xi) an agreement on the part of two or more persons binds them jointly and severally; and
    (xii) a reference to an agreement, other than this agreement, includes an undertaking, deed, agreement or legally enforceable arrangement or understanding, whether or not in writing.
  (b) If the day on or by which something must be done is not a business day, that thing must be done on or by the preceding business day.
  (c) Headings are for convenience only and do not affect the interpretation of this agreement.
  (d) This agreement may not be construed adversely to a party only because that party prepared this agreement.

SIGNED as an agreement.

DATE 11 November 2002

Signed by REACH GLOBAL SERVICES LIMITED:    

 

/s/ Sean Brennan

  

 

/s/ Raja P Kanthan
Signature of witness   Signature of Authorised Representative

 

Sean Brennan

  

 

Raja P Kanthan
Name of witness (print)   Name of Authorised Representative(print)
     
Signed by PACIFIC INTERNET LIMITED:    

 

/s/ Loh Pao Yen

  

 

/s/ Tan Tong Hai
Signature of witness   Signature of Authorised Representative

 

Loh Pao Yen

  

 

Tan Tong Hai
Name of witness (print)   Name of Authorised Representative(print)

 

Date: 11 November 2002

    

 

ATTACHMENT 1

GIA SERVICE TERMS

GENERAL TERMS
 

PARTIES

1. REACH GLOBAL SERVICES LIMITED of 18th Floor Telecom House, 3 Gloucester Road, Wanchai, Hong Kong (REACH); and

2. ______________________ of ______________________ (Customer).

Agreement

1. All Services provided by REACH to the Customer will be governed by:
(a) these General Terms; and
(b) for each Service:

    (i) the relevant Service Terms; and
    (ii) the relevant Customer Order,

which together form the agreement between the parties (Agreement).

2. REACH must supply each Service to the Customer from the applicable Service Commencement Date until termination of that Service or this Agreement in accordance with clause 10.

3. The Agreement is effective from the last date on which a party executes these General Terms (Signing Date) and continues until terminated in accordance with this Agreement.
 

Signed by the authorised representative of Reach
Global Services Limited		   Signed by the authorised representative of the Customer

 

 

  

 

 
Signature of Authorised Representative   Signature of Authorised Representative

 

 

  

 

 
Name of Authorised Representative (Print)   Name of Authorised Representative (Print)
   

 

 

Position

Date:

  

Position

Date:

REACH GLOBAL SERVICES LIMITED

GENERAL TERMS
 
Capitalised terms have the meaning given to them in the dictionary set out in clause 18.
 
1 AGREEMENT
1.1 The Customer must complete a Customer Order for each Service it wishes to acquire.
1.2 REACH must notify the Customer as soon as reasonably practicable after receipt of a Customer Order that it:
  (a) requires further information to process the Customer Order;
  (b) rejects the Customer Order, in which case neither party has any further right or obligation in respect of the relevant Service; or
  (c) accepts the Customer Order.
1.3 The Customer Order and applicable Service Terms shall be automatically incorporated into this Agreement at the time REACH notifies the Customer that it accepts the Customer Order.
1.4 REACH may advise the Customer of a Target Service Date either:
  (a) at the time REACH accepts the Customer Order; or
  (b) if REACH is to arrange any Non-REACH Circuit in relation to the Service, after REACH has been notified of delivery dates for such circuit.
1.5 REACH must use its reasonable endeavours to supply a Service on or before the Target Service Date, if any. If REACH will be unable to do so, REACH must:
  (a) notify the Customer as soon as practicable of a revised Target Service Date; and
  (b) meet the other requirements of the relevant Service Terms in respect of late delivery.
1.6 A Customer Test Period, if provided for in the Customer Order or the Service Terms, begins when REACH notifies the Customer that a Service is ready. If, before conclusion of the Customer Test Period:
  (a) the Customer notifies REACH of a Service fault, REACH must investigate and rectify any problem which is REACH's responsibility before re-notifying the Customer that the Service is ready for use, when a new Customer Test Period shall begin; or
  (b) the Customer does not notify REACH of a Service fault, the Customer is deemed to accept the Service
1.7 To request a variation in a Service (eg increased capacity) the Customer must submit a new Customer Order.
1.8 If requested by REACH, the Customer must provide a forecast of its Service requirements. A forecast is not binding on REACH or the Customer.
 
2 VARIATION OF SERVICE TERMS AND CAPACITY
2.1 Service Terms may be varied by REACH:
  (a) in the case of minor variations (including changes in the Service description which do not materially adversely affect the quality or functionality of the Services), upon 7 days' written notice to the Customer; or
  (b) in all other cases, on 3 months' notice to the Customer but the Customer may terminate the Service by giving notice in writing to REACH not less than 60 days prior to expiry of the 3 months' notice period.
 
3 CHARGES AND TAXES
3.1 The Customer must pay the Charges for each Service to REACH in accordance with the relevant Service Terms and this clause 3.
3.2 The Customer acknowledges that records generated by the REACH Network or any interconnected network are prima facie evidence of the matters to which those records relate (eg Charges or compliance with Service Levels).
3.3 Subject to clause 3.4, REACH may vary the Charges for a Service after expiry of the relevant Minimum Commitment Period (if any) by giving notice of the amended Charges, which in the case of Charge increases will not be less than 30 days. REACH may give notice of the amended Charges by posting the varied Charges on its web site.
3.4 Variations for tariffed Charges shall be notified and take effect in accordance with applicable tariff procedures.
3.5 The Customer must reimburse REACH for any charges incurred by REACH for communications services and capacity supplied by third party operators including Local Circuits and other Non-REACH Circuits, except where those third party services form part of the Services.
3.6 Notwithstanding clause 3.3, REACH may vary the Charges for a Service to the extent reasonably necessary to account for fluctuations in exchange rates between the currencies in which REACH buys underlying network elements and renders the Charges.
3.7 The Charges do not include any Tax, whether existing at the Signing Date or coming into effect at any later time.
3.8 Subject to this clause 3.8, the Customer must make each payment to REACH without any set off or counterclaim and without deduction or withholding of any Taxes. If at any time an Applicable Law obliges the Customer to make a deduction, withholding or payment in respect of Taxes from any amount paid or payable to REACH, the Customer must:
  (a) notify REACH of the obligation as soon as the Customer becomes aware of it;
  (b) ensure that the deduction, withholding or payment does not exceed the minimum amount required by the Applicable Law;
  (c) pay to the relevant government agency the full amount of the deduction, withholding or payment by the due date and promptly deliver to REACH a copy of any receipt, certificate or other proof of payment satisfactory to REACH; and
  (d) indemnify REACH against the deduction, withholding or payment in respect of any amount paid or payable to REACH by paying REACH, at the time that the payment to REACH is due, an additional amount that ensures that, after the deduction or withholding is made, REACH receives a net sum equal to the sum it would have received if the deduction or withholding had not been made.
3.9 The indemnification in clause 3.8 shall not apply to any Tax deduction or withholding that REACH is entitled to subsequently recover from the relevant government agency.
 
4 INVOICING AND SETTLEMENT
4.1 Subject to clause 5.2, the Customer must pay the whole amount of the Charges shown on each Statement:
  (a) directly by electronic transfer to the bank account nominated in writing by REACH or such other means as REACH may expressly approve;
  (b) within 30 days of the date of the Statement or, in respect of a particular Service, by the date specified in relevant Service Terms ; and
  (c) in the currency specified in the Customer Order or as notified by REACH from time to time.
4.2 The Customer must pay interest on any overdue amount, calculated daily at the Interest Rate, from the date payment is due until payment in full is made.
4.3 REACH may include Charges omitted from an earlier Statement in a subsequent Statement.
4.4 If requested by the Customer, REACH shall arrange for the Charges for a Service to be included in statements issued by an Affiliate of REACH (in which case the Affiliate acts as REACH's billing agent), subject to:
  (a) the Customer continuing to obtain services from that Affiliate; and
  (b) the agreement of the relevant Affiliate.
4.5 REACH may, at its sole discretion, deduct from any money owed by REACH to the Customer any amount:
  (a) owed by the Customer to REACH or to a REACH Affiliate, in which case REACH indemnifies the Customer against any further claim by the REACH Affiliate in respect of the amount deducted; or
  (b) owed by a Customer Affiliate to REACH or a REACH Affiliate, in which case REACH shall release or cause the REACH Affiliate to release the Customer Affiliate from the debt for the deducted amount.
4.6 REACH may, at its sole discretion, deduct from any money owed by REACH to a Customer Affiliate any amount owed by the Customer:
  (a) to REACH, in which case the Customer indemnifies REACH against any further claim by the Customer Affiliate in respect of the deducted amount; or
  (b) to a REACH Affiliate, in which case the Customer indemnifies REACH against any further claim by the Customer Affiliate in respect of the deducted amount and REACH indemnifies the Customer against any further claim by the REACH Affiliate in respect of the deducted amount.
4.7 REACH may, at its sole discretion, apply in satisfaction of any money owed by a REACH Affiliate to the Customer any amount owed by the Customer to REACH, in which case REACH indemnifies the Customer against any further claim by the REACH Affiliate in respect of the applied amount.
 
5 BILLING DISPUTES
5.1 The Customer must raise any Billing Dispute by notice in writing to REACH specifying:
  (a) the Statement in dispute;
  (b) the Charges which are the subject of the Billing Dispute (Disputed Amount); and
  (c) the reasons for the Billing Dispute and the facts on which the Customer relies,
  (Billing Dispute Notice), within 15 days of the date of the Statement, otherwise the relevant Statement is deemed accepted.
5.2 Where a Billing Dispute is notified under clause 5.1:
  (a) the Customer may withhold the Disputed Amount but must pay the balance of the Statement; and
  (b) the parties must negotiate in good faith to resolve the Billing Dispute as soon as practicable.
5.3 If a Billing Dispute is not resolved within 60 days of the date of the Billing Dispute Notice either party may by written notice to the other party refer the matter to a suitable expert agreed between the parties or, failing such agreement within 14 days of the referral notice, as appointed by the Chairman of the Local Accounting Society (Expert). The parties must provide the co-operation the Expert reasonably requires. The Expert must:
  (a) reach a decision in relation to the Billing Dispute within 60 days of the Expert's appointment; and
  (b) give written reasons for the decision within 7 days of reaching a decision.
5.4 On resolution of a Billing Dispute (whether by agreement or by expert determination):
  (a) if the Disputed Amount or part thereof is agreed or determined to be owing to REACH, that amount shall become immediately payable, together with interest calculated at the Interest Rate from the due date of the original Statement to the date of payment;
  (b) if the Disputed Amount or part thereof is agreed or determined not to be owing to REACH, a corrected Statement shall be issued by REACH as soon as practicable; or
  (c) if it is agreed or determined that REACH issued the relevant Statement for less than the correct amount, REACH shall issue a further Statement for that additional amount, which shall be due and payable within 7 days of the date of that Statement.
5.5 The Expert's costs and REACH's reasonable costs of participating in the Expert determination shall be payable:
  (a) if the Disputed Amount is determined to be payable in full, by the Customer;
  (b) if none of the Disputed Amount is determined to be payable, by REACH; and
  (c) if the Disputed Amount is determined to be payable in part by the Customer, proportionally by the Customer.
5.6 Where a Statement is accepted (whether deemed or otherwise), then the amount due (Debt) may be sued upon in any court of competent jurisdiction.
 
