Tools / Contract library / Where the termination fee goes, and what the hyperscaler gets for it
Contract library · Backstops and guarantees
Where the termination fee goes, and what the hyperscaler gets for it
If the hyperscaler lets the lease go, how does its money reach the landlord’s debt?
If Google rejects the lease, it pays a scheduled termination fee. The fee goes straight into an account named in a financial support agreement with the landlord’s financiers, so it reaches the debt and not the landlord’s general funds. In return Fluidstack is released, Google has no further liability, and Google takes an equity stake in the landlord sized as the fee over the total cost of the project. At Barber Lake the support agreement is signed by Alphabet Inc. as well as Google, and Google must cooperate with the landlord’s financing. Google’s total liability on rejection is capped at the fee.
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What the filed contracts say
Contract
What the filed wording says
Google recognition (TeraWulf)
Google pays the fee directly into the account named in the financial support agreement, so it goes to the landlord’s financiers.
Google recognition (TeraWulf)
On payment Fluidstack is released, Google has no further liability, and Google receives equity in the landlord equal to the fee divided by the total development cost.
Google recognition (Cipher)
At Barber Lake the support agreement is with Google, Alphabet Inc., the landlord and Wilmington Trust; Google is also party to a pledge agreement, and must cooperate with the landlord’s financing.
Google recognition (TeraWulf)
On rejection, Google’s total liability under the agreement is capped at the termination fee.
The filed wording
The payment of the FS Termination Fee will be made by Google directly into the Designated FS Termination Fee Account pursuant to the terms of the Google Financial Support Agreement. … Upon the payment of the FS Termination Fee by Google, (a) Akela releases and discharges Fluidstack from all liabilities and obligations under the Fluidstack Lease; (b) Google will have no further liabilities or obligations related to the Fluidstack Lease; (c) Google will be provided an equity interest position in Akela equal to the quotient derived from (i) the amount of the FS Termination Fee paid by Google divided by (ii) the total cost to develop the Akela Property and construct the Building
Each extract is quoted from the contract as filed with the SEC, checked against the filed text when it was added; “…” marks words left out. Filers redact commercial terms, so a [***] or [*] is the filer's, not ours. The summaries describe the wording, not how a court would read it, and each contract's defined terms and other clauses can change the effect. General information drawn from public filings. It is not legal advice on any transaction, and using this page does not create a lawyer-client relationship. Views are personal.
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