SICHERUNGSZWECKERKLÄRUNG
SECURITY PURPOSE AGREEMENT
Dated May 15, 2024
SICHERUNGSZWECKERKLÄRUNG / SECURITY PURPOSE AGREEMENT
dated
May 15, 2024
among
IRONHAVEN FRANKFURT GmbH (as Security Provider / Sicherungsgeber)
IRONHAVEN DATA CENTERS LLC (as Pledgor of Shares / Anteilsverpfänder)
and
PINNACLE TRUST COMPANY, N.A. acting through its London branch (as Security Trustee / Sicherheitentreuhänder)
in connection with the
Senior Secured Term Loan B Credit Agreement dated May 15, 2024
Aggregate Commitments: $950,000,000 CUSIP: 46283LAA5
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PARTIES
This Sicherungszweckerklärung / Security Purpose Agreement (this "Agreement" / diese Sicherungszweckerklärung) is entered into on May 15, 2024 (the "Signing Date") among:
(1) Ironhaven Frankfurt GmbH, a company with limited liability (Gesellschaft mit beschränkter Haftung) organized and existing under the laws of the Federal Republic of Germany, with its registered office (Sitz) at Hanauer Landstraße 188, 60314 Frankfurt am Main, Germany, registered in the commercial register (Handelsregister) of the local court (Amtsgericht) of Frankfurt am Main under registration number HRB 129457, represented by its managing directors (Geschäftsführer) Marcus Delaine and Katarina Bremer (the "Security Provider" or "Sicherungsgeber" or "IHDC Frankfurt");
(2) Ironhaven Data Centers LLC, a limited liability company organized and existing under the laws of the State of Delaware, United States of America, with its principal office at 4500 Dominion Ridge Boulevard, Suite 300, Ashburn, Virginia 20147, USA, in its capacity as sole quotaholder (Alleingesellschafter) of Ironhaven Frankfurt GmbH and as grantor of the share pledge over 100% of the quotas (Geschäftsanteile) in the share capital of Ironhaven Frankfurt GmbH (the "Pledgor of Shares" or "Anteilsverpfänder" or "IHDC"); and
(3) Pinnacle Trust Company, N.A., a national trust company organized and existing under the laws of the United States of America, with its principal office at 101 Constitution Avenue NW, Washington, D.C. 20001, USA, acting through its London branch located at 25 Old Broad Street, London EC2N 1HQ, United Kingdom, acting for the benefit of the Secured Parties (as defined below), represented by William Hargrove, Senior Vice President, Corporate Trust (the "Security Trustee" or "Sicherheitentreuhänder").
The Security Provider, the Pledgor of Shares, and the Security Trustee are each referred to herein as a "Party" and collectively as the "Parties."
In connection with:
The Senior Secured Term Loan B Credit Agreement dated May 15, 2024 (as amended, restated, supplemented, extended, increased, refinanced, or otherwise modified from time to time, the "Credit Agreement"), among Ironhaven Data Centers LLC (as Borrower), Ironhaven Frankfurt GmbH (as Co-Borrower), Ironhaven Holdings Inc. (as Parent Guarantor), Crescent Harbor Bank, N.A. (as Administrative Agent), Pinnacle Trust Company, N.A. (as Collateral Agent), and the Lenders party thereto from time to time, providing for aggregate commitments of $950,000,000, CUSIP 46283LAA5.
And in connection with:
The Parallel Debt and Security Trust Agreement (Sicherheitentreuhandvertrag) dated May 15, 2024 (the "Parallel Debt and Security Trust Agreement"), among Ironhaven Frankfurt GmbH, Ironhaven Data Centers LLC, and Pinnacle Trust Company, N.A. (acting through its London branch, as Security Trustee).
RECITALS (*VORBEMERKUNGEN*)
(A) Background to the Credit Facility
On the date hereof, the Credit Agreement has been entered into among IHDC (as Borrower), IHDC Frankfurt (as Co-Borrower), Ironhaven Holdings Inc. (as Parent Guarantor), Crescent Harbor Bank, N.A. (as Administrative Agent), Pinnacle Trust Company, N.A. (as Collateral Agent), and the Lenders party thereto from time to time, pursuant to which the Lenders have agreed to make available to the Borrower and the Co-Borrower a senior secured term loan B facility in an aggregate principal amount of $950,000,000 (the "Facility"). The Facility comprises:
(i) a USD Tranche in the aggregate principal amount of $675,000,000 (the "USD Tranche"), drawn by IHDC as Borrower; and
(ii) a EUR Sub-Tranche in the aggregate principal amount of €253,571,429 (equivalent to approximately $275,000,000 at the agreed EUR/USD exchange rate of 1.0846 as of the date hereof) (the "EUR Sub-Tranche"), drawn by IHDC Frankfurt as Co-Borrower.
