ESCROW AGREEMENT
Frankfurt Campus Construction Funds
dated as of June 3, 2024
among
IRONHAVEN FRANKFURT GmbH (as Depositor)
CRESCENT HARBOR BANK, N.A. (as Administrative Agent)
and
NORDBRÜCKE AG (as Frankfurt Escrow Bank)
EUR Sub-Tranche Proceeds: €253,571,429
CONFIDENTIAL TREATMENT REQUESTED — This Agreement and its contents are strictly confidential and are subject to the confidentiality provisions set forth herein and in the Credit Agreement (as defined below).
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement") is made and entered into as of June 3, 2024 (the "Closing Date"), by and among:
(1) IRONHAVEN FRANKFURT GmbH, a Gesellschaft mit beschränkter Haftung organized and existing under the laws of the Federal Republic of Germany, registered with the Commercial Register (Handelsregister) of the Amtsgericht Frankfurt am Main under HRB 129457, having its registered office at Hanauer Landstraße 188, 60314 Frankfurt am Main, Germany (the "Depositor" or "IHDC Frankfurt");
(2) CRESCENT HARBOR BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States of America, having its principal office at 1200 Harbor Point Drive, Charlotte, North Carolina 28202, acting in its capacity as Administrative Agent under the Credit Agreement (as defined below) (the "Administrative Agent"); and
(3) NORDBRÜCKE AG, an Aktiengesellschaft organized and existing under the laws of the Federal Republic of Germany, a licensed credit institution (Kreditinstitut) regulated by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, "BaFin"), having its principal office at Neue Mainzer Straße 72, 60311 Frankfurt am Main, Germany (the "Frankfurt Escrow Bank" or "Escrow Agent").
The Depositor, the Administrative Agent, and the Frankfurt Escrow Bank are hereinafter referred to individually as a "Party" and collectively as the "Parties."
With the acknowledgment and consent of:
PINNACLE TRUST COMPANY, N.A., a national trust company organized under the laws of the United States, having its principal office at 101 Constitution Avenue NW, Washington, D.C. 20001, acting through its London branch in its capacity as Security Trustee (Sicherheitentreuhänder) under the German Parallel Debt and Security Trust Agreement (Sicherheitentreuhandvertrag) and as Collateral Agent under the Credit Agreement (the "Security Trustee" or "Collateral Agent"), solely for the purposes of Sections 2.05, 8.01, and 8.02 of this Agreement.
REFERENCE IS MADE TO that certain Senior Secured Term Loan B Credit Agreement, dated as of May 15, 2024 (as amended, restated, supplemented, or otherwise modified from time to time, the "Credit Agreement"), among Ironhaven Data Centers LLC, a Delaware limited liability company (as Borrower), Ironhaven Frankfurt GmbH (as Co-Borrower), Ironhaven Holdings Inc., a Delaware corporation (as Parent Guarantor), Crescent Harbor Bank, N.A. (as Administrative Agent), Pinnacle Trust Company, N.A. (as Collateral Agent), and the several lenders from time to time party thereto (the "Lenders"). The Credit Agreement provides for a $950,000,000 senior secured term loan facility (the "Term Loan"), of which a EUR Sub-Tranche in the principal amount of €253,571,429 (equivalent to approximately $275,000,000 at the EUR/USD exchange rate of 1.0846 on the Closing Date) (the "EUR Sub-Tranche") has been allocated to fund the Phase I construction of the Frankfurt data center campus known as "Ironhaven Frankfurt I" (the "Frankfurt Campus" or the "Project"), located at Hanauer Landstraße 188, 60314 Frankfurt am Main, Germany, on the parcel recorded in the Grundbuch von Frankfurt am Main-Ost, Blatt 54321, Flur 12, Flurstück 789 (approximately 18.7 hectares).
This Agreement is entered into in order to establish an escrow account for the controlled disbursement of the EUR Sub-Tranche proceeds to fund the Phase I construction of the Frankfurt Campus, with a planned critical IT load capacity of 80 MW (Phase I: 40 MW) and estimated Phase I construction cost of €253,571,429 (approximately $275,000,000).
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RECITALS
WHEREAS:
A. Pursuant to the Credit Agreement, dated as of May 15, 2024 and closed on June 3, 2024, the Lenders have agreed to provide a $950,000,000 senior secured term loan facility to Ironhaven Data Centers LLC (as Borrower) and IHDC Frankfurt (as Co-Borrower), of which the EUR Sub-Tranche in the principal amount of €253,571,429 is allocated specifically to fund the Phase I construction of the Frankfurt Campus;
B. IHDC Frankfurt is a wholly-owned subsidiary of Ironhaven Data Centers LLC, a Delaware limited liability company headquartered at 4500 Dominion Ridge Boulevard, Suite 300, Ashburn, Virginia 20147, which entity is in turn wholly owned by Ironhaven Holdings Inc. through Thornfield Capital Partners, LP (and specifically through Thornfield Infrastructure Fund III, LP), a private equity fund managed by Thornfield Capital Partners, LP and focused on digital infrastructure and data center investments;
C. The EUR Sub-Tranche proceeds are to be held in escrow and disbursed on a controlled basis to fund Phase I construction costs of the Ironhaven Frankfurt I campus, which campus has a planned total capacity of 80 MW critical IT load, of which Phase I encompasses approximately 40 MW of critical IT load capacity, with estimated Phase I construction costs of €253,571,429 (approximately $275,000,000 at the Closing Date exchange rate);
D. NordBrücke AG has been appointed as the Frankfurt Escrow Bank in connection with this Agreement given its status as a BaFin-regulated credit institution (Kreditinstitut) with existing banking relationships with IHDC Frankfurt, including in its capacity as account bank under the German Account Pledge Agreement (Kontoverpfändung) dated as of the date hereof, and its familiarity with the Frankfurt financial and real estate markets;
E. NordBrücke AG is also a Lender under the Credit Agreement with a commitment of $150,000,000, allocated entirely to the Frankfurt sub-tranche, and has disclosed such relationship to all Parties hereto, and such dual role has been consented to by the Administrative Agent (on behalf of the Required Lenders) as permitted under the Credit Agreement;
F. The Escrow Account (as defined below) is subject to the security interests granted under the German security documents executed in connection with the Credit Agreement, including the German Account Pledge Agreement (Kontoverpfändung) and the German Parallel Debt and Security Trust Agreement (Sicherheitentreuhandvertrag), with Pinnacle Trust Company, N.A. (through its London branch) acting as Security Trustee (Sicherheitentreuhänder); and
G. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Credit Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I — DEFINITIONS AND INTERPRETATION
Section 1.01 — Definitions
As used in this Agreement, the following terms shall have the following meanings:
"Administrative Agent" means Crescent Harbor Bank, N.A., in its capacity as Administrative Agent under the Credit Agreement, and any successor Administrative Agent appointed in accordance with the terms of the Credit Agreement.