6 CREDIT MANAGEMENT
Security Requirement
6.1 REACH may require the Customer to provide and maintain the Security Requirement.
6.2 The Customer must vary the form or value of the Security Requirement within 14 days of receiving written notice from REACH requiring it to do so.
6.3 If the Customer fails to pay any Charges owing under this Agreement (except pursuant to a Billing Dispute):
  (a) REACH may enforce the Security Requirement, or part of it, in satisfaction of unpaid Charges; and
  (b) the Customer must immediately restore or procure the restoration of the Security Requirement to the required level.
6.4 On termination of this Agreement, REACH may enforce the Security Requirement, or part of it, in satisfaction of any unpaid Charges, provided that within 6 months following termination the Security Requirement (or any balance) must be released to the Customer. REACH reserves the right to retain interest, if any, accruing on the Security Requirement.
6.5 Provision by the Customer of any Security Requirement does not:
  (a) relieve the Customer of its obligation to pay the Charges to REACH; or
  (b) affect any right of REACH to terminate or suspend the operation of this Agreement in whole or in part under clause 10.
 
7 USE OF THE SERVICES
7.1 The Customer must:
  (a) use a Service and must ensure that third parties use services supplied using the Service in accordance with:
    (i) REACH's Acceptable Use Policy; and
    (ii) all Applicable Laws;
  (b) not pass any traffic across a physical point of demarcation between the parties' networks of a type or with technical specifications to which REACH has not agreed;
  (c) promptly notify REACH of any fault in the Service; and
  (d) comply with directions given by REACH from time to time in relation to modifications required to any equipment connected to any Service or other action necessary to eliminate any impairment of a Service or the REACH Network.
7.2 On request by REACH, the Customer must provide information relating to the Customer and its use of the Services (including information relating to customers of the Customer) reasonably required by REACH:
  (a) to assist REACH in complying with its obligations under any Applicable Law; and
  (b) to assess whether or not the Customer has complied, is complying and will be able to continue to comply with all its obligations under the Agreement,
  and such information shall be treated by REACH as Confidential Information.
Equipment
7.3 Except where expressed otherwise in this Agreement:
  (a) each party is responsible for the safe and proper operation and maintenance of its own network and equipment and third party networks and equipment which it permits to be connected to its network; and
  (b) the party who owns or occupies the premises on which the other party's equipment is located:
    (i) must take reasonable steps to ensure the security and safety of the other party's equipment (including in relation to the supply of air-conditioning, electricity and other utility services and environmental conditions required to operate the equipment); and
    (ii) must notify the other party immediately of any damage, fault, theft or loss of such equipment;
    (iii) must not and must not allow a third party to alter, tamper with or attempt to repair such equipment, without the other party's prior consent; and
    (iv) must comply with all reasonable instructions issued by the other party to protect the other party's ownership of such equipment;
    (v) must not connect any such equipment to any other equipment or service except as expressly authorised the other party; and
    (vi) must provide the other party with access to the premises at all reasonable times to install or inspect, maintain, repair, replace or remove the other party's equipment (including to remove equipment no later than 14 days after termination of this Agreement).
7.4 REACH will at its discretion repair or replace REACH equipment which is located at Customer premises:
  (a) if required as a result of fair wear and tear or a negligent act or omission of REACH, free of charge; and
  (b) otherwise, charged at REACH's time and materials rate.
Security
7.5 REACH makes no representations or warranties concerning, and is not liable for, the security of traffic transmitted over any Service.
7.6 The Customer must take every reasonable precaution in the use of the Services to prevent contamination of any software or hardware or diffusion of any software or hardware contamination, including computer viruses, worms or trojan horses.
Access to Premises
7.7 The Customer licences REACH, its employees, representatives and agents to enter any premises owned or occupied by the Customer at all reasonable times to:
  (a) determine whether or not the Customer is complying with clause 7.1(a) or (b);
  (b) inspect any equipment or facilities which REACH considers is, or may be, causing or likely to cause any interference to a Service or the REACH Network; or
  (c) obtain any information requested under clause 7.2 if the Customer has not complied with that request within 48 hours.
Public statements
7.8 Except where the Customer has obtained prior written consent from REACH, the Customer must not make any representation or public statement that:
  (a) any service provided by the Customer is supplied using the REACH Network or is provided in whole or in part by REACH; or
  (b) the Customer is authorised to act for or on behalf of REACH.
 
8 CUSTOMER INFORMATION
8.1 The Customer agrees that REACH may collect and retain Customer Information.
8.2 The Customer agrees that REACH may use or permit use of Customer Information for any and all of the following purposes in relation to the Services:
  (a) provision, and improvement in the provision, of the Services;
  (b) matching the Customer Information with other data collected for other purposes and from other sources including third parties in relation to the provision of the Services;
  (c) marketing of goods and services to the Customer by REACH, its agents or Affiliates and determining entitlements to discounts or other benefits offered by REACH and its Affiliates and keeping the Customer informed of other services of REACH;
  (d) analysing, verifying and checking the Customer's credit;
  (e) processing any billing or payment instructions, direct debit facilities or credit facilities;
  (f) enabling the daily operation of the Customer's account and billing and collection of Charges;
  (g) enabling REACH to comply with its obligations to interconnect and for other industry processes; and
  (h) as required by law enforcement or other competent government authorities or as otherwise required or permitted by law,
  to the extent permitted by the Applicable Law, including those regulating privacy.
8.3 REACH may, for any of the purposes listed in clause 8.2:
  (a) disclose Customer Information to REACH's Affiliates, agents, contractors, telecommunications operators, any other third parties including collection agencies, credit reference agencies, security agencies, credit providers or other financial institutions and to any actual or proposed assignee or transferee of REACH under this Agreement; and
  (b) transfer Customer Information from one jurisdiction to another in the course of such disclosure,
  to the extent such disclosure or transfer is permitted by the Applicable Law.
 
9 LIABILITY AND INDEMNITY
9.1 To the extent permitted by law, REACH is not liable to the Customer for any Loss, except to the extent that REACH has failed to meet applicable Service Levels, in which case the Customer's exclusive remedy in respect of that failure shall be as provided by the relevant Service Levels.
9.2 A party's maximum liability under the Agreement or in relation to the performance of the Agreement is limited to:
  (a) USD 500,000 for any one incident or series of events arising from a single incident or common cause; and
  (b) an aggregate amount of USD 1,000,000 for all liability arising out of or in connection with the Agreement,
  providing that nothing in this clause 9.2 excludes or restricts:
  (c) the rights and obligations of the parties in relation to the Service Levels; or
  (d) the liability of a party for death or personal injury resulting from the negligence of that party.
9.3 IF ANY APPLICABLE LAW IMPLIES WARRANTIES OR CONDITIONS OR IMPOSES OBLIGATIONS ON REACH WHICH CANNOT BE EXCLUDED, RESTRICTED OR MODIFIED, OR TO ONLY A LIMITED EXTENT, THEN TO THE EXTENT TO WHICH REACH IS ENTITLED TO DO SO, THE LIABILITY OF REACH UNDER THE APPLICABLE LAW SHALL BE LIMITED:
  (a) TO THE SUPPLY OF SERVICES AGAIN OR THE PAYMENT OF THE COST OF HAVING THE SERVICES SUPPLIED AGAIN, AT REACH'S OPTION;
  (b) TO THE REPAIR OR REPLACEMENT OF PROPERTY OR PAYING THE COST OF REPAIR OR REPLACEMENT, AT REACH'S OPTION; OR
  (c) TO ANY OTHER REMEDY PRESCRIBED BY THE APPLICABLE LAW.
9.4 The Customer indemnifies REACH against all Claims, other than to the extent that it is the result of the wilful breach of the Agreement by REACH. Nothing in this Agreement limits the liability of either party for death or personal injury.
 
10 TERMINATION
10.1 Either party may terminate this Agreement in respect of a Service on 5 days' written notice if 3 months have passed since the original Target Service Date, if any, and the Service Commencement Date has not yet occurred.
10.2 This Agreement may be terminated on 30 days' written notice without cause by either party, either in its entirety or in respect of particular Services nominated by the terminating party in its notice, provided that:
  (a) subject to clause 10.5, REACH is not permitted to terminate a Service prior to expiry of the applicable Minimum Commitment Period; and
  (b) if the Customer terminates a Service prior to expiry of the applicable Minimum Commitment Period, the Customer must pay the applicable Cancellation Charge as a genuine pre-estimate of loss and not as a penalty.
10.3 The Customer is not entitled to terminate or suspend this Agreement, whether in its entirety or in respect of particular Services, as a result of any failure to meet any Service Levels for which REACH is responsible, except where the right to terminate or suspend is expressly provided in the Service Levels.
10.4 REACH may immediately terminate or suspend the operation of this Agreement without prior notice (either in its entirety or in respect of a particular Service, and including in respect of Services which are subject to a Minimum Commitment Period) if:
  (a) provision of the Services would cause REACH to be in breach of any Applicable Law; or
  (b) REACH becomes unable to provide any Service or meet relevant Service Levels as a result of the termination or suspension of its access to the infrastructure used by REACH for supply of the Services (including without limitation undersea telecommunications cables, Local Circuits or other Non-REACH Circuits, backhaul or associated facilities and equipment);
  (c) REACH has reasonable grounds to suspect that the Customer is in breach of clauses 7.1(a);
  (d) the Customer has failed to pay any monies owing under this Agreement (except a Disputed Amount) 30 days after the due date; or
  (e) the Customer fails to provide or maintain or vary a Security Requirement in accordance with clause 6.
10.5 Notwithstanding any other provision of this Agreement, either party may immediately terminate or suspend this Agreement upon written notice (including in respect of Services which are subject to a Minimum Commitment Period) if:
  (a) the other party breaches any material term of this Agreement which is not capable of remedy;
  (b) the other party becomes subject to an Insolvency Event;
  (c) provided the Notifying Party has complied with clause 15.2, a Force Majeure Event substantially and adversely affecting the ability of the other party to perform its obligations to the Notifying Party under this Agreement continues for a period of 3 months;
  (d) for any reason, the parties have been unable to negotiate such variations to this Agreement as may be required under clause 14.1 by the time that the Regulatory Event commences to have legal effect;
  (e) the other party ceases to carry on business for a period of more than 14 days without the prior written consent of the terminating party; or
  (f) the other party breaches any material term of this Agreement which is capable of remedy and the other party fails to remedy the breach within 30 days after receiving a notice to do so.
10.6 On termination of the Agreement:
  (a) all Charges for use of the Service up to and including the date of termination and all other amounts owing by the Customer to REACH shall become immediately due and payable;
  (b) the Customer must cease to use the Services and all equipment supplied or made available by REACH under the Agreement; and
  (c) each party must, at its own expense, deliver to the other party or, after notice from that other party, destroy or erase the other party's Confidential Information unless such Confidential Information is stored in, or is essential to the operation of a party's network.
10.7 WITHOUT LIMITING THE EXCLUSIONS OR LIMITATIONS OF LIABILITY CONTAINED ANYWHERE IN THIS AGREEMENT, REACH SHALL NOT BE LIABLE TO THE CUSTOMER NOR TO ANY THIRD PARTY FOR ANY LOSS (INCLUDING ANY CONSEQUENTIAL LOSS) ARISING FROM, OR CONSEQUENTIAL UPON, TERMINATION OR SUSPENSION OF THE OPERATION OF THIS AGREEMENT UNDER THIS CLAUSE 10 OR CLAUSE 11.
10.8 If REACH has suspended the operation of the Agreement under this clause 10 in respect of any particular Service, the Customer may be required to pay a reconnection fee in advance of the Service being reconnected.
10.9 Suspension or termination of this Agreement (either in its entirety or in respect of a particular Service):
  (a) will not operate as a waiver of any breach by a party of any of its provisions;
  (b) will be without prejudice to any rights, liabilities or obligations which a party has accrued up to the date of termination or expiry, including a right of indemnity; and
  (c) will not extinguish or otherwise affect the provisions of this Agreement which by their nature survive such termination.
 
