Exhibit 10.7
Pathnet
BINDING TERM SHEET
By and Between Pathnet, Inc. and American Tower Corporation
This BINDING TERM SHEET is made and entered into as of the 17th day of
February, 1998, by and between PATHNET, INC. ("Pathnet"), a Delaware corporation
having its principal place of business at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇▇▇ and AMERICAN TOWER CORPORATION ("ATC"), a Delaware corporation having
its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇.
W I T N E S S E T H:
WHEREAS, Pathnet is engaged in the business of creating high capacity,
digital microwave communications systems for purposes of marketing and selling
the excess long distance telecommunications capacity created by such systems;
WHEREAS, ATC is the owner of existing and future tower assets as
identified in Exhibit A;
WHEREAS, Pathnet is seeking a potential strategic alliance with ATC to act
as ATC's sole representative for the purpose of (i) installing a high capacity
digital microwave system along ATC's tower assets and sites, as identified in
Exhibit A, and (ii) creating capacity to be marketed and sold by Pathnet which,
under the Pathnet program, will generate revenue for both Pathnet and ATC.
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties agree as follows:
1. Preliminary Services and Proposal. Upon execution of this Binding Term
Sheet (referred to herein as "BTS"), Pathnet will conduct preliminary
engineering studies and undertake an analysis of ATC's tower assets which will
be delivered to ATC in the form of a proposal book (referred to herein as the
"Pathnet Proposal"). Pathnet's preliminary studies and analysis will assist ATC
and Pathnet in determining whether to install a high capacity digital microwave
system constructed with SONET architecture (the "System") along certain ATC's
tower paths using ATC tower assets and sites. Pathnet will (i) within sixty (60)
days from the date of this BTS, commence performance of the preliminary site
inspection services listed below and (ii) thereafter, issue its findings upon
completion of such preliminary services in the form of the Pathnet Proposal.
A. Inventory and survey ATC's existing microwave sites and supporting
facilities based on information provided by ATC;
B. Conduct microwave path studies and reliability analyses that will
provide performance data and serve as the engineering basis for design of
the System;
C. Conduct a preliminary evaluation of the probability of successfully
coordinating frequencies on the System;
D. Determine whether a structural analysis of ATC's towers and loading
factors (for metal towers only) is required;
E. Determine potential paths to develop and site locations for new towers,
if any;
F. Develop a preliminary business case model for the deployment of a
Pathnet/ATC System; and
F. Preliminarily design the System.
Provided, however, Pathnet's obligation to provide such preliminary services and
issue the Pathnet Proposal is contingent upon ATC providing to Pathnet all
information necessary to perform such preliminary services and issue the Pathnet
Proposal.
2. Terms of a Potential Relationship. Upon completion of the preliminary
studies and analysis and at the end of the Reservation Period (as defined
below), Pathnet and ATC shall agree as to such tower assets and sites that are
economically and technologically feasible to develop the System, which assets
and sites shall be listed in Exhibit B, as follows:
A. System development responsibilities will be as follow: (i) Pathnet will
pay for and provide the radios, radio software, antenna, waveguide, and
multiplexers required to develop and operate the System, and (ii) ATC will
provide the towers, shelters (subject to existing equipment colocation
agreements with CSX), real property, power supply (as exists), and related
physical assets and infrastructure, as such assets currently exist at the
site; provided (X) Pathnet or ATC (at ATC's discretion) will have the
right to upgrade such assets as required to develop and operate the
System; (Y) ATC will provide intermediate sites required to complete
certain paths or segments in order to create a linear point-to-point
network; and (Z) ATC will provide Pathnet interconnection sites to other
networks, as requested by Pathnet and as available for Pathnet's use.
B. ATC will provide six (6) months of free access to all tower sites owned
by ATC and as required by Pathnet. Such six (6) month term to begin on May
1, 1998 (the "Reservation Period"). After expiration of the reservation
period, a fee to reserve each site selected by Pathnet will be applicable
("Reservation Fee"). The Reservation Fee will be in the amount of three
hundred dollars ($300) per month per site, and shall continue until the
Pathnet system becomes operational and available for commercial traffic,
as mutually determined by the parties. Upon completion of the Reservation
Period, the parties shall attach hereto in the form of Exhibit B a list
of such tower assets and sites which shall be subject to the Reservation
Fee, which exhibit may be amended from time
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to time upon mutual agreement of the parties. All revenue sharing as
outlined in paragraph 2.c will become effective once the System is
operational and available for commercial service; provided the parties
shall execute a lease agreement in the form of Exhibit C setting forth the
rights and obligations of each party as to the tower assets and sites on
such System (the "Lease Agreement").
C. Upon execution of the Lease Agreement, revenue sharing will commence
under the following terms: (i) ATC will receive between three and five (3
and 5%) percent of the collected revenue and (ii) Pathnet will receive
between ninety-seven and ninety-five (97 and 95%) percent of collected
revenue; provided such revenue sharing allocation will be based on the
capital contribution made by Pathnet to the development of the System.
