Contract analysis

I. Executive Summary This memorandum analyzes the tax gross-up and indemnity provisions contained in the Credit Agreement dated as of May 15, 2024 (the "Credit Agreement"), among Ironhaven Data Centers LLC, a Delaware limited liability company (the "Borrower" or "IHDC"), Ironhaven Frankfurt GmbH, a German limited liability company (Gesellschaft mit beschränkter Haftung) (the "Co-Borrower" or "IHDC Frankfurt"), Ironha

II. Transaction Overview and Relevant Parties A. Facility Structure The Credit Agreement provides for a senior secured Term Loan B credit facility in an aggregate principal amount of $950,000,000. The facility is structured as follows: USD Tranche. The U.S. Dollar-denominated tranche has aggregate commitments of $675,000,000 and bears interest at a rate of Adjusted Term SOFR (as defined in the Credit Agreement) plus

III. Analysis of "Indemnified Taxes" Definition A. Scope of Indemnified Taxes The Credit Agreement defines "Indemnified Taxes" as follows: "Indemnified Taxes" means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document, and (b) to the extent not otherwise described in clause (a), Other Taxes. This definition is

IV. Analysis of "Excluded Taxes" Definition A. Categories of Excluded Taxes The "Excluded Taxes" definition in the Credit Agreement establishes the specific categories of taxes for which the Borrower bears no gross-up or indemnity obligation. Each carve-out is designed to address a circumstance in which the imposition of tax is attributable to the Lender's own status, conduct, or failure, rather than to the Borrower'

1. Connection-Based Taxes. The first category excludes taxes imposed on or measured by the net income (however denominated), franchise taxes, and branch profits taxes of a Lender, in each case, (i) imposed as a result of a present or former connection between such Lender and the jurisdiction imposing such tax (other than connections arising solely from such Lender having executed, delivered, become a party to, perfor

2. Branch Profits Taxes and Equivalents. The second category specifically identifies the U.S. federal branch profits tax under IRC § 884 and any similar tax imposed by any other jurisdiction. IRC § 884 imposes a 30% tax (subject to treaty reduction) on the "dividend equivalent amount" of a foreign corporation's effectively connected earnings and profits attributable to a U.S. branch. This is a second level of tax, an

3. Taxes Attributable to Lender's Failure to Comply with Documentation Requirements. The third category — and, from the Borrower's perspective, perhaps the most important — excludes any tax that would not have been imposed but for the failure of a Lender to comply with the documentation requirements set forth in the Credit Agreement (specifically, the provisions requiring delivery of IRS Forms W-8BEN-E, W-8ECI, W-8IM

4. FATCA Withholding. The fourth category excludes any U.S. federal withholding taxes imposed under FATCA — specifically, IRC §§ 1471 through 1474, as in effect as of the date of the Credit Agreement (or any amended or successor version that is substantively comparable), any current or future regulations or official interpretations thereof, and any agreement entered into pursuant to IRC § 1471(b)(1). This exclusion i

5. Taxes Imposed on Assignees and Participants. The fifth category excludes taxes that would not have been imposed but for an assignment of, or participation in, a Lender's commitment or loans — unless such assignment or participation was made at the request of the Borrower. This exclusion is critical in the secondary market context and is analyzed in Section XI below. B. Borrower-Protective Function Taken together,

V. Tax Gross-Up Mechanics A. Obligation to Gross Up The gross-up provision of the Credit Agreement provides, in relevant part, as follows: If any Loan Party shall be required by applicable law to deduct or withhold any Indemnified Tax from any payment made by such Loan Party under any Loan Document, then (i) such Loan Party shall make such deductions or withholdings, (ii) such Loan Party shall timely pay the full amo

VI. Portfolio Interest Exemption Analysis A. Statutory Framework — IRC § 881(c) IRC § 881(c) provides an exemption from the 30% withholding tax imposed by IRC § 881(a) on certain interest income received by foreign persons from sources within the United States. To qualify for the exemption, the interest must be paid on an obligation that constitutes a "portfolio debt obligation" within the meaning of IRC § 871(h)(2).

VII. FATCA Provisions — IRC §§ 1471–1474 A. Overview of FATCA Withholding Regime The Foreign Account Tax Compliance Act ("FATCA"), codified at IRC §§ 1471 through 1474 and effective in phases since 2014, imposes a 30% withholding tax on certain "withholdable payments" made to foreign financial institutions ("FFIs") and non-financial foreign entities ("NFFEs") that do not comply with FATCA's information reporting and

1. NordBrücke AG (German FFI). Germany has entered into a Model 1 IGA with the United States. Under the Model 1 IGA, German financial institutions such as NordBrücke AG comply with FATCA by reporting through the German Federal Central Tax Office (Bundeszentralamt für Steuern or "BZSt") rather than directly to the IRS. NordBrücke AG, as a major BaFin-regulated credit institution, is expected to be fully FATCA-complian

2. Osprey Insurance Capital, Ltd. (Bermuda Entity). Bermuda has entered into a Model 2 IGA with the United States. Under the Model 2 IGA, financial institutions in Bermuda are required to register as "participating FFIs" or to establish an applicable FATCA-exempt status. Osprey Insurance Capital, Ltd. must either (a) register with the IRS as a participating FFI and obtain a GIIN, (b) qualify as a "deemed-compliant FF

3. Pacific Rim Institutional Lending Corp. (U.S. Corporation with Cayman CLO Parent). Pacific Rim is a Delaware corporation and is treated as a U.S. person for all purposes, including FATCA. Payments of interest by the Borrower (or the Administrative Agent, on behalf of the Borrower) to Pacific Rim are not "withholdable payments" for FATCA purposes, because withholdable payments include only payments to non-U.S. pers

4. U.S. Lenders (Crescent Harbor Bank, N.A.; Ridgeline National Bank; Marlowe Asset Management Meridian Capital, LLC; Atlas Peak Credit Partners, LP). All four of these Lenders are U.S. persons. FATCA withholding does not apply to payments to U.S. persons. Each of these Lenders is required to deliver an IRS Form W-9 to the Administrative Agent at closing, certifying its U.S. taxpayer identification number and its exe

VIII. Tax Indemnity Provisions A. Scope of Tax Indemnity The Credit Agreement contains a tax indemnity provision that is separate from, and in addition to, the gross-up obligation described in Section V above. Under this provision, each Loan Party (including the Borrower, the Co-Borrower, and the Parent Guarantor) agrees to indemnify each Lender, the Administrative Agent, and the Collateral Agent for the full amount

IX. Withholding Tax on Payments by IHDC Frankfurt (German Source Payments) A. German Domestic Law Under German domestic tax law, interest paid by a German corporate borrower (Kapitalgesellschaft) to unrelated third-party lenders on ordinary loan obligations is generally not subject to German withholding tax. This is a well-established principle of German tax law and stands in contrast to the withholding regimes appli