11 SUSPENSION OF SERVICES IN EXTRAORDINARY CIRCUMSTANCES
11.1 REACH may suspend, de-activate or restrict all, or any part, of a Service at any time on giving as much notice as is reasonably practicable (if any) until further notice to the Customer in the following circumstances:
  (a) to comply with an order, instruction or request of a Government agency, emergency service or other competent authority; or
  (b) to reduce or prevent fraud or interference within the REACH Network; or
  (c) to carry out repairs, maintenance, servicing or upgrading of any equipment, software or facility forming part of REACH's Network, whether planned or required due to an emergency; or
  (d) in respect of a Regulatory Event, REACH reasonably believes that continued supply of the affected Service during the Regulatory Event would expose REACH to significant risk of adverse legal or economic consequences.
11.2 If a Service is suspended, de-activated or restricted under clause 11.1, REACH must use its reasonable endeavours to minimize disruption to the Customer.
 
12 CONFIDENTIALITY AND INTELLECTUAL PROPERTY RIGHTS
12.1 This Agreement and all information in whatever form disclosed by one party to the other in connection with this Agreement or the Services, or during the negotiations preceding this Agreement (Confidential Information) must be kept secret and confidential and treated at least as securely as the receiving party's own confidential information and may only be disclosed or used with the prior written consent of the disclosing party.
12.2 Despite clause 12.1, the receiving party may:
  (a) disclose the Confidential Information to its officers, employees, contractors, professional advisers or Affiliates, provided that they do not further disclose the Confidential Information except in accordance with this clause 12; and
  (b) use the Confidential Information for the purposes of this Agreement.
12.3 A party may disclose or use the Confidential Information without consent if the Confidential Information is:
  (a) lawfully in the possession of the receiving party through sources other than the disclosing party; or
  (b) generally and publicly available (except where such availability is due to a breach of this Agreement); or
  (c) such disclosure or use is:
    (i) required or authorised by an Applicable Law; or
    (ii) required by the listing rules of a stock exchange on which the receiving party's securities or the securities of an Affiliate of the receiving party are or will be listed or quoted; or
    (iii) strictly required in connection with legal proceedings or a dispute resolution procedure relating to this Agreement.
12.4 REACH does not under this Agreement or as a result of the provision of any Service:
  (a) assign any Intellectual Property Rights of REACH or any third party to the Customer; or
  (b) grant any licence to the Customer in respect of any Intellectual Property Rights of REACH or any third party unless otherwise agreed in writing.
 
13 DISPUTE RESOLUTION
13.1 The parties must seek to resolve any bona fide dispute, controversy or claim arising between them under or in relation to this Agreement in accordance with the procedures set out in this clause 13, other than:
  (a) a Billing Dispute, which must be resolved in accordance with clause 5 ;
  (b) a Service Level Dispute, which must be resolved in accordance with clause 14; or
  (c) a Debt which is recoverable by REACH,
  (Dispute).
13.2 Subject to the other provisions of this Agreement, the parties must continue to comply with their respective obligations during the pendency of a Dispute.
13.3 A party must not use information obtained in the course of any procedure established by this clause 13 for any purpose other than to resolve the particular Dispute.
13.4 A Dispute between the parties must be referred to the Chief Executive Officer of each of the respective parties, or their nominee, who must confer and endeavour in good faith to resolve the dispute.
13.5 If a Dispute remains unresolved 28 days after referral to the parties' Chief Executive Officers, either party may by written notice to the other party, refer the dispute to compulsory arbitration to be conducted in Hong Kong in accordance with the Arbitration Rules of the Hong Kong International Arbitration Centre (HKIAC) in force from time to time (Arbitration Rules) and the provisions of this clause 13, which will prevail over the Arbitration Rules to the extent of any inconsistency. English shall be the language of all proceedings
 
14 SERVICE LEVEL DISPUTES
14.1 If REACH and the Customer are in dispute about:
  (a) whether a breach of a particular Service Levels commitment has occurred or is occurring;
  (b) the duration, extent or nature of any alleged breach;
  (c) which Service Level, if any, may have been breached; or
  (d) whether the alleged breach was REACH's fault,
  (Service Level Dispute), REACH and the Customer will seek to resolve the Service Level Dispute in accordance with the following procedure:
  (e) if the parties cannot resolve the Service Level Dispute, either party may request that both parties escalate the Service Level Dispute to their respective Chief Executive Officer or his or her nominee, who shall endeavour to resolve the Service Level Dispute in good faith;
  (f) if the parties' Chief Executive Officers or their nominees are unable to resolve the Service Level Dispute within 14 days of escalation to them, either party may by notice in writing to the other party refer the dispute to an independent expert for investigation and resolution;
  (g) if the parties are unable to agree on an independent expert within 14 days of the notice under paragraph (f) either party may request the President of the Local Engineering Association to appoint a suitably qualified expert (Expert);
  (h) the Expert will make his or her decision within 14 days of the Service Level Dispute being referred to him or her for resolution;
  (i) the Expert will not function as an arbitrator but as an expert and his or her decision will be final;
  (j) if the Expert determines that a Service Level rebate is owed by REACH, REACH must:
    A. credit the rebate against Charges in the next Statement issued by REACH to the Customer; and
    B. pay the Expert's costs; and
  (k) if the Expert determines that a rebate is not owed by REACH, the Customer must pay the Expert's costs.
 
15 REGULATORY EVENT AND FORCE MAJEURE
15.1 If the rights or obligations of either party under this Agreement are materially affected by a Regulatory Event:
  (a) the party affected by the Regulatory Event shall not be taken to have breached this Agreement due to any action or inaction of that party as a consequence of the Regulatory Event; and
  (b) the parties agree to negotiate in good faith to vary this Agreement to reflect or accommodate the Regulatory Event,
  subject to REACH's suspension rights under clause 11.1.
15.2 If either party fails to comply with or observe any term of this Agreement, and such failure is caused by a Force Majeure Event, that party must notify the other party as soon as practicable, and use all reasonable endeavours to avoid, mitigate and remedy the consequences of the Force Majeure Event.
15.3 Neither party is liable to the other by reason of any failure in performance under this Agreement if such failure arises out of a Regulatory Event or Force Majeure Event, unless that failure is a failure to pay Charges.
 
16 NOTICES
16.1 A notice, consent or other communication under this Agreement is only effective if it is in writing and delivered by the following means to the person specified in the relevant Customer Order or as otherwise notified by the relevant party:
  (a) delivered personally; or
  (b) sent by pre-paid registered post, facsimile or in electronic form (such as e-mail), in which case a copy of the electronic notice must be sent by facsimile as soon as possible afterwards.
16.2 The notice, consent or other communication is deemed to be received:
  (a) if delivered personally, on delivery;
  (b) if sent by prepaid registered post, 7 days after the date of posting, unless actually received earlier;
  (c) if sent by facsimile, when the machine that sent the facsimile produces a transmission report which confirms that the facsimile was sent in its entirety to the facsimile number of the recipient; and
  (d) if sent in an electronic form, on the date on which the recipient's e-mail system logs the e-mail message as being received.
16.3 Communications received by a party outside of normal working hours in the place in which such communications are received (being 9:00am to 5:00pm on any Monday to Friday excluding recognised public holidays) will be regarded as being received on the working day immediately following.
 
17 GENERAL
Variation and assignment
17.1 Subject to clause 2, the Agreement (including any Customer Order) can only be varied, supplemented or replaced by another document signed by both parties.
17.2 Except as provided in clause 16.3, neither party can assign or otherwise transfer its rights or interests under this Agreement without the other party's prior written consent, which consent must not be unreasonably delayed or withheld.
17.3 REACH may assign or otherwise transfer its rights or interests under this Agreement to an Affiliate of REACH without obtaining the prior consent of the Customer.
Relationship of Parties
17.4 No provision of this Agreement constitutes a joint venture, partnership or agency between the parties or merges the assets, liabilities and undertakings of the parties and neither party has the authority to bind the other in any way (except as provided by this Agreement).
Subcontracting
17.5 REACH may appoint a third party, including an Affiliate, to provide any Services to the Customer on REACH's behalf or to perform any of REACH's obligations under the Agreement. This clause 16.5 does not release REACH from its obligations under this Agreement.
Operation of this Agreement
17.6 This Agreement supersedes all previous agreements between the parties in relation to the Services and contains the parties' entire agreement in relation to the Services provided from time to time to the Customer.
17.7 Any provision of this Agreement which is unenforceable or partly unenforceable is, where possible, to be severed to the extent necessary to make this Agreement enforceable, unless this would materially change the intended effect of this Agreement.
17.8 If there is any inconsistency between any of any applicable tariff, these General Terms, the Service Terms, or the Customer Order, the inconsistency will be resolved according to the following order of priority:
  (a) the applicable tariff approved by a competent authority;
  (b) the Customer Order;
  (c) the Service Terms; and
  (d) these General Terms.
17.9 While the Agreement may be translated into other languages, the English version shall prevail.
Waiver
17.10 A right may only be waived in writing, signed by the party granting the waiver, and
  (a) no other conduct of a party (including a failure to exercise, or delay in exercising, the right) operates as a waiver of the right or otherwise prevents the exercise of the right;
  (b) a waiver of a right on one or more occasions does not operate as a waiver of that right if it arises again; and
  (c) the exercise of a right does not prevent the further exercise of that right or any other right.
Execution
17.11 This Agreement may be executed in counterparts.
Governing law and jurisdiction
17.12 The Agreement is governed by the laws of Hong Kong Special Administrative Region. The parties irrevocably submit to the exclusive jurisdiction of the courts of Hong Kong Special Administrative Region.
 
