Exhibit 10.2
------------
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
MARKETING AGREEMENT
This Marketing Agreement ("Agreement") between PACIFIC FIBER LINK, LLC,
a Washington limited liability company ("PFL") and PATHNET, INC., a Delaware
corporation ("Purchaser), dated as of the 31st day of March, 1999 ("Effective
Date"). Each of PFL and Purchaser are referred to herein as a "Party" or the
"Parties."
RECITALS
A. PFL and Purchaser entered into that certain Agreement for Construction
and Sale of Conduit and Dark Fiber System on the 31st day of March,
1999 ("Conduit and Fiber Sale Agreement") for the sale and purchase of
[ * * * ] and [ * * * ] fibers or [ * * * ] of the total number of
fibers pulled through PFL's first conduit (the "Primary Conduit"),
whichever is greater, in PFL's [ * * * ] fiber optic
telecommunications system being developed and constructed between
Denver, Colorado and Chicago, Illinois (the "System").
B. In connection with the development and construction of the System by
PFL, the Parties desire to enter into this Agreement in order to
establish certain restrictions on the sale, swap or lease of fibers
pulled through the Primary Conduit to facilitate the mutual
development of a substantial customer base for each Party to utilize
to efficiently maximize and increase each Party's investment in the
System for a greater financial return, on the terms and conditions set
forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency whereof are hereby acknowledged, the Parties hereto agree as
follows:
All terms not defined herein shall have the meaning set forth in the
Conduit and Fiber Sale Agreement.
1. OWNERSHIP:
----------
The System shall contain [ * * * ] conduits. PFL shall own [ * * * ]
conduits and Purchaser shall own [ * * * ]. The first one (1) of PFL's
[ * * * ] conduits to contain the fibers being purchased by Purchaser
shall be designated the Primary Conduit. Purchaser shall own
1
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
[ * * * ] fibers or [ * * * ] of the total number of fibers pulled
through the Primary Conduit, whichever is greater.
2. SALES AND MARKETING:
--------------------
Both Parties acknowledge and agree that each Party's [ * * * ] fibers, or [
* * * ] of the total number of fibers pulled through the Primary Conduit as
the case may be, shall be designated and disposed of as follows:
(a) Each Party shall retain exclusive ownership rights in [ * * * ] fibers
contained in the Primary Conduit for its own use ("Retained Fibers").
Subject to the provisions of Section (e) below, nothing herein shall
limit or preclude the other Party from negotiating a sale, lease,
license or grant of any indefeasible right to use fibers (hereinafter,
a "Disposition") or a swap of fibers, as it relates to each Party's
exclusive ownership of its Retained Fibers. Accordingly, all revenue
arising from or attributable to either Party's Disposition or swap of
its Retained Fibers shall remain the personal property of that Party
and such revenue shall not be shared with the other Party.
(b) Each Party agrees to contribute its remaining fibers in the Primary
Conduit (the "Joint Fibers") for joint marketing purposes as set forth
in this Agreement (i.e. If the Parties agree to pull a [ * * * ] count
fiber cable through the Primary Conduit, each Party retains exclusive
ownership rights in [ * * * ] fibers each with the remaining [ * * * ]
to be used for joint marketing purposes). Each Party will undertake
reasonable sales and marketing efforts to make Dispositions of the
Joint Fibers. All Dispositions shall be made pursuant to an agreement
in form and content to be mutually agreed to between the Parties prior
to any Disposition. Provided that the proposed Disposition complies
with the Minimum Prices (as defined below) and is for a period of not
less than five (5) years (the "Minimum Term"), and is in form and
content mutually agreed to between the Parties, then (i) each Party
will contribute [ * * * ] of the Joint Fibers required for the
Disposition; and (ii) neither Party will have the right to decline to
contribute its Joint Fibers to a Disposition.
(c) Any other arrangement, transfer or disposition of the Joint Fibers,
including, without limitation, a swap involving Joint Fibers, a
Disposition of Joint Fibers for less than the Minimum Price or Minimum
Term or not in accordance with an agreement mutually agreed to between
the Parties, a Disposition of the Joint Fibers with the benefit of
optical amplification equipment, or a sale of lit telecommunications
capacity on the Joint Fibers, shall require the prior written consent
of both Parties, and absent such consent, such alternate disposition
shall not occur.
