Powered shell lease

Lease of powered shell premises

The Parties agree as follows:

1. 1Definitions and interpretation

   1. 1.1

      In this lease:

      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)“Building” means the building on the Property described in Schedule 1;
      3. (c)“Business Day” means a day other than a Saturday, Sunday or public holiday in [country];
      4. (d)“Connection Point” means the point at which the Reserved Capacity is made available to the Tenant, as described in Schedule 1;
      5. (e)“Grid Connection Agreement” means the agreement between the Landlord [or its Affiliate] and the Network Operator for the connection of the Property to the electricity grid, described in Schedule 1;
      6. (f)“Handover Date” means the date determined under clause 5.3;
      7. (g)“Landlord Works” and “Tenant Works” mean the works allocated to the Landlord and the Tenant respectively in Schedule 3;
      8. (h)“Network Operator” means the operator of the electricity network to which the Property is connected;
      9. (i)“Permitted Use” has the meaning given in clause 13.1;
      10. (j)“Premises” means the [whole / part] of the Building described in Schedule 1, with the external areas allocated to the Tenant in it;
      11. (k)“Property” means the land at [address], registered as [land register designation], with the Building and all other buildings and installations on it;
      12. (l)“Rent” means the rent payable under section 7, and “Rent Commencement Date” means the date so described in Schedule 2;
      13. (m)“Reserved Capacity” means the electrical capacity, in megawatts (MW), reserved for the Tenant at the Connection Point, as stated in Schedule 1;
      14. (n)“Service Charge” means the charge payable under section 8; and
      15. (o)“Term” means the term of this lease under clause 3.1, as extended under clause 3.2.
   2. 1.2

      Headings do not affect interpretation. “Including” means including without limitation. References to clauses, sections and Schedules are to those of this lease, and the Schedules form part of it.

2. 2Grant of the lease

   1. 2.1

      The Landlord lets the Premises to the Tenant for the Term at the Rent, with the rights in clause 2.2 and subject to the rights reserved in clause 2.3.

   2. 2.2

      The Tenant has the following rights over the Property, in common with others where the areas are shared:

      1. (a)access to and from the Premises at all times, on foot and with vehicles, over the roads and paths of the Property;
      2. (b)to install, use, maintain and replace cables, ducts and pipes along the routes shown in Schedule 1, including from the Connection Point and the fibre entry points;
      3. (c)to install and use generators, transformers, fuel tanks, cooling plant and other equipment in the external plant areas and roof areas identified in Schedule 1; and
      4. (d)to use [number] parking spaces.
   3. 2.3

      The Landlord reserves the right to enter the Premises under section 20, to use and maintain service media passing through them, and to develop other parts of the Property, provided that it does not materially interfere with the Tenant’s use of the Premises, the rights in clause 2.2 or the Reserved Capacity.

3. 3Term

   1. 3.1

      The term of this lease is [number] years from the Handover Date.

   2. 3.2

      The Tenant may extend the Term by [number] further periods of [number] years each, by written notice at least [number] months before the end of the current Term, on the terms of this lease with the Rent [as indexed under section 11 / reviewed to market rent at the start of the extension, as agreed or, failing agreement, as determined under clause 28.3].

   3. 3.3

      [The Parties agree that the Tenant’s statutory right to an extended or renewed lease is excluded, to the extent permitted by and in the form required by [applicable law].]

4. 4Reserved grid capacity

   1. 4.1

      From the Handover Date, or from the later dates for any capacity tranches in Schedule 1, the Landlord shall make available to the Tenant at the Connection Point electrical capacity up to the Reserved Capacity, at the voltage stated in Schedule 1.

   2. 4.2

      The Landlord shall keep the Grid Connection Agreement in force for the Term, pay the charges under it allocated to the Landlord in Schedule 2, and comply with it. The Landlord shall not reduce, reallocate or give up any part of the Reserved Capacity, or agree to any change to the Grid Connection Agreement that would adversely affect the Tenant, without the Tenant’s prior written consent.