IHDC Frankfurt acts as Co-Borrower under the Credit Agreement with respect to the EUR Sub-Tranche for the purpose of funding the design, development, construction, commissioning, and equipping of the data center campus known as "Ironhaven Frankfurt I" located at Hanauer Landstraße 188, 60314 Frankfurt am Main, Germany (the "Frankfurt Campus"). The interest rate applicable to the EUR Sub-Tranche is the Euro Interbank Offered Rate ("EURIBOR") plus a margin of 425 basis points per annum, with a EURIBOR floor of 0.00%. The interest rate applicable to the USD Tranche is the Secured Overnight Financing Rate ("SOFR") plus a margin of 425 basis points per annum, with a SOFR floor of 0.50%. The Facility has a scheduled maturity date of June 3, 2031 (the "Maturity Date").
(B) The Parallel Debt Structure
Under the Parallel Debt and Security Trust Agreement, IHDC Frankfurt and IHDC have each acknowledged and undertaken an independent, abstract payment obligation (abstraktes Schuldversprechen) vis-à-vis the Security Trustee in an amount that at all times equals the aggregate amount of all Secured Obligations outstanding from time to time (the "Parallel Debt" or "Parallelverpflichtung"). The purpose of the Parallel Debt is to create a single claim (Forderung) held by the Security Trustee to which all German-law security rights, whether accessory (akzessorisch) or non-accessory (nicht-akzessorisch), can be attached. The Parallel Debt serves as the anchor claim (gesicherte Forderung) for which all non-accessory security is granted and to which all accessory security is connected.
The Security Trustee holds all German-law security created pursuant to the German Security Documents (as defined below) on a fiduciary basis (treuhänderisch) for the benefit of the Administrative Agent (Crescent Harbor Bank, N.A.) and the Lenders from time to time party to the Credit Agreement (collectively, the "Secured Parties"), including:
(i) Crescent Harbor Bank, N.A., with a commitment of $200,000,000;
(ii) Ridgeline National Bank, with a commitment of $175,000,000;
(iii) Marlowe Asset Management Meridian Capital, LLC, with a commitment of $150,000,000;
(iv) Atlas Peak Credit Partners, LP, with a commitment of $125,000,000;
(v) NordBrücke AG, with a commitment of $150,000,000 (allocated entirely to the EUR Sub-Tranche / Frankfurt sub-tranche);
(vi) Pacific Rim Institutional Lending Corp., with a commitment of $75,000,000; and
(vii) Osprey Insurance Capital, Ltd., with a commitment of $75,000,000.
The composition of the Secured Parties may change from time to time as Lender assignments and transfers occur in accordance with the Credit Agreement, and the security created under the German Security Documents shall continue to benefit the Secured Parties as so reconstituted without the need for separate amendment of this Agreement or the German Security Documents.
(C) The German Security Documents
In connection with the Facility and as required under the Credit Agreement and the Parallel Debt and Security Trust Agreement, the following German-law security documents have been or are being entered into on or about the date hereof (collectively, the "German Security Documents" or "Sicherheitendokumente"):
(1) Land Charge Agreement (*Grundschuldbestellungsurkunde*) — A notarized deed establishing a non-possessory land charge (Buchgrundschuld) without interest (nicht-verzinsliche Grundschuld), or with interest as specified therein, over the Frankfurt Campus parcel registered in the Land Register (Grundbuch) of Frankfurt am Main-Ost, Folio (Blatt) 54321, Section (Flur) 12, Parcel (Flurstück) 789, comprising approximately 18.7 hectares, in favor of the Security Trustee (the "Grundschuld");
(2) Global Assignment of Receivables (*Globalzession*) — An agreement for the assignment (Abtretung) of all present and future trade and other receivables (Forderungen) of IHDC Frankfurt in favor of the Security Trustee, including receivables from colocation agreements, managed hosting contracts, interconnection services, and all other receivables arising in the ordinary course of the business of IHDC Frankfurt (the "Globalzession");
(3) Account Pledge Agreement (*Kontoverpfändung*) — An agreement for the pledge (Verpfändung) of all bank accounts of IHDC Frankfurt maintained with NordBrücke AG, Frankfurt am Main, including the operating account (IBAN DE89 5021 0000 0012 3456 78), the debt service reserve account (IBAN DE89 5021 0000 0012 3456 86), and the revenue waterfall account (IBAN DE89 5021 0000 0012 3456 94), and any replacement or successor accounts, in favor of the Security Trustee (the "Kontoverpfändung");
(4) Security Transfer of Movable Assets (*Sicherungsübereignungsvertrag*) — An agreement for the security transfer (Sicherungsübereignung) of certain movable assets (bewegliche Sachen) located at and belonging to the Frankfurt Campus, including server racks, cooling infrastructure, generators, uninterruptible power supply units, fiber optic cabling, and other fixed and movable equipment as specified therein, in favor of the Security Trustee (the "Sicherungsübereignung"); and
(5) Share Pledge Agreement (*Anteilsverpfändungsvertrag*) — A notarized agreement for the pledge (Verpfändung) by IHDC of 100% of the quotas (Geschäftsanteile) in the share capital (Stammkapital) of IHDC Frankfurt (registered at Amtsgericht Frankfurt am Main under HRB 129457) in favor of the Security Trustee (the "Anteilsverpfändung").