(d) Any Disposition of Joint Fibers, whether agreed to prior to or after
execution of this Agreement, shall be governed by this Agreement and
shall be in the name of the Party who originated and negotiated the
Disposition; provided, however, that the
2
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
originating Party include the non-originating Party as a named Party
in the Disposition agreement and any press release relating to the
Disposition of the Joint Fibers. In the case of Dispositions entered
into prior to completion of construction of the subject Joint Fibers,
the Parties will take such steps as are necessary to ensure that the
benefit of the Disposition accrues to the non-originating Party even
if the originating Party defaults under the Conduit and Fiber Sales
Agreement and the subject fibers are provided solely by the
non-originating Party. Neither Party shall have the right to receive
any revenue from a Disposition unless it has timely fulfilled its
payment obligations under the Conduit and Fiber Sale Agreement.
(e) Each Party agrees that the other may Dispose of [ * * * ] of its [ * *
* ] Retained Fibers in any third party fiber exchange without the
other Party's consent; provided that any such fiber exchange shall
include a [ * * * ] resale restriction on the receiving third party.
Each Party's remaining [ * * * ] Retained Fibers shall not be Disposed
of in any third party transaction, make any swap of its Retained
Fibers or sell the Retained Fibers with the benefit of optical
amplification, until this Agreement is terminated as provided for in
Article 3. Either Party may at any time and at its sole cost and
expense, light its Retained Fibers and sell telecommunications
capacity thereon.
(f) Each Party expressly agrees not to install any cable in its own
conduit or make any Disposition of its own conduit in any third party
transaction, or swap its own conduit, until the termination of this
Agreement pursuant to Article 3.
(g) The number of fibers installed in the Primary Conduit, whether during
initial construction or thereafter, shall be subject to the mutual
agreement of the Parties. The Provisions of this paragraph shall
survive expiration or termination of this Agreement.
(h) Upon expiration or termination of any Disposition, all Joint Fibers
that were part of that Disposition shall revert to the Party that
owned such fibers and shall be deemed Retained Fibers.
(i) Sales, leases, grants of indefeasible rights to use, and other
dispositions of Joint Fibers to an Affiliate (as hereinafter defined)
shall not be deemed Dispositions hereunder, and any Joint Fibers that
are the subject of such arrangement shall remain Joint Fibers
notwithstanding such arrangement.
(j) The Disposition of the Joint Fibers shall not be made for less than
the following prices per mile (the "Minimum Prices").
3
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
Fiber:
------
(i) [ * * * ]
(ii) [ * * * ]
(iii) [ * * * ]
(iv) [ * * * ]
(v) [ * * * ]
(vi) If the selling price is less than the Minimum Prices listed
above, the price shall be mutually negotiated between the
Parties. If the Parties fail to agree on a mutually
acceptable price, the Disposition shall not be consummated.
Upon either Party's receipt of payment from a third party for
Disposition of Joint Fibers, the receiving Party shall immediately
remit to the non-receiving Party [ * * * ] of the revenue received
from the third party.
Conduit: No conduit or right to use conduit, including the Primary
--------
Conduit, shall be sold, leased or otherwise disposed of except on the
mutual written agreement of the Parties.
3. TERM:
-----
The term of this Agreement shall commence on the date hereof and,
unless sooner terminated by mutual agreement of the Parties, shall
terminate upon the occurrence of any of the following events:
(a) The Parties have completed Dispositions of all of the Joint
Fibers;
(b) The contribution by either Party of its last Joint Fibers to a
Distribution;
(c) [ * * * ]
4. DEFAULT:
--------
For the purposes of this Agreement, an "Event of Default" is defined
as follows:
(a) Failure of either Party to provide reasonably competent staff in
sufficient numbers, and undertake diligent efforts, to adequately
market and sell the marketable fibers under the terms and
conditions of this Agreement.
(b) Material failure of either Party to perform its duties and
obligations as set forth herein.
