Letter of intent (heads of terms)

Write down the main commercial terms of a colocation, powered shell, powered land or GPU deal before the full contract is drafted. Non-binding on the deal itself, binding on confidentiality, exclusivity, costs and governing law.

For both sides · Updated Nov 2, 2026 · Example to adapt

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How this model works

How it works

A letter of intent, also called heads of terms or a term sheet, records the main points both sides have agreed in principle: what capacity, where, from when, for how long and at roughly what price. Lawyers then turn it into the definitive agreement.
The deal terms in it are not binding. Either side can still walk away until the definitive agreement is signed. A short list of clauses does bind from signature: confidentiality, exclusivity if you agree it, who pays costs, and governing law.
On AICapacity, it usually follows the NDA and a first site visit or technical call. Schedule 1 then becomes the checklist both sides’ lawyers work from, and Schedule 2 the shared timetable.

Good for

Testing whether a buyer is serious before you spend money on design, grid studies or long-lead equipment.
Giving your board, landowner or lender something concrete. Financiers of new capacity often ask for a signed letter of intent from an anchor customer.
Fixing the numbers that matter (capacity, ramp, ready-for-service date, price unit) so they are not reopened in every drafting round.
Holding capacity for one buyer for a short, defined exclusivity period while they complete due diligence.

How the money works

Be precise about the price unit. Colocation and whitespace are usually priced per kW of contracted IT capacity per month or per rack per month; powered shells per m² or per MW per year; powered land per MW of grid connection or per hectare; GPU compute per GPU-hour or per node per month.
Say whether electricity is included or passed through. Passing it through at cost, often with a PUE factor or a small management fee, keeps energy price risk with the customer. Nordic and European power prices can move a lot over a long term.
Long terms are usually indexed once a year to a consumer price index. Agree the index now, and whether there is a floor or a cap.
If you give exclusivity, it is reasonable to ask for an exclusivity fee or deposit, credited against the first invoice if the deal is signed.

Watch out for

Keep the non-binding parts clearly non-binding. In several European legal systems, a party that breaks off advanced negotiations without good reason, after leading the other to rely on a deal, can be liable for wasted costs even under a non-binding letter.
Do not commit to a ready-for-service date you do not control. Make grid connection, permits and financing conditions, and set realistic dates in Schedule 2.
Exclusivity ties up your capacity. Keep it short, give it a fixed end date and link it to the customer making progress.
Do not start customer-specific works or order equipment on the strength of the letter alone. Agree in writing first who pays if the deal falls through (clause 7.2).
Check that whoever signs has authority, and make board or investment committee approval an explicit condition for both sides.

An example of how this kind of deal can be structured, to adapt with your own advisers. Not legal advice and not a final agreement. AICapacity is not a party to agreements made from it.

Letter of intent

This letter of intent is dated [date] and is made between:

(1) [Provider legal name], a company registered in [country] under number [registration number], whose registered office is at [address] (“Provider”); and

(2) [Customer legal name], a company registered in [country] under number [registration number], whose registered office is at [address] (“Customer”),

each a “Party” and together the “Parties”.

Background

(A) The Provider [owns / operates / holds the development rights to] the site described in Schedule 1 (the “Site”) and intends to make capacity available at it in the form of [colocation space / data hall whitespace / a powered shell / powered land / GPU compute capacity].

(B) The Customer wishes to secure that capacity, subject to due diligence, internal approvals and a definitive agreement.

(D) This letter records the main terms on which the Parties currently intend to proceed. Except for the Binding Provisions, it is not legally binding.

The Parties agree as follows:

