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21-1486ORDINANCE NO. 21-1486 AN ORDINANCE OF THE CITY OF DENTON, A TEXAS HOME -RULE MUNICIPAL CORPORATION, AUTHORIZING THE CITY MANAGER TO EXECUTE A LEASE WITH CORE SCIENTIFIC, INC. FOR APPROXIMATELY 30 ACRES OF CITY -OWNED PROPERTY LOCATED IN THE MOSES H. DAVIS SURVEY, ABSTRACT NO. 377, AND IN THE JOHNSON, GREEN, MYERS, AND BRUMMETT SURVEY, ABSTRACT NO. 1699, ALL IN THE CITY AND COUNTY OF DENTON, TEXAS; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City of Denton ("City") owns the Denton Energy Center ("DEC") located in Denton, TX and owns certain real property at and around the DEC (the "DEC Property"); WHEREAS, Core Scientific, Inc. ("Lessee"), a provider of digital asset mining, infrastructure, hosting and software solutions for digital mining companies, wishes to enter into a lease with the City, pursuant to that certain Lease Agreement attached hereto as Exhibit A and made a part hereof for all purposes (the "Lease"), for certain real property located at the DEC Property consisting of two tracts, with Site One being an approximately 19.064 acre tract located in the Moses H. Davis Survey, Abstract No. 377 and Site Two being an approximately 11.256 acre tract located in the Moses H. Davis Survey, Abstract No. 377 and in the Johnson, Green, Myers, and Br❑mmett Survey, Abstract No. 1699, all in the City of Denton, Denton County, Texas (the "Leased Premises"); WHEREAS, Lessee further wishes to develop a high efficiency data center on the Leased Premises and to enter into a Power Purchase Agreement for the purchase by Lessee from City of electric power in support thereof (the "PPA"); WHEREAS, the City Council finds it is in the public interest to enter into the Lease; NOW THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The findings and recitations contained in the preamble of this Ordinance are incorporated herein by reference as true and as if fully set forth in the body of this Ordinance. SECTION 2. The City Manager, or designee, is hereby authorized to execute the Lease. SECTION 3. The City Manager, or designee, is hereby further authorized to take any other actions that may be necessary, appropriate or convenient, in the reasonable opinion of either the City Manager or the City Attorney, to exercise the City's rights and to perform the City's obligations under the Lease including, but not limited to, amending the Lease to extend the term of the Lease for up to seven (7) additional years beyond the initial term in accordance with the provisions of the Lease and contemporaneously and consistent with any extension(s) of the PPA. SECTION 4. This Ordinance shall become effective immediately upon its passage and approval. The motion to aninrove this Ordinance was made by G 2 cc,,c A i' Uc4,zl 0 2 -th and seconded by N, C V--� The Ordinance was passed and approved by the following vote [L_ - Aye Nay Abstain Absent Mayor Gerard Hudspeth: y Vicki Byrd, District 1: Brian Beck, District 2: ✓ Jesse Davis, District 3: ✓ Alison Maguire, District 4: I'll - Deb Deb Armintor, At Large Place 5: ,/ Paul Meltzer, At Large Place 6: PASSED AND APPROVED this the ZA+= day of fAyq U S t 52021. V - ATTEST: ROSA RIOS, CITY SECRETARY `0%J11e+081h �J 0 F D BY: �� F ri(/"�]i�i • • rte, c • Fr i i APPROVED AS TO LEGAL FORM: CATHERINE CLIFTON, INTERIM CITY ATTORNEY •�, �' . '0 .• C' BY: LEASE AGREEMENT between CITY OF DENTON and CORE SCIENTIFIC, INC. dated as of September 3 , 2021 �p t TABLE OF CONTENTS Page No. ARTICLE I LEASE OF LEASED PREMISES; TERM.......................................................... 2 Section 1.1 Lease of Leased Premises..................................................................................2 Section 1.2 Lease Term........... 2 Section 1.3 Holding Over; Rights at Expiration or Termination..........................................2 Section 1.4 Inspection of Leased Premises,• Access to Books and Records .........................3 Section 1.5 Ownership of Leased Premises..........................................................................3 ARTICLE II RENTAL; SECURITY DEPOSIT....................................................................... 3 Section2.1 Rent....................................................................................................................3 Section 2.2 Late Charge ....................................................4Error! Bookmark not defined. Section 2.3 Time and Place of Payments..............................................................................4 Section2.4 Delinquent Rent.................................................................................................4 ARTICLE III OCCUPANCY, USE AND CONDITIONS OF LEASED PREMISES........... 4 Section 3.1 Condition of Leased Premises...........................................................................4 Section 3.2 Project Construction and Ownership of Improvements .....................................4 Section3.3 Access................................................................................................................5 Section 3.4 Use of Leased Premises and Compliance with all Laws and Regulations ........6 Section 3.5 No Unauthorized Use.........................................................................................7 Section 3.6 Permits and Licenses ........................................... Section3.7 Payment of Taxes............................................................................•-----.............7 Section 3.8 No Liens ............... ARTICLE IV REPRESENTATIONS AND WARRANTIES .................................................. 8 Section 4.1 Representations by City .........................................•----.......................................8 Section 4.2 Representations by Lessee.................................................................................8 ARTICLE V OBLIGATIONS OF LESSEE.............................................................................. 8 Section 5.1 Plans and Specifications; Re--Zoning.................................................................8 Section 5.2 Operations and Maintenance..............................................................................9 Section5.3 Utilities...............................................................................................................9 Section5.4 SiM...................................................................................................................9 Section5.5 Security........................................................................................ ........9 Section 5.6 Hazardous Materials..........................................................................................9 Section 5.7 Trash Garba e and Other Refuse ................................. ARTICLE VI INDEMNIFICATION AND INSURANCE..................................................... 11 Section6.1 Insurance..........................................................................................................I1 Section 6.2 Lessee's Indemnification and Duty to Pqy Damages ...................................... I I ARTICLE VII DEFAULT AND REMEDIES.........................................................................12 Section 7.1 Lessee's Default ................ Section 7.2 Default by City ............. I.......................... Section 7.3 Remedies for Failure to Pay Rent ........... Section 7.4 Remedies for Breach of Agreement........ Section. 7.5 Cross Default . ...................................... Section 7.6 SurviyaI................................................... ...................................................12 ...................................................12 ...................................................12 ...................................................13 ...................................................13 ...................................................13 ARTICLE VIII ASSIGNMENT AND SUBLEASING...........................................................13 Section 8.1 Assignment by Lessee......................................................................................13 Section 8.2 Assignment by CitX..........................................................................................14 Section 8.3 Encumbrances..................................................................................................14 Section8.4 Leasehold Mortgage.........................................................................................14 Section 8.5 Leasehold Mort a e - Non -exhaustive List of Preconditions . ......................14 ARTICLE IX MISCELLANEOUS PROVISIONS................................................................. 16 Section 9.1 Waiver of Exemption ................ Section9.2 Addresses.........................................................................................................16 Section9.3 No Waiver........................................................................................................16 Section 9.4 Lessee's Subordination....................................................................................16 Section 9.5 Additional Charges as Rent.............................................................................16 Section 9.6 Non -Interference With O eration of the DEC.................................................17 Section9.7 Interpretation....................................................................................................17 Section9.8 Force Majeure..................................................................................................17 Section 9.9 Governimz Law and Venue..............................................................................18 Section 9.10 Amendments and Waivers...............................................................................18 Section9.11 Severability.................................................................................