   3. 4.3

      The Tenant shall not draw more than the Reserved Capacity and shall comply with the conditions of the Grid Connection Agreement that apply to users of the connection, including on power quality, protection settings and any flexibility or curtailment obligations, copies of which the Landlord has given to the Tenant. By [date] each year, the Tenant shall give the Landlord a forecast of its maximum demand for the next [three] years.

   4. 4.4

      The Landlord does not guarantee the continuity or quality of supply from the public grid. The Landlord is responsible for its installations up to the Connection Point, as set out in Schedule 3.

   5. 4.5

      If the Network Operator gives notice that it intends to reduce or withdraw any part of the Reserved Capacity, including because it has not been used, the Landlord shall notify the Tenant immediately and the Parties shall cooperate to keep the capacity in place.

   6. 4.6

      At the Tenant’s request and cost, the Landlord shall use reasonable endeavours to obtain additional capacity from the Network Operator. Any additional capacity obtained is added to the Reserved Capacity at the rent stated in Schedule 2.

   7. 4.7

      If, for reasons other than an interruption of the public grid outside the Property or a breach by the Tenant, the Landlord fails to make available all or a material part of the Reserved Capacity for more than [number] consecutive days, the Rent shall be reduced in proportion to the capacity not available, and if the failure lasts more than [number] months the Tenant may terminate this lease by written notice.

5. 5Landlord Works and handover

   1. 5.1

      The Landlord shall carry out the Landlord Works in a good and workmanlike manner, using good-quality materials, in accordance with Schedule 3, applicable law and permits, and shall use reasonable endeavours to complete them by the target handover date in Schedule 1.

   2. 5.2

      Before handover, the Parties shall jointly inspect the Premises, list any minor defects that do not prevent the Tenant Works from starting (which the Landlord shall remedy within [number] Business Days), and record the condition of the Premises in a photographic schedule of condition. The Landlord shall also provide an environmental baseline report on the Property.

   3. 5.3

      The Handover Date is the date on which the Landlord notifies the Tenant that the Landlord Works are complete, as certified by [an independent surveyor / the Landlord’s architect], and that the Reserved Capacity [or its first tranche] is energised at the Connection Point, or, if earlier, the date on which the Tenant starts the Tenant Works other than under clause 6.4.

   4. 5.4

      The Landlord shall remedy at its own cost any defect in the Landlord Works notified within [24] months after the Handover Date.

   5. 5.5

      If the Handover Date has not occurred by the target handover date, other than because of the Tenant, the rent-free period in Schedule 2 is extended by [number] days for each day of delay. If it has not occurred by the long-stop date in Schedule 1, the Tenant may terminate this lease by written notice given before the Handover Date, and the Landlord shall return any security under section 12.

6. 6Tenant Works and permits

   1. 6.1

      The Tenant shall carry out the Tenant Works in accordance with plans approved by the Landlord. Approval shall not be unreasonably withheld or delayed, and may be refused only where the works would affect the structure or external envelope of the Building, the Landlord’s installations, the insurance of the Building or the use of other parts of the Property.

   2. 6.2

      The Tenant shall use competent contractors, comply with applicable law, permits and safety rules, insure the Tenant Works during construction, and give the Landlord as-built drawings for any installation affecting the Building within [number] months after completion.

   3. 6.3

      The Landlord is responsible for [the planning and zoning position permitting the Permitted Use, the building permit for the Landlord Works, and the Grid Connection Agreement]. The Tenant is responsible for the permits for the Tenant Works and its operations, including [the building permit for the fit-out, environmental permits for generators and fuel storage, and fire authority approvals]. Each Party shall cooperate with and sign applications reasonably required by the other. If a permit essential for the Permitted Use is finally refused despite the responsible Party’s reasonable endeavours, either Party may terminate this lease by written notice given before [date], without liability except for earlier breaches.

   4. 6.4

      The Landlord may allow the Tenant access before the Handover Date for early works, on terms agreed in writing. Early access does not by itself make the Handover Date occur.