18 DICTIONARY
18.1 In the Agreement:
Acceptable Use Policy means REACH's policies governing the permitted use and restrictions on use of the Services posted at REACH's website (www.Reach.com) and as varied from time to time.
Affiliate means, in relation to an entity, any other entity which directly or indirectly controls, is controlled by, or is under common control with, such entity and in the case of REACH, also includes Reach Communications Services (Thailand) Limited, TeleWeb Networks (India) Pvt Ltd, and Reach Networks (Philippines) Inc.
Applicable Law means:
  (a) any applicable law, rule or regulation of any jurisdiction;
  (b) any applicable lawful determination, decision or direction of a government agency in any jurisdiction;
  (c) any applicable obligations under any telecommunications licence, any binding industry standard or industry code; and
  (d) any applicable international convention or agreement.
Billing Dispute means any claim or dispute relating to Charges or a Statement.
Business Day means a day other than a Saturday, Sunday or public holiday in the location of the premises of the Customer or of its customer to which the Services are supplied or, if Services are supplied in more than one location, such of those locations nominated by REACH or if none nominated, Hong Kong.
Cancellation Charge means in relation to a Service the cancellation charge payable upon termination of the Service prior to expiry of the Minimum Commitment Period, as specified in the relevant Service Terms or Customer Order or applicable tariff.
Charges means the charges for a Service, calculated in accordance with the relevant Customer Order and Service Terms or applicable tariff.
Claims means claims, losses, damages, costs, charges and expenses (including Consequential Loss and including legal costs on an indemnity basis) arising out of, or as a consequence of:
  (a) the supply or failure to supply any Service or any service provided by the Customer using the Service;
  (b) the use or attempted use of any Service or equipment, or any service provided by the Customer using the Service, by the Customer or by any third person (with or without the Customer's permission) which gives rise to a breach of the Customer's obligations under this Agreement; or
  (c) REACH's access to any premises owned or occupied by the Customer in accordance with clauses 7.3 or 7.7.
Confidential Information has the meaning given to it in clause 12.1.
Consequential Loss of a party means any loss of profits, indirect, special, economic, punitive or collateral loss including goodwill, revenue, bargain or opportunities or loss or corruption of data or loss of anticipated savings or business whether caused by negligence or otherwise and whether arising out of or relating to the Agreement, any Service, or any failure to supply or delay in supplying any Service.
Customer Information means information of a Customer within the meaning of any licence issued to REACH or its Affiliates or any Applicable Law and includes information identifying the Customer, the Services it purchases and its expenditure on Services and also includes personal data within the meaning of the Personal Data (Privacy) Ordinance (Cap 486 of the laws of Hong Kong).
Customer Order means an order for a Service in the form specified by REACH from time to time.
Customer Test Period means in relation to a Service the period, if any, specified in the Customer Order or relevant Service Terms during which the Customer has the opportunity to test the Service.
Force Majeure Event means an event beyond the reasonable control of the affected party, including but not limited to natural disasters, acts of terrorism or war (whether declared or not), the mobilisation of armed forces, civil commotion or riot, industrial action or labour disturbance, currency restriction, embargo, governmental restraint, expropriation or prohibition, or a failure of a public utility or telecommunications system (except to the extent covered by a Service Level).
Intellectual Property Rights means all rights conferred under statute, common law and equity in and in relation to trade marks, trade names, logos and get up, inventions, patents, designs, copyright, circuit layouts, Confidential Information, know-how and trade secrets and all rights and interests in them or licences to use any of them.
Insolvency Event means:
  (a) an order is made or an effective resolution is passed for winding up or dissolution without winding up (otherwise than for the purposes of solvent reconstruction or amalgamation) of the other party and the order or resolution remains in effect for a continuous period of 14 days;
  (b) a receiver, receiver and manager, official manager, controller, administrator (whether voluntary or otherwise), provisional liquidator, liquidator, or like official is appointed over the whole or a substantial part of the undertaking and property of the other party and the appointment remains in effect for a continuous period of 14 days;
  (c) a holder of an encumbrance takes possession of the whole or any substantial part of the undertaking or property of the other party, or the other party enters or proposes to enter into any scheme of arrangement or any composition for the benefit of its creditors other than as part of a solvent reconstruction or amalgamation;
  (d) the other party seeks or is granted protection from its creditors under any Applicable Law; or
  (e) the other party is or will be unable to pay its debts as and when they fall due.
Interest Rate means the Prime Lending Rate set by the Hong Kong and Shanghai Banking Corporation Limited for loans made in Hong Kong, plus 2 per cent.
Local Accounting Society means the local member association of the International Federation of Accountants in the country in which the Customer's REACH account manager is based or, if none or if unable or unwilling to appoint the Expert, such other independent accountant as nominated by REACH.
Local Circuit means a circuit connecting premises of the Customer or its subscriber to an international gateway located in the same country.
Local Engineering Association means the local chapter of the Institute of Electrical and Electronic Engineering in the country in which the relevant REACH Customer account manager is located or, if there is no such local chapter, such other independent communications engineering association as REACH nominates.
Loss means, whether arising in contract, in tort, under statute or otherwise:
  (a) any Consequential Loss arising out of this Agreement or breach of this Agreement;
  (b) any loss arising from, or consequential upon, any act or omission of any third party not under the direct control of REACH; or
  (c) any loss arising from, or in relation to:
    (i) any delay in the initial provision of, or any failure to provide, or any interruption in the provision of any Services which REACH is required to provide under this Agreement;
    (ii) any failure of the REACH Network or any part of it; or
    (iii) any error or omission in relation to information transmitted through either party's Network.
Minimum Commitment Period means in relation to a Service the period specified in the Customer Order or the Service Terms and commencing from the Service Commencement Date.
Non-REACH Circuit means a circuit on a third party network, including a Local Circuit or an international half circuit, which is or is to be connected to a Service provided by REACH.
REACH Network means the network owned and operated by REACH and its Affiliates.
Regulatory Event means:
  (a) an amendment of or change in any Applicable Law;
  (b) the grant of an injunction against a party in relation to a breach or alleged contravention of an Applicable Law;
  (c) the making of a determination or direction by a competent authority; or
  (d) where a party reasonably believes that any event of the kind described in (a), (b) or (c) will occur.
Security Requirement means security for the payment of Charges or the meeting of other obligations of the Customer under the Agreement, the form of which may be any, or a combination, of the following:
  (a) a deposit from the Customer held by REACH or by any other entity agreed by the parties;
  (b) an irrevocable guarantee from the controlling entity of the Customer or such other entity as is acceptable to REACH;
  (c) an irrevocable guarantee, performance bond or letter of credit from a bank or other financial institution reasonably acceptable to REACH; or
  (d) some other form of security interest or obligation.
Service Commencement Date means in relation to a Service the date on which either:
  (a) if there is no Customer Test Period, the earlier of the date REACH notifies the Customer the Service is ready for use or the Customer commences using the Service; or
  (b) if there is a Customer Test Period, the Customer accepts the Service in accordance with clause 1.6.
Service Levels means the committed levels of service in accordance with which REACH will use its reasonable endeavours to provide a Service, as specified in relevant Service Terms or Customer Orders or as notified to the Customer from time to time.
Service Level Dispute means a dispute in relation to Service Levels, as more particularly defined in relevant Service Terms or in Service Levels notified to the Customer from time to time.
Services means all telecommunications services supplied by REACH to the Customer from time to time under this Agreement.
Service Terms means the specific terms applicable to each particular Service.
Statement means an invoice provided by REACH setting out the Charges payable for Services provided by REACH.
Target Service Date means, the date notified by REACH to the Customer as the target date for commencement of the Service or of the Customer Test Period, as the case may be.
Tax means any present or future tax, levy, impost, deduction, charge, duty or withholding tax (together with any related interest, penalty, fine and expense in connection with any of them) levied or imposed by any government agency, other than those imposed on overall income.
USD means US dollars.
 
Interpretation
18.2 In the Agreement unless the contrary intention appears:
  (a) headings are for convenience only, and do not affect interpretation;
  (b) a word importing the singular includes the plural and vice versa;
  (c) a reference to:
    (i) a day, week or month means a calendar day week or month;
    (ii) a party to this Agreement or to any other document or agreement includes a successor or permitted substitute or permitted assign of that party;
    (iii) a document includes any amendment or supplement to, or replacement or notation of, that document;
    (iv) a person includes any type of entity or body of persons, whether or not it is incorporated or has a separate legal identity;
    (v) any statute, regulation, proclamation, ordinance or by-law includes all statutes, regulations, proclamations, ordinances or by-laws varying, consolidating or replacing it and a reference to a statute includes all regulations, proclamations, ordinances and by-laws issued under that statute.
 
SERVICE TERMS FOR GLOBAL INTERNET ACCESS SERVICE

These Service Terms form part of the Agreement between REACH and the Customer dated , on and from the date REACH accepts the first Customer Order for Global Internet Access Service. Capitalized terms are defined in the Dictionary to these Service Terms or, if not, have the same meaning as in the General Terms. A reference to a numbered clause means a clause in these Service Terms.
 
1 SUPPLY OF GLOBAL INTERNET ACCESS SERVICE
1.1 The Customer must submit a completed Customer Order to REACH to request supply of the Global Internet Access Service.
1.2 The Global Internet Access Service provides connectivity between REACH Points of Presence and the Internet using the REACH Network.
1.3 If the Customer is located in a country in which there is no REACH Point of Presence, the Global Internet Access Service shall include connectivity between:
  (a) a REACH Point of Presence nominated by REACH; and
  (b) the effective midpoint between the international gateway serving that REACH Point of Presence and the international gateway serving the Customer's locality.
    The Customer is responsible for providing the half circuit connecting from its end to that midpoint. REACH may agree to arrange the half circuit on the same basis as REACH may organise Local Circuits in accordance with clause 3.
1.4 The Global Internet Access Service does not include the provision or maintenance of any hardware or software or telecommunications services required by the Customer to connect to the REACH Points of Presence.
1.5 The Customer acknowledges and agrees that:
  (a) multiple telecommunications services connected to the same REACH Point of Presence may not terminate on the same router;
  (b) the Customer must choose which REACH Points of Presence it connects to; and
  (c) the Customer must pay REACH's Charge (at REACH's then-current time and materials rates) for any change to the nominated REACH Points of Presence requested by the Customer.
1.6 The policy for routing packets through the REACH Network may be changed from time to time at REACH's discretion without notice to the Customer.
 