1Definitions and interpretation
1. 1.1
  In this letter:
  1. (a)“Affiliate” means any entity that controls, is controlled by, or is under common control with a Party, where control means the ownership of more than half of the voting rights or the power to direct management;
  2. (b)“Binding Provisions” means sections 1 and 2 and sections 5 to 12;
  3. (c)“Business Day” means a day other than a Saturday, a Sunday or a public holiday in [country];
  4. (d)“Capacity” means the capacity described in the row headed “Capacity” in Schedule 1;
  5. (e)“Definitive Agreement” means the full written agreement or agreements for the Proposed Transaction, signed by both Parties;
  6. (f)“Indicative Terms” means the terms set out in Schedule 1;
  7. (g)“Long-stop Date” means the date stated as such in Schedule 2;
  8. (h)“Proposed Transaction” has the meaning given in clause 3.1; and
  9. (i)“Representatives” has the meaning given in the NDA.
2. 1.2
  Headings are for convenience only. References to sections, clauses and Schedules are to those of this letter, and the Schedules form part of it. Words such as “including” and “such as” do not limit the words that come before them.
2Status of this letter
1. 2.1
  Except for the Binding Provisions, this letter is a record of the Parties’ current intentions only. It is subject to contract, is not legally binding, and creates no obligation on either Party to negotiate, to continue negotiating, or to enter into the Proposed Transaction or any Definitive Agreement.
2. 2.2
  No agreement for the Proposed Transaction will come into existence unless and until a Definitive Agreement has been signed and delivered by both Parties. No conduct, correspondence, agreement on an individual term or preparatory work shall create such an agreement.
3. 2.3
  Either Party may end negotiations at any time and for any reason by written notice to the other, without liability to the other except for any breach of the Binding Provisions before that notice.
  Drafting note. Under some legal systems used in the Nordics and continental Europe, a party that ends advanced negotiations without good reason, after leading the other to rely on a deal being signed, can be liable for the other side’s wasted costs whatever the letter says. Keep the non-binding parts genuinely open, avoid words such as “agreed” or “committed” in Schedule 1, and ask counsel how your governing law treats this.
4. 2.4
  The Binding Provisions are legally binding on the Parties from the date of this letter.
3Proposed transaction
1. 3.1
  The Parties intend to negotiate and enter into [a colocation services agreement / a lease of data hall whitespace / a lease of a powered shell / an option and lease of powered land / a GPU capacity reservation agreement] under which the Provider will make the Capacity available to the Customer at the Site on terms substantially consistent with the Indicative Terms (the “Proposed Transaction”).
  Drafting note. Keep the option that fits and delete the others. If the deal combines models, for example a powered shell now with an option over adjoining land later, list each one here and give the terms for each in Schedule 1.
2. 3.2
  The Indicative Terms reflect the Parties’ understanding at the date of this letter. They may change as a result of due diligence, design development, grid connection studies, financing requirements or negotiation, and either Party may propose terms that are not set out in Schedule 1.
3. 3.3
  The Parties expect the Definitive Agreement to cover, in addition to the Indicative Terms, service levels and service credits, access and site rules, the works each Party is to carry out, insurance, limitation of liability, termination, assignment and change of control, and data protection.
4Due diligence and the Definitive Agreement
1. 4.1
  The Provider intends to give the Customer and its Representatives reasonable access to the Site, on reasonable notice and subject to the Provider’s site rules, and to provide the information the Customer reasonably requests to evaluate the Proposed Transaction. This may include title and land documents, permits and planning status, the grid connection agreement and any capacity reservation, design and redundancy documentation, and the construction or delivery programme.
2. 4.2
  The Customer intends to provide the information the Provider reasonably requests to evaluate the Customer. This may include its corporate details and ownership, financial statements or other evidence of credit standing, the information needed for anti-money laundering, sanctions and export-control checks, and its technical requirements such as power density, cooling method and connectivity.