7. 7Rent

   1. 7.1

      From the Rent Commencement Date, the Tenant shall pay rent under the alternative selected in Schedule 2:

      1. (a)Alternative A (area-based rent): [amount] per m² of lettable area per year, the lettable area being [number] m² measured in accordance with [measurement standard]; or
      2. (b)Alternative B (capacity-based rent): [amount] per MW of Reserved Capacity per year, applied to each tranche of Reserved Capacity from the date it is made available under section 4.
   2. 7.2

      The Rent is payable whether or not the Tenant uses the Premises or the Reserved Capacity.

8. 8Service charge

   1. 8.1

      The Tenant shall pay [[number]% / a fair and reasonable proportion] of the Landlord’s reasonable and properly incurred costs of the services listed in Schedule 2, such as maintenance of shared roads and areas, maintenance of the Landlord’s substation and installations up to the Connection Point, perimeter security and property management.

   2. 8.2

      The Service Charge is paid on account with the Rent, based on the Landlord’s annual budget. Within [number] months after each service charge year, the Landlord shall give the Tenant a statement of actual costs, and any balance shall be paid or credited within [30] days. The Tenant may inspect the supporting invoices on reasonable notice.

   3. 8.3

      The Service Charge excludes the cost of the Landlord Works and their defects, capital improvements, the Landlord’s financing costs, costs recoverable from others or under insurance, and costs of letting other parts of the Property.

9. 9Energy supply

   1. 9.1

      Energy is supplied to the Premises under the alternative selected in Schedule 2:

      1. (a)Alternative A (Tenant’s own supply): the Tenant contracts directly with an electricity supplier of its choice for energy delivered at the Connection Point, registered as a metering point in the Tenant’s name, and pays energy and network charges directly [or, for network charges, to the Landlord at cost]; or
      2. (b)Alternative B (supply through the Landlord): the Landlord procures energy for the Premises and re-charges it monthly in arrears, based on the Landlord’s meter at the Connection Point, at its actual cost per kWh including energy, network charges, energy taxes and levies [, plus a handling fee of [amount] per kWh].
   2. 9.2

      Meters used for charging shall comply with applicable metering regulations, and each Party shall give the other the metering data reasonably required for invoicing and energy reporting.

   3. 9.3

      [The Tenant shall make waste heat from the Premises available to [a district heating network / the Landlord] at a connection point on the Property, on terms to be agreed in good faith.]

10. 10Payment

    1. 10.1

       The Rent and the Service Charge on account are payable [quarterly / monthly] in advance on [dates]. Energy charges under clause 9.1(b) and all other amounts are payable within [30] days of invoice. All amounts are payable in [currency] without set-off or deduction, except as required by law.

    2. 10.2

       All amounts are exclusive of value added tax. [The Landlord has registered / shall register for VAT on the letting where permitted, and] the Tenant shall pay VAT in addition at the applicable rate.

    3. 10.3

       Overdue amounts bear interest from the due date until payment at [the statutory late-payment rate in [country] / [number]% per year above [reference rate]].

11. 11Indexation

    1. 11.1

       The Rent shall be adjusted on [1 January each year / each anniversary of the Rent Commencement Date] by [100% / [number]%] of the percentage change in [index, for example the national consumer price index for [country] published by [statistics authority]] over the most recent 12-month period published [, subject to a minimum of [number]% and a maximum of [number]%]. The Rent shall not fall below the Rent for the previous year.

    2. 11.2

       If the index stops being published or its basis changes materially, the Parties shall use the published index that most closely replaces it, adjusted so that clause 11.1 has as nearly as possible its original effect.

12. 12Security

    1. 12.1

       On signing this lease, the Tenant shall provide [a cash deposit / an on-demand bank guarantee from a bank rated at least [rating] / a guarantee from [guarantor legal name]] for [amount / [number] months’ Rent and Service Charge, including VAT], remaining in force until [number] months after the end of the Term.

    2. 12.2

       The Landlord may draw on the deposit or bank guarantee for any amount more than [number] days overdue, and the Tenant shall restore it within [ten] Business Days. If the bank’s rating falls below the required level, or the guarantor becomes insolvent, the Tenant shall provide replacement security within [20] Business Days.