"Approved Budget" means the detailed construction budget for Phase I of the Frankfurt Campus, as approved by the Administrative Agent and attached hereto as Exhibit A, which budget sets forth the estimated costs of the Project, totaling €253,571,429, organized by construction category, trade, and milestone, as such budget may be amended from time to time with the prior written approval of the Administrative Agent (acting on the instructions of the Required Lenders).
"Approved Contractor" means any contractor, subcontractor, supplier, consultant, or other service provider listed on the initial Approved Contractors List attached hereto as Exhibit D, or subsequently approved by the Administrative Agent in accordance with Section 3.02 and the Credit Agreement, for the performance of work, delivery of materials, or provision of services in connection with the construction of the Frankfurt Campus.
"BaFin" means the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht), or any successor regulatory authority.
"Business Day" means any day other than a Saturday, Sunday, or any day on which commercial banks in Frankfurt am Main, Germany or New York, New York are required or authorized by law to be closed; provided that, for purposes of any payment or transfer to be effected through TARGET2, a "Business Day" shall also mean a day on which TARGET2 is operational.
"Closing Date" means June 3, 2024, being the date on which this Agreement is executed and the initial deposit of Escrow Funds into the Escrow Account is made.
"Collateral Agent" means Pinnacle Trust Company, N.A., in its capacity as Collateral Agent under the Credit Agreement and as Security Trustee (Sicherheitentreuhänder) under the German Parallel Debt and Security Trust Agreement, and any successor collateral agent or security trustee appointed in accordance with the terms of the Credit Agreement and the German Security Documents.
"Construction Commencement Date" means the date on which physical construction of the Frankfurt Campus (including, without limitation, site preparation, earthworks, and foundation work) commences, as certified by the Depositor in a written certificate delivered to the Administrative Agent and confirmed by the Independent Engineer.
"Credit Agreement" has the meaning assigned to such term in the preamble of this Agreement, and shall include such agreement as amended, restated, supplemented, refinanced, replaced, or otherwise modified from time to time in accordance with its terms.
"Depositor" means Ironhaven Frankfurt GmbH, as described in the preamble of this Agreement, and its successors and permitted assigns.
"Disbursement Certificate" has the meaning assigned to such term in Section 3.02.
"Escrow Account" means the segregated interest-bearing blocked account (Sperrkonto) established and maintained by the Frankfurt Escrow Bank in the name of "Ironhaven Frankfurt GmbH — Construction Escrow" as specified in Section 2.01, with account details set forth in Schedule 1.
"Escrow Funds" means the EUR Sub-Tranche proceeds in the amount of €253,571,429 deposited into the Escrow Account on the Closing Date, together with all interest, earnings, and investment returns thereon, less any amounts previously disbursed or withdrawn in accordance with the terms of this Agreement.
"EUR Sub-Tranche" means the euro-denominated sub-tranche of the Term Loan in the original principal amount of €253,571,429 (equivalent to approximately $275,000,000 at the EUR/USD exchange rate of 1.0846 on the Closing Date), as defined and described in the Credit Agreement.
"Event of Default" has the meaning assigned to such term in the Credit Agreement.
"Frankfurt Campus" or "Ironhaven Frankfurt I" means the data center campus to be developed and constructed at Hanauer Landstraße 188, 60314 Frankfurt am Main, Germany, on the parcel recorded in the Grundbuch von Frankfurt am Main-Ost, Blatt 54321, Flur 12, Flurstück 789 (approximately 18.7 hectares), including all buildings, improvements, infrastructure, mechanical and electrical systems, and related facilities comprising Phase I of such campus.
"Frankfurt Escrow Bank" means NordBrücke AG, as described in the preamble of this Agreement, and any successor escrow bank appointed in accordance with Section 7.01.
"German Security Documents" means, collectively, the following security documents executed in connection with the Credit Agreement and governed by German law: (i) the German Parallel Debt and Security Trust Agreement (Sicherheitentreuhandvertrag); (ii) the German Land Charge Agreement (Grundschuldbestellungsurkunde); (iii) the German Global Assignment of Receivables (Globalzession); (iv) the German Account Pledge Agreement (Kontoverpfändung); (v) the German Security Transfer of Movable Assets (Sicherungsübereignungsvertrag); (vi) the German Share Pledge Agreement (Anteilsverpfändungsvertrag); and (vii) the German Security Purpose Agreement (Sicherungszweckerklärung), in each case as amended, restated, supplemented, or otherwise modified from time to time.
"GwG" means the German Anti-Money Laundering Act (Geldwäschegesetz), as amended from time to time, together with all implementing regulations and administrative guidance issued thereunder.
"Independent Engineer" means the independent construction engineer or consulting firm appointed by the Administrative Agent pursuant to the Credit Agreement to review and approve disbursement requests, monitor construction progress, and issue certificates in connection with the disbursement of Escrow Funds, in each case acting in accordance with the terms of the Independent Engineer engagement letter.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of May 15, 2024, among the Administrative Agent, the Collateral Agent, and the other parties thereto, as amended, restated, supplemented, or otherwise modified from time to time.
"Lender Group" means, collectively, the Lenders under the Credit Agreement from time to time.
"OFAC" means the Office of Foreign Assets Control of the U.S. Department of the Treasury.
"Permitted Investments" has the meaning assigned to such term in Section 2.04 of this Agreement.
"Project" means the Phase I development and construction of the Frankfurt Campus, consisting of approximately 40 MW of critical IT load capacity, together with all associated infrastructure, mechanical and electrical systems, data halls, cooling systems, fire suppression systems, security systems, site improvements, and ancillary facilities, all as more particularly described in the Approved Budget.