Each of the German Security Documents is listed in further detail in Annex A (List of German Security Documents) hereto.
(D) Purpose of This Agreement
This Sicherungszweckerklärung defines the security purpose (Sicherungszweck) applicable to all German Security Documents. It governs the relationship between the secured obligations (being the Parallel Debt and the underlying claims under the Credit Agreement and related documents) and the security interests created pursuant to the German Security Documents. In particular, this Agreement:
(i) specifies the scope and extent of the Secured Obligations that are secured by the German Security Documents;
(ii) establishes the connection between the German Security Documents and the Parallel Debt;
(iii) sets forth the conditions under which the security interests may be enforced and the manner of such enforcement; and
(iv) regulates the release and retransfer of the security interests upon satisfaction of all Secured Obligations.
This Agreement is entered into in order to comply with the requirements of German law, which provides that the enforceability of non-accessory security instruments (such as a Grundschuld, a Globalzession, and a Sicherungsübereignung) and the appropriate scope of enforcement of accessory security instruments (such as pledges) are governed by the underlying security purpose agreement (Sicherungszweckerklärung) between the security provider and the secured party.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
SECTION 1 — DEFINITIONS (*DEFINITIONEN*)
1.1 In this Agreement, unless the context otherwise requires, the following terms shall have the meanings set forth below:
"Administrative Agent" means Crescent Harbor Bank, N.A., in its capacity as administrative agent under the Credit Agreement, and any successor in such capacity.
"Collateral Agent" means Pinnacle Trust Company, N.A., in its capacity as collateral agent under the Credit Agreement, and any successor in such capacity.
"Credit Agreement" means the Senior Secured Term Loan B Credit Agreement dated May 15, 2024, as described in Recital (A) above, as amended, restated, supplemented, extended, increased, refinanced, replaced, or otherwise modified from time to time.
"Enforcement Event" (Verwertungsfall) means an Event of Default (as defined in the Credit Agreement) that has occurred and is continuing, and in respect of which the Administrative Agent (or the Required Lenders, as applicable under the Credit Agreement) has directed enforcement of the German Security Documents in accordance with the terms of the Credit Agreement and the Intercreditor Agreement.
"EUR Sub-Tranche" has the meaning given in Recital (A).
"Fee Letter" means the fee letter dated February 28, 2024 between IHDC and Crescent Harbor Bank, N.A. relating to arrangement fees, upfront fees, and other fees in connection with the Facility.
"Frankfurt Campus" has the meaning given in Recital (A).
"German Security Documents" (Sicherheitendokumente) means the security documents described in Recital (C) and listed in Annex A hereto, as each may be amended, restated, or supplemented from time to time.
"Grundschuld" has the meaning given in Recital (C)(1).
"Intercreditor Agreement" means the First Lien / Super-Senior Intercreditor Agreement dated on or about the date hereof among IHDC, Crescent Harbor Bank, N.A. (in its capacities as term loan administrative agent under the Credit Agreement and as revolver agent under the existing $100,000,000 Super-Senior Revolving Credit Facility dated March 1, 2023), and Pinnacle Trust Company, N.A. (as Collateral Agent), as amended, restated, supplemented, or otherwise modified from time to time.
"Parallel Debt" (Parallelverpflichtung) means the independent, abstract payment obligation (abstraktes Schuldversprechen) owed by the Security Provider and the Pledgor of Shares, severally, to the Security Trustee under the Parallel Debt and Security Trust Agreement, which at all times equals the aggregate outstanding amount of the Secured Obligations.
"Parallel Debt and Security Trust Agreement" (Sicherheitentreuhandvertrag) means the Parallel Debt and Security Trust Agreement dated May 15, 2024, among IHDC Frankfurt, IHDC, and the Security Trustee, as amended, restated, supplemented, or otherwise modified from time to time.