    3. 12.3

       The Landlord shall return the security, less any amount properly applied, within [30] days after the later of the end of the Term and the Tenant’s compliance with section 23.

13. 13Use

    1. 13.1

       The Tenant may use the Premises as a data centre, including for colocation, hosting, cloud and compute services to third parties, with ancillary offices, storage and workshops, and for any other use to which the Landlord consents, such consent not to be unreasonably withheld (the “Permitted Use”).

    2. 13.2

       The Tenant shall comply with all law and permits applying to its use, shall not cause a nuisance, and shall keep noise from its plant within [the limits in its permits / [number] dB(A) at the boundary of the Property]. Routine generator testing shall take place only [on Business Days between [time] and [time]].

14. 14Repair and maintenance

    1. 14.1

       The Landlord shall keep in good repair the structure, foundations, roof and external walls of the Building, the shared parts of the Property, and the Landlord’s installations up to the Connection Point. The cost is recoverable through the Service Charge, except for structural defects and defects in the Landlord Works.

    2. 14.2

       The Tenant shall keep in good repair and condition the interior of the Premises, the Tenant Works and all its plant and equipment, and maintain its fire, electrical and pressure systems in accordance with law and manufacturers’ recommendations.

    3. 14.3

       If the Tenant fails to carry out repairs for which it is responsible within [number] days after written notice, the Landlord may carry them out at the Tenant’s reasonable cost.

15. 15Alterations

    1. 15.1

       The Tenant may, on notice but without consent, make internal non-structural alterations and alter or replace its own plant, provided this does not affect the structure, roof or external envelope of the Building or the Landlord’s installations.

    2. 15.2

       Any other alteration, including structural or external works, new roof penetrations and new plant outside the areas identified in Schedule 1, requires the Landlord’s prior written consent, not to be unreasonably withheld or delayed. The Tenant shall pay the Landlord’s reasonable costs of reviewing a request.

16. 16Assignment, subletting and financing

    1. 16.1

       The Tenant may not assign this lease without the Landlord’s prior written consent, which shall not be unreasonably withheld or delayed. The Landlord may require the assignee to be of sufficient financial standing and to provide security equivalent to that under section 12. The Tenant may assign this lease to an Affiliate on written notice without consent if the security under section 12 continues or is replaced.

    2. 16.2

       The Tenant may, without consent, enter into agreements with its customers for the use of racks, cages, suites or halls within the Premises in the ordinary course of its data centre business, provided that:

       1. (a)the agreements are service agreements or licences that do not, so far as the law allows, give the customer a lease, an interest in the Property or statutory tenant protection against the Landlord;
       2. (b)they end no later than the end of the Term; and
       3. (c)the Tenant remains fully responsible to the Landlord for the obligations under this lease.
    3. 16.3

       The Tenant may sublet the whole or part of the Premises by way of lease with the Landlord’s prior written consent, not to be unreasonably withheld or delayed, if the sublease ends before the end of the Term, excludes statutory tenant protection where the law permits, and requires the subtenant to comply with the obligations of this lease for the sublet part. The Tenant shall give the Landlord a copy of each sublease, from which commercial terms may be removed.

    4. 16.4

       [If this lease ends early for any reason other than a break under section 19, the Landlord shall, at the request of a subtenant of a whole hall or more, consider in good faith granting it a direct lease of the sublet part on the terms of its sublease for the rest of the sublease term.]

    5. 16.5

       The Tenant may grant security over its interest in this lease and the Tenant Works to its financiers. Within [15] Business Days of request, the Landlord shall sign a direct agreement with those financiers, in customary form, giving them notice of any Tenant default and [number] days to remedy it before termination, and allowing them or their nominee to step in and to transfer this lease to a transferee of sufficient standing approved by the Landlord, acting reasonably.

