Term Sheet for Operator Agreement

This term sheet outlines the key terms and conditions under which the Operator shall manage the open access network. The Operator is responsible for maintaining the infrastructure, onboarding Retail Service Providers (RSPs), and managing customer relationships.

Base Fees and Revenue Share Model

Zone Type Base Fee (Upon Activation) Revenue Share (Customer Acquisition) Minimum Take-Up Commit

Access Zone

$X,XXX

Y%

Z%

Community Zone

$X,XXX

Y%

Z%
The base fee is a fixed fee charged as each Service Area within the zone becomes operational. The revenue share is a percentage of the revenue from each customer acquired by the Operator. Minimum take-up commit refers to the minimum percentage of potential customers in a Service Area that the Operator is expected to acquire within a specified timeframe.

SLA Penalties and Performance Incentives

Performance KPI Target Penalty per Breach Incentive for Exceeding Target

Network Uptime

99.99%

$XXX

$XX

Customer Acquisition Rate

ZZ% per quarter

$XXX

$XX

Response Time to Incidents

Within X hours

$XXX

$XX
Penalties will be enforced on SLA breaches, with specific amounts deducted for each breach. Incentives will be provided for performance that exceeds the specified KPI targets.

Risk Management: Bonding and Holdbacks

Risk Aspect Requirement Remarks

Execution Bond

XX% of annual base fee

Ensures compensation for failure to meet performance or operational standards.

Payment Bond

XX% of total estimated revenue share

Guarantees payment obligations to subcontractors and suppliers.

Performance Bond

XX% of total contract value

Provides assurance for satisfactory completion of the agreement.

Holdback

XX% of each invoice

Retained to manage risks associated with non-compliance or defects until satisfactory resolution.
Bonds are a form of financial assurance that the Operator will perform the duties as stated in the agreement. The holdback is a risk management tool to ensure that the Operator corrects any deficiencies in a timely and satisfactory manner. This will be for installations and hook-ups, and will be released after a specified period of time.