"Permitted Liens" has the meaning ascribed to such term in the Credit Agreement.
"Required Lenders" has the meaning ascribed to such term in the Credit Agreement.
"Secured Obligations" (Gesicherte Verbindlichkeiten) means all present and future, actual and contingent, due and not yet due, monetary and non-monetary obligations of the Borrower (IHDC), the Co-Borrower (IHDC Frankfurt), and the Parent Guarantor (Ironhaven Holdings Inc.) under or in connection with:
(a) the Credit Agreement, including without limitation all obligations in respect of principal, interest (at SOFR + 425 basis points per annum with respect to the USD Tranche and at EURIBOR + 425 basis points per annum with respect to the EUR Sub-Tranche), default interest, breakage costs, fees, costs, indemnities, and expenses;
(b) the Parallel Debt and Security Trust Agreement;
(c) each German Security Document;
(d) any fee letters entered into in connection with the Credit Agreement, including the Fee Letter dated February 28, 2024 between IHDC and Crescent Harbor Bank, N.A.;
(e) any interest rate hedging agreements, currency hedging agreements, or other derivative transactions entered into with a Secured Party or an affiliate thereof in connection with the Facility, to the extent designated as "Secured Hedge Obligations" under the Credit Agreement; and
(f) any refinancing, refunding, restructuring, extension, or replacement of any of the foregoing, to the extent such refinancing, refunding, restructuring, extension, or replacement constitutes a "Secured Obligation" or equivalent term under the applicable documentation.
"Secured Parties" (Gesicherte Parteien) means the Administrative Agent, the Collateral Agent, and each Lender under the Credit Agreement from time to time, and each counterparty under a hedging agreement that constitutes a Secured Hedge Obligation.
"Security Provider" (Sicherungsgeber) means Ironhaven Frankfurt GmbH.
"Security Trustee" (Sicherheitentreuhänder) means Pinnacle Trust Company, N.A., acting through its London branch, in its capacity as security trustee under the Parallel Debt and Security Trust Agreement, and any successor in such capacity appointed in accordance with the terms thereof.
"USD Tranche" has the meaning given in Recital (A).
1.2 To the extent not separately defined herein, capitalized terms used in this Agreement shall bear the meanings ascribed to them in the Credit Agreement or, if defined in the Parallel Debt and Security Trust Agreement but not in the Credit Agreement, the meanings ascribed in the Parallel Debt and Security Trust Agreement.
1.3 References to "Sections" are references to sections of this Agreement unless otherwise specified. References to "Recitals" are references to the recitals set out above. References to "Annexes" are references to the annexes attached hereto, which form an integral part of this Agreement.
1.4 References to any agreement, document, or instrument shall mean such agreement, document, or instrument as amended, restated, supplemented, extended, or otherwise modified from time to time in accordance with its terms and in accordance with the Credit Agreement, unless otherwise specified.
1.5 Words denoting the singular shall include the plural and vice versa. References to any German legal term shall, in respect of any jurisdiction other than Germany, be deemed to include the closest analogous concept or institution of such jurisdiction. The recitals and annexes to this Agreement form an integral part hereof.
SECTION 2 — SECURITY PURPOSE (*SICHERUNGSZWECK*)
2.1 Scope of Security Purpose
Each German Security Document secures the due and punctual payment, performance, and discharge of all Secured Obligations. Without limiting the generality of the foregoing, the security purpose encompasses:
(a) the repayment of all principal amounts outstanding under the EUR Sub-Tranche (being €253,571,429 as of the date hereof) and, to the extent IHDC Frankfurt bears Co-Borrower liability or joint and several liability (gesamtschuldnerische Haftung) in respect thereof, any amounts outstanding under the USD Tranche;
(b) the payment of all interest accruing on amounts outstanding under the Credit Agreement, including interest at the rate of EURIBOR plus 425 basis points per annum on the EUR Sub-Tranche and SOFR plus 425 basis points per annum on the USD Tranche (to the extent applicable to IHDC Frankfurt), default interest at the rate of 2.00% per annum above the otherwise applicable rate, and any interest accruing after the commencement of any insolvency proceeding to the extent allowed as a claim in such proceeding;
(c) the payment of all fees and other amounts payable under the Credit Agreement and the Fee Letter, including without limitation:
(i) the arrangement fee of $14,250,000 (being 1.50% of the aggregate commitments);
(ii) the annual administrative agent fee of $175,000 payable to Crescent Harbor Bank, N.A.;
(iii) the annual collateral agent fee of $200,000 payable to Pinnacle Trust Company, N.A., of which $75,000 is attributable to the German security trustee function;