    6. 16.6

       The Landlord may sell or charge the Property if any buyer agrees to be bound by this lease, and shall procure that any mortgagee of the Property agrees not to disturb the Tenant’s possession while the Tenant complies with this lease. Each Party shall, on request, confirm in writing to the other’s financiers or buyers the main terms of this lease and whether it knows of any breach.

17. 17Insurance

    1. 17.1

       The Landlord shall insure the Building, excluding the Tenant Works and the Tenant’s plant, for its full reinstatement value against the risks usually insured for buildings of this kind, together with [number] years’ loss of Rent. The Tenant shall pay the premium [through the Service Charge / as a separate insurance rent].

    2. 17.2

       The Tenant shall insure the Tenant Works and its plant and equipment for their full replacement value, its own business interruption, and its liability to third parties for at least [amount] per event.

    3. 17.3

       The Tenant shall not do anything that would invalidate the Landlord’s insurance or increase its premium, and shall notify the Landlord in advance of any fuel storage, battery energy storage or other installation the insurers must be told about. [Each Party shall procure that its property insurers waive subrogation against the other Party, where available on reasonable terms.]

18. 18Damage and destruction

    1. 18.1

       If the Premises, or access to them, are damaged by an insured risk so that they cannot be used for the Permitted Use, the Rent and the Service Charge are reduced in proportion until the Premises are reinstated or the loss of Rent cover under clause 17.1 runs out, unless the Tenant caused the damage.

    2. 18.2

       The Landlord shall reinstate the Building, other than the Tenant Works, using the insurance proceeds and subject to permits. The Tenant shall reinstate the Tenant Works. If the Building has not been reinstated within [number] months after the damage, either Party may terminate this lease by written notice.

19. 19Break options

    1. 19.1

       [The Tenant may end this lease on [break date(s)] by giving at least [number] months’ written notice, provided that by the break date it has paid the Rent due up to that date and a break fee of [amount / [number] months’ Rent], and gives up occupation in accordance with section 23.]

    2. 19.2

       The Landlord has no right to end this lease early except under sections 6, 18 and 22.

20. 20Landlord’s access

    1. 20.1

       The Landlord and those authorised by it may enter the Premises on at least [number] Business Days’ notice, or without notice in an emergency, to inspect them, to carry out the Landlord’s obligations, and to show them to prospective buyers or financiers [and, in the last [number] months of the Term, prospective tenants]. The Landlord shall follow the Tenant’s reasonable security procedures, be escorted in data halls and keep disruption to a minimum.

21. 21Liability

    1. 21.1

       Nothing in this lease limits or excludes either Party’s liability for death or personal injury caused by its negligence, for fraud, [for gross negligence or wilful misconduct,] or for any liability that cannot be limited or excluded by law.

    2. 21.2

       Subject to clause 21.1, neither Party is liable to the other for loss of profit, revenue, business, contracts or goodwill, loss or corruption of data, or any indirect or consequential loss. The Landlord is not liable for any interruption of supply from the public grid, except to the extent caused by its breach of clause 4.2 or clause 14.1.

    3. 21.3

       Subject to clause 21.1, the Landlord’s total liability under or in connection with this lease in any year is limited to [the Rent payable for that year / [amount]]. The Tenant’s obligations to pay Rent and other amounts and to comply with section 23 are not limited by this clause.

    4. 21.4

       The Tenant shall indemnify the Landlord against claims by the Tenant’s customers and subtenants arising from the services the Tenant provides to them.

22. 22Termination for default

    1. 22.1

       Subject to any mandatory procedure under applicable law and to the rights of the Tenant’s financiers under clause 16.5, the Landlord may terminate this lease by written notice if:

       1. (a)any Rent remains unpaid [number] days after the Landlord’s written notice of non-payment;
       2. (b)the Tenant commits a material breach and, where it can be remedied, fails to remedy it within [60] days after written notice, or such longer period as is reasonable while the Tenant is diligently pursuing the remedy; or
       3. (c)the Tenant becomes insolvent, enters into any insolvency or similar procedure, or makes an arrangement with its creditors generally, to the extent termination on that ground is permitted by law.
    2. 22.2

       The Tenant may terminate this lease by written notice if the Landlord commits a material breach of clause 4.2 or clause 14.1 that causes the loss of all or a material part of the Reserved Capacity or prevents use of the Premises, and fails to remedy it within [number] days after written notice.