  Drafting note. For GPU compute deals, hardware suppliers and financiers increasingly expect export-control and sanctions checks on the customer and on the intended use of the compute. Raise this early so it does not hold up signing.
3. 4.3
  The Parties intend to work to the timetable in Schedule 2. [Provider / Customer] intends to prepare the first draft of the Definitive Agreement.
4. 4.4
  Each Party’s lead contact for the Proposed Transaction is named in Schedule 2.
5Exclusivity
1. 5.1
  In return for [the Customer’s payment of the Exclusivity Fee under clause 5.4 / the Customer’s undertakings in this letter], during the Exclusivity Period the Provider shall not, and shall ensure that its Affiliates and Representatives do not, directly or indirectly solicit, encourage, negotiate or enter into any arrangement with any person other than the Customer for the reservation, lease, licence, sale or other use of the Capacity or any part of it, or that would prevent the Provider from entering into the Proposed Transaction.
  Drafting note. Optional. Exclusivity means you stop marketing the Capacity while the Customer completes due diligence. Commonly 30 to 90 days, sometimes longer for build-to-suit deals. Under English law a promise to stay exclusive is enforceable only if it is for a defined period and given in return for something, which is why an exclusivity fee or the Customer’s own undertakings are referred to. If no exclusivity is agreed, replace the text of each clause in this section with “Not used.” so the numbering and cross-references stay correct.
2. 5.2
  The “Exclusivity Period” starts on the date of this letter and ends on the earliest of:
  1. (a)the date [number] days after the date of this letter;
  2. (b)the date on which the Definitive Agreement is signed; and
  3. (c)the date on which the Customer notifies the Provider in writing that it does not wish to proceed.
3. 5.3
  If, during the Exclusivity Period, the Provider receives an approach from a third party concerning the Capacity, it shall promptly tell the Customer that it has done so, without being required to disclose information it is not permitted to share.
4. 5.4
  The Customer shall pay the Provider an exclusivity fee of [amount and currency] (the “Exclusivity Fee”) within [number] Business Days of the date of this letter. If the Definitive Agreement is signed, the Exclusivity Fee shall be credited against the first invoice under it. If the Provider breaches clause 5.1, the Provider shall refund the Exclusivity Fee in full within [number] Business Days of the Customer’s written request. In all other cases the Exclusivity Fee is non-refundable.
  Drafting note. Optional. If no fee is agreed, replace this clause with “Not used.” and choose the second option in clause 5.1.
6Confidentiality
1. 6.1
  The NDA applies to all information exchanged in connection with the Proposed Transaction. The existence and terms of this letter, and the fact that the Parties are negotiating, are Confidential Information (as defined in the NDA) of each Party.
  Drafting note. If no NDA has been signed yet, sign the mutual NDA before or together with this letter. Do not rely on this letter alone to protect site, grid and pricing information.
2. 6.2
  If the NDA ends before this letter ends, its terms continue to apply to information exchanged in connection with the Proposed Transaction as if they were set out in full in this letter, for as long as the NDA states they apply after it ends.
3. 6.3
  Neither Party shall make any public announcement about the Proposed Transaction, or name the other Party as a customer or supplier, without the other Party’s prior written consent, except where required by law or by the rules of a stock exchange. In that case the Party making the announcement shall, where legally permitted, consult the other Party on its timing and content beforehand.
7Costs
1. 7.1
  Each Party shall bear its own costs and expenses, including the fees of its advisers, in connection with this letter, due diligence and the negotiation of the Definitive Agreement, whether or not the Proposed Transaction proceeds.
2. 7.2