"Requisition" means a written request for disbursement from the Escrow Account, substantially in the form of Exhibit B attached hereto, submitted by the Depositor in accordance with Section 3.02.
"Retainage" means the portion of each approved disbursement withheld from payment in accordance with Section 3.04, equal to ten percent (10%) of the approved disbursement amount.
"Sanctioned Person" has the meaning assigned to such term in the Credit Agreement.
"Security Trustee" means Pinnacle Trust Company, N.A. (acting through its London branch), as security trustee (Sicherheitentreuhänder) under the German Parallel Debt and Security Trust Agreement, and any successor security trustee appointed in accordance with the terms thereof.
"Substantial Completion" means, with respect to the Project or any construction milestone thereof, the achievement of substantial completion as defined in the applicable construction contracts entered into by the Depositor for the Phase I construction of the Frankfurt Campus, as confirmed by the Independent Engineer in a written certificate delivered to the Administrative Agent, the Depositor, and the Frankfurt Escrow Bank.
"TARGET2" means the Trans-European Automated Real-time Gross Settlement Express Transfer system, or any successor system operated by the European Central Bank.
Section 1.02 — Interpretation
(a) Unless the context otherwise requires, references in this Agreement to the Credit Agreement and to terms defined in the Credit Agreement shall be construed in accordance with the definitions and interpretive provisions set forth in the Credit Agreement as in effect on the Closing Date (or, where the context requires, as amended from time to time). In the event of any conflict between a definition set forth in this Agreement and a definition set forth in the Credit Agreement, the definition set forth in this Agreement shall control for purposes of this Agreement, except with respect to terms that are used herein solely in the context of obligations arising under the Credit Agreement, in which case the Credit Agreement definition shall control.
(b) German-language terms are used in this Agreement in parallel with their English-language equivalents where relevant to German-law concepts, including but not limited to Grundschuld (land charge), Kontoverpfändung (account pledge), Sicherheitentreuhandvertrag (security trust agreement), Sperrkonto (Blocked account), Gesellschaftsvertrag (articles of association), Handelsregister (commercial register), Grundbuch (land register), Hinterlegung (deposit with court), grobe Fahrlässigkeit (gross negligence), and Vorsatz (willful misconduct). In each case, the German-language term is provided for reference and convenience only, and the substantive provisions of this Agreement shall be governed by the English-language text in accordance with Section 9.06.
(c) All monetary amounts in this Agreement are expressed in Euros ("EUR" or "€") unless otherwise stated. Where U.S. Dollar ("USD" or "$") equivalents are provided, such equivalents have been calculated at the Closing Date spot rate of EUR/USD 1.0846 and are provided for reference purposes only; the obligations and amounts under this Agreement are denominated exclusively in EUR.
(d) References to "days" shall mean calendar days unless "Business Days" are specified. In computing any period of time, the day of the act, event, or default from which the period begins to run shall not be included, and the last day of such period shall be included unless it is not a Business Day, in which case the period shall extend to the next succeeding Business Day.
(e) References to any statute, regulation, or legislative provision include references to any statutory or regulatory modification, re-enactment, or successor legislation thereof.
(f) The headings and captions in this Agreement are for convenience of reference only and shall not affect the interpretation or construction of this Agreement.
(g) The words "include," "includes," and "including" shall be deemed to be followed by the words "without limitation."
(h) References to "Sections," "Articles," "Exhibits," and "Schedules" are references to the sections, articles, exhibits, and schedules of this Agreement unless otherwise specified.
Section 1.03 — Exhibits and Schedules
The following Exhibits and Schedules are attached hereto and incorporated herein by reference:
ARTICLE II — ESTABLISHMENT AND ADMINISTRATION OF ESCROW ACCOUNT
Section 2.01 — Establishment of Escrow Account
(a) On or prior to the Closing Date, the Frankfurt Escrow Bank shall establish and maintain a segregated interest-bearing account in the name of "Ironhaven Frankfurt GmbH — Construction Escrow" (the "Escrow Account") at the Frankfurt Escrow Bank's offices located at Neue Mainzer Straße 72, 60311 Frankfurt am Main, Germany. The Escrow Account shall be denominated in Euros (EUR).
(b) The IBAN, BIC/SWIFT code, and other account details for the Escrow Account shall be as set forth in Schedule 1 hereto, as completed upon the opening of the Escrow Account. The Frankfurt Escrow Bank shall promptly provide the completed account details to the Administrative Agent, the Depositor, and the Security Trustee upon establishment of the Escrow Account.
(c) The Escrow Account shall be established no later than the Closing Date. In the event that the Escrow Account cannot be established on or prior to the Closing Date due to circumstances beyond the reasonable control of the Frankfurt Escrow Bank, the Frankfurt Escrow Bank shall use commercially reasonable efforts to establish the Escrow Account as promptly as practicable and shall immediately notify the Administrative Agent and the Depositor of any delay.
(d) The Escrow Account shall be a blocked account (Sperrkonto) subject to the conditions of this Agreement. No withdrawals, transfers, or disbursements shall be made from the Escrow Account except in strict accordance with the terms and conditions of this Agreement. The Frankfurt Escrow Bank shall not permit the Depositor or any other person to access, withdraw from, or direct any transfer from the Escrow Account except pursuant to a disbursement instruction from the Administrative Agent delivered in accordance with Article III hereof, or as otherwise expressly provided in this Agreement.
(e) The Frankfurt Escrow Bank shall maintain the Escrow Account in accordance with all applicable German banking laws and regulations, including the requirements of BaFin, and shall ensure that the Escrow Account is treated as a client escrow account (Treuhandkonto) for regulatory and accounting purposes.
Section 2.02 — Initial Deposit
(a) On the Closing Date, the Administrative Agent shall cause the EUR Sub-Tranche proceeds in the amount of €253,571,429 (two hundred fifty-three million, five hundred seventy-one thousand, four hundred twenty-nine Euros) to be deposited into the Escrow Account by means of TARGET2 wire transfer, in accordance with the wire instructions set forth in Schedule 2 hereto and the funds flow memorandum dated June 3, 2024, prepared by Calderwood & Harkness LLP (Borrower's Counsel) and reviewed and approved by Blackthorn & Sundial Software (Lenders' Counsel).