2 IP ADDRESSES
2.1 REACH grants to the Customer a non-exclusive, non-transferable, revocable licence to use the Access Port IP Address and Customer Equipment IP Address (Licensed IP Addresses) in the Customer Equipment for the sole purpose of enabling the Customer Equipment to access a REACH Point of Presence.
2.2 The Customer may only use the Licensed IP Addresses as follows:
  (a) Access Port IP Address - as the gateway IP address for that Internet Access Port; and
  (b) Customer Equipment IP Address - as the IP address for the Customer Equipment that will use the Internet Access Port.
2.3 The Customer's licence to use the Licensed IP Addresses terminates immediately upon the earlier of:
  (a) termination or expiry of the Agreement; or
  (b) REACH ceasing to provide the Global Internet Access Service via the relevant REACH Point of Presence.
2.4 REACH may change a Licensed IP Address:
  (a) on 5 days' written notice to the Customer; or
  (b) immediately, if the change is needed because of a Service difficulty.
2.5 REACH may, as a condition of providing the Service, require the Customer to provide REACH with IP addresses from within a certain block agreed between the parties (Customer Supplied IP Addresses).
2.6 If the Customer advertises IP addresses which are not provided by REACH and are not Customer Supplied IP Addresses, REACH may request written permission from the registered owner of those IP addresses to route those IP addresses on the Customer's behalf. If REACH does not receive such written permission, REACH may refuse to route such IP addresses through the REACH Network.
 
3 LOCAL CIRCUIT PROVISIONING
3.1 When placing a Customer Order, the Customer shall notify REACH whether the Customer:
  (a) wishes REACH or REACH Affiliate to provide any Local Circuit required (by resupplying the Local Circuit);
  (b) wishes REACH to arrange on behalf of the Customer (i.e. as agent of the Customer) provisioning of a Local Circuit by a suitable Third Party Operator, in which case the Customer shall pay REACH's reasonable administration costs for this work; or
  (c) will arrange for provisioning of a Local Circuit directly with a suitable Third Party Operator.
3.2 If REACH or a REACH Affiliate agrees to supply a Local Circuit , then:
  (a) the Customer must promptly pay all amounts invoiced by REACH or the REACH Affiliate for the Local Circuit; and
  (b) the Customer shall indemnify REACH and the REACH Affiliate against liability for any charges, cancellation charges or other amounts payable by REACH in relation to the Local Circuit upon termination of the Service by the Customer.
3.3 If REACH agrees to arrange, on the Customer's behalf, provisioning of a Local Circuit:
  (a) the Customer appoints REACH to act as the Customer's agent for the purposes of arranging provisioning of the Local Circuit, for which the Customer will pay REACH's reasonable administration charges;
  (b) unless the Customer nominates a particular Third Party Operator, REACH shall have authority to order appropriate Local Circuit services on behalf of the Customer from either a REACH Affiliate or a Third Party Operator selected by REACH, on that operator's standard terms and conditions (including charges);
  (c) the Customer shall contract as principal for the Local Circuit;
  (d) the Customer acknowledges that REACH is under no duty to obtain the Local Circuit service on the best terms and conditions available;
  (e) any representation by REACH as to the availability of any proposed Local Circuit is indicative only unless confirmed in writing as final;
  (f) REACH will notify the Customer if REACH is unable to obtain the required Local Circuit, in which case the Customer may itself endeavour to obtain that circuit;
  (g) if the Customer is unable to obtain an appropriate Local Circuit within 3 months of REACH's notice pursuant to subclause (f), the Customer Order will be deemed to be cancelled;
  (h) if requested by the Customer, REACH may agree to include the Local Circuit charges in the Customer's Statements, for which the Customer shall pay REACH's reasonable administration charges;
  (i) the Customer must promptly pay all Local Circuit charges invoiced directly to the Customer or through REACH; and
  (j) the Customer indemnifies REACH against any liability to the REACH Affiliate or Third Party Operator, as the case may be, in its dealings concerning provisioning and operation of any Local Circuit service for the Customer.
3.4 If either:
  (a) the Customer elects to arrange provisioning of a Local Circuit itself; or
  (b) REACH notifies the Customer that REACH declines its request pursuant to clause 3.1 to arrange such provisioning,
  the Customer must use its reasonable endeavours to ensure that:
  (c) the Local Circuit is installed, tested and made available in good time to enable the Global Internet Access Service to be provided on or before the Target Service Date;
  (d) the interfaces between the Local Circuit and the Global Internet Access Service conform to REACH's technical standards and specifications;
  (e) the Third Party Operator deals directly with, and provides reasonable assistance to, REACH in relation to the connection and inter-working of the Global Internet Access Service and the Local Circuit; and
  (f) the Customer ensures the continued operation of the Local Circuits during the terms of the provision of the relevant Global Internet Access Service, including by promptly settling all invoices for Local Circuit service.
3.5 The Customer shall provide to REACH all information REACH reasonably requires in order to connect the Local Circuit to the REACH Network.
3.6 If supply of a Local Circuit arranged by the Customer expires or is suspended, withdrawn or terminated for any reason before the expiry of the Minimum Commitment Period, the Customer continues to be liable for all Charges payable for the Global Internet Access Service until the expiry of the Minimum Commitment Period.
 
4 CHARGES
4.1 The Charges are payable by the Customer in accordance with monthly Statements. Charges must be paid within 21 days of the date of the relevant Statement. Flat rate monthly Charges shall be billed in advance. Other Charges shall be billed as they are incurred and shall appear on the monthly Statement. Billing for partial months will be pro rated.
4.2 Customer Traffic Sent and Customer Traffic Received for each Internet Access Port shall be measured at approximately 5 minute intervals and, at the end of each calendar month the resulting sample measurements shall respectively be ranked from least to greatest. The highest 5% of the samples for each of the Customer Traffic Sent and Customer Traffic Received shall be discarded and the remaining highest sample is the 95th percentile for that traffic type for that Internet Access Port.
4.3 The Charges shall comprise:
  (a) a once-off Set-up Charge, as set out in the relevant Customer Order;
  (b) a monthly Committed Usage Charge, as set out in the relevant Customer Order, for use of bandwidth up to and including the level of Committed Usage for each Internet Access Port and for provision of the required port capacity;
  (c) if the Customer Traffic Sent or Customer Traffic Received for an Internet Access Port exceeds the relevant Committed Usage, a monthly Additional Usage Charge, which shall be the greater of:
    (i) if Customer Traffic Sent exceeds the Committed Usage for Customer Traffic Sent, the difference between the Customer Traffic Sent and that Committed Usage multiplied by the applicable rate (determined in accordance with the table of Charges set out in the relevant Customer Order) for the 95th percentile of Customer Traffic Sent; or
    (ii) if Customer Traffic Received exceeds the Committed Usage for Customer Traffic Received, the difference between the Customer Traffic Received and that Committed Usage multiplied by the applicable rate (determined in accordance with the table of Charges set out in the relevant Customer Order) for the 95th percentile of Customer Traffic Received; and
  (d) if the Customer terminates the Global Internet Access Service before the expiry of the Minimum Commitment Period, a Cancellation Charge, which shall be calculated by:
    (i) multiplying the number of months (including parts thereof) remaining of the Minimum Commitment Period by the Committed Usage Charges for the cancelled Internet Access Ports; and
    (ii) if REACH or a REACH Affiliate provides a Local Circuit, adding the amount of any charges or cancellation charges incurred by REACH or the REACH Affiliate to the Third Party Operator in respect of the Local Circuit.
4.4 If the Committed Usage aggregates more than one Internet Access Port, the Customer Traffic Received and the Customer Traffic Sent respectively from those Internet Access Ports shall be aggregated together for the purposes of calculating the 95th percentile pursuant to clause 4.2 and those Internet Access Ports shall be treated as if they were a single port for the purposes of determining whether additional charges are payable under clause 4.3(c).
4.5 If the Customer has not specified a Committed Usage, the Committed Usage shall be deemed, for the purposes of clause 4.3, to be the maximum capacity of the port or ports used by REACH to provide the Global Internet Access Service to the Customer.
4.6 If the Customer cancels the Global Internet Access Service prior to the commencement of the Minimum Commitment Period the Customer must pay one months' Charges as a genuine pre-estimate of REACH's loss and not as a penalty.
4.7 Cancellation Charges are payable within 7 days of the date of termination.
 
5 FAULT REMEDIATION
5.1 The Customer must promptly either:
  (a) notify the relevant REACH Global Internet Access help desk; or
  (b) log a report on the relevant Global Internet Access On-line Service Support site, if available,
  of any service difficulty and provide all available details necessary to assist REACH in investigating the service difficulty.
5.2 If REACH performs any work to attempt to remedy a problem in:
  (a) Customer Equipment or other equipment or software that does not form part of the Global Internet Access Service; or
  (b) the Global Internet Access Service resulting from a breach of the Agreement by the Customer,
  (Customer Problem) then:
  (c) the Customer must pay REACH for such work at REACH's then current labour and materials rates; and
  (d) REACH may cease work at any time without incurring any liability for failing to correct the Customer Problem.
5.3 The Customer may request, in writing, Service Level measurements, which REACH shall provide within a reasonable time of receipt of the request either:
  (a) where separately agreed with the Customer, in electronic form by means of the Global Internet Access On-line Service Support (OLSS) website; or
  (b) otherwise, in writing.
5.4 Service Level measurements shall be made by REACH and retained for 3 calendar months after which they may be destroyed.
5.5 REACH must, if it intends to do anything which may affect the Global Internet Access Service, notify the Customer:
  (a) in the case of planned repairs, modification or maintenance (Scheduled Work), in writing at least 14 days in advance; and
  (b) in the case of emergency repairs or modification (Emergency Work), by the best available means as soon as reasonably practicable.
 