  Neither Party is obliged to carry out works, order equipment, apply for or increase any grid capacity, or incur any third-party cost at the request of the other before the Definitive Agreement is signed. If the Parties wish any such step to be taken earlier, they shall first agree in writing what is to be done, its estimated cost, which Party bears that cost, and whether and when it is refundable if the Proposed Transaction does not proceed.
  Drafting note. Customers sometimes ask the Provider to start design work, to order long-lead items such as transformers, switchgear, cooling plant or GPUs, or to increase a grid application before contract. Without a written cost agreement under this clause (often called an early works or reservation agreement), the Provider usually carries that cost alone if the deal falls through.
8Introduction through the platform
1. 8.1
  The Parties acknowledge that they were introduced through AICapacity and that the terms of use of AICapacity that each of them has accepted continue to apply to any agreement between them arising from that introduction, including the Definitive Agreement. AICapacity is not a party to this letter or to any Definitive Agreement and has no rights or obligations under them.
9Personal data
1. 9.1
  Each Party shall share personal data in connection with the Proposed Transaction only where necessary and shall comply with applicable data protection law, including the General Data Protection Regulation (EU) 2016/679, in respect of any personal data it receives, such as the names and contact details of the other Party’s staff and Representatives and records of Site visits. Each Party acts as an independent controller of the personal data it receives.
10Duration and termination
1. 10.1
  This letter ends on the earliest of:
  1. (a)the signing of the Definitive Agreement;
  2. (b)the Long-stop Date, unless the Parties agree in writing to extend it; and
  3. (c)the date on which either Party gives notice under clause 2.3.
2. 10.2
  Where section 5 applies and the Provider gives notice under clause 2.3 during the Exclusivity Period, section 5 continues to apply until the Exclusivity Period would otherwise have ended.
3. 10.3
  When this letter ends, sections 6 to 9, 11 and 12, clause 10.2, and section 1 to the extent needed to interpret them, continue to apply. Ending this letter does not affect any right or remedy that has accrued before it ends.
11General
1. 11.1
  Together with the NDA, this letter is the entire agreement between the Parties about the subject matter of the Binding Provisions and supersedes any earlier arrangement about that subject matter.
2. 11.2
  Each Party confirms that, in entering into this letter, it has not relied on any statement, representation or assurance that is not set out in the Binding Provisions. Nothing in this clause limits liability for fraud.
3. 11.3
  No variation of this letter is effective unless it is in writing and signed by both Parties. No failure or delay in exercising a right is a waiver of it.
4. 11.4
  Neither Party may assign or transfer its rights or obligations under this letter without the other Party’s prior written consent.
5. 11.5
  Nothing in this letter creates a partnership, joint venture or agency between the Parties, and a person who is not a Party has no right to enforce any of its terms.
6. 11.6
  Notices under this letter shall be in writing and sent by email to the addresses each Party gives below, with a copy by post or courier where the notice ends negotiations or concerns a breach.
7. 11.7
  This letter may be signed in counterparts and by electronic signature, each of which is an original and together form one document.
12Governing law and disputes
1. 12.1
  This letter and any dispute or claim arising out of or in connection with it, including any non-contractual dispute or claim, are governed by the laws of [governing law].
2. 12.2
  Any dispute arising out of or in connection with this letter shall be finally resolved by [arbitration under the rules of [arbitral institution], with the seat of arbitration in [city] and the proceedings conducted in English / the courts of [country and city]].
  Drafting note. Common choices for Nordic and European capacity deals: Swedish law with arbitration under the SCC Arbitration Rules seated in Stockholm, or English law with arbitration under the LCIA Rules seated in London. Arbitration keeps disputes confidential, which matters for site and pricing information. The governing law also decides how far the non-binding parts are truly non-binding (see the note to clause 2.3), so use the law you expect for the Definitive Agreement. Have counsel confirm the choice for your deal.