(iv) commitment fees, ticking fees, and utilization fees, if any;
(d) all amounts payable under mandatory prepayment provisions of the Credit Agreement, including without limitation:
(i) the Excess Cash Flow sweep at 75% (when the Total Net Leverage Ratio exceeds 4.50:1.00), 50% (when the Total Net Leverage Ratio is equal to or less than 4.50:1.00 but exceeds 3.50:1.00), and 25% (when the Total Net Leverage Ratio is equal to or less than 3.50:1.00 but exceeds 2.50:1.00), with a step-down to 0% when the Total Net Leverage Ratio is equal to or less than 2.50:1.00;
(ii) mandatory prepayments upon asset dispositions, casualty events, and receipt of extraordinary receipts (subject to reinvestment rights as set forth in the Credit Agreement);
(iii) the change of control mandatory prepayment at a price equal to 101% of the outstanding principal amount plus accrued and unpaid interest;
(e) all amounts payable under any indemnification, reimbursement, or compensation provisions in the Credit Agreement, the German Security Documents, or the Parallel Debt and Security Trust Agreement, including without limitation indemnification for increased costs, tax gross-up amounts, and breakage costs;
(f) all costs, expenses, and fees (including the reasonable and documented legal fees and disbursements of Blackthorn & Sundial Software as lenders' counsel, and of any local German counsel retained by the Security Trustee or the Administrative Agent) incurred in connection with the negotiation, documentation, perfection, administration, enforcement, or protection of any Secured Obligation or any German Security Document; and
(g) all amounts payable under any Secured Hedge Obligations entered into by IHDC Frankfurt with any Secured Party or affiliate thereof.
2.2 Relationship to the Parallel Debt
2.2.1 The German Security Documents secure the Parallel Debt owed to the Security Trustee, and not the underlying claims (Hauptforderungen) of the individual Lenders or the Administrative Agent under the Credit Agreement directly. The interposition of the Parallel Debt ensures that a single creditor — the Security Trustee — holds the secured claim to which all German-law security interests are attached, thereby avoiding the difficulties that would arise under German law from the syndicated nature of the Facility and the frequent transfer of Lender participations.
2.2.2 The Parallel Debt is an independent and abstract claim (abstraktes Schuldversprechen) of the Security Trustee within the meaning of § 780 of the German Civil Code (Bürgerliches Gesetzbuch, "BGB"). Notwithstanding such independence, the Parallel Debt decreases automatically and proportionately to the extent the corresponding underlying Secured Obligations are discharged (whether through payment, set-off, or otherwise), and vice versa. Accordingly, any payment made under or in respect of the Parallel Debt (including any proceeds received upon enforcement of the German Security Documents) shall discharge the corresponding underlying Secured Obligations pro tanto, and any payment made under or in respect of the underlying Secured Obligations shall reduce the Parallel Debt correspondingly.
2.2.3 No double recovery (keine doppelte Befriedigung): The Security Trustee shall not be entitled to recover under the Parallel Debt more than the aggregate outstanding amount of the underlying Secured Obligations at the relevant time. Any amount recovered by the Security Trustee or any Secured Party under or in respect of the underlying Secured Obligations shall reduce the Parallel Debt to the same extent, and any amount recovered under or in respect of the Parallel Debt shall reduce the underlying Secured Obligations to the same extent. The Parties acknowledge that this principle applies notwithstanding the abstract nature of the Parallel Debt and that it reflects the fundamental understanding of the Parties that the German Security Documents serve to secure, in economic substance, the obligations arising under the Credit Agreement and related documents.
2.3 Maximum Secured Amount for Non-Accessory Security
2.3.1 For each non-accessory security instrument — namely, the Grundschuld, the Globalzession, and the Sicherungsübereignung — the maximum secured amount (Höchstbetragssicherung) is as follows:
(a) the full principal amount of the EUR Sub-Tranche, being €253,571,429;
(b) a margin of twenty percent (20%) over and above the principal amount referred to in paragraph (a) to cover accrued and accruing interest, fees, costs, enforcement expenses, and any other amounts forming part of the Secured Obligations, yielding a maximum secured amount of up to €304,285,715 (being €253,571,429 multiplied by 1.20); and
(c) in the case of the Grundschuld, the specific land charge amount (Grundschuldbetrag) as set forth in the Grundschuldbestellungsurkunde, which may include a separately specified interest amount (Grundschuldzinsen) and one-time additional payment (einmalige Nebenleistung) as provided therein.