    3. 22.3

       Termination does not affect accrued rights. Sections 10, 21, 23, 24, 26 and 28 and clause 12.3 continue to apply after this lease ends.

23. 23End of the Term

    1. 23.1

       At the end of the Term, the Tenant shall give up occupation of the Premises free of occupation by its customers and subtenants, remove its IT equipment and movable plant, remove the Tenant Works other than those listed as retained works in Schedule 3 or selected by the Landlord under clause 23.2, make good any damage caused by removal, and return the Premises in the condition recorded under clause 5.2, fair wear and tear excepted.

    2. 23.2

       At least [number] months before the end of the Term, the Landlord may notify the Tenant of further Tenant Works it wishes to keep, which the Tenant shall leave in place in working order [without compensation / against payment of [their depreciated value / [amount]]]. The Parties may instead agree a payment by the Tenant in place of any reinstatement.

    3. 23.3

       The Tenant shall remove and lawfully dispose of all fuel, coolants, refrigerants and batteries, and is responsible for any contamination of the Property caused by it or its customers during the Term, measured against the environmental baseline report under clause 5.2.

    4. 23.4

       If the Tenant remains in occupation after the end of the Term without agreement, it shall pay [number]% of the last Rent and the Service Charge, pro rata, for the period of occupation. No new lease is created by that occupation.

24. 24Confidentiality

    1. 24.1

       Each Party shall keep confidential the terms of this lease and all non-public information about the other Party it receives under it, except for disclosure to its Affiliates, professional advisers, insurers, financiers and prospective buyers or financiers bound by confidentiality, as required by law, or for registration of this lease. This section continues for [three] years after this lease ends.

25. 25Introduction through the platform

    1. 25.1

       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. AICapacity is not a party to this lease and has no rights or obligations under it.

26. 26Personal data

    1. 26.1

       Each Party may process personal data about the other’s personnel, contractors and visitors, including site access records, visitor logs, CCTV recordings and contact details, to control access, for security and to administer this lease. Each Party acts as an independent controller of that personal data and shall comply with applicable data protection law, including the General Data Protection Regulation (EU) 2016/679.

    2. 26.2

       The Landlord is responsible for access control and CCTV at the perimeter and in the shared areas of the Property, and the Tenant for access control and CCTV within the Premises, including for its own customers and their visitors. Each shall give appropriate privacy information to the people concerned and keep records no longer than necessary.

27. 27General

    1. 27.1

       This lease is the entire agreement between the Parties about its subject matter and supersedes any letter of intent or heads of terms concerning it. A variation is effective only if in writing and signed by both Parties. A failure or delay in exercising a right is not a waiver of it.

    2. 27.2

       [Either Party may / The Tenant shall] register this lease [or a memorandum of it] in [the land register] at the Tenant’s cost, and the other Party shall sign any document reasonably required for that purpose.

    3. 27.3

       If any provision is found invalid, the rest continues in force, and the Parties shall replace it with a valid provision as close as possible to its intended effect.

    4. 27.4

       Notices shall be in writing and sent by email to the addresses below, with a copy by post or courier where the notice concerns a breach, termination or the exercise of an option, and in any form required by applicable law. This lease may be signed in counterparts and by electronic signature where the law permits.

28. 28Governing law and disputes

    1. 28.1

       This lease and any dispute or claim arising out of or in connection with it are governed by the laws of [governing law].

    2. 28.2

       Subject to clause 28.3, any dispute arising out of or in connection with this lease 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]].

    3. 28.3

       A dispute about market rent, service charge costs, the condition of the Premises or the Landlord Works may be referred by either Party to an independent expert with relevant experience, appointed by agreement or, failing agreement within [ten] Business Days, by [appointing body]. The expert acts as an expert and not as an arbitrator, and the decision is final and binding except for manifest error.