Schedule 1Indicative commercial terms

The terms below are indicative and not binding (see section 2). Where a row does not apply to the type of deal, write “Not applicable”.

Term	To fill in
Type of deal	[Retail colocation / Wholesale whitespace lease / Powered shell lease / Powered land option and lease / GPU compute reservation]
Site	[Site name or code], [address], [land registry or cadastral reference]For powered land and powered shells, attach a plan showing the boundary.
Capacity	[number] MW of critical IT load / [number] racks at up to [number] kW each / [number] m² of data hall / [number] hectares with a grid connection of [number] MW / [number] GPUs of [model] in [number] nodesState power as critical IT load (what the customer’s equipment may draw), not the site’s grid connection, unless the deal is for powered land or a powered shell.
Design and redundancy	Power: [N+1 / 2N / other]; cooling: [air / liquid / hybrid], [N+1 / other]; design standard: [standard, if any]Name a design standard only if the facility is designed or certified to it.
Ramp	Phase 1: [quantity] from the ready-for-service date; Phase 2: [quantity] from [date]; further phases: [details]A ramp lets the Customer take capacity in steps. Agree whether charges for each phase start on its date whether or not the Customer has moved in (common), or only on occupation.
Ready-for-service date	Phase 1: [date]; later phases: [dates], subject to the conditions belowThe date by which the Capacity is built, commissioned and handed over. Tie it to the grid connection and permits if you do not control them.
Delay	Choose: fee credit of [amount] per day of delay after [date]; Customer right to terminate if not ready by [date]; or no remedyWholesale and build-to-suit customers usually ask for a remedy for late delivery. Cap it, and exclude delay caused by the Customer or by events outside your control.
Term	[number] years from the ready-for-service date of Phase 1
Renewal	[number] renewal periods of [number] years each, at the Customer’s option on [number] months’ notice
Price unit	Per kW of contracted IT capacity per month / per rack per month / per m² per year / per MW of grid connection per year / per GPU-hourChoose one. For colocation, say whether the price is for contracted (reserved) capacity or only for capacity actually used.
Indicative price	[currency] [amount] per [price unit], excluding VAT
One-off charges	[Installation, fit-out, cross-connect or onboarding charges]
Minimum commitment	[number]% of contracted Capacity payable from each phase’s ready-for-service date, whether used or notAlso called take-or-pay. It is what makes the deal financeable for the Provider.
Indexation	Annually on [date] by the change in [index] over the previous [12] months, with a floor of [number]% and a cap of [number]%Commonly a national consumer price index or the euro area harmonised index. A floor protects the Provider if prices fall; a cap protects the Customer.
Power pricing	Choose: pass-through of metered IT energy × [PUE factor or measured PUE] × cost of electricity, plus [management fee]; fixed price of [amount] per kWh; included in the price above; or Customer’s own power purchase agreementPass-through leaves energy price risk with the Customer and is usual for wholesale, powered shell and land deals. A fixed price per kWh leaves the risk with the Provider. Agree how grid tariffs, energy taxes and guarantees of origin are passed on.
Renewable energy	[Guarantees of origin for [share]% of consumption / power purchase agreement / none]
Deposit and security	[number] months’ charges as a cash deposit; or a parent company guarantee from [entity]; or a bank guarantee for [amount]Usually larger for build-to-suit capacity and for customers without a credit history. Agree when it is returned.
Service levels	Service levels and service credits for power, cooling, [network] and [GPU nodes] in a service level schedule to the Definitive Agreement
Connectivity	[Carrier-neutral / Provider network]; [number] diverse fibre routes into the Site; cross-connects at [charge]
Works and fit-out	Provider delivers [shell and core / fitted data hall to rack level / installed and tested GPU nodes]; Customer installs [details]
Assignment	Customer may assign to an Affiliate [or a financier] on notice; otherwise with the Provider’s consent, not to be unreasonably withheld
Condition: approvals	Approval of the Proposed Transaction by the board or investment committee of [each Party / the Customer / the Provider]
Condition: financing	The Provider obtaining financing for [works or equipment]; the Customer obtaining financing for [equipment], if applicable
Condition: grid connection	A signed grid connection agreement with [grid operator] for at least [number] MW, with energisation by [date]Delete if the connection is already energised. Otherwise this is usually the condition that decides the ready-for-service date.
Condition: permits	[Building permit / environmental permit / zoning approval] for [scope], final and no longer open to appeal
Condition: due diligence	Completion of [technical, legal and financial] due diligence to the reasonable satisfaction of [the Customer / each Party]
Other conditions	[Any other condition]
Exclusivity	[Applies, see section 5 / Does not apply]

Schedule 2Timetable to the Definitive Agreement

The target dates below are indicative and not binding (see section 2), except the Long-stop Date, which is used in clause 10.1.

Term	To fill in
NDA signed	[date]
Letter of intent signed	[date]
Site visit and technical workshop	[date]
Provider’s due diligence information available	[date]
Customer’s identity, credit and compliance information delivered	[date]
First draft of the Definitive Agreement	[date]
Due diligence complete	[date]
Board and other internal approvals	[date]
Target signing date	[date]
Long-stop Date	[date]If the Definitive Agreement is not signed by this date, the letter ends under clause 10.1(b). Set it after the end of any Exclusivity Period.
Lead contact, Provider	[name], [role], [email], [telephone]
Lead contact, Customer	[name], [role], [email], [telephone]

Signed for and on behalf of the Provider

Name

Title

Date

Signature

Signed for and on behalf of the Customer

Name

Title

Date

Signature

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Letter of intent (heads of terms)

How this model works

How it works

Good for

How the money works

Watch out for

Letter of intent

Background

1Definitions and interpretation

2Status of this letter

3Proposed transaction

4Due diligence and the Definitive Agreement

5Exclusivity

6Confidentiality

7Costs

8Introduction through the platform

9Personal data

10Duration and termination

11General

12Governing law and disputes

Schedule 1Indicative commercial terms

Schedule 2Timetable to the Definitive Agreement

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