•---.................18 Section9.12 Merger..........................................................................................................1 -18 Section 9.13 Relationship of Parties.....................................................................................18 Section 9.14 Further Assurances...........................................................................................18 LEASE AGREEMENT THIS LEASE AGREEMENT (this "A reement') effective as of this �3� day of September, 2021, by and between the CITY OF DENTON, a Texas home -rule municipal corporation ("City"), and Core Scientific, Inc., a Delaware corporation ("Lessee" and, together with City, the "Parties" and each a "Party"). RECITALS WHEREAS, City is the owner and operator of the Denton Energy Center located in Denton, Texas (the "DEC"); WHEREAS, Lessee is a company specializing in digital asset mining, infrastructure, hosting and software solutions for digital asset mining companies; WHEREAS, City has the right, title and interest in and to the real property at the DEC depicted on Exhibit A, together with the facilities, rights, and privileges hereinafter granted, (collectively referred to herein as the "DEC Property") and has full power and authority to enter into this Agreement in respect thereof, WHEREAS, within the DEC Property, City owns that certain real property described and depicted on Exhibit B, attached hereto and made part hereof, consisting of two sites referred to on Exhibit B as Site One and Site Two, that together total approximately 30 acres more or less (such real property, together with all rights, privileges, easements and appurtenances benefiting or encumbering such real property and all Preexisting Improvements, as hereafter defined, are collectively referred to herein as the "Leased Premises"); WHEREAS, Lessee plans to develop a high efficiency data center on the Leased Premises, subject to the terms set forth herein (the "Project"); WHEREAS, City desires to develop and permit uses of the Leased Premises that are beneficial to the City and the general public; WHEREAS, Lessee is qualified, willing and able to undertake such commercial development and use, and the City is willing to Iease the Leased Premises to Lessee for such activities; WHEREAS, on or about the effective date of this Agreement, City and Lessee have entered into or will enter into a Power Purchase Agreement for the purchase by Lessee from City of electric power to support the proposed high efficiency data center to be located on the Leased Premises (the "PPA"); and WHEREAS, the Parties hereto wish to memorialize their agreement with respect to the Leased Premises herein. l CITY LESSEE AGREEMENT NOW, THEREFORE, in consideration of the foregoing Recitals, which by this reference are hereby incorporated into this Agreement, and the mutual covenants contained in this Agreement, and for other good and valuable consideration, the sufficiency of which is acknowledged by the Parties, the Parties hereto agree as follows: ARTICLE I LEASE OF LEASED PREMISES; TERM Section 1.1 Lease of Leased Premises. A. City hereby ]cases to Lessee, and Lessee hereby rents from City for its exclusive use the Leased Premises and the Preexisting Improvements (as defined herein), and all herein described rights incident thereto, for and during the Lease Term (hereafter defined) and upon and subject to the terms, provisions and conditions herein set forth. All improvements preexisting in, on or under the Leased Premises as of the Commencement Date, as hereafter defined, shall be referred to herein as "Preexisting Improvements". The "Leased Premises" shall be deemed to include the Preexisting Improvements and, as and when installed or constructed the Interconnection Improvements, as hereafter defined. 454040y..r 3 Section 1.2 Lease Term. The term of this Agreement shall be for an initial term commencing on Atignsi —' 2021 (the "Commencement Date") and continuing until the end of the r(y� seventh (7th) "Contract Year" as defined below (the "Initial Term"), unless sooner terminated pursuant to the provisions of this Agreement or the PPA. "Contract Year" means a calendar year period, with the first (I") Contract Year commencing on January I of the calendar year following the Commercial Operation Date of Phase I of the Seller's Interconnection Facilities (as such terms are defined in the FPA) and the second (2" d) and each subsequent Contract Year commencing sequentially on each January 1 thereafter. The Initial Term will be extended contemporaneously with any extensions) of the FPA consistent with the terms of the PAA for up to seven (7) additional years, the "Extension Term" (collectively, the Initial Term and the Extension Term are referred to herein as the "Lease Term"). No further extensions of the Lease Term shall be permitted by City. However, the foregoing shall not preclude the Parties from entering into a new lease to be effective after the expiration of the Lease Term. If the PPA is terminated for any reason, this Agreement shall also automatically terminate, and City and Lessee shall have no further obligations or liabilities hereunder except as otherwise stated herein. Except as provided in Section 9.8 and except during System Curtailment or Seller's Curtailment as defined and provided for in the PPA, if during the Lease Term, electric service is not provided to the Leased Premises, Lessee may terminate this Agreement by providing City with at least thirty (30) days' prior written notice of such termination. Section 1.3 Holding Over; Rights at Expiration or Termination. A. If Lessee retains all or any portion of the Leased Premises after the expiration or termination of the Lease Term by lapse of time or otherwise, such holding over shall constitute the creation of a month-to-month tenancy with respect to such retained portion, terminable by either Party at ny time upon thirty (30) days prior written notice to the other Party. Under such month - 2 CITY LESSEE to -month tenancy, all provisions of this Agreement shall remain in full force and effect during such holdover period except that monthly Rent (as hereafter defined) shall be equal to one hundred fifty percent (150%) of the monthly Rent that was in effect immediately prior to the expiration or termination. B. Lessee further agrees that, upon the expiration or termination of the Lease Term, the Leased Premises and Improvements will be delivered to City in good working order and condition, reasonable wear and tear is permitted and matters covered by insurance are excepted. For the avoidance of doubt, the Improvements, but not any Lessee Personal Property, shall become the property of the City in accordance with Section 3.213. C. Upon expiration and termination Lessee shall have no rights with respect to any Improvements on Leased Premises. Section 1.4 Inspection of Leased Premises,• Access to Books and Records. City, through its duly authorized agents, shall have at any reasonable time the right to enter the Leased Premises and the Improvements, as hereafter defined in Section 3.2.A, for the purpose of periodic inspection for fire protection, maintenance and to investigate compliance with the terms of this Agreement and the PPA; provided, however, that except in the case of emergency, Lessee shall have no less than forty-eight (48) hours' notice and an opportunity to have an employee or agent present. The City agrees that any entry pursuant to this Section 1.4 will not unreasonably interfere with Lessee's construction or operations. Lessee agrees to provide documents that may be reasonably requested by City to determine compliance with this Agreement within thirty (30) days of such request. Section 1.5 Ownership of Leased Premises. The Leased Premises shall be and remain the property of City during the entire term of this Agreement and thereafter. ARTICLE II RENTAL Section 2.1 Rent. A. In consideration for the use of the Leased Premises herein granted, Lessee shall pay to City the following rental amounts (the "Rent"). The monthly rent shall be in the sum of TEN THOUSAND SEVENTY-FIVE AND NO/100 DOLLARS ($10,075.00) per month (sales tax included). On or prior to the Commencement Date, Lessee shall pay City a sum equal to the first month's Rent, which shall be applied to the first month's Rent due under this Agreement. All other Rent payments will be due in advance on or before the first day of the month to which the Rent payment relates. As a courtesy, City will include the amount of the monthly Rent for the subsequent month on the monthly invoice provided by City to Lessee pursuant to the PPA. Failure to receive an invoice reflecting Rent in a timely manner does not absolve Lessee from its obligation to pay the monthly Rent on or before the first day of the month to which the Rent payment relates. If the Commencement Date or a termination date occurs on a day other than the first day of a calendar month, Rent for the first and last partial months will be prorated on the basis of the number of actual days in such month. CC 3 op CITY LESSEE B. The Rent for the Leased Premises shall be increased, but not decreased, at the end of each two (2) year period during the Lease Term, with the first adjustment occurring on the first day of January, 2023 and future adjustments occurring every other January 1st thereafter, by a percentage amount equal to the percentage change in the United States Consumer Price Index for all urban consumers ("CPI -U") for the Dallas -Fort Worth Bureau of Labor Statistics which occurred during the previous 2 year period based upon the then current and available month's data compared to the data for the same month two years prior. Section 2.2 Timc and Place of Payments. The Rent, as well as all other charges hereunder, shall be payable by wire transfer monthly with the Non-ERCOT invoices as specified in the PPA. Section 2.4 Delinquent Rent. In the event Rent due pursuant to Section 2.1 or any other amounts payable by Lessee hereunder shall not be paid by Lessee on or before thirty (30) days after the due date thereof (the "Grace Period"), Lessee shall pay to City as additional Rent, an interest charge equal to the Iower of (i) the annual rate equal to the Prime Rate (as defined herein) then in effect plus two percent (2%) and (ii) the maximum percentage allowed by law, multiplied by the amount due for each full calendar month of delinquency, computed as simple interest. Interest shall be computed and assessed from the due date. The "Prime Rate" means the interest rate (sometimes referred to as the "base rate") for large commercial loans to creditworthy entities announced from time to time by Citibank, N.A. (New York), or its successor bank, or, if such rate is not announced, the rate published in The Wall Street Journal as the "Prime Rate" from time to time (or, if more than one rate is published, the arithmetic average of such rates), in either case determined as of the date the obligation to pay interest