(b) The Frankfurt Escrow Bank shall confirm receipt of the Escrow Funds in writing (which may be by electronic mail with confirmed receipt) to the Administrative Agent, the Depositor, and the Collateral Agent within one (1) Business Day of receipt. Such confirmation shall include the date and time of receipt, the amount received, and the Escrow Account number and IBAN.
(c) The Frankfurt Escrow Bank shall not accept any deposit into the Escrow Account other than the initial deposit of the EUR Sub-Tranche proceeds described in paragraph (a) above and any interest or earnings on Permitted Investments credited in accordance with Section 2.04, unless otherwise agreed in writing by all Parties.
Section 2.03 — Segregation of Funds
(a) The Escrow Funds shall at all times be maintained in the Escrow Account as a segregated account, separate and distinct from the general assets, accounts, and proprietary funds of the Frankfurt Escrow Bank. The Frankfurt Escrow Bank shall ensure that the Escrow Funds are not commingled with any other funds of the Frankfurt Escrow Bank, the Depositor, or any other party, and that the Escrow Funds are clearly identifiable as client funds held in escrow.
(b) The Frankfurt Escrow Bank shall comply with all applicable BaFin regulations and German banking law requirements regarding the segregation and safekeeping of client funds, including Section 1 paragraph 1 sentence 2 number 5 of the German Banking Act (Kreditwesengesetz, "KWG") and any applicable provisions of the German Deposit Guarantee Act (Einlagensicherungsgesetz, "EinSiG"), to the extent applicable to escrow arrangements.
(c) In the event of the insolvency, bankruptcy, or liquidation of the Frankfurt Escrow Bank, the Escrow Funds shall not form part of the Frankfurt Escrow Bank's insolvency estate (Insolvenzmasse) and shall be subject to segregation rights (Aussonderungsrecht) in favor of the Depositor and, as applicable, the Security Trustee, to the fullest extent permitted by applicable German law.
Section 2.04 — Investment of Escrow Funds
(a) Pending disbursement in accordance with Article III, the Escrow Funds shall be invested only in "Permitted Investments" as directed jointly in writing by the Depositor and the Administrative Agent. For purposes of this Agreement, "Permitted Investments" shall mean:
(i) overnight deposits at NordBrücke AG bearing interest at the rate offered by NordBrücke AG to institutional clients from time to time;
(ii) short-term (with maturity not exceeding thirty (30) calendar days) Euro-denominated money market instruments issued by investment-grade-rated (at least A-/A3 by Standard & Poor's or Moody's, respectively) sovereign or quasi-sovereign entities within the European Union, including but not limited to Federal Republic of Germany treasury discount papers (Unverzinsliche Schatzanweisungen);
(iii) Euro-denominated time deposits at NordBrücke AG with maturities not exceeding ninety (90) calendar days, bearing interest at the rate offered by NordBrücke AG to institutional clients from time to time; and
(iv) such other instruments as may be jointly approved in writing by the Depositor and the Administrative Agent, provided that any such instrument shall have a credit quality rating of at least A-/A3 and a maturity not exceeding ninety (90) calendar days.
(b) In the absence of joint written investment instructions from the Depositor and the Administrative Agent, the Frankfurt Escrow Bank shall invest the Escrow Funds in overnight deposits at NordBrücke AG as described in clause (i) above.
(c) All interest, earnings, and investment returns on the Escrow Funds shall be credited to the Escrow Account and shall constitute part of the Escrow Funds for all purposes of this Agreement.
(d) The risk of loss on Permitted Investments shall be borne solely by the Depositor. The Frankfurt Escrow Bank shall not be liable for any loss arising from the investment of the Escrow Funds in Permitted Investments, except to the extent such loss results from the Frankfurt Escrow Bank's gross negligence (grobe Fahrlässigkeit) or willful misconduct (Vorsatz).
(e) The Frankfurt Escrow Bank shall, upon request by the Administrative Agent or the Depositor, liquidate any Permitted Investment to make Escrow Funds available for disbursement in accordance with Article III. The Frankfurt Escrow Bank shall use commercially reasonable efforts to ensure that Permitted Investments are sufficiently liquid to permit disbursement within the time frames specified in Section 3.05.
Section 2.05 — Account Pledge / Security Interest
(a) The Parties acknowledge and agree that the Escrow Account is subject to the account pledge (Kontoverpfändung) granted under the German Account Pledge Agreement, dated as of the date hereof, executed by IHDC Frankfurt in favor of Pinnacle Trust Company, N.A. (acting through its London branch) as Security Trustee, securing the obligations of IHDC Frankfurt under the Credit Agreement and the German Security Documents.
(b) NordBrücke AG, in its capacity as Frankfurt Escrow Bank and as the account-holding bank (kontoführende Bank), hereby expressly consents to and acknowledges the pledge over the Escrow Account in favor of the Security Trustee. The Frankfurt Escrow Bank confirms that it has received a duly executed copy of the Kontoverpfändung and that it has been notified of the pledge in accordance with Section 1280 of the German Civil Code (Bürgerliches Gesetzbuch, "BGB"). The Frankfurt Escrow Bank waives any right of set-off (Aufrechnungsrecht) or retention (Zurückbehaltungsrecht) that it might otherwise have against the claims arising from the Escrow Account, to the extent such set-off or retention would conflict with the rights of the Security Trustee under the German Account Pledge Agreement, except for set-off or retention rights in respect of the fees and expenses payable to the Frankfurt Escrow Bank under Article VI of this Agreement.
(c) The Frankfurt Escrow Bank shall not create, permit, or suffer to exist any lien, encumbrance, charge, pledge, right of set-off, or other security interest over the Escrow Account or the Escrow Funds, other than (i) the pledge in favor of the Security Trustee under the German Account Pledge Agreement, (ii) any liens or rights arising by operation of mandatory provisions of German law, and (iii) as otherwise expressly permitted under the Credit Agreement.