Such contribution and revenue allocation will be set on a sliding
percentage based on the following outside parameters: (i) Pathnet will
receive ninety-seven (97%) percent (and ATC will receive 3%) if it
contributes an amount equal to or greater than one hundred thousand
dollars ($100,000) for site development and (ii) Pathnet will receive
ninety-five (95%) percent (and ATC will receive 5%) if Pathnet does not
contribute capital to the site development. Such revenue sharing terms
shall be specified in the Lease Agreement.
D. Subject to paragraph 2.b. above, Pathnet will have the right to reserve
capacity on certain towers and paths; provided Pathnet commences
construction on such towers and paths within fourteen (14) months after
the end of the Reservation Period.
3. Ownership of Pathnet Work Product. Any and all documents and
preliminary reports created as a result of providing the preliminary services
and the Pathnet Proposal will remain the property of Pathnet. Pathnet agrees to
allow ATC access to the data and the information contained in such documents and
reports. ATC agrees that it will not retain and that it will return to Pathnet,
any copies of such reports or other documents provided by Pathnet, unless and
until such time as the parties enter into the Lease Agreement.
4. No Discussions with Other Parties. ATC agrees that for a period of six
(6) months from the execution date of this BTS, ATC will not negotiate or enter
into any other agreement with any other party concerning the use of its tower
assets for developing a System; provided nothing herein shall prevent ATC from
meeting its obligations to CSX under existing agreements between ATC and CSX.
5. Access to Sites and Information. On a segment by segment basis, ATC
will use its best efforts to provide Pathnet (i) access to all sites and (ii)
all the relevant information and data in ATC's possession, custody and control
that would be of assistance to Pathnet in the performance of Pathnet's
inspection and review of ATC's tower network, including the evaluation of ATC's
existing tower assets, sites (whether containing a tower or not), equipment,
specifications, equipment sheds, and rights-of-ways.
6. Maintenance. ATC will provide maintenance services for the towers,
shelters and sites. Maintenance of Pathnet equipment will be the responsibility
of Pathnet; provided ATC shall assist Pathnet in identifying service providers
for Pathnet equipment.
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7. Certificates of Insurance. Upon the request of ATC, Pathnet will
furnish ATC with current certificates of the insurance evidencing the coverage
in both type and amount which shall be in form reasonably satisfactory to ATC.
8. Indemnification by Pathnet. Pathnet and its agents agree to abide by
all applicable laws, regulations, and specific safety regulations during tower
site visits. In addition, Pathnet agrees to indemnify, defend and hold harmless
ATC from and against any liability directly resulting from Pathnet's access to
ATC's facilities during the period of this BTS.
9. Term and Cancelation of BTS. This BTS is valid until (i) the end of the
Reservation Period, if and only if Pathnet elects not to pay any Reservation Fee
for any tower assets and sites, (ii) upon execution of a Lease Agreement in the
form of Exhibit C for those tower assets and sites upon which Pathnet will
develop the System or (iii) in the event the parties do not execute a Lease
Agreement, fourteen (14) months after the end of the Reservation Period. Except
for as provided herein, this BTS may not be terminated without the written
mutual consent of the parties.
AMERICAN TOWER CORPORATION
By: /s/ ▇. ▇. ▇▇▇▇▇▇
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Name: ▇. ▇. ▇▇▇▇▇▇
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Title: Vice President
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Date: 2/17/98
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PATHNET, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Title: Chairman
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Date: 2/16/98
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[PATHNET LETTERHEAD]
AMENDMENT TO BINDING TERM SHEET
By and Between
Pathnet, Inc. and American Tower Corporation
Dated February 17, 1998
In further consideration of the mutual promises contained in the Binding Term
Sheet, dated February 17, 1998, by and between Pathnet, Inc. and American Tower
Corporation, the parties hereby agree to amend EXHIBIT A to include the
additional sites and tower assets as set forth in the attachment hereto.
Agreed to and accepted as of
the date written below:
AMERICAN TOWER CORPORATION
By: /s/ ▇. ▇. ▇▇▇▇▇▇
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Name: ▇. ▇. ▇▇▇▇▇▇
Title: Vice President
Date: February 25, 1998
PATHNET, INC.
By: ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President & CEO
[Pathnet Letterhead]
AMENDMENT NO. 2 TO BINDING TERM SHEET
By and Between
Pathnet, Inc. and American Tower Corporation
Dated February 17, 1998
In further consideration of the mutual promises contained in the Binding Term
Sheet, dated February 17, 1998, by and between Pathnet, Inc. and American Tower
Corporation (the "BTS"), the parties hereby agree to amend EXHIBIT A to include
the additional sites and tower assets as set forth in the attachment hereto, as
such sites and tower assets may modify, supplement or duplicate the sites and
tower assets set forth in EXHIBIT A to the Binding Term Sheet and the Amendment
to Binding Term Sheet, dated February 25, 1998.
Agreed to and accepted as of
the date written below:
AMERICAN TOWER CORPORATION
By: /s/ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
Date: April 8, 1998
PATHNET, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President & CEO