arises. ARTICLE III OCCUPANCY, USE AND CONDITIONS OF LEASED PREMISES Section 3.1 Condition of Leased Premises. Lessee accepts the Leased Premises in their present "as is" condition. Except as provided in Section 5.6 D, Lessee releases City and holds City and City's officers, directors, elected and appointed officials, employees, and agents harmless for any claims arising out of or related to any condition of the Leased Premises. Section 3.2 Project Construction and Ownership of Improvements. A. The Parties agree that this Agreement is entered into specifically with the understanding that Lessee will build, construct, and complete the Project at its own expense in accordance with the requirements of the Denton Development Code and Denton Municipal Electric's (DME)'s specifications unless this Agreement is sooner terminated pursuant to the terms herein. Any and all buildings, structures, fixtures, appurtenances, site work, site utilities, or other improvements to be located or constructed on the Leased Premises by Lessee during the Lease Terra shall be known as "Improvements". Improvements shall not include any Preexisting Improvements, Lessee Personal Property or Interconnection Improvements, as hereafter defined. Those improvements made by City or Lessee to enable the delivery of electric energy to the equipment of Lessee pursuant to the PPA will be referred to herein as the "Interconnection Improveme ". Personal property of Lessee (collectively, the "Lessee Personal Property") shall 4 (]} CITY �� LESSEE mean any structures, including electrical equipment beyond the Seller's side of the Delivery Point (as defined in PPA) (e.g., transformers and circuit breakers), from which the high efficiency computing business will be conducted that are placed on the Leased Premises by Lessee during the Lease Term that can be disassembled and removed from the Leased Premises without causing material damage unable to be reasonably repaired, such repairs to be at the sole cost to Lessee, to the Leased Premises, will not be considered part of the Leased Premises. Lessee agrees to commence construction of the Project immediately upon obtaining necessary governmental approvals and permits after the Commencement Date and to complete the Project in accordance with all governmental requirements and specifications and to obtain a Certificate of Occupancy, and/or such other evidence of completion as may be applicable, as soon as practicable after the Commencement Date. Lessee shall not construct, locate, install, place or erect any improvements, other than the Improvements and Interconnection Improvements, at, upon or under the Leased Premises or elsewhere at the DEC Property without the express prior written consent of City, which consent shall not be unreasonably withheld or delayed. B. Lessee will own the Improvements during the Lease Term only. Effective upon the expiration or termination of this Agreement, the Improvements shall become the property of City, without the payment by City of any compensation or other consideration for any Improvements, and title to the Improvements shall merge with the title of, or be otherwise considered and deemed a part of, the real property of City, free and clear of any claim of Lessee and any persons or entities claiming under or through Lessee including, without limitation, the trustee, beneficiary or holder of any mortgage or deed of trust. The Lessee Personal Property and any other personal property of Lessee may remain the personal property of Lessee and may be removed by Lessee at any time on or before the end of the Lease Term so long as such removal does not materially damage the Leased Premises or the Improvements. In connection with the expiration or termination of this Agreement, City reserves the right to require Lessee to remove the Lessee Personal Property from the Leased Premises by the date of expiration or termination of this Agreement. If so required, Lessee shall remove the Lessee Personal Property from the Leased Premises by the date of expiration or termination of this Agreement. Lessee shall, in removing any such Lessee Personal Property or other personal property, repair all damage to the Leased Premises or Improvements caused by such removal, if any. Any Lessee Personal Property or any other property, of any kind or type, left or remaining on the Leased Premises at the expiration or termination of this Agreement shall be deemed abandoned property and, without liability of any kind to City and without payment of consideration of any kind to Lessee, at City's option may be removed, retained, stored, destroyed, or disposed of by City or its contractors, all at Lessee's expense. Preexisting Improvements are and shall continue to be owned by City. Interconnection Improvements shall become the property of City as and when installed or constructed, without payment by City of any compensation or other consideration, and from such installation title to the Interconnection Improvements shall merge with the title of, or be otherwise considered and deemed a part of, the real property of City, free and clear of any claim of Lessee and any persons or entities claiming under or through Lessee including, without limitation, the trustee, beneficiary or holder of any mortgage or deed of trust. The rights and obligations provided in this Section 3.2.13. shall survive any expiration or termination of this Agreement. Section 3.3 Access; Staging Areas. City agrees that if Lessee is not in breach of this Agreement beyond any applicable notice and cure period, Lessee and Lessee's employees, off ectors, sublessees (that are approved by City pursuant to this A e ent), high 5 CITY LESSEE efficiency data center or computing customers, contractors, subcontractors, suppliers, agents, invitees, and other representatives ("Lessee's Associates") are authorized to enter, exit and transit across the existing roads in the non -controlled access areas of the DEC Property on a non-exclusive basis for purposes of ingress and egress to the extent reasonably necessary in connection with Lessee's construction of the Project authorized by City, Lessee's construction of the Interconnection Improvements, and for Lessee's use, occupancy, and operations at the Leased Premises. If one or more of the unimproved existing roads in the non -controlled access areas of the DEC Property require improvement or modification, if approved in writing in advance by City, Lessee may undertake such road improvement or modification at Lessee's expense. If in connection with any construction authorized hereunder, Lessee wishes (i) to use or access the City's utility poles for purposes of attaching any telecommunications lines or cables, Lessee may do so only with City's prior approval, consistent with the City's normal practice and procedures pursuant to a written Pole Attachment Agreement signed by the Parties, or (ii) to temporarily stage any construction materials or equipment, Lessee may do so only at those locations in the non - controlled access areas of the DEC Property authorized by City in writing and only in the manner, and for the duration, permitted by City, which permission shall not be unreasonably withheld. Lessee shall, at its expense, in connection with any of the activities described in this Section 3.3 or elsewhere in this Agreement, repair or restore any and all damage to the DEC Property, Leased Premises, and Improvements caused by or resulting from the acts or omissions of Lessee or any of Lessee's Associates. Lessee and Lessee's Associates agree to comply with the reasonable security and safety policies, procedures and practices of the City at all times. Section 3.4 Use of Leased Premises and Compliance with all Laws and Regulations. Lessee agrees that it shall use the Leased Premises only for its reasonable business purposes authorized by City from time to time in its sole discretion, which City -authorized business purposes include the construction and operation of high efficiency computing facilities. Lessee and Lessee's Associates shall comply at all times, in all material respects, at Lessee's sole cost, with any and all laws and regulations (as amended or otherwise modified from time to time) that are applicable to Lessee's business or to Lessee's construction of the Improvements or Interconnection Improvements, including any applicable laws or regulations pertaining to the construction of buildings or other improvements on public property, and that are applicable to Lessee's use, occupancy, or operations at the Leased Premises, the Improvements or, to the limited extent provided herein, the DEC Property (the "Laws and Regulations"), which include, but are not limited to, all laws, statutes, ordinances, regulations, rules, orders, writs, judgments, decrees, injunctions, directives, rulings, guidelines, standards, codes, policies, common law, and other pronouncements of any kind having the effect of law that may be applicable at any time during the term of this Agreement including, but not limited to, master plans and zoning codes, and all Laws and Regulations pertaining to the environment (the "Environmental Laws"); any and all plans and programs developed in compliance with such requirements (including, but not limited to, any DEC safety or security plans); and all Iawful, reasonable, and nondiscriminatory City policies and other requirements, including but not limited to restrictions on noise, dust and light spillover and any current or future agreements to which the City is a party restricting noise, dust, light spillover or operations on the DEC Property. Lessee shall provide all required notices under the Laws and Regulations with respect to the Leased Premises or the Improvements. If requested by City in writing, Lessee will verify, within a reasonable time frame, compliance with any Laws and Regulations. Further, in its use of the Leased Premises and the Improvements, Lessee shall comply with h owing: b CITY LESSEE A. Address. Lessee shall file with the DEC Plant Manager and keep current its mailing and email addresses, Iandline telephone and cell phone numbers, and contacts where it can be reached in an emergency. B. List of Sublessees. At least quarterly, Lessee shall file with the DEC Plant Manager and keep current a list of its sublessees and a list of all Improvements and Interconnection Improvements on the Leased Premises. Section 3.5 No Unauthorized Use. Lessee and Lessee's Associates shall use