4
Prior to either Party terminating this Agreement due to an Event of Default,
each Party shall provide the other with written notice of its intention to
terminate or seek other remedies available under this Agreement. Such notice
shall specify in detail the act or event constituting an Event of Default and
the notified Party shall be entitled a reasonable time to cure such Event of
Default, not to exceed thirty (30) days. If each such matter is cured (at the
defaulting Parties' sole cost and expense) within such period, no grounds for
termination shall then exist. If the defaulting Party fails to cure the Event of
Default as set forth herein, the non-defaulting Party may, in its sole and
absolute discretion, terminate this Agreement or obtain specific performance
from the defaulting Party in addition to any other remedies available to the
non-defaulting Party at law or in equity.
5. MISCELLANEOUS:
--------------
(a) Entire Agreement. This Agreement embodies the entire agreement
------------------
and understanding between the Parties hereto relating to the
marketing of the System and Purchaser System and the obligations
of the Parties with respect to the marketing of the System,
including Purchaser System, and supersedes all prior agreements
and understandings, whether written or oral, between them with
respect thereto.
(b) No Partnership. Nothing herein shall constitute either Party as
---------------
the agent or legal representative of the other Party and does not
create a partnership or joint venture between the Parties.
(c) Limitation of Authority. Neither Party shall have the right or
-------------------------
authority, express or implied, to commit or otherwise obligate
the other in any manner whatsoever except to the extent
specifically authorized in writing by the respective Parties.
(d) Assignment. This Agreement is personal to both PFL and Purchaser
-----------
and neither Party shall have the right, power or authority to
assign this instrument, or any portion thereof, or to delegate
any duties or obligations arising hereunder, either voluntary,
involuntary or by operation of law, without the prior written
approval of the non-assigning Party. Notwithstanding the
foregoing, this Agreement may be assigned without the consent of
either Party to an Affiliate of either Party provided that any
such Affiliate enters into a written agreement with the
non-assigning Party to be bound by the provisions of this
Agreement in all respects. For purposes of this Agreement, an
Affiliate shall mean (i) an entity controlling, controlled by or
under the common control of a Party; or (ii) the successor by
merger or purchase of all or substantially all of a Party's stock
or assets.
(e) Amendments. This Agreement may be amended only in writing, in
-----------
whole or in part, at any time only by the approval of both
Parties. No provision of this Agreement may be waived except by a
writing signed by the waiving Party.
(f) Applicable Law. This Agreement shall be governed by and construed
---------------
and enforced in accordance with the laws of the State of New York
without regard for principles of conflicts of laws that would
require the application of law of any other jurisdiction. Venue
for all disputes shall be Denver, Colorado.
5
(g) Severability. If any provision of this Agreement is held to be
-------------
invalid, as applied to any fact or circumstance, such invalidity
shall not affect the validity of any remaining provision hereof
or the validity of such provision as applied to any other fact or
circumstance.
(h) Captions. All captions contained in this Agreement are for
---------
convenience of reference only and shall not be considered in any
way in connection with the interpretation or enforcement of any
provision of this Agreement.
(i) Binding Effect. Except as herein otherwise provided, this
----------------
Agreement shall be binding upon, and inure to the benefit of, PFL
and Purchaser and their respective Affiliates, successors and
permitted assigns. No provision of this Agreement shall be
applied for the benefit of, or be enforceable by, any person who
is not Party to, an Affiliate, or a permitted assignee of, this
Agreement.
(j) Counterparts. This Agreement may be executed in any number of
-------------
counterparts each of which shall be deemed an original, but all
of which together shall constitute the same instrument.
(k) Attorneys' Fees. In any action or proceeding to enforce rights
-----------------
under this Agreement, the prevailing Party shall be entitled to
recover reasonable costs and reasonable attorneys' fees.
(l) Waiver of Trial by Jury. In the event of any litigation with
-------------------------
respect to this Agreement or any instrument document executed and
delivered in connection herewith, each Party waives its right to
trial by jury.
(m) Dispute Resolution . The Parties agree that any disagreement or
---------------------
dispute arising under or related to this Agreement shall be
resolved in accordance with Article 35 of the Conduit and Fiber
Sale Agreement.
6
Executed as of the date and year first above written.
PACIFIC FIBER LINK, LLC, a Washington limited
liability company
By: /s/ [name illegible]
----------------------------------
Its: Executive V.P.
----------------------------------
March 31/99
PATHNET, INC., a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Its: President and CEO
----------------------------------
3/31/99
7