(d) The Parties acknowledge the parallel debt structure (Parallelverpflichtung) established under the German Parallel Debt and Security Trust Agreement (Sicherheitentreuhandvertrag), pursuant to which IHDC Frankfurt has undertaken an independent and abstract payment obligation to the Security Trustee in an amount equal to all amounts owed under the Credit Agreement, and that the German Security Documents secure such parallel debt.
Section 2.06 — Compliance with German Law
(a) The Frankfurt Escrow Bank shall at all times comply with all applicable German banking regulations and laws, including the requirements of the German Banking Act (Kreditwesengesetz), BaFin directives and guidance, and the European Central Bank's regulations and guidelines applicable to credit institutions operating within the European Union.
(b) The Frankfurt Escrow Bank shall ensure that it has completed and maintains current know-your-customer ("KYC") due diligence and anti-money laundering ("AML") compliance procedures in respect of all Parties to this Agreement, all beneficial owners of the Depositor, and all payees of disbursements from the Escrow Account, in each case in accordance with the requirements of the GwG and applicable EU anti-money laundering directives (including Directive (EU) 2015/849, as amended by Directive (EU) 2018/843).
(c) The Frankfurt Escrow Bank shall comply with all applicable economic sanctions laws and regulations, including (i) the EU Sanctions Regulations, including Council Regulation (EU) No 269/2014 and any other applicable EU restrictive measures, (ii) OFAC sanctions, including the Specially Designated Nationals and blocked Persons List, (iii) the sanctions lists maintained by the UK Office of Financial Sanctions Implementation ("OFSI"), and (iv) any other applicable sanctions regimes, with respect to any disbursement from the Escrow Account.
(d) The Frankfurt Escrow Bank shall not disburse any Escrow Funds to any person or entity that is, or that the Frankfurt Escrow Bank has reason to believe is, a Sanctioned Person as defined in the Credit Agreement, or to any person or entity located in, organized under the laws of, or resident in a Sanctioned Country (as defined in the Credit Agreement).
(e) In the event that the Frankfurt Escrow Bank identifies any sanctions concern with respect to a proposed disbursement or payee, the Frankfurt Escrow Bank shall promptly notify the Administrative Agent and the Depositor and shall withhold the affected disbursement pending resolution of the concern.
ARTICLE III — DISBURSEMENTS
Section 3.01 — General Disbursement Procedures
(a) Disbursements from the Escrow Account shall be made only upon satisfaction of all conditions set forth in this Article III and only in accordance with the procedures specified herein. No disbursement shall be made from the Escrow Account in any manner or for any purpose not expressly authorized by this Agreement.
(b) Except as otherwise consented to in writing by the Administrative Agent, disbursements shall be made no more frequently than once per calendar month. The Administrative Agent may, in its sole discretion, consent to more frequent disbursements in circumstances where the construction schedule reasonably requires expedited payment (for example, to avoid delays to critical-path items or to comply with contractual payment milestones under construction contracts), provided that in no event shall disbursements be made more frequently than twice per calendar month without the prior written approval of the Required Lenders (as defined in the Credit Agreement).
(c) Each disbursement shall be in a minimum amount of €500,000 (five hundred thousand Euros), except for the final disbursement from the Escrow Account (including any final Retainage release), which may be for a lesser amount.
(d) All disbursements shall be made by wire transfer in EUR to the bank accounts specified in the applicable Requisition, which accounts must be in the name of Approved Contractors or other payees approved by the Administrative Agent. No cash disbursements shall be permitted.
Section 3.02 — Disbursement Certificate / Requisition Requirements
(a) Each request for disbursement from the Escrow Account shall be initiated by the Depositor by submission to the Administrative Agent and the Frankfurt Escrow Bank of a written Requisition, substantially in the form of Exhibit B attached hereto (each such request, a "Requisition," and the accompanying certificate, a "Disbursement Certificate"). Each Requisition must include the following:
(i) A completed Disbursement Certificate substantially in the form of Exhibit B, duly executed by an authorized officer of IHDC Frankfurt, being either Katarina Bremer, Managing Director (Geschäftsführerin), or Marcus Delaine, Managing Director (Geschäftsführer), or such other officer as may be designated in writing by the Depositor with the prior consent of the Administrative Agent;
(ii) A detailed schedule of construction costs to be paid from the requested disbursement, which schedule shall identify each payee by name, address, and bank account details, the nature and description of the work performed or materials delivered, the applicable invoice number(s), the amount payable to each payee, and the applicable line item or category in the Approved Budget to which such cost is allocated;
(iii) Evidence satisfactory to the Administrative Agent that the work has been completed or the materials have been delivered to the Project site, including copies of contractor and subcontractor invoices, delivery receipts, and executed lien waivers or German-law equivalents (including, where applicable, certificates of completion (Abnahmeprotokolle) and contractor affidavits (eidesstattliche Versicherungen));
(iv) An Independent Engineer's Certificate substantially in the form of Exhibit C attached hereto, prepared and executed by the Independent Engineer, certifying (A) the percentage of completion of the Project and each applicable construction milestone, (B) that the work for which payment is requested has been performed in conformity with the approved plans, specifications, and construction contracts, (C) that the Independent Engineer recommends payment of the requested disbursement amount, and (D) the estimated date of Substantial Completion;
(v) A certification by an authorized officer of the Depositor that, as of the date of the Requisition, (A) no Event of Default has occurred and is continuing under the Credit Agreement or any related Loan Document (as defined in the Credit Agreement), and (B) no event has occurred that, with the giving of notice or the passage of time or both, would constitute an Event of Default;
(vi) A certification by an authorized officer of the Depositor that the Phase I construction is proceeding in compliance with all applicable permits, zoning requirements, building codes, environmental regulations, and governmental approvals, including but not limited to the building permits (Baugenehmigungen) issued by the city of Frankfurt am Main and the environmental approvals issued in connection with the Phase I and Phase II environmental site assessments;
(vii) An updated construction schedule showing the anticipated timeline for completion of each remaining construction milestone and the estimated date of Substantial Completion of Phase I (the baseline estimated completion date being Q1 2026), together with an explanation of any material changes from the previously delivered construction schedule; and
(viii) Evidence of insurance coverage in compliance with the requirements of the Credit Agreement, as confirmed by Calloway & Strand Insurance Brokers, Inc. (Patricia Calloway, Managing Director), including confirmation that builder's risk insurance, general liability insurance, property insurance, and any other required insurance policies remain in full force and effect, with Pinnacle Trust Company, N.A. named as loss payee and additional insured, as applicable.