6 DICTIONARY
  Access Port IP Address means the IP address provided by REACH to the Customer from time to time for use as the gateway IP address for the Internet Access Port.
  Committed Usage means the amount of bandwidth set out in the relevant Customer Order, in Mbps, for which the Customer agrees to pay and which REACH agrees to provide to the Customer.
  Customer Equipment means the equipment and software used by the Customer or its suppliers to connect to, access or use the Global Internet Access Service.
  Customer Equipment IP Address means the IP address provided by REACH to the Customer from time to time for use as the IP address for the Customer Equipment that will use the Internet Access Port.
  Customer Traffic Received means the volume (in Megabits) of data received by the Customer, on the Customer's side of the Internet Access Port, by means of the Global Internet Access Service.
  Customer Traffic Sent means the volume (in Megabits) of data sent by the Customer, by means of the Global Internet Access Service, and received by REACH on REACH's side of the Internet Access Port.
  Global Internet Access On-line Service Support means the REACH web site as advised to the Customer by REACH which can be accessed by the Customer to ascertain and change information about the Global Internet Access Service and log a Service difficulty notification.
  Global Internet Access Service means the service provided under these Service Terms and more particularly described in clause 1.
  Internet Access Port means the point of demarcation at a REACH Point of Presence where the networks of REACH and the Customer are physically connected together at a digital distribution frame.
  Local Circuit means any local transmission capacity connecting the Customer site to:
    (a) the REACH Point of Presence; or
    (b) an international gateway connected to a REACH Point of Presence.
  REACH Global Internet Access Help Desk means the REACH operations centre to which Service difficulties (as advised to the Customer by REACH from time to time) should be reported.
  REACH Network means the data communication network delineated by the edge routers operated by REACH and used by REACH to provide the Global Internet Access Service, based on the TCP/IP protocol suite, using any form of transmission medium.
  REACH Point of Presence means a point of interconnection to the REACH Network.
  Third Party Operator means a telecommunications operator that is authorised under Applicable Law to provide Local Circuits in the relevant jurisdiction and includes PCCW-HKT Telephone Limited and its Affiliates and Telstra Corporation Limited and its Affiliates.
   
SERVICE LEVEL ATTACHMENT
 
1 SERVICE PROVISIONING GUARANTEE
  REACH will use its reasonable efforts to install the Global Internet Access Service on or before the Target Service Date specified in the relevant Customer Order (Service Provisioning Guarantee).
 

REACH's obligation to meet the Service Provisioning Guarantee (and the Customer's entitlement to any rebate) shall depend on the Customer Order being completed sufficiently in advance of the Target Services Date for REACH to complete its provisioning work.

If REACH does not meet the Service Provisioning Guarantee, the Customer shall be entitled to the Service Credits (subject to paragraph 7.1) determined in accordance with Table 1 below (Service Provisioning Rebate):
 
2 SERVICE AVAILABILITY GUARANTEE
2.1 Service Availability Level
  REACH will use its reasonable efforts to ensure the Global Internet Access Service is available 99.999% of the time (Service Availability Guarantee).
2.2 Service Availability Rebate
 

The Customer shall be entitled to claim a Service Credit (subject to paragraph 7.1) determined in accordance with Table 2 below where REACH fails to meet the Service Availability Guarantee (Service Availability Rebate) because the Global Internet Access Service fails to select alternate paths automatically in the event of a single component failure (Service Outage). A Service Outage shall be deemed to commence at the time REACH records it being reported to the REACH Global Internet Access Help Desk and shall conclude at the time REACH records Global Internet Access Service being restored.

3 TRANSIT DELAY SERVICE LEVEL GUARANTEE
3.1 Average Transit Delay
  REACH will measure, at five minute intervals, the time taken to send sample ping IP packets between REACH edge routers on the paths indicated in the table below and receive an acknowledgment to each (Round Trip Delay).
  Average Transit Delay means, in respect of each of the routes within the geographic zones specified in Table 3 below, the average for the month of Round Trip Delay times for that route.
  REACH will endeavour to ensure that the Average Transit Delay in a particular month does not exceed the Normal Transit Delay set out in the table below (Transit Delay Guarantee).
 
3.2 Transit Delay Rebate
 

The Customer shall be entitled to one Service Credit if the Average Transit Delay between REACH edge routers in a particular month exceeds the Normal Transit Delay set out in Table 3 below (Transit Delay Rebate)
  Notes:
  1. The routes comprised within the Hong Kong to Asian Countries, Trans-Pacific and Trans-Atlantic categories in the above table are specified on the Global Internet Access On-line Service Support site or, if Customer does not have access to this system, as notified in writing by REACH from time to time.
  2. The target transit time for each individual route is specified on the Global Internet Access On-line Service Support site. The Average Transit Delay is calculated as an average of the performance across the individual routes. Failure to meet a target transit time on an individual route does not require a Service Credit to be paid nor does it give rise to any other liability on REACH's part.
  3. The individual route target transit times may be varied from time to time but without affecting the relevant Average Transit Time.
  The Transit Delay Rebate shall not exceed one Service Credit per month.
 
4 PACKET DELIVERY GUARANTEE
4.1 Average Packet Loss
  REACH will measure, at five minute intervals, the number of sample ping IP packets lost between REACH routers within the REACH Network (Lost Packets).
  Average Packet Delivery means, in respect of a particular route, the average for the month of sample ping IP packets sent on that route which are delivered (i.e. are not Lost Packets) as a percentage of all sample ping IP packets sent on that route.
  REACH will endeavour to ensure that the Average Packet Delivery in any month is 99% or more (Packet Delivery Guarantee).
4.2 Packet Loss Rebate
  The Customer shall be entitled to Service Credit(s) if the Average Packet Delivery on one or more occasions in a particular month is less than 99% (Packet Delivery Rebate).
  If REACH does not meet the Packet Delivery Guarantee in any calendar month, the Customer shall be entitled to a Service Credit determined in accordance with Table 4 below:
  The Packet Delivery Rebate shall not exceed three Service Credits per month.
 
5 RESPONSE TIMES
5.1 REACH will use its reasonable efforts to ensure that the period of time between a Service difficulty being reported by the Customer to the REACH Global Internet Access Help Desk and REACH responding to the Customer to acknowledge receipt of the report of the Service difficulty (Response Time) is no more than 30 minutes.
 
6 EXCLUSIONS
6.1 A Customer shall not be entitled to claim a rebate in respect of a breach of the :
  (a) Service Provisioning Guarantee;
  (b) Service Availability Guarantee; or
  (c) Transit Delay Guarantee; or
  (d) Packet Delivery Guarantee,
  where the breach is due to:
  (e) any Scheduled Work notified to the Customer in accordance with clause 5.5 of the Service Terms;
  (f) any Emergency Work notified to the Customer in accordance with clause 5.5 of the Service Terms;
  (g) any failure of the Customer to observe agreed procedures or any relevant Service
  manuals;
  (h) any unauthorised change made to REACH equipment by the Customer;
  (i) any delay in provisioning of or any fault in or service quality issue with any Local Circuits, other Non-REACH Circuits, Customer equipment or other equipment or software that does not form part of the REACH Network;
  (j) any fault identified as arising from a fault in Customer Equipment or the Customer's access circuit;
  (k) any fault in third party networks, local or public Internet traffic exchange points; or
  (l) any abuse or fraud or failure to comply with the Acceptable Usage Policy, on the part of the Customer or its customers.
 
7 REBATE CLAIMS
7.1 Each Service Level applies in respect of each Service provisioned under these Service Terms on and from the Service Commencement Date. In no event shall the total amount of Service Credits issued to the Customer in any month exceed the monthly recurring Charge for the affected Service. For the avoidance of doubt, all such Service Credits are receivable only as a deduction to non-recurring Charges and/or recurring monthly Charges and shall not be receivable in the form of hard currency.
7.2 A Service Credit shall be calculated as 1/30th of the Committed Usage Charge for the relevant Internet Access Port(s) in the last full month Statement (or if none, in the next full month Statement). If the Internet Access Port in respect of which the breach of Service Levels occurs is together with other Internet Access Ports covered by a single Committed Usage Charge, the Committed Usage Charge for that Internet Access Port shall be deemed to be, solely for the purposes of calculating the Service Credit, the amount which is equal to the Committed Usage Charge divided by the number of Internet Access Ports covered by the charge. For the purposes of clarification, the Charges used to calculate the Service Credit do not include any charges payable in respect of Local Circuits or any other Non-REACH Circuits, irrespective of whether the charges for those services are billed by or payable to REACH.
7.3 A claim for a Service Level rebate for the Global Internet Access Service must:
  (a) be sent in writing to the REACH Global Internet Access Help Desk within 7 days of the end of the month in which the event giving rise to the claim for the rebate occurred; and
  (b) provide relevant details, including:
    (i) the Customer reference number;
    (ii) the fault reference number;
    (iii) the date and time the service difficulty was reported to the REACH Global Internet Access Help Desk;
    (iv) the date and time the service difficulty was resolved;
    (v) Customer contact details;
    (vi) kind of rebate claimed (i.e. Service Provisioning Rebate, Service Availability Rebate, Packet Delivery Rebate or Transit Delay Rebate); and
    (vii) the grounds for claiming the rebate.
 
8 REBATE PAYMENT AND SERVICE LEVEL DISPUTES
8.1 If REACH is in breach of a Service Level under this Service Level Schedule, REACH must credit the Customer with the applicable rebate in the Statement for the month following such breach or, if not practicable, in the Statement for the following month.
8.2 Any claim for a rebate must comply with the requirements set out in these Service Terms. If the Customer fails to make a claim in accordance with those requirements, the Customer is taken to have unconditionally and irrevocably waived its right to:
  (a) claim the rebate; and
  (b) make any claim against REACH in respect of REACH's failure to meet the Service Availability Guarantee, Transit Delay Guarantee or Packet Delivery Guarantee, as the case may be.
8.3 Service Level Disputes shall be handled in accordance with the General Terms.
8.4 If total Service Outages in each of three successive months results in the GIA Service being available less than 98 per cent of the time during which REACH was to make the service available in each of those months , the Customer shall be entitled to terminate that Service, by giving REACH written notice no later than 30 days after the end of the third month, notwithstanding that a Minimum Commitment Period (if any) might not have expired. If the Customer does give such notice, the Service shall terminate on the later of the expiry of the 30 day period or 14 days from the date REACH receives the notice. No Cancellation Charges shall be payable by the Customer in the event of termination pursuant to this clause 8.4.

EXHIBIT 4.107

Master Deed of Assignment

THIS MASTER DEED OF ASSIGNMENT is made the 11th day of November 2002

BETWEEN:

  1. Reach Internet Services Pte Ltd of 80 Raffles Place 33-01 UOB Plaza 1, Singapore ("Assignor"); and
     
  2. Pacific Internet Limited of 89 Science Park Drive, #02-05/06 The Rutherford, Singapore 118261 ("Assignee")

(hereinafter, each of the Assignor and the Assignee shall be individually referred to as a "Party" and collectively referred to as the "Parties").

WHEREAS:

  1. By a sale and purchase of business agreement dated 11 November 2002 and made between the parties hereto (the "Sale of Business Agreement"), it was agreed, inter alia, that the Assignor shall transfer the Business Assets (as defined in the Sale of Business Agreement) to the Assignee on terms and conditions as stated in the Sale of Business Agreement.
     