2.3.2 The twenty percent (20%) margin specified in Section 2.3.1(b) is intended to provide adequate coverage for the ongoing accrual of interest, fees, expenses, and costs that may arise over the life of the Facility. The Parties agree that such margin is reasonable and proportionate given the tenor of the Facility (through June 3, 2031) and the interest rate applicable to the EUR Sub-Tranche. If and to the extent the aggregate of interest, fees, costs, and other amounts exceeds the twenty percent (20%) margin, the non-accessory security instruments shall nevertheless secure such excess amounts up to the applicable maximum amount of the Grundschuld as notarized, but the Security Trustee shall have no right to realize security in excess of the total Secured Obligations actually outstanding.
2.4 Accessory Security (Pledge)
2.4.1 For each accessory security instrument — namely, the Kontoverpfändung (account pledge) and the Anteilsverpfändung (share pledge) — the secured claim is the Parallel Debt as described in Section 2.2 of this Agreement. The pledge secures all and any claims of the Security Trustee arising from or in connection with the Parallel Debt, up to the full aggregate amount of the Secured Obligations outstanding from time to time.
2.4.2 As accessory security rights (akzessorische Sicherungsrechte), the Kontoverpfändung and the Anteilsverpfändung exist, as a matter of German law, only to the extent the Parallel Debt (as the secured claim) exists. The Parallel Debt shall exist at all times when any Secured Obligation remains outstanding. Accordingly, the pledges shall remain in full force and effect until the irrevocable and unconditional discharge in full of all Secured Obligations, including the Parallel Debt.
2.4.3 To the extent the Parallel Debt is reduced by payments or other discharges, the obligations secured by the pledges are correspondingly reduced. No separate notice or amendment to the pledge agreements is required to give effect to such reductions.
SECTION 3 — ENFORCEMENT (*VERWERTUNG*)
3.1 Conditions for Enforcement
3.1.1 The Security Trustee shall be entitled to enforce any or all of the German Security Documents only upon the occurrence and during the continuance of an Enforcement Event, as defined in Section 1 of this Agreement.
3.1.2 Prior to commencing any enforcement action, the Security Trustee shall have received written instructions from the Administrative Agent (or the Required Lenders, as applicable under the terms of the Credit Agreement) directing enforcement. The Security Trustee shall not be required independently to determine the occurrence of an Enforcement Event and shall be entitled to rely on the written certification of the Administrative Agent that an Enforcement Event has occurred and is continuing.
3.1.3 Enforcement shall be subject to the terms and conditions of the Intercreditor Agreement, including any standstill periods, enforcement priority rules, and consultation requirements specified therein. In the event of any conflict between this Agreement and the Intercreditor Agreement with respect to the timing or manner of enforcement, the terms of the Intercreditor Agreement shall prevail.
3.1.4 The Security Trustee shall not be obligated to commence enforcement proceedings, and shall have no liability for any failure or delay in enforcement, unless and until it has received the instructions and indemnities required under the Parallel Debt and Security Trust Agreement and the Credit Agreement.
3.2 Manner of Enforcement
3.2.1 Upon the occurrence and during the continuance of an Enforcement Event and receipt of enforcement instructions in accordance with Section 3.1, the Security Trustee shall be entitled to enforce the German Security Documents in accordance with applicable German law, including but not limited to the following methods:
(a) Grundschuld: Enforcement through the competent court (Zwangsvollstreckung in das Grundstück) pursuant to §§ 1191 et seq. BGB and the Act on Compulsory Auction and Compulsory Administration (Gesetz über die Zwangsversteigerung und die Zwangsverwaltung, "ZVG"), including by way of compulsory auction (Zwangsversteigerung) and/or compulsory administration (Zwangsverwaltung) of the Frankfurt Campus parcel registered in the Grundbuch von Frankfurt am Main-Ost, Blatt 54321, Flur 12, Flurstück 789. To the extent the Grundschuldbestellungsurkunde contains a submission to immediate enforcement (sofortige Zwangsvollstreckungsunterwerfung) pursuant to § 794(1) No. 5 of the German Code of Civil Procedure (Zivilprozessordnung, "ZPO"), the Security Trustee may enforce the Grundschuld without the need for a court judgment, based on an enforceable certified copy (vollstreckbare Ausfertigung) of the notarized deed;