(b) Each Requisition shall be delivered to the Administrative Agent and the Frankfurt Escrow Bank by electronic mail (with confirmed receipt) and by physical delivery (or recognized overnight courier), with copies to the Security Trustee at the addresses set forth in Schedule 3. A Requisition shall not be deemed submitted until received by both the Administrative Agent and the Frankfurt Escrow Bank.
(c) The Depositor shall be responsible for ensuring the accuracy and completeness of each Requisition and all accompanying documentation.
Section 3.03 — Administrative Agent Approval Process
(a) Upon receipt of a complete Requisition and all accompanying documentation required under Section 3.02, the Administrative Agent shall have a period of ten (10) Business Days to review the Requisition and accompanying documentation (the "Review Period"). The Review Period shall commence on the Business Day following the date on which the Administrative Agent receives the complete Requisition, including all required attachments and supporting documentation.
(b) During the Review Period, the Administrative Agent may:
(i) approve the Requisition in full;
(ii) approve the Requisition in part, specifying the approved amount and the reasons for any partial approval;
(iii) reject the Requisition in its entirety, specifying in reasonable detail the reasons for such rejection; or
(iv) request additional information, documentation, or clarification from the Depositor, in which case the Review Period shall be tolled from the date of such request until the date on which the Administrative Agent receives the requested information or documentation.
(c) Approval of a Requisition by the Administrative Agent shall not be unreasonably withheld, conditioned, or delayed, provided that all conditions set forth in Section 3.02 have been satisfied and the requested disbursement is consistent with the Approved Budget. For the avoidance of doubt, it shall not be unreasonable for the Administrative Agent to withhold approval if (i) the documentation is incomplete or contains material errors or omissions, (ii) the Independent Engineer has not recommended payment, (iii) the requested amount exceeds the applicable line item in the Approved Budget by more than ten percent (10%) without an approved budget amendment, or (iv) an Event of Default has occurred and is continuing.
(d) In reviewing any Requisition, the Administrative Agent may consult with the Collateral Agent (Pinnacle Trust Company, N.A.), the Independent Engineer, and the Lenders' Counsel (Blackthorn & Sundial Software, and specifically the Frankfurt office of Blackthorn & Sundial Software, attention: Maximilian Roth) regarding any aspect of the Requisition, including the adequacy of the supporting documentation, compliance with the Approved Budget, and any legal, regulatory, or construction issues. The cost of any such consultation shall be borne by the Depositor to the extent provided in the Credit Agreement.
(e) Upon approval of a Requisition (in whole or in part), the Administrative Agent shall deliver to the Frankfurt Escrow Bank a written disbursement instruction (a "Disbursement Instruction"), specifying the approved disbursement amount, the payees, the wire transfer instructions for each payee, and the date on which the disbursement is to be processed. The Administrative Agent shall deliver a copy of the Disbursement Instruction simultaneously to the Depositor and the Security Trustee.
Section 3.04 — Retainage
(a) The Frankfurt Escrow Bank shall withhold from each approved disbursement an amount equal to ten percent (10%) of the approved disbursement amount (the "Retainage"). The Retainage amount shall be retained in the Escrow Account and shall not be disbursed except in accordance with the provisions of this Section 3.04.
(b) By way of illustration, if the Administrative Agent approves a Requisition for a disbursement of €5,000,000, the Frankfurt Escrow Bank shall disburse €4,500,000 to the specified payees and shall retain €500,000 in the Escrow Account as Retainage.
(c) Retainage shall be released upon the satisfaction of all of the following conditions:
(i) the Independent Engineer shall have delivered a certificate to the Administrative Agent certifying that Substantial Completion of the relevant construction milestone (or, in the case of final Retainage, of Phase I of the Project) has been achieved in conformity with the approved plans and specifications;
(ii) the Administrative Agent shall have delivered written approval of the Retainage release to the Frankfurt Escrow Bank; and
(iii) the Depositor shall have delivered to the Administrative Agent final lien waivers or German-law equivalents (including executed completion certificates (Abnahmeprotokolle) and release letters (Freigabeerklärungen)) from all contractors and subcontractors performing work or delivering materials in connection with the applicable construction milestone.
(d) Retainage may be released in stages corresponding to completed construction milestones, as such milestones are set forth in the Approved Budget. Each release of Retainage corresponding to a completed milestone shall require satisfaction of all conditions set forth in paragraph (c) above with respect to such milestone.
(e) In the event that punch-list items or warranty work remain outstanding at the time of Substantial Completion, the Administrative Agent may, in its reasonable discretion, approve the release of a portion of the Retainage while retaining an amount sufficient to cover the estimated cost of such punch-list items or warranty work, as estimated by the Independent Engineer.
Section 3.05 — Disbursement Mechanics
(a) Upon receipt of a written Disbursement Instruction from the Administrative Agent in accordance with Section 3.03(e), the Frankfurt Escrow Bank shall process the approved disbursement within three (3) Business Days following receipt of the Disbursement Instruction. The Frankfurt Escrow Bank shall not process any disbursement without having first received a valid Disbursement Instruction from the Administrative Agent.
(b) All disbursements shall be made by TARGET2 wire transfer or SEPA credit transfer (as specified in the Disbursement Instruction) to the bank accounts specified in the applicable Requisition and confirmed in the Disbursement Instruction. The Frankfurt Escrow Bank shall ensure that all wire transfers are initiated with the correct beneficiary information, including the payee's name, IBAN, and BIC/SWIFT code, as set forth in the applicable Requisition.
(c) The Frankfurt Escrow Bank shall provide written confirmation of each disbursement (including the date and time of payment, the payee, the amount, and the bank reference number) to the Administrative Agent, the Depositor, and the Security Trustee within one (1) Business Day of payment. Such confirmation may be delivered by electronic mail with confirmed receipt.
(d) All transfer fees and bank charges incurred in connection with the processing of disbursements from the Escrow Account shall be deducted from the Escrow Funds and charged to the Depositor. The Frankfurt Escrow Bank shall clearly identify any such charges in its monthly account statements.