  2. This Deed is made pursuant to the Sale of Business Agreement.

NOW IT IS HEREBY AGREED AS FOLLOWS:

  1. Pursuant to the Sale of Business Agreement, the Assignor as legal and beneficial owner assigns to the Assignee absolutely all its rights title and interest in all the Business Assets with effect from the date of signing of the Sale of Business Agreement.
     
  2. Unless the context otherwise requires, any term used in this Deed which is defined in the Sale of Business Agreement and is not specifically defined in this Deed shall have the meaning attributed to it in the Sale of Business Agreement.
     
  3. This Deed shall be binding on and shall enure for the benefit of each Party's successors and assigns and personal representatives (as the case may be).
     
  4. This Deed shall not be altered, changed or supplemented unless the same is made in writing and signed by the Parties hereto.
     
  5. This Deed shall be governed by and construed in accordance with the laws of the Republic of Singapore and the Parties agree to submit to the non-exclusive jurisdiction of the courts of the Republic of Singapore.

IN WITNESS WHEREOF this Deed has been executed as a Deed on the day and year first abovewritten.

The Common Seal of )
Reach Internet Services Pte Ltd )
was hereunto affixed )
in the presence of: )

 

Director /s/ Robert Kenny
Director /s/ Raja P Kanthan

 

The Common Seal of )
Pacific Internet Limited )
was hereunto affixed )
in the presence of: )

 

Director /s/ Tan Tong Hai
Secretary /s/ Mah Swee Keong

EXHIBIT 4.108

Master Deed of Assignment

THIS MASTER DEED OF ASSIGNMENT is made the 11th day of November 2002

BETWEEN:

  1. Reach Communications Services (Thailand) Limited of 16th Floor, CAT Telecom Tower No 72, Trok Wat Muang Kae, Charoenkrung Road, Bangrak, Bangkok, Thailand ("Assignor"); and
     
  2. World Net & Services Co., Ltd of 333 Lao Peng Nguan Building Tower 1 Building, 28th Floor, Soi Chay Puang, Vibhavadi Rangsit Road, Kwaeng Ladyao, Khet Chatuchak, Bangkok,Thailand ("Assignee")

(hereinafter, each of the Assignor and the Assignee shall be individually referred to as a "Party" and collectively referred to as the "Parties").

WHEREAS:

  1. By a sale and purchase of business agreement dated 11 November 2002 and made between the parties hereto (the "Sale of Business Agreement"), it was agreed, inter alia, that the Assignor shall transfer the Business Assets (as defined in the Sale of Business Agreement) to the Assignee on terms and conditions as stated in the Sale of Business Agreement.
     
  2. This Deed is made pursuant to the Sale of Business Agreement.

NOW IT IS HEREBY AGREED AS FOLLOWS:

  1. Pursuant to the Sale of Business Agreement, the Assignor as legal and beneficial owner assigns to the Assignee absolutely all its rights title and interest in all the Business Assets with effect from the date of signing of the Sale of Business Agreement.
     
  2. Unless the context otherwise requires, any term used in this Deed which is defined in the Sale of Business Agreement and is not specifically defined in this Deed shall have the meaning attributed to it in the Sale of Business Agreement.
     
  3. This Deed shall be binding on and shall enure for the benefit of each Party's successors and assigns and personal representatives (as the case may be).
     
  4. This Deed shall not be altered, changed or supplemented unless the same is made in writing and signed by the Parties hereto.
     
  5. This Deed shall be governed by and construed in accordance with the laws of the Kingdom of Thailand and the Parties agree to submit to the non-exclusive jurisdiction of the courts of the Kingdom of Thailand.

IN WITNESS WHEREOF this Deed has been executed as a Deed on the day and year first abovewritten.

The Common Seal of )
Reach Communications Services (Thailand) Limited )
was hereunto affixed )
in the presence of: )

 

Director /s/ Robert Kenny
Director /s/ Raja P Kanthan

 

The Common Seal of )
World Net & Services Co., Ltd )
was hereunto affixed )
in the presence of: )

 

Director /s/ Lim Hock Koon
Director /s/ Prithayuth Nivasabutr

EXHIBIT 4.109

Master Deed of Assignment

THIS MASTER DEED OF ASSIGNMENT is made the 11th day of November 2002

BETWEEN:

  1. Reach Internet Services (MSC) Sdn Bhd of Level 49, Tower 2, Petronas Twin Tower, Kuala Lumpur City Centre, 50088, Kuala Lumpur, Malaysia ("Assignor"); and
     
  2. Pacific Internet (Malaysia) Sdn Bhd of Level 36 Menara Maxis, Kuala Lumpur City Centre, 50088, Kuala Lumpur, Malaysia ("Assignee")

(hereinafter, each of the Assignor and the Assignee shall be individually referred to as a "Party" and collectively referred to as the "Parties").

WHEREAS:

  1. By a sale and purchase of business agreement dated 11 November 2002and made between the parties hereto (the "Sale of Business Agreement"), it was agreed, inter alia, that the Assignor shall transfer the Business Assets (as defined in the Sale of Business Agreement) to the Assignee on terms and conditions as stated in the Sale of Business Agreement.
     
  2. This Deed is made pursuant to the Sale of Business Agreement.

NOW IT IS HEREBY AGREED AS FOLLOWS:

  1. Pursuant to the Sale of Business Agreement, the Assignor as legal and beneficial owner assigns to the Assignee absolutely all its rights title and interest in all the Business Assets with effect from the date of signing of the Sale of Business Agreement.
     
  2. Unless the context otherwise requires, any term used in this Deed which is defined in the Sale of Business Agreement and is not specifically defined in this Deed shall have the meaning attributed to it in the Sale of Business Agreement.
     
  3. This Deed shall be binding on and shall enure for the benefit of each Party's successors and assigns and personal representatives (as the case may be).
     
  4. This Deed shall not be altered, changed or supplemented unless the same is made in writing and signed by the Parties hereto.
     
  5. This Deed shall be governed by and construed in accordance with the laws of Malaysia and the Parties agree to submit to the non-exclusive jurisdiction of the courts of Malaysia.

 

IN WITNESS WHEREOF this Deed has been executed as a Deed on the day and year first abovewritten.

The Common Seal of )
Reach Internet Services (MSC) Sdn Bhd )
was hereunto affixed )
in the presence of: )

 

Director /s/ Raja P Kanthan
Director/Secretary /s/ Mike

 

The Common Seal of )
Pacific Internet (Malaysia) Sdn Bhd )
was hereunto affixed )
in the presence of: )

 

Director /s/ Tan Tong Hai
Director /s/ Lim Hock Hoon

EXHIBIT 4.110

DEED OF RATIFICATION AND ACCESSION CUM AMENDMENT

THIS DEED OF RATIFICATION AND ACCESSION CUM AMENDMENT ("this Deed") is made the 6th day of January 2003 BETWEEN:

(1) GLADE TRADING COMPANY PRIVATE LIMITED, a company incorporated in India and having its registered office at 1 Sumer Kendra, Pandurang Budhkar Marg, Worli, Mumbai 400018, India ("Glade Trading");
(2) PACIFIC INTERNET INDIA PRIVATE LIMITED, a company incorporated in India and having its registered office at 105 Sumer Kendra, Pandurang Budkhar Marg, Worli, Mumbai 400018, India (the "Company");
(3) PRIMEAST INVESTMENTS LTD, a company incorporated in India and having its registered office at Devatha Plaza, 131 Residency Road, Bangalore 560025, India ("Primeast"); and
(4) PACIFIC INTERNET LTD, a company incorporated in Singapore and having its registered office at 89 Science Park Drive, #02-05/06, The Rutherford, Singapore 118261 ("PI").
(hereinafter the Company, Primeast and PI shall collectively be referred to as "the Existing JVA Parties").


WHEREAS:

 
(A) On the 28th day of February 2001, the Existing JVA Parties entered into a joint venture agreement (the "JVA") to regulate the relationship of PI and Primeast inter se as shareholders of the Company.
 
(B) Pursuant to Clause 3 of the JVA, Glade Trading was required to transfer the Shares held by it representing 49% of the total issued and paid-up capital of the Company to Primeast on or before 15 July 2001.
 
(C) The Existing JVA Parties and Glade Trading are desirous of:
  (i) amending Clause 3 of the JVA in order to reflect a new shareholding structure in respect of the Company wherein Glade Trading shall retain a higher percentage of the Shares in the Company than earlier contemplated; and
  (ii) amending Clause 5.1.1 of the JVA to increase the number of directors who constitute the Board of Directors of the Company.
 
(D) The Existing JVA Parties and Glade Trading agree to enter into this Deed in order to:
  (i) make Glade Trading a party to the JVA;
  (ii) ratify and sanction the new shareholding structure of the Company; and
  (iii) effect the requisite amendments to the JVA.
 
NOW THIS DEED WITNESSES as follows:
     