(b) Globalzession: Collection of the assigned receivables by the Security Trustee, including by notification (Offenlegung) to the debtors (Drittschuldner) of the assigned receivables that the receivables have been assigned to the Security Trustee and that payment shall be made directly to the Security Trustee or to such account as the Security Trustee may designate. Prior to the occurrence of an Enforcement Event, the Security Provider shall be entitled to collect the assigned receivables in the ordinary course of its business (Einziehungsermächtigung), but such authorization shall be revocable and shall automatically terminate upon the occurrence of an Enforcement Event;
(c) Sicherungsübereignung: Realization of the transferred movable assets in a commercially reasonable manner (bestmögliche Verwertung), including by way of private sale, public auction, or sale to a willing buyer at fair market value. The Security Trustee shall use commercially reasonable efforts to obtain the best price reasonably achievable under the circumstances. Prior to enforcement, the Security Trustee shall, to the extent practicable and not prejudicial to its interests, provide the Security Provider with reasonable prior notice of the intended manner and timing of realization;
(d) Kontoverpfändung: Exercise of the pledge over the bank accounts of IHDC Frankfurt maintained with NordBrücke AG by way of written notice to NordBrücke AG (as account bank) and demand for payment of the balances standing to the credit of the pledged accounts. The Security Trustee shall give notice to IHDC Frankfurt substantially simultaneously with the delivery of the enforcement notice to NordBrücke AG; and
(e) Anteilsverpfändung: Enforcement of the share pledge through public auction (öffentliche Versteigerung) or, if permitted by law and with the consent of the Pledgor of Shares to the extent required, private sale, pursuant to § 1277 BGB in conjunction with §§ 1233 et seq. BGB. To the extent required under applicable law, enforcement may be conducted through the competent court. The Security Trustee shall provide at least one (1) month's prior notice to the Pledgor of Shares before conducting a sale by public auction, unless such notice period is waived pursuant to applicable law or by agreement of the parties.
3.2.2 The Security Trustee may enforce all or any of the German Security Documents concurrently or separately, in such order and by such method as the Security Trustee (acting on instructions of the Administrative Agent or Required Lenders) may determine, in its reasonable discretion. No enforcement of any one German Security Document shall preclude or limit enforcement of any other German Security Document.
3.2.3 The Security Trustee shall use commercially reasonable efforts to maximize recovery in any enforcement and shall act in compliance with any applicable duties to the Security Provider under German law, including the duty of best realization (Pflicht zur bestmöglichen Verwertung).
3.3 Application of Enforcement Proceeds
3.3.1 All proceeds from the enforcement of any German Security Document shall be received and held by the Security Trustee and shall be applied first to satisfy the Parallel Debt, and correspondingly, to discharge the underlying Secured Obligations. The application of proceeds shall be made in accordance with the payment waterfall set out in the Credit Agreement and the Intercreditor Agreement, which provides, in summary and subject to the detailed terms thereof, for application in the following order of priority:
(a) first, to the payment of all costs, expenses, and fees of the Security Trustee, the Administrative Agent, and the Collateral Agent (including the fees of legal counsel and other advisors) incurred in connection with enforcement;
(b) second, to the payment of all costs, expenses, and fees of the Lenders incurred in connection with enforcement, on a pro rata basis;
(c) third, to the payment of accrued and unpaid interest and fees under the Credit Agreement, on a pro rata basis among the Lenders;
(d) fourth, to the repayment of outstanding principal under the Credit Agreement, on a pro rata basis among the Lenders;
(e) fifth, to the payment of any other Secured Obligations then outstanding, on a pro rata basis; and
(f) sixth, any surplus remaining after full satisfaction of all Secured Obligations shall be returned to the relevant Security Provider.
3.3.2 The foregoing summary of the waterfall is for reference purposes only and is subject to the detailed provisions of the Credit Agreement and the Intercreditor Agreement. In the event of any inconsistency between the summary in Section 3.3.1 and the Credit Agreement or Intercreditor Agreement, the Credit Agreement and Intercreditor Agreement shall prevail.
3.3.3 Surplus proceeds, if any, remaining after the irrevocable and unconditional satisfaction of all Secured Obligations (including the Parallel Debt and all fees, costs, and expenses) shall be returned to the relevant Security Provider — being IHDC Frankfurt in respect of proceeds from the Grundschuld, the Globalzession, the Kontoverpfändung, and the Sicherungsübereignung, and IHDC in respect of proceeds from the Anteilsverpfändung — without undue delay (unverzüglich).