Section 3.06 — Conditions Precedent to Initial Disbursement
In addition to the requirements of Section 3.02 applicable to each Requisition, the following conditions must be satisfied or waived (in the Administrative Agent's sole discretion) prior to the first disbursement from the Escrow Account:
(a) The Frankfurt Escrow Bank shall have received a certified copy of the fully executed Credit Agreement and all German Security Documents, including the German Account Pledge Agreement (Kontoverpfändung), the German Parallel Debt and Security Trust Agreement (Sicherheitentreuhandvertrag), the German Land Charge Agreement (Grundschuldbestellungsurkunde), the German Global Assignment of Receivables (Globalzession), the German Security Transfer of Movable Assets (Sicherungsübereignungsvertrag), the German Share Pledge Agreement (Anteilsverpfändungsvertrag), and the German Security Purpose Agreement (Sicherungszweckerklärung).
(b) The Grundschuld (land charge) over the Frankfurt Campus parcel (recorded in the Grundbuch von Frankfurt am Main-Ost, Blatt 54321, Flur 12, Flurstück 789, approximately 18.7 hectares) shall have been registered with the competent land registry office (Grundbuchamt), or evidence satisfactory to the Administrative Agent shall have been delivered that such registration is in the process of being completed (including a priority notice of conveyance (Auflassungsvormerkung) or notarial confirmation of submission to the Grundbuchamt), and the Administrative Agent shall have received a legal opinion from Wendt Falkenberg Rechtsanwälte PartG mbB (Dr. Lukas Wendt) confirming the enforceability of such land charge.
(c) All building permits (Baugenehmigungen), environmental approvals, and other governmental authorizations required for the commencement and completion of Phase I construction of the Frankfurt Campus shall have been obtained and shall be in full force and effect, and certified copies thereof shall have been delivered to the Administrative Agent.
(d) Evidence satisfactory to the Administrative Agent that the Phase I and Phase II environmental site assessments prepared by Greenline Environmental Solutions, Inc. (Dr. Ramon Quelibo, Principal Engineer) have been completed and delivered, and that the results thereof are satisfactory to the Administrative Agent, and that no material environmental remediation is required as a condition to Phase I construction.
(e) Evidence of builder's risk insurance and property insurance meeting the requirements of the Credit Agreement shall have been delivered to the Administrative Agent, such insurance having been placed by Calloway & Strand Insurance Brokers, Inc. (Patricia Calloway, Managing Director), with coverage limits and terms satisfactory to the Administrative Agent, and with Pinnacle Trust Company, N.A. named as loss payee and additional insured, as applicable. Such evidence shall include copies of insurance policies or binders and certificates of insurance.
(f) Confirmation that the requisite filing with the German Transparency Register (Transparenzregister) in respect of IHDC Frankfurt has been made in accordance with Section 20 of the GwG, identifying all beneficial owners of IHDC Frankfurt as required by applicable law.
(g) No Event of Default shall have occurred and be continuing under the Credit Agreement or any related Loan Document.
(h) The anchor tenant pre-lease letter of intent between IHDC Frankfurt and Euronova Digital GmbH for approximately 20 MW of critical IT load capacity (with a seven (7)-year initial term and annual rent of approximately €9,800,000) (the "Euronova LOI") shall remain in full force and effect, and neither party thereto shall have given notice of termination, withdrawal, or material amendment thereof, and the Depositor shall have delivered to the Administrative Agent a certificate confirming the foregoing.
Section 3.07 — Excess Funds / Remaining Balance
(a) Upon Substantial Completion of Phase I of the Frankfurt Campus and satisfaction of all Retainage release conditions set forth in Section 3.04, any remaining Escrow Funds (including all accrued but undisbursed interest) shall be applied as follows:
(i) First, to fund the estimated cost of any punch-list items, deficiency corrections, or warranty work identified by the Independent Engineer or the Depositor as remaining outstanding at the time of Substantial Completion, such amount to be retained in the Escrow Account as a reserve (the "Punch-List Reserve") in an amount to be agreed in writing by the Administrative Agent and the Depositor, based on the Independent Engineer's estimate of the cost to complete such items. The Punch-List Reserve shall be disbursed upon completion of the applicable punch-list items and warranty work, subject to the approval of the Administrative Agent.
(ii) Second, after satisfaction or release of the Punch-List Reserve, the remaining balance of the Escrow Funds shall be released to IHDC Frankfurt's operating account at NordBrücke AG (account details to be specified in Schedule 2), subject to the German Account Pledge Agreement. For the avoidance of doubt, such operating account shall remain subject to the security interests granted under the German Security Documents, and the release of funds from the Escrow Account to such operating account shall not constitute a release of the security interests in favor of the Security Trustee.
(b) In the event that Phase I construction costs exceed the Approved Budget of €253,571,429, the Depositor shall fund the excess construction costs from other available sources, including the Ironhaven equity contribution from Thornfield Infrastructure Fund III, LP (which has committed a total equity contribution of $410,000,000 for both the Ashburn, Virginia and Frankfurt, Germany campuses). The Frankfurt Escrow Bank shall have no obligation to disburse any amount in excess of the Escrow Funds.
Section 3.08 — Suspension of Disbursements
(a) The Administrative Agent shall have the right, exercisable by written notice to the Frankfurt Escrow Bank and the Depositor, to suspend all disbursements from the Escrow Account upon the occurrence and continuance of any of the following events:
(i) the occurrence and continuance of an Event of Default under the Credit Agreement;
(ii) receipt by the Administrative Agent of written notice from the Security Trustee that an enforcement action has been commenced or is being threatened under the German Security Documents (including, without limitation, enforcement of the German Account Pledge or the Grundschuld);
(iii) the Depositor's failure to deliver a required Requisition or any required documentation within the time periods specified in this Agreement, or the Depositor's failure to cure any deficiency identified by the Administrative Agent within thirty (30) days of notice thereof;
(iv) a determination by the Independent Engineer, delivered in writing to the Administrative Agent, that construction of the Project is not proceeding in material conformity with the approved plans and specifications, or that the construction schedule has been materially delayed such that Substantial Completion is unlikely to be achieved by the date that is ninety (90) days after the then-current estimated completion date;
(v) a sanctions-related concern regarding any payee, contractor, subcontractor, or other person or entity to which Escrow Funds are to be disbursed, including any finding or reasonable determination that such person or entity is a Sanctioned Person under OFAC, EU Sanctions Regulation (Council Regulation (EU) No 269/2014), or UK/OFSI sanctions lists, or is located in, organized under the laws of, or resident in a Sanctioned Country; and
(vi) any order, directive, or instruction from BaFin, any other governmental authority, or any court of competent jurisdiction directing the Frankfurt Escrow Bank or the Administrative Agent to cease or suspend disbursements from the Escrow Account.
(b) The Administrative Agent shall provide prompt notice to the Depositor of any suspension of disbursements, specifying in reasonable detail the grounds for such suspension.
(c) Disbursements shall resume upon (A) cure or waiver of the applicable suspension event, in each case to the satisfaction of the Administrative Agent (or, in the case of an Event of Default under the Credit Agreement, to the satisfaction of the Required Lenders), and (B) delivery by the Administrative Agent of a written notice to the Frankfurt Escrow Bank confirming that the suspension has been lifted and that disbursements may resume.
(d) During any period in which disbursements are suspended, the Escrow Funds shall continue to be held in the Escrow Account and invested in Permitted Investments in accordance with Section 2.04. No interest or earnings shall be disbursed during any suspension period.
ARTICLE IV — REPRESENTATIONS AND WARRANTIES
Section 4.01 — Representations and Warranties of the Depositor
IHDC Frankfurt hereby represents and warrants to the Administrative Agent and the Frankfurt Escrow Bank, as of the date hereof and (unless otherwise specified) as of the date of each Requisition, as follows:
(a) Organization and Existence. IHDC Frankfurt is a Gesellschaft mit beschränkter Haftung duly organized, validly existing, and in good standing under the laws of the Federal Republic of Germany, registered with the Commercial Register (Handelsregister) of the Amtsgericht Frankfurt am Main under HRB 129457. IHDC Frankfurt has been assigned the tax identification number (Steuernummer) 045/127/98321 and the VAT identification number (Umsatzsteuer-Identifikationsnummer) DE347891205.
(b) Management. The current managing directors (Geschäftsführer) of IHDC Frankfurt are Marcus Delaine and Katarina Bremer, each of whom is duly appointed and authorized to represent IHDC Frankfurt and to execute and deliver this Agreement and all documents contemplated hereby.
(c) Authorization. IHDC Frankfurt has full corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution, delivery, and performance of this Agreement by IHDC Frankfurt have been duly authorized by all necessary corporate action, including all requisite shareholder resolutions of Ironhaven Data Centers LLC as the sole quotaholder (Alleingesellschafter) of IHDC Frankfurt.
(d) No Conflict. The execution, delivery, and performance of this Agreement by IHDC Frankfurt do not and will not (i) violate or conflict with the articles of association (Gesellschaftsvertrag) of IHDC Frankfurt, (ii) violate or conflict with any applicable law, regulation, order, or decree applicable to IHDC Frankfurt, or (iii) result in a breach of, or constitute a default under, any material agreement, instrument, or obligation to which IHDC Frankfurt is a party or by which it is bound.
(e) Sanctions Compliance. IHDC Frankfurt is in compliance with all applicable sanctions laws and regulations, including OFAC sanctions, the EU Sanctions Regulation (Council Regulation (EU) No 269/2014), and German anti-money laundering laws (GwG). Neither IHDC Frankfurt nor any of its beneficial owners, directors, officers, or affiliates is a Sanctioned Person or is located in, organized under the laws of, or resident in a Sanctioned Country.
(f) Enforceability. This Agreement constitutes the legal, valid, and binding obligation of IHDC Frankfurt, enforceable against IHDC Frankfurt in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity.
(g) Property. The Frankfurt Campus parcel, recorded in the Grundbuch von Frankfurt am Main-Ost, Blatt 54321, Flur 12, Flurstück 789 (approximately 18.7 hectares), is owned by IHDC Frankfurt free and clear of all liens, encumbrances, charges, and other security interests, other than (i) the security interests granted in favor of the Security Trustee under the German Security Documents and (ii) any other liens or encumbrances expressly permitted under the Credit Agreement.
(h) No Litigation. There are no pending or, to the knowledge of IHDC Frankfurt, threatened actions, suits, proceedings, or investigations before any court, arbitral tribunal, or governmental authority that could reasonably be expected to have a material adverse effect on the ability of IHDC Frankfurt to perform its obligations under this Agreement.
Section 4.02 — Representations and Warranties of the Administrative Agent
The Administrative Agent hereby represents and warrants to IHDC Frankfurt and the Frankfurt Escrow Bank, as of the date hereof, as follows:
(a) Organization and Existence. The Administrative Agent is a national banking association duly organized, validly existing, and in good standing under the laws of the United States of America.
(b) Authorization. The Administrative Agent has full power and authority to enter into this Agreement and to deliver Disbursement Instructions and other communications hereunder, in its capacity as Administrative Agent under the Credit Agreement. The execution, delivery, and performance of this Agreement by the Administrative Agent have been duly authorized by all necessary corporate action.
(c) No Conflict. The execution, delivery, and performance of this Agreement by the Administrative Agent do not and will not violate or conflict with any applicable law, regulation, order, or decree, or the organizational documents of the Administrative Agent, or constitute a breach of or default under the Credit Agreement or any other material agreement to which the Administrative Agent is a party.
Section 4.03 — Representations and Warranties of the Frankfurt Escrow Bank
NordBrücke AG hereby represents and warrants to IHDC Frankfurt and the Administrative Agent, as of the date hereof, as follows:
(a) Organization and Existence. NordBrücke AG is an Aktiengesellschaft duly organized, validly existing, and in good standing under the laws of the Federal Republic of Germany.
(b) Regulatory Status. NordBrücke AG is a licensed credit institution (Kreditinstitut) regulated by BaFin, and holds all licenses and authorizations necessary to carry on its banking business and to act as escrow agent and maintain the Escrow Account as contemplated by this Agreement.