1. Interpretation
  1.1 In this Deed, except as the context may otherwise require, all words and expressions defined in the JVA shall have the same meanings when used herein.
  1.2  The Existing JVA Parties and Glade Trading hereby agree that all references to the Local Partner in the JVA as supplemented by this Deed shall refer to Primeast and Glade Trading jointly unless otherwise expressly referred to herein.
2. Amendments
  In consideration of the terms, conditions and mutual covenants herein contained, the sufficiency and adequacy of which the Existing JVA Parties hereby acknowledge, the Existing JVA Parties agree and covenant that Clauses 3 and 5.1.1 of the JVA shall be deleted and replaced by the following new Clauses 3 and 5.1.1:
  3. COMPLETION
  3.1 The Parties hereby agree that within sixty (60) days from the date the last of the Requisite Approvals (as defined in Clause 3.2 below) has been obtained, the Parties shall procure the holding of the necessary meetings of the Directors and the shareholders of the Company in order to effect the shareholding structure of the Company in the following manner:
  3.2 The Parties hereby acknowledge that the new shareholding structure of the Company as outlined in Clause 3.1 above is subject to:
    3.2.1 prior written approval from the Foreign Investment Promotion Board of India ("FIPB Approval"); and
    3.2.2 such other licences, permits, consents and/or approvals from other statutory authorities and/or regulatory bodies as may be required under applicable laws to give effect to the provision of Clause 3.1 hereof (if any) ( the "Other Approvals").
(The FIPB Approval and the Other Approvals shall be collectively referred to as the "Requisite Approvals")
  3.3 The Local Partner and PI hereby agree that the Company shall apply for the Requisite Approvals. The Local Partner and PI shall do all acts and things necessary to assist the Company in obtaining the Requisite Approvals expeditiously and the cost incurred thereto shall be borne by the Shareholders in the proportions of their respective shareholdings prior to the new shareholding structure as outlined in Clause 3.1 above. The Parties further agree that the sixtieth (60th) day after the last of the Requisite Approvals have been obtained shall be deemed "the Completion Date".
  3.4  The Local Partner (excluding Glade Trading) hereby warrants and represents to PI that on and after 15 July 2001, the foreign direct investment in the Local Partner (excluding Glade Trading) shall not exceed 49% and management of the Local Partner (excluding Glade Trading) shall be with Indian owners.
  3.5 The Local Partner and the Company shall do all acts and things necessary to ensure that the aforesaid shareholding structure is duly effected on or before the Completion Date and PI shall provide all necessary consents and approvals to effect the same.
  3.6 The Parties further agree that after the shareholding structure under Clause 3.1 hereof has been duly effected, Glade Trading and the Local Partner (excluding Glade Trading) shall be entitled to transfer Shares held by them to each other without the other Party’s written approval as required under clause 9.2, subject to the following:
    3.6.1 the Requisite Approvals (if any) being obtained;
    3.6.2 such transfer being in accordance with the Applicable Laws and Indian regulatory requirements;
    3.6.3 the transferee is a Related Corporation of the transferor;
    3.6.4 Glade Trading shall retain at least 2% of the total issued and paid-up capital of the Company after such transfer;
    3.6.5 the Local Partner (excluding Glade Trading) shall retain at least 26% of the total issued and paid-up capital of the Company after such transfer;
    3.6.6 at least fourteen (14) days prior to the intended transfer, PI shall be notified of the same by the Local Partner via written notice; and
    3.6.7  all costs and expenses incurred in relation to any such transfer (including but not limited to, costs incurred to obtain the Requisite Approvals) shall be borne by the Local Partner.
  5. ORGANISATION OF THE COMPANY
  5.1 Board Of Directors
  5.1.1 Unless otherwise unanimously agreed upon by the Shareholders, the Board of Directors of the Company shall comprise of six (6) directors, being three (3) PI Directors and three (3) Local Partner Directors.
 3.

Covenants Of Glade Trading

Glade Trading hereby covenants to the Existing JVA Parties and to the Company as trustee for all other parties who may hereinafter be bound by the JVA as supplemented by this Deed to adhere to and be bound by all the duties, burdens and obligations of the Local Partner pursuant to the provisions of the JVA as supplemented by this Deed, and a Shareholder holding the same class of shares as the Shares imposed pursuant to the provisions of the JVA as supplemented by this Deed and all documents expressed in writing to be supplemental or ancillary thereto as if Glade Trading had been an original party to the JVA as supplemented by this Deed since the date thereof.
4. Rights of Glade Trading
   4.1 Glade Trading shall, as long as it remains a shareholder of the Company, be independently entitled to all rights and benefits of a Shareholder (other than those that are non-assignable) under the JVA as supplemented by this Deed in each case as if Glade Trading had been an original party to the JVA as supplemented by this Deed since the date thereof.
  4.2 Glade Trading shall, as long as it remains a shareholder of the Company, jointly with Primeast, exercise all rights and benefits accorded to the Local Partner under the JVA as supplemented by this Deed in each case as if Glade Trading had been an original party to the JVA as supplemented by this Deed since the date thereof.
  4.3 In the event Glade Trading is desirous of transferring its shares to an unrelated third party which is not under common management and/or control with Glade Trading and/or Primeast (the "Unrelated Transferee"), Glade Trading shall be entitled to do so subject to and in accordance with all provisions of the JVA as supplemented by this Deed. In the event of such transfer and for the avoidance of doubt, the provisions of Clauses 4.2 and 5 of this Deed shall not apply to the Unrelated Transferee.
5.

Joint And Several Obligations

Primeast and Glade Trading acknowledge that they are under common management control and since references to the Local Partner in the JVA as supplemented by this Deed refer to both Primeast and Glade Trading jointly, Primeast and Glade Trading hereby acknowledge and agree that their obligations and liability therein under are joint and several.

6.

Representations And Warranties Of Primeast

Primeast hereby represents and warrants to PI and the Company that as at the date hereof:
  6.1 the foreign direct investment in Primeast does not exceed 49% of the total issued and paid-up capital of Primeast; and
  6.2 the management of Primeast is controlled by local Indian shareholders.
7. Miscellaneous
7.1

JVA Still Applicable

Subject to the amendments, variations and modifications herein contained, the JVA shall remain in full force and effect and the JVA and this Deed shall be read as a single, integrated document as if the aforesaid amendments, modifications and variations had formed part of the JVA.
7.2

References To Include Amendments Herein

All references to the expression "Agreement" in the JVA itself shall be construed as references to the JVA as amended and supplemented by this Deed.
7.3

Preservation Of Respective Parties’ Rights Under JVA

Without prejudice to the JVA, the Existing JVA Parties hereby agree and declare that the respective parties’ accrued rights, obligations and liabilities under the JVA are to remain in full force and effect in relation to and under the JVA subject to the amendments as hereinbefore set out above.
7.4

Governing Law

THIS DEED SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF INDIA.

IN WITNESS WHEREOF this Deed has been executed as a deed on the date first above written.

The Common Seal of )
GLADE TRADING COMPANY )
PRIVATE LIMITED )
was hereunto affixed )
in the presence of: )

 

Director /s/ R.C. Bhavuk
Director /s/ K.J. Binoj

 

The Common Seal of )
PACIFIC INTERNET INDIA )
PRIVATE LIMITED )
was hereunto affixed )
in the presence of: )

 

Director /s/ Purushotam Ram Yagnik
Director /s/ Foong Tai Hung

 

The Common Seal of )
PRIMEAST INVESTMENTS LTD )
was hereunto affixed )
in the presence of: )

 

Director /s/ Kanwaljeet Singh Bawa
Director /s/ R.C. Bhavuk

 

The Common Seal of )
PACIFIC INTERNET LTD )
was hereunto affixed )
in the presence of: )

 

Director /s/ Tan Tong Hai
Director /s/ Mah Swee Keong

EXHIBIT 4.111

SUPPLEMENTARY AGREEMENT NO.2

DATE: 6 January 2003

We refer to the (a) Joint Venture Agreement dated 28 February 2001 (the "JVA") entered into between Pacific Internet Limited ("PI"), Primeast Investments Ltd ("Primeast") and Pacific Internet India Private Limited ("PII"), (b) Cooperation Agreement dated 28 February 2001 (the "Cooperation Agreement") entered into between PI and Thakral Brothers (Pte) Ltd ("TG"), (c) Supplementary Agreement dated 28 February 2001 ("Supplementary Agreement No. 1") entered into between PI and TG, and (d) Deed of Ratification And Accession Cum Amendment of even date ("Deed of Ratification") entered into between PI, PII, Primeast and Glade Trading Company Private Limited ("Glade").

The parties hereto agree as follows:

  1. TG shall do all acts and things necessary to ensure that the obligations of Primeast and Glade as contained in the Deed of Ratification are duly effected on or before the Completion Date as referred to in the Deed of Ratification.
     
  2. TG shall procure Glade and Primeast to fulfill all of their obligations and observe all the provisions of the JVA as amended by the Deed of Ratification.
     
  3. Subject to such amendments, variations and modifications as provided in the Deed of Ratification, all provisions of the Cooperation Agreement and Supplementary Agreement No. 1 shall remain in full force and effect.
PACIFIC INTERNET LIMITED THAKRAL BROTHERS (PTE) LTD
/S/ TAN TONG HAI
President And Chief Executive Office		 /S/ GURMUKH SINGH THAKRAL
Managing Director

    EXHIBIT 8.1
LIST OF SUBSIDIARIES
 		  
S/n Name of Company Country of Incorporation
     
1. Pacific Internet Corporation Pte Ltd
 		 Singapore
2. Pacific Internet (Australia) Pty. Limited
 		 Australia
3. Zip World Pty Ltd
 		 Australia
4. Hunterlink Pty Limited
 		 Australia
5. Pacific Supernet Limited
 		 Hong Kong
6. Pacific Internet (Hong Kong) Limited
 		 Hong Kong
7. Pacific Internet India Private Limited
 		 India
8. Pacific Internet (Malaysia) Sdn. Bhd.
 		 Malaysia
9. Pacific Internet Philippines, Inc.
 		 Philippines
10. PW Holding Corporation
 		 Philippines
11. Pacific Digiway Limited
 		 Thailand
 
12. Pacific Internet (Thailand) Limited
 		 Thailand
 
13. World Net & Services Co., Ltd. Thailand
 
14. Pacfusion Limited
 		 Bermuda
15. Pacfusion.com Inc.
 		 Delaware, USA
16. Pacfusion Group Holdings Pte Ltd
 		 Singapore
17. Pacfusion.com (Australia) Pty Limited
 		 Australia
18. Pacfusion.com (Hong Kong) Limited
(deregistered on 13 December 2002)
 		 Hong Kong
19. Pacfusion.com (India) Private Limited
 		 India
20. Pacfusion (Malaysia) Sdn. Bhd.
(In Members' Voluntary Liquidation)
 		 Malaysia
21. Pacfusion.com (Thailand) Limited
 		 Thailand
 
22. TravelFusion.com Limited
 		 Bermuda
23. Safe2Travel Pte Ltd
 		 Singapore

  EXHIBIT 12.2
 
CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Pacific Internet Limited, (the "Company"), does hereby certify that, to such officer's knowledge:
 
1. the accompanying annual report of the Company on Form 20-F for the fiscal year ended December 31, 2002 (the "Annual Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
2. the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
  /s/ Tan Tong Hai
Name: Tan Tong Hai
Title: President and Chief Executive Officer
Date: May 31, 2003
 
  /s/ Tan Hwee Siang Nancy
Name: Tan Hwee Siang Nancy
Title: Chief Financial Officer
Date: May 31, 2003
 
A signed original of this written statement required by Section 906 has been provided to Pacific Internet Limited and will be retained by Pacific Internet Limited and furnished to the Securities and Exchange Commission or its staff upon request.
 
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. In accordance with the interim guidance for Section 906 certification issued by the United States Securities and Exchange Commission on March 21, 2003 in Release No. 33-8212, this certification will not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section.

Exhibit 12.3


CONSENT OF INDEPENDENT AUDITORS


We consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-10242 dated April 13, 1999) pertaining to the 1998 Employees' Share Option Plan, and Registration Statements on Form S-8 (No. 333-11122 dated November 12, 1999 and No. 333-106508 dated June 26, 2003) pertaining to the 1999 Share Option Plan of Pacific Internet Limited of our report dated February 28, 2003, with respect to the consolidated financial statements of Pacific Internet Limited included in the Annual Report (Form 20-F) for the year ended December 31, 2002, filed with the Securities and Exchange Commission.


/s/ Ernst & Young
ERNST & YOUNG
Singapore
June 27, 2003