SECTION 4 — RELEASE AND RETRANSFER OF SECURITY (*FREIGABE UND RÜCKÜBERTRAGUNG*)
4.1 Full Release upon Discharge
4.1.1 Upon the irrevocable and unconditional payment and discharge in full of all Secured Obligations (including the Parallel Debt), and upon confirmation thereof by the Administrative Agent to the Security Trustee in writing, the Security Trustee shall promptly, at the cost and expense of the Security Provider:
(a) consent to the deletion (Löschung) of the Grundschuld from the Land Register (Grundbuch) of Frankfurt am Main-Ost, Folio (Blatt) 54321, Section (Flur) 12, Parcel (Flurstück) 789, and execute and deliver all documents and declarations (including a deletion consent — Löschungsbewilligung) required for such deletion;
(b) reassign to IHDC Frankfurt all receivables assigned under the Globalzession, by execution and delivery of a written reassignment agreement or confirmation, and take all steps reasonably necessary to notify relevant debtors of such reassignment if notification had previously been given;
(c) release the pledge over the bank accounts of IHDC Frankfurt under the Kontoverpfändung, by delivery of a written release notice to IHDC Frankfurt and to NordBrücke AG (as account bank);
(d) retransfer ownership of all movable assets transferred under the Sicherungsübereignung, by execution and delivery of a written retransfer agreement or confirmation, and cooperate in any necessary physical or constructive delivery of possession; and
(e) release the share pledge under the Anteilsverpfändung, by execution and delivery of a written release notice to the Pledgor of Shares (IHDC) and to IHDC Frankfurt, and consent to the deletion of the pledge notation (Verpfändungsvermerk) in the shareholders' list (Gesellschafterliste) maintained at the commercial register of the Amtsgericht Frankfurt am Main (HRB 129457), including by execution of an updated shareholders' list or cooperation in the filing thereof.
4.1.2 The Security Trustee shall execute and deliver all such further documents and take all such further actions as may reasonably be necessary to give full effect to the release and retransfer contemplated by this Section 4.1. The Security Provider and the Pledgor of Shares shall cooperate in providing any information or documentation required for such purposes.
4.2 Partial Release
4.2.1 The Security Trustee shall release specific items of collateral, or reduce the maximum secured amount applicable to any German Security Document, if and to the extent expressly permitted under the Credit Agreement and upon receipt of a written request from the Administrative Agent (acting on instructions of the Required Lenders or as otherwise permitted under the Credit Agreement) certifying that the conditions for such release or reduction have been satisfied. Circumstances in which a partial release may be required include, without limitation:
(a) dispositions of assets that constitute Permitted Dispositions under the Credit Agreement, to the extent the disposed assets are subject to a German Security Document;
(b) reduction of the outstanding principal of the Facility below a level that renders the existing maximum secured amount disproportionate; and
(c) release of specific receivables or bank accounts that are replaced by substitute collateral in accordance with the terms of the Credit Agreement.
4.2.2 The form of any partial release request shall substantially follow the form set out in Annex C hereto.
4.2.3 Any partial release effected pursuant to this Section 4.2 shall not affect the continued validity and enforceability of the remaining German Security Documents, this Sicherungszweckerklärung, or the security interests created thereunder with respect to the remaining Secured Obligations. The security purpose set forth in Section 2 shall continue to apply to the remaining German Security Documents and the remaining collateral in full force and effect.
4.3 Retransfer of Grundschuld
4.3.1 Following the full discharge of all Secured Obligations and the Parallel Debt, the Security Provider may elect to have the Grundschuld either:
(a) deleted from the Land Register in accordance with Section 4.1(a); or
(b) transferred to the Security Provider as an owner's land charge (Eigentümergrundschuld) pursuant to § 1196 BGB.
4.3.2 The election between deletion and transfer shall be at the sole discretion of the Security Provider, exercised by written notice to the Security Trustee. All costs, fees (including notary fees and land register fees), taxes, and expenses associated with such deletion or transfer shall be borne by the Security Provider.
4.3.3 The Security Trustee shall cooperate in the execution and delivery of all documents required to give effect to the Security Provider's election, including execution of any notarized consent or assignment document before a German notary.
SECTION 5 — REPRESENTATIONS AND WARRANTIES (*ZUSICHERUNGEN UND GEWÄHRLEISTUNGEN*)
5.1 Representations and Warranties of Ironhaven Frankfurt GmbH
IHDC Frankfurt hereby represents and warrants to the Security Trustee as of the date hereof as follows:
(a) Due Organization and Good Standing. 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. It is registered in the commercial register (Handelsregister) of the Amtsgericht Frankfurt am Main under registration number HRB 129457.
(b) Management. IHDC Frankfurt is managed by its managing directors (Geschäftsführer) Marcus Delaine and Katarina Bremer, each of whom is duly appointed and authorized to represent the company jointly or, to the extent authorized by the articles of association, individually.
(c) Ownership. IHDC Frankfurt is wholly owned by Ironhaven Data Centers LLC, which holds 100% of the share capital (Stammkapital) of IHDC Frankfurt. No other person holds any quotas or equity interests in IHDC Frankfurt.
(d) Tax