the Leased Premises, the Improvements and, to the limited extent provided herein, the DEC Property only for purposes that are expressly authorized by this Agreement and shall not engage in any unauthorized use of the same. Unauthorized uses include, but are not limited to, restricting access on any road or other area that Lessee does not lease; placing waste materials on or around the DEC Property or disposing of such materials in violation of any Laws and Regulations; any use that would constitute a public or private nuisance or adversely impact adjacent landowners; driving a motor vehicle in a controlled access area on the DEC Property or in an otherwise prohibited area on the DEC Property; parking outside of the Leased Premises or using automobile parking areas outside of the Leased Premises, unless authorized by the DEC Plant Manager in writing; use of automobile parking areas within the Leased Premises in a manner not authorized by this Agreement or City; any use that would interfere with any operation at the DEC or the DEC Property or that would decrease the DEC's effectiveness (as determined by City in its sole discretion); and any use that would be prohibited by or would impair coverage under either Party's insurance policies or would cause an increase in the existing rate of insurance upon the Leased Premise or the DEC Property. Section 3.6 Permits and Licenses. Lessee shall obtain and maintain in current status all permits and licenses that are required under any Laws and Regulations in connection with Lessee's construction of Improvements or Interconnection Improvements and the use, occupancy, or operations at the Leased Premises or of the Improvements. Those permits and licenses include, but are not limited to, (i) all contractors doing work on the Leased Premises, including work on or for the Improvements or Interconnection Improvements, must be licensed by the State of Texas, (ii) if applicable, prior to commencing construction of any Improvements or Interconnection Improvements, a permit must be obtained from the City and a copy of the permit must be furnished to the DEC Plant Manager, and (iii) if applicable, clearance must be obtained from the responsible health department or other agency. In the event that Lessee receives notice from any governmental entity that Lessee lacks, or is in violation of, any such permit, license or other requirement, Lessee shall provide City with timely written notice of the same and Lessee shall diligently pursue the resolution of any such issues. Section 3.7 Payment of Taxes. Lessee shall pay (before their respective due dates) all taxes, including ad valorem taxes, and all fees, charges, assessments, and levies that relate to Lessee's Personal Property or Lessee's use, occupancy, or operations at the Leased Premises or the Improvements and all other obligations for which a lien may be created relating thereto (including, but not limited to, utility charges and work for any Improvements or Interconnection Improvements). With respect to ad valorem taxes, such taxes shall be prorated between Lessee and City on a daily basis for the tax years in which the Lease Term commences and expires or terminates. City shall either forward tax bills for the Leased Premises to Lessee, or cause the taxing to mail the bills directly to Lessee. 7 CITY LESSEE Section 3.8 No Liens. No liens related. to Lessee or Lessee's use, occupancy or operations may be placed upon the Leased Premises or the DEC Property. Within thirty (30) days, Lessee shall pay all lawful claims made against City and discharge all liens filed or which exist against the Leased Premises or any portion of the DEC Property to the extent such claims arise out of or in connection with, whether directly or indirectly, the failure to make payment for work done or materials provided by Lessee its contractors, subcontractors, or materialmen. However, Lessee shall have the right to contest the amount or validity of any such claim or lien without being in default under this Agreement upon furnishing security in form acceptable to City, in an amount equal to one hundred percent (100%) of such claim or lien, which insures that such claim or lien will be properly and fully discharged forthwith in the event that such contest is finally determined against Lessee or City. City shall give timely notice to Lessee of all such claims and liens of which it becomes aware. When contracting for any work in connection with the Leased Premises, Improvements or Interconnection Improvements, Lessee shall include in such contract a provision prohibiting the contractor or any subcontractor or supplier from filing a lien or asserting a claim against City's real property or any interest therein. Lessee is solely responsible for ensuring that all requirements are met such that such lien waivers are effective and enforceable (such as fling such contracts, if necessary). Furthermore, when completed, the Improvements and Interconnection Improvements on the Leased Premises shall be free from all construction liens. ARTICLE IV REPRESENTATIONS AND WARRANTIES Section 4.1 Representations by City. City represents and warrants that it has the right, power, and legal capacity to enter into and perform its obligations under this Agreement, has duly executed and delivered this Agreement, and that this Agreement constitutes a legal, valid, and binding obligation of City. Section 4.2 Representations by Lessee. Lessee represents and warrants that it has the right, power, and legal capacity to enter into and perform its obligations under this Agreement, has duly executed and delivered this Agreement, and that this Agreement constitutes a legal, valid, and binding obligation of Lessee. ARTICLE V OBLIGATIONS OF LESSEE Section 5.1 Plans and Specifications; Re -Zoning. With respect to any Improvements and Interconnection Improvements, Lessee shall select qualified architects and engineers to prepare and, if applicable, submit for approval, prior to construction or on a phased basis during construction, any architectural, site, structural, civil, mechanical, and/or electrical drawings and specifications for the Improvements and Interconnection Improvements in the form and with the content required by the appropriate local planning and zoning authorities and pursuant to all applicable Laws and Regulations and this Agreement (collectively, the "Plans and Specifications"). S CITY LESSEE Section 5.2 Operations and Maintenance. Lessee shall maintain the Leased Premises and all Improvements in a condition that is clean, free of debris, safe, sanitary, and in good repair and shall not accumulate or permit the accumulation of any trash, refuse, debris, or anything that is unsightly, creates a fire hazard or nuisance, or causes inconvenience to adjoining properties. Lessee shall at its own expense create, execute, and maintain a comprehensive landscaping, tree canopy, and irrigation plan for the Leased Premises in accordance with relevant local development and landscaping codes. Lessee shall perform all work in accordance with Laws and Regulations and in a good and workmanlike manner. Lessee shall promptly remedy any condition that fails to meet this standard. Without limiting the foregoing obligations, Lessee shall not store on the Leased Premises any inoperable equipment, excess, discarded or unsightly materials, or materials Iikely to create a hazard; shall not use areas outside of enclosed buildings for storage; and shall store trash in covered metal receptacles. Any substance or material that is regulated by any Environmental Law ("Hazardous Materials") shall be governed by Section 5.6. In addition, Lessee agrees to comply with all applicable provisions of City's Texas Pollutant Discharge Elimination Multi -Sector General Permit. Section 5.3 Utilities. City represents that there are water, sewer, and electrical lines accessible within the general vicinity of the Leased Premises. Lessee shall be responsible, at Lessee's sole cost and expense, for obtaining all utility connections at or for the Leased Premises, Improvements and Lessee Personal Property. Further, Lessee shall pay for telecommunications, television, internet, gas, light bulbs, electricity, water, sewer, and garbage and trash removal services provided to or used by Lessee and shall make such deposits as are required to secure service. Lessee shall be responsible for any water or sewer impact fees incurred by Lessee's and Lessee's Associates' use of the Leased Premises. Any repairs of the Interconnection Improvements or other utility lines, other than those which are the responsibility of the utility service, are the responsibility of Lessee. Section 5.4 Sins. Lessee shall not place, or cause to be placed, any sign or signs on the Leased Premises or the Improvements unless otherwise agreed to in writing by City. Section 5.5 Security. Lessee is responsible to comply (at Lessee's sole cost) with all security measures that City, the United States Department of Homeland Security ("Homeland Securi "), the National Electric Regulatory Commission ("NERC"), the Texas Reliability Entity ("TRE"), or any other governmental entity having jurisdiction may require now or in the future in connection with the Lessee's activities and operations, the Leased Premises or the DEC Property, including, but not Iimited to, any access credential and escort requirements, and any civil penalty obligations and other costs arising from a breach of security requirements caused or permitted by Lessee or Lessee's Associates. Lessee shall protect and preserve security at the Leased Premises and, as applicable, the DEC Property. Section 5.6 Hazardous Materials. A. No Violation of Environmental Laws. Lessee shall not cause or permit any Hazardous Materials to be used, produced, stored, transported, brought upon, or released on, under, or about the Leased Premises or the DEC Property by Lessee or Lessee's Associates in violation of applicable Environmental Laws. Lessee is responsible for any such violation as provided by Section 7.1. 4� 9 CITY LESSEE B. Response to Violations. Lessee agrees that in the event of a release or threat of release of any Hazardous Material by Lessee or Lessee's Associates at the DEC Property, Lessee shall provide City with prompt notice of the same. Lessee shall respond to any such release or threat of release in accordance with applicable Laws and Regulations. If City has reasonable cause to believe that any such release or threat of release has occurred, City may request, in writing, that Lessee conduct reasonable testing and analysis (using qualified independent experts reasonably acceptable to City) to show that Lessee is complying with applicable Environmental Laws. City may conduct the same at Lessee's expense if Lessee fails to respond in a reasonable manner. Lessee shall cease any or all of Lessee's activities as City determines necessary, in its reasonable discretion, in connection with any investigation, cure, or remediation. If Lessee or Lessee's Associates violate any Environmental Laws at the DEC Property or the Leased Premises (whether due to the release of a Hazardous Material or otherwise), Lessee, at Lessee's sole expense, shall have the following obligations, which shall survive any expiration or termination of this Agreement: (i) promptly remediate such violation in compliance with applicable Environmental Laws; (ii) submit to City a written remediation plan, and City reserves the right to approve such plan (which approval shall not be unreasonably withheld) and to review and inspect all work; (iii) work with City and other governmental authorities having jurisdiction in connection with any violation; and (iv) promptly provide City copies of all documents pertaining to any environmental concern that are not subject to Lessee's attorney-client privilege. C. Obligations upon Termination and Authorized Transfers. Upon any expiration or termination of this Agreement or any change in possession of the Leased Premises authorized by City, Lessee shall demonstrate to City's reasonable satisfaction that Lessee has removed any Hazardous Materials and is in compliance with applicable Environmental Laws. Such demonstration may include, but is not limited to, independent analysis and testing to the extent that facts and circumstances warrant analysis and testing, such as evidence of past violations or specific uses of the Leased Premises. If the site is contaminated during Lessee's possession, Lessee shall bear all costs and responsibility for the required clean up, and shall hold City, its officers, elected and appointed officials, employees, and agents harmless therefrom unless such contamination was caused by the City. Notwithstanding anything to the contrary, the obligations of this Section 5.6.C. shall survive any termination of this Agreement. D. City's Environmental Representation; Indemnity. City covenants, represents, and warrants that as of the Commencement Date, to the City's knowledge, the Leased Premises and Preexisting Improvements do not contain any Hazardous Materials in such quantities that would constitute a violation of any Environmental Law. City shall indemnify, defend and hold Lessee harmless to the extent permitted by law, from and against any and all claims, liabilities, penalties, fines, judgment, forfeitures, losses, costs (including costs for clean-up required pursuant to applicable Environmental Law) or expenses (including reasonable attorney's fees, consultant's fees and expert's fees) for the death of or injury to any person or damage to any property, arising from or caused in whole or in part, directly or indirectly, by (i) the presence prior to the Commencement Date in, on, under or about the Leased Premises or the Preexisting Improvements of any Hazardous Materials; (ii) the use, storage, transportation, generation, disposal, release or discharge of Hazardous Materials by City or its agents, employees, or independent contractors to, in, on, under, about or from the Leased Premises; and (iii) City's failure to comply with any Environmental Law. City agrees to remediate, at City's cost and expense, any remediation required by applicable Laws and/or Re ions following receipt of notice from Lessee of any condition describ Pi) through la CITY LESSEE (iii) of the previous sentence. The indemnities contained in this Section 5.6.D. shall survive the expiration or earlier termination of this Agreement. Nothing contained in this Section 5.61) is intended to nor shall it waive the City's governmental immunity, or any defenses related thereto or under any local state, or federal law, rule or ordinance. Section 5.7 Trash, Garbage, and Other Refuse. Lessee shall pick up and provide for a complete and proper arrangement for the adequate sanitary handling and disposal of trash, garbage and other refuse, away from the DEC Property through the City or any other licensed refuse hauler. Lessee is responsible for contacting the refuse hauler and arranging for such waste management, handling and disposal services and for payment of such services. Lessee shall provide and use suitable covered metal receptacles for all such garbage, trash, and other refuse on the Leased Premises. Lessee shall not pile boxes, cartons, barrels, pallets, debris, or similar items in an unattractive or unsafe manner, on or about the Leased Premises. ARTICLE VI INDEMNIFICATION AND INSURANCE Section 6.1 Insurance. Lessee agrees to purchase general liability insurance in the amount of $1,000,000.00 combined single limit to cover Lessee's operations as described in Section 3.4. Insurance coverage shall include City as an additional named insured, providing fifteen (15) days' notice of cancellation. Lessee shall submit Certificate(s) of Insurance to City within ten (10) working days after the effective date of this Agreement, and yearly thereafter. Section 6.2 Indemnification and Duty to Pay Damages. A. Lessee shall indemnify and hold City and City's officers, elected and appointed officials, employees, and agents exempt and harmless, to the extent allowed by law, from and against any and all claims, demands, suits, judgments, costs, and expenses asserted by any person or persons (including agents or employees of City, Lessee, or sublessee) by reason of death or injury to persons or loss of or damage to property resulting from (i) Lessee's breach of this Agreement, or and (ii) Lessee's activities, including but not limited to construction activities by Lessee or by any of Lessee's Associates, or operations, acts or omissions by Lessee or by any of Lessee's Associates, under this Agreement except to the extent that such claims, demands, suits, judgments, costs, and expenses may be attributed to the intentional acts or omissions of City, its agents, its employees or as provided in Section 5.6 D. B. City shall not be liable to Lessee for any damage by or from any act or negligence of any tenant or other occupant of the DEC Property, or by any owner or occupant of adjoining or contiguous property. C. Lessee agrees to pay for all damages to the Leased Premises or the Improvements and any related apparatus or appurtenances caused by Lessee's misuse or neglect thereof. D. Lessee shall be responsible and liable for its conduct and the conduct of Lessee's Associates in, on and around the Leased Premises and the DEC Property, including but not limited to under or around any transmission lines. 11 CITY LESSEE E. The provisions of this Section 6.2 and the remedies and rights provided in this Section 6.2 shall survive any expiration or termination of this Agreement. ARTICLE VII DEFAULT AND REMEDIES Section 7.1 Lessee's Default. The occurrence of any of the following events shall constitute a default by Lessee under this Agreement unless cured within thirty (30) days following written notice of such violation from City: (i) Lessee fails to timely pay any Rent; (ii) Lessee or Lessee's Associates violate any requirement under this Agreement (including, but not limited to, abandonment of the Leased Premises); (iii) Lessee assigns or encumbers any right in this Agreement, delegates any performance hereunder, or subleases any part of the Leased Premises except as expressly permitted in this Agreement; (iv) Lessee files a petition in bankruptcy or has a petition filed against Lessee in bankruptcy, insolvency, or for reorganization or appointment of a receiver or trustee which is not dismissed within sixty (60) days; (v) Lessee petitions for or enters into an arrangement for the benefit of creditors, or suffers this Agreement to become subject to a writ of execution and such writ is not released within thirty (30) days; (vi) Lessee defaults in constructing any Improvements that are required to be constructed under this Agreement or the PPA; (vii) Lessee dissolves with no successor or dies; (viii) Lessee is in default under the terms of the PPA; or (ix) the PPA terminates or expires. Notwithstanding the foregoing, with respect to clauses (ii), (vi) and (viii) of the previous sentence, if the nature of Lessee's requirement is such that more than thirty (30) days are reasonably required for performance or cure of such requirement, Lessee shall not be in default if Lessee commences performance within such 30 -day period and thereafter diligently pursues the same to completion. Section 7.2 Default by City. City shall not be in default under this Agreement unless City fails to perform an obligation required of City under this Agreement within thirty (30) days after written notice by Lessee to City. If the nature of City's obligation is such that more than thirty (30) days are reasonably required for performance or cure, City shall not be in default if City commences performance within such thirty (30) day period and thereafter diligently pursues the same to completion. Section 73 Remedies for Failure to Pay Rent. If any Rent required by this Agreement shall not be paid when due, and City has provided Lessee with the required notice and opportunity to cure as set forth in Section 7. 1, City shall have the option to: A. Terminate this Agreement and the PPA, take possession of the Improvements, resume possession of the Leased Premises for its own account, and recover immediately from Lessee the differences between the Rent and the fair rental value of the Property for the Lease Term, reduced to present worth; or B. Terminate this Agreement and the PPA, take possession of the Leased Premises, resume possession of the Leased Premises, re -lease the Leased Premises for the remainder of the Lease Term for the account of Lessee, and recover from Lessee, at the end of the Lease Term or at the time each payment of Rent comes due under this Agreement as City may choose, the difference between the Rent and the rent received on the re-leasing or renting of the Leased Premises 12 CITY LESSEE NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, CITY HEREBY WAIVES ANY LOCK -OUT REMEDIES PROVIDED UNDER SECTION 93.002 OF THE TEXAS PROPERTY CODE AND SHALL NOT TERMINATE LESSEE'S RIGHT TO POSSESSION OF THE LEASED PREMISES UNTIL AN APPROPRIATE WRIT OF POSSESSION HAS BEEN OBTAINED FROM A COURT OF COMPETENT JURISDICTION. Section 7.4 Remedies for Breach of Agreement. If Lessee breaches or fails to perform any provision of this Agreement other than the agreement of Lessee to pay Rent, City shall provide written notice to Lessee identifying the breach or specifying the performance required. If Lessee fails to remedy the breach within the required notice and cure period set forth in Section 7.1 City may terminate this Agreement and the PPA or take any such action it is legally entitled to take, including instituting litigation to compel performance of this Agreement. Should Iitigation be filed by City and it is the prevailing party in that litigation, Lessee shall be liable for all reasonable and documented expenses related to such litigation, including City's reasonable attorneys' fees. Section 7.5 Cross Default. Any event of default under the PPA (or under any of the other agreements referenced therein or executed in connection therewith) by either City or Lessee shall be an event of default hereunder. Section 7.6 Survival. The provisions of this Article VII and the remedies and rights provided in this Article VII shall survive any expiration or termination of this Agreement. ARTICLE VIII ASSIGNMENT AND SUBLEASING Section $.1 Assignment by Lessee. A. Except as otherwise set forth in Section $.1(B) of this Agreement, Lessee shall not assign any of its rights under this Agreement, including, but not limited to, rights in any Improvements, (whether such assignment is voluntarily or involuntarily, by consolidation, dissolution, change in control, or any other manner), and shall not delegate any performance under this Agreement, except with the prior written consent of City to any of the same, which City should not unreasonably withhold. As a condition of obtaining such consent, the City reserves the right to require the transferee receiving any such rights from Lessee to (i) provide its financial statements or other financial or credit information to City for review, (ii) provide replacement insurance certificates for the insurance required under this Agreement prior to the effective date of the transfer or assignment, (iii) provide a security deposit or letter of credit in the manner and form acceptable to City securing payment and other obligations under this Agreement, and/or (iv) execute a new lease agreement provided by City. Regardless of City's consent, Lessee shall not be released from any obligations for matters arising during the time when this Agreement was in effect. Any purported assignment or delegation of rights or delegation of performance in violation of this section is void. B. Notwithstanding anything to the contrary contained in this Article VIII, an assignment or transfer of this Agreement (each a "Transfer"): (i) to a successor to Les ee by merger, 13 CITY LESSEE consolidation or reorganization or in connection with the sale of all or substantially all of the assets of Lessee (a "Successor"); or (ii) to an entity which is controlled by, controls, or is under common control with Lessee, shall not require City's consent. Lessee shall notify City of any such Transfer and promptly supply City with any documents or information reasonably requested by City regarding such Transfer or such entity, and further provided that no uncured event of default exists. "Control," as used in this Section, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or entity, whether by the ownership of voting securities, by contract or otherwise. C. Upon the expiration or termination of this Agreement with respect to the Improvements and upon construction or installation with respect to the Interconnection Improvements, Lessee hereby grants, assigns, transfers, and conveys to City, without warranty, the following: (a) The right to enforce, in Lessee's own name as a proper party, (i) any subcontracts related to the Improvements or other maintenance or services contracts in force with respect to the Leased Premises or Improvements and any warranties arising under any of them or in connection with the performance thereof, as the case may be. Section 8.2 Assignment by City. City shall have the right, in City's sole discretion, to assign any of its rights under this Agreement (and in connection therewith, shall be deemed to have delegated its duties), and upon any such assignment, Lessee agrees that Lessee shall perform its obligations under this Agreement in favor of such assignee. Section 8.3 Encumbrances. Lessee shall not encumber or permit the encumbrance of any DEC Property. Except for a Leaschold Mortgage as defined in Section 8.5, Lessee shall not encumber or permit the encumbrance of the Leased Premises or any of Lessee's rights under this Agreement without City's prior written consent, in City's sole discretion. Lessee shall not record this Agreement or any document or interest relating thereto. Any purported encumbrance of rights in violation of this Section 8.3 is void. Section 8.4 Leasehold Mortgage. Absent the prior written consent of City, Lessee shall not have the right to mortgage or collaterally assign its leasehold estate and rights under this Agreement (the "Leasehold Estate"). Section 8.5 Leasehold Mortgage - Non -exhaustive List of Preconditions. Lessee may mortgage or collaterally assign its Leasehold Estate to a commercial bank or other similar institutional lender (a "Lender") solely in order to secure financing for the construction of Improvements or Interconnection Improvements (a "Leasehold Mortgage"). In connection with a Leasehold Mortgage or City's written consent to any other encumbrance, City may require the following: Lender to certify in writing to City that it has reviewed this Agreement and accepts the provisions of this Agreement, including but not limited to the provisions of this Section and that no loan requirements conflict with or materially erode any provisions of this Agreement. 14 CITY LESSEE ii. Lender agrees that in no event shall any encumbrance be placed upon the Improvements, the Leased Premises or the DEC Property. iii. Lender agrees that City may, require the inclusion of certain provisions in lending documents that are defined to protect City and/or comply with federal, state or local law, rules, or regulations. iv. Lender agrees to maintain current contact information with City and provide City with concurrent copies of any notices or communications regarding a default under the loan agreement or Leasehold Mortgage. V. Lender agrees that in the event of a default under the loan agreement or Leasehold Mortgage, Lender shall promptly inform the City of such default in writing. vi. Lender agrees that, in the event that Lender takes actual or de facto control of the Improvements and/or Lessee's interests in this Agreement, it shall immediately notify the City of that event ("Lender Control"). vii. Lender agrees that any use by Lender, assignee, or any other party, will be limited to those uses authorized by City hereunder that were existing at the time Lender Control commenced. viii. The Leasehold Mortgage and any other encumbrances shall terminate prior to the expiration or termination of this Agreement and Lender agrees to promptly remove the Leasehold Mortgage and any encumbrances at the earlier of the date when the obligation that the Leasehold Mortgage or other encumbrance secures has been satisfied or the termination or expiration of the Lease occurs. Lender agrees to hold City, its officers, elected and appointed officials, employees, and agents harmless for all claims arising from and after the date that Lessee was in default under its loan agreement(s) with the Lender. Lessee agrees to release and hold City, its officers, elected and appointed officials, employees, and agents harmless for all claims related to City's consent, non -consent, or any other act or omission related to encumbering the Improvements and/or this Agreement. City shall have no obligation to provide any notices to Lender and City shall have no liability of any kind to Lender or other lienholder. Section 8.6 Further Assurances. Upon request by Lessee or by any existing or prospective Lender, City shall deliver to the requesting Party such documents and agreements as the requesting Party shall reasonably request to further effectuate the intentions of the Parties as set forth in this Agreement, including a separate written instrument in recordable form signed and acknowledged b setting forth and confirming any or all rights of Lender. 15 CITY LESSEE ARTICLE IX MISCELLANEOUS PROVISIONS Section 9.1 Waiver of Exemption. Any constitutional or statutory exemption of Lessee of any property usually kept on the Leased Premises, from distress or forced sale, is waived. Section 9.2 Addresses. All notices given under this Agreement to City shall be sent to the City in care of General Manager, City of Denton, d/b/a Denton Municipal Electric, at 1659 Spencer Road, Denton Texas, 76205, with a copy to the City Attorney, City of Denton, at 215 E. McKinney, Denton, Texas 76201, or such other place as City shall specify in writing. All notices given under this Agreement to Lessee shall be sent to: Name Core Scientific, Inc. Attn: General Counsel Address 2800 Northup Way #220 City, State, ZIP Bellevue, WA 98004 Telephone Number (425) 822-1466 E-mail address legal@corescientific.com Notices given under this Agreement to the Lender, if any, shall be sent to the address provided by the Lender to City in writing. Any notice properly mailed by registered mail, postage and fee prepaid, shall be deemed delivered when mailed, whether received or not, and all notices sent via overnight delivery service or email shall be deemed delivered when received. Section 9.3 No Waiver. The waiver by City in writing of any breach of any term, covenant, or condition herein contained shall not be deemed to be a waiver of such term, covenant, or condition or any subsequent breach of the same or any other term, covenant, or condition herein contained. The subsequent acceptance of Rent hereunder by City shall not be deemed to be a waiver of any preceding breach by Lessee of any term, covenant, or condition of this Agreement, other than the failure of Lessee to pay the particular Rent so accepted, regardless of City's knowledge of such preceding breach at the time of acceptance of such Rent. Section 9.4 Lessee's Subordination. Lessee hereby subordinates and makes this Agreement inferior to all existing and future mortgages, trust indentures or other security interest of City or City's successor in interest. Lessee shall execute and deliver to City any documents required to evidence and perfect such subordination. Section 9.5 Additional Charges as Rent. Any actual charges assessed against Lessee by City for services or for work done on the Leased Premises or the Improvements by order of Lessee or otherwise accruing under this Agreement shall be treated as Rent due. 16 CITY LESSEE Section 9.6 Non -Interference With O eration of the DEC. Lessee expressly agrees for itself, its successors, and assigns that Lessee and its successors and assigns will not conduct operations in or on the Leased Premises or the Improvements in a manner that in the reasonable judgment of City, (i) interferes or might interfere with the reasonable use or operation of the DEC or the DEC Property by the City, including Denton Municipal Electric; (ii) hinders or might hinder police, fire fighting, or other emergency personnel in the discharge of their duties; (iii) would or would be likely to constitute a hazardous condition at the DEC or the DEC Property; (iv) would or would be likely to increase the premiums for insurance policies maintained by City; (v) is in contradiction to any rule, regulation, directive, or similar restriction issued by agencies having jurisdiction over the DEC or the DEC Property; or (vi) would involve any illegal purposes. In the event this covenant is breached, City reserves the right, after prior written notice to Lessee, to enter upon the Leased Premises and the Improvements and cause the abatement of such interference at the expense of Lessee. In the event of a breach in DEC security caused by Lessee, resulting in fine or penalty, such fine or penalty will be considered and charged to Lessee as Rent. Section 9.7 Interpretation A. References in the text of this Agreement to articles, sections, or exhibits pertain to articles, sections, or exhibits of this Agreement, unless otherwise specified. B. The terms "hereby," "herein," "hereof," "hereto," "hereunder," and any similar terms used in this Agreement refer to this Agreement. The term "including" shall not be construed in a limiting nature, but shall be construed to mean "including, without limitation." C. Words importing persons shall include firms, associations, partnerships, trusts, corporations, and other legal entities, including public bodies, as well as natural persons. D. Any headings preceding the text of the articles and sections of this Agreement, and any table of contents or marginal notes appended to copies hereof, shall be solely for convenience of reference and shall not constitute a part of this Agreement, nor shall they affect the meaning, construction or effect of this Agreement. E. Words importing the singular shall include the plural and vice versa. Words of the masculine gender shall be deemed to include correlative words of the feminine and neuter genders. F. Capitalized terms in this Agreement that are used throughout this Agreement and in any Annexes, Exhibits and Schedules hereto shall have the meaning or definition ascribed to it herein. Absent such meaning or definition in this Agreement, such term shall have the meaning or definition ascribed to it in the PPA between the Parties. Section 9.8 Force Majeure. No act or event, whether foreseen or unforeseen, shall operate to excuse Lessee from the prompt payment of rent or any other amounts required to be paid under this Agreement. If City (or Lessee in connection with obligations other than payment obligations) is delayed or hindered in any performance under this Agreement by a force majeure event, such performance shall be excused to the extent so delayed or hindered during the time when such force majeure event is in effect, and such performance shall promptly occur or resume thereafter at the expense of the Party so delayed or hindered. A "force majeure event" is an act or event, he ceseen or unforeseen, that prevents a Party in whole or in part frrforming 17 CITY LESSEE as provided in this Agreement, that is beyond the reasonable control of and not the fault of such Party, and that such Party has been unable to avoid or overcome by exercising due diligence, and may include, but is not limited to, acts of nature, war, riots, strikes, accidents, fire, epidemics, pandemics, viruses, diseases, quarantines, acts of government, public health emergencies and changes in law. Lessee hereby releases City and City's officers, elected and appointed officials, employees, and agents from any and all liability, whether in contract or tort (including strict liability and negligence) for any loss, damage, or injury of any nature whatsoever sustained by Lessee, its employees, agents, or invitees during the Lease Term, including, but not limited to, loss, damage, or injury to the Leased Premises or the personal property of Lessee that may be located or stored in, on or under the Leased Premises or the Improvements due to a force majeure event. Section 9.9 Governing Law and Venue. This Agreement has been made in and will be construed in accordance with the laws of the State of Texas. In any action initiated by one Party against the other, exclusive venue and jurisdiction will be in the appropriate state courts in and for Denton County, Texas. Section 9.10 Amendments and Waivers. No amendment to this Agreement shall be binding on City or Lessee unless reduced to writing and signed by both Parties. No provision of this Agreement may be waived, except pursuant to a writing executed by the Party against whom the waiver is sought to be enforced. Section 9.11 Severability. If any provision of this Agreement is determined to be invalid, illegal, or unenforceable, the remaining provisions of this Agreement shall remain in full force and effect if both the economic and legal substance of the transactions that this Agreement contemplates are not affected in any manner materially adverse to any Party. If any provision of this Agreement is held invalid, illegal, or unenforceable, the Parties shall negotiate in good faith to modify this Agreement to fulfill as closely as possible the original intents and purposes of this Agreement. Section 9.12 Merger. This Agreement and, to the extent referenced herein, the PPA constitutes the final, complete, and exclusive agreement between the Parties on the matters contained in this Agreement. All prior and contemporaneous negotiations and agreements between the Parties on the matters contained in this Agreement are expressly merged into and superseded by this Agreement. In entering into this Agreement, neither Party has relied on any statement, representation, warranty, nor agreement of the other Party except for those expressly contained in this Agreement. Section 9.13 Relationship of Parties. This Agreement does not create any partnership, joint venture, employment, or agency relationship between the Parties. Nothing in this Agreement shall confer upon any other person or entity any right, benefit, or remedy of any nature. Section 9.14 Further Assurances. Each Party shall execute any document or take any action that may be necessary or desirable to consummate and make effective a performance that is required under this Agreement. 18 CiT�' LESSEE Section 9.15 Quiet Enjoyment. Provided Lessee is not in default under this Agreement beyond the applicable cure period, Lessee will peaceably and quietly hold and enjoy the Leased Premises from and after delivery thereof to Lessee without disturbance, hindrance, or ejection by City, or any party claiming under or through City, and City will defend Lessee's right to such use and occupancy. Section 9.16 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original, but all of which, together, shall constitute one and the same instrument. A signed copy of this Agreement delivered by facsimile, e-mail, or other means of electronic transmission (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement. [SIGNATURE PAGES FOLLOW] 1�e 19 CITY LESSEE IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day of SQP w nr\ v>-9, r , 2021. ATTEST: Rosa Rios, City Secretary By: �/ De u Sadw APPROVED AS TO LEGAL FORM: Catherine Clifton, Interim City Attorney By: THE STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON By: Sara Hensley, Interim City eager THIS AGREEMENT HAS BEEN BOTH REVIEWED AND APPROVED As to financial and operational obligations and business terms. Signature Title Department Date Signed: ACKNOWLEDGMENT This instrument was acknowledged before me on the � day of 54 4t M be (' , 2021, by Sara Hensley, Interim City Manager of the City of Denton, on behalf of said municipality. �' 3 KARISA LEIGH RICHARM Notary ID # 139826791 December 14, 2022 VNTARY PUBLIC, STATE OF TEXAS Signature Page to Lease Agreement CORE SCIENTIFIC, INC., LESSEE By: --4 Name: Weston Adams Title: Chief Construction Officer APPROVED AS TO LEGAL FORM: By: 4 Dan Christen ATTORNEY LESSEE NOTARY THE STATE OF § COUNTY OF _L,1�C�l�1� _ § �This instrument was acknowledged before me on the Qday of , 2021, by jl« ��C'►c, on behalf of said company. �rr�JJty.'111.1.1..1Y.lJ.l.JJ✓.J!1✓J✓!!f� Signature Page to Lease Agreement We%-jel. DEC Property and Lease Tracts N DEC Property Boundary S °r DENTON Ex A Exhibit B Leased Premises Site One BEING a 19.064 acre tract of land situated in the Moses H. Davis Survey, Abstract No. 377, City of Denton, Denton County, Texas, being part of a called 340.469 acre tract of land described in a Deed to the City of Denton, a Texas home -rule municipal corporation, as recorded in Document No. 2016-143882 of the Official Records of Denton County, Texas and being more particularly described as follows: COMMENCING at a 112 inch iron rod found for an interior Southwest corner of the above cited 340.469 acre tract and the Northwest corner of a called 116.154 acre tract of land described in a Deed to the Mark Hicks Investments, LLC, as recorded in Document No. 2021-8595 of the Official Records of Denton County, Texas, from which a 112 inch iron rod with cap stamped "Vannoy 563- 7101" found for an interior ell corner of said 340.469 acre tract, same being the Northeast corner of a called 152 acre tract of land described in a Deed to Walter B. (Bud) Wolf, as recorded in Volume 533, Page 541 of the Deed Records of Denton County, Texas bears North 00°26'46" East, a distance of 599.88 feet; THENCE South 89°50'49" East along the South line of said 340.469 acre tract and North line of said 116.154 acre tract, for a distance of 506.72 feet to a 518 inch iron rod with cap stamped "TNP" set for the POINT OF BEGINNING of the herein described tract; THENCE North 0 1 °31 '40" West departing the South line of said 340.469 acre tract and the North Iine of said 116.154 acre tract, for a distance of 608.71 feet to a 518 inch iron rod with cap stamped "TNP" set; THENCE South 89°59'35" East for a distance of 611 .28 feet to an "X" cut set in concrete; THENCE South 00°00'25" West for a distance of 65.60 feet to a 518 inch iron rod with cap stamped "TNP" set; THENCE North 90°00'00" East for a distance of 872.65 feet to a 518 inch iron rod with cap stamped "TNP" set at the beginning of a non -tangent curve to the left; THENCE in a Southern direction, along said non -tangent curve to the left having a central angle of 07°27'36", a radius of 4210.63 feet, a chord bearing of South 03°47'11" West, a chord distance of 547.84 feet and an arc length of 548.23 feet to a 518 inch iron rod with cap stamped "TNP" set in the South line of said 340.469 acre tract and the North line of said 116.154 acre tract, from which a 112 inch iron rod with cap stamped "Vannoy 5 63 -7 101 " found for the Northeast corner of said 116.154 acre tract and an interior ell corner of said 340.469 acre tract bears South 89°50'49" East, a distance of 420.07 feet; Ex B THENCE North 89°50'49" West along the South line of said 340.469 acre tract and the North line of said 116.154 acre tract, for a distance of 1431.52 feet to the POINT OF BEGINNING, and containing 19.064 acres of land, more or less. L 1 I I I I fWTP&LE4SEAAEIVr EI III ��"�o I Ipp j i I! on.naT. i !�I X� $ o l k{ I I i 0 100 200 400 SCALE: 1" — 240' REMAINOrR OF CA11ED3US 439 ACRES 1 CITY Or OCHTON• TEXAS Illi�'llll WC No2W6543362 OR OCT S 89°59'35" E 61tn' ill I I xi•rN✓COR EIEcrRYCOELnrE72Y00 FASEAMWArnmsHroF-WAY \ 1 1 DOC. NO.200613516 7C 7WA0SEMEHT I �� VOL YfGL POINT OF I I I 21Jlrl% OCO�MMENCING ` 1 j O�A9 1 II III.----__— T S 89'50'49'E 506.72' I I l I POINT OF j I BEGINNING a2zFs. Ne'caA3 �llv Burcpt a I.w um.n naleon re l�rmcae m ow fWM d Ane Tues Cm9Gwa SYReem a teE3lGafh £abet tem amt: WWB31ml i) FporJl 19101 eo eeriro! "calk Fern RTK NetwN mntln�a�YY eFY'�F ra".ti-. Yumu ECOPS7 w nr lNr Enrswac IRrY9 4YlY�T mYaloRA. iM PeRnYet Yhvea fNYem .tp4e4R ".1amr4vel µq�b] 1 uu1R�E 6RA`lAeClRlacb.d t amsome .n Yale halo pr"x gffare 2 TA's Sa / rra p"p 1 d ou[ CMMI TAB C� OF W. [OVS.M6601ATF. m6G alkowe aMY 0< ONOV 25, 2916. MwNe4 6I RlfaERG The ai Tdas Fm eaaerlwrca 4yvd�emY aM�er anu meners a roam 1"Irs"Y aokvs mY trees Ane 5a121ru1eml sae? � saes rme�m,rnwe 3 A�ey41 j}p�(ppn(N MEnpIpe AMGVM dSAnP.V:RS E'1L 3mn0elY SurYey, 5Re PYpeld2 4 3a 7S.,,ymh E.Wigw.npsnwnmylmeemev�arEne"Yer;"ma:eP.a roague null and parkins ]260141" ph h m Sia 1124 wmw, rAw.a6z16 N0731RIA 1401Y1rOT61Y w.r.r� rmir" Site Two xcur .j N 90°00'00" E 19.054 ACRES PART OF GALLED 343.439 LCRES CITY OF DEMOµ TEXM DOC. NO, MG -147069 O.R.O.C.Y. ® x r. " m.oezR ARITIM. LOCATION AW"NO AESYOW GAS rnewE RIC. ElSEAWNr OM 140. 200645433 O.RD.CT. N 89.50'49" W 1431.57 MARK Yorks INYESTTMEIM LLC UNE TABLE CALLED 110.134 ACRES L3N {735TA DOC-N0.1L21-ries Lt S 00'0025 W 65.60 O.R.D.C.T. CURVE TABLE CURVE ARG. Ct 548.23 4210.63 7'27'36- 5 03'47 11 w 597.89 BOUNDARYSGRIA�Y 19.064 ACRE TRACT RIM & "MI°` DENTON ENERGY CENTER 4359• BEINH SITUATED IN THE MOB ES H. DAMS SURVEY. ABSTRACT NO. 377 Ft _� City&DBNOA, Dmon Ce iy, rA ~ • CPH21131 FAGS 2 OF 2 BEING an 11.256 acre tract of land situated in the Moses H. Davis Survey, Abstract No. 377 and the Johnson, Green, Myers and Brummett Survey, Abstract No. 1699, City of Denton, Denton County, Texas, being part of a called 340.469 acre tract of land described in a Deed to the City of Denton, a Texas home -rule municipal corporation, as recorded in Document No. 2016- 143882 of the Official Records of Denton County, Texas and being more particularly described as follows: COMMENCING at a 518 inch iron rod found for the Southwest corner of Lot 1, Block I of Krum Tap Electrical Switch Station, per Plat recorded in Document No. 2010-3 of the Plat Records of Denton County, Texas; THENCE North 89°39'01" East along the South Iine of said Lot 1, for a distance of 21.24 feet to a 518 inch iron rod with cap stamped "TNP" set for the POINT OF BEGINNING of the herein described tract: Ex B THENCE North 89°39'01" East continuing along the South line of said Lot 1, passing a 5/8 inch iron rod found for the Southeast corner of same at a distance of 658.12 feet, and continuing for a total distance of 806.50 to a 518 inch iron rod with cap stamped "TNP" set; THENCE South 67°31 '07" East, for a distance of 8593 to a 518 inch iron rod with cap stamped "TNP" set; THENCE South 75°20'51" East, for a distance of 150.68 to a 518 inch iron rod with cap stamped "TNP" set; THENCE South 56048'38" East, for a distance of 80.84 to a 518 inch iron rod with cap stamped "TNP" set; THENCE South 21 °23'05" East, for a distance of 76.31 to a 518 inch iron rod with cap stamped "TNP" set; THENCE South 43°26'26" East, for a distance of 72.63 to a 518 inch iron rod with c-,ap stamped "TNP" set; THENCE South 00°24'23" East. for a distance of 179.60 to a 518 inch iron rod with cap stamped "TNP" set; THENCE North 90°00'00" West, for a distance of 1259.39 to a 518 inch iron rod with cap stamped "TNP" set; THENCE North 70°47'23" West, for a distance of 60.77 to a 518 inch iron rod with cap stamped "TNP" set; THENCE North 19022119" East, for a distance of 417.32 to the POINT OF BEGINNING, and containing 11.256 acres of land, more or less. EX B bees J L9 E'0 / N 89'39'01" E 806.x' s4•arossrrstNDrD1r 1 1 J rLIr11NE �'� 1 F4 RAND A)FLWAr GENT OF �w P �~ DOC. NO.7005402321 / \ OJLDar. I I I!I BEGINNING n`iTP 1 I! �!! � •Trap• AfaPRGIfeUATESUNVEYI6�E "•� 1 11.256 ACRES svvErerANvlrESLrr srLaw. !! I !i l PART D QED �AN Ag R8 'uv i � DOCK PC, 81. No. 2019443M DOC. No 200-4W72 OFLUCT. �FU 7/ Ir I nRncr OAD.0-T. N 90'09'00" W 12693 ° s iWOdVCORELECTRIC DEUMIRYCO ro' crl�r ��u3t�iL i"f ! 7 ! l ! 1 EASEMEWANDRxwr-Or,"Y QR.RGT �'�-�-"' I DOG NO' "W135re e�'�F - j " ' JOa OT 1 ee"iy. d ir�ea alwn hettbn w leersetme w GM hlulh d O" TexAe eeeareoee •y4en b 1883 AAbnh Gen281 Z6ro 47Pt MM120111 Eltxn .1501 ee Oem160 aulp hem RTN R6t6ar1c wilnuu+Ar ePerele'9 tefveern eta6em (G0REi) vre lee' REMNNDER Or CALLED 3W 464 ACRES D 100 2OD 400 Ike cpsY,v11,.. (RrtSl au"ey rta91o6s Tre tlhntiva ello+n herein lgeetatl Wrlae rYwe ai'9 a wAece e4'nh"fie 18cb� d t /m1E0B]Qb �b/run 9ria m ualor�_ C , DOC No mie-aW.' 2 TRe S.., e:e #<PeR^•I We+ Ito We d thle da'JM Teo C, 1-1 GF No D a DCT 1O 2W801-RTT.rehertea,efteeOMI- 25.2016.crn.i heRlr b Tele SCALE: 1" = 200' er Teeu ro<.ae.n.+.. n o6erMt eer. on" mrwre of r.ee.411 mer efl.a LINE TABLE I>re eea o�e5 yer leeea sdelr on aiemw.rmmm. t � •.•r1n LIN A N I A BOUNOARYSURYFY Pr 615rfga'a. LF 567'3107 E 85.93 r A Leyl Oeofrfm °1'."' °'°° h".e.w '°`°"'4"'@ e" �°ter s'°'Rr $e" y fed' � o � u' L2 5 '5'20 5f E 150.88 11.28 ACRE TRACT Iv4eldl. _ ..:-.. ••••••••^•^•^••• •^ L3 558'4836 E 80.84 + rheo,eee,.aars�.wye•+rE.+...Pe.^b,...b.e...se,e,lmwmb •T°ODa L4 S 21'2305 E 7fi.31 DENTQN ENEROYCEMTER V .................. sa.. nq6emmu6. hedge <etv.m a,rawt ,, 4854 _ L5 S 43'2626 E 72.63 Baxd srruATFDIN THE 5eagua nail and pefkins rp S OD Za 23 E 179.69 JOHNSON, GREEN, NIERS ANDERUN LETT SURVEY �� 1rm t 4 j- 115 215 5121 6 L7 N 70 47 23 E 17. ABSTRACT NO. 7399 AHD THE Ounce, Team 16]16 LB N 19'22 19 E 417:32 NOSES H. DAV13 SURVEY, ABSTRACT NO. 377 MQN11t 'eh WO.Ye1WM Ix �//�. L9 N 69'39 Ot E 21.24 City I d Denfcn. Denton Counh. Torea e6+lAIFe"t t60tIN1 1- '��!' GPN211IIf n PAGE 2OFZ Ex B RUr'r3G'�SL' I ae4r-e- m6e4yaex osnms, main enw O.R0.GT. I 1 l L�, jB,--- e A.T t+Home een" men eus J J LOT 4, BLOCK 1 MN TAP ELECTRICAL9VATCR STATION S 4A6GT eeln ha"o+mrrvt+e 1 If/ I OOL. NO.26103 I , REIN-NDER Or CALLED 409ACRES CITY OF DENTON, TEXAS 1 1 i P.RD.C4 DOC. NO 2015-143882 — — •.w.n 1el 1 / 1 _ yl 3.1 `` \ O.A.0 C T ELEFCTFW EA3ELffM q�. D= N0. 20 POINT OF ] ! I I r PA4T:7r Iy.`\ f�.�--t APPRWwA'm uwrrs OG x r ORJr.Gr. AT 8881Y COMMENCING II ! f T5 100YEAtLFL000IiAIN �, bees J L9 E'0 / N 89'39'01" E 806.x' s4•arossrrstNDrD1r 1 1 J rLIr11NE �'� 1 F4 RAND A)FLWAr GENT OF �w P �~ DOC. NO.7005402321 / \ OJLDar. I I I!I BEGINNING n`iTP 1 I! �!! � •Trap• AfaPRGIfeUATESUNVEYI6�E "•� 1 11.256 ACRES svvErerANvlrESLrr srLaw. !! I !i l PART D QED �AN Ag R8 'uv i � DOCK PC, 81. No. 2019443M DOC. No 200-4W72 OFLUCT. �FU 7/ Ir I nRncr OAD.0-T. N 90'09'00" W 12693 ° s iWOdVCORELECTRIC DEUMIRYCO ro' crl�r ��u3t�iL i"f ! 7 ! l ! 1 EASEMEWANDRxwr-Or,"Y QR.RGT �'�-�-"' I DOG NO' "W135re e�'�F - j " ' JOa OT 1 ee"iy. d ir�ea alwn hettbn w leersetme w GM hlulh d O" TexAe eeeareoee •y4en b 1883 AAbnh Gen281 Z6ro 47Pt MM120111 Eltxn .1501 ee Oem160 aulp hem RTN R6t6ar1c wilnuu+Ar ePerele'9 tefveern eta6em (G0REi) vre lee' REMNNDER Or CALLED 3W 464 ACRES D 100 2OD 400 Ike cpsY,v11,.. (RrtSl au"ey rta91o6s Tre tlhntiva ello+n herein lgeetatl Wrlae rYwe ai'9 a wAece e4'nh"fie 18cb� d t /m1E0B]Qb �b/run 9ria m ualor�_ C , DOC No mie-aW.' 2 TRe S.., e:e #<PeR^•I We+ Ito We d thle da'JM Teo C, 1-1 GF No D a DCT 1O 2W801-RTT.rehertea,efteeOMI- 25.2016.crn.i heRlr b Tele SCALE: 1" = 200' er Teeu ro<.ae.n.+.. n o6erMt eer. on" mrwre of r.ee.411 mer efl.a LINE TABLE I>re eea o�e5 yer leeea sdelr on aiemw.rmmm. t � •.•r1n LIN A N I A BOUNOARYSURYFY Pr 615rfga'a. LF 567'3107 E 85.93 r A Leyl Oeofrfm °1'."' °'°° h".e.w '°`°"'4"'@ e" �°ter s'°'Rr $e" y fed' � o � u' L2 5 '5'20 5f E 150.88 11.28 ACRE TRACT Iv4eldl. _ ..:-.. ••••••••^•^•^••• •^ L3 558'4836 E 80.84 + rheo,eee,.aars�.wye•+rE.+...Pe.^b,...b.e...se,e,lmwmb •T°ODa L4 S 21'2305 E 7fi.31 DENTQN ENEROYCEMTER V .................. sa.. nq6emmu6. hedge <etv.m a,rawt ,, 4854 _ L5 S 43'2626 E 72.63 Baxd srruATFDIN THE 5eagua nail and pefkins rp S OD Za 23 E 179.69 JOHNSON, GREEN, NIERS ANDERUN LETT SURVEY �� 1rm t 4 j- 115 215 5121 6 L7 N 70 47 23 E 17. ABSTRACT NO. 7399 AHD THE Ounce, Team 16]16 LB N 19'22 19 E 417:32 NOSES H. DAV13 SURVEY, ABSTRACT NO. 377 MQN11t 'eh WO.Ye1WM Ix �//�. L9 N 69'39 Ot E 21.24 City I d Denfcn. Denton Counh. Torea e6+lAIFe"t t60tIN1 1- '��!' GPN211IIf n PAGE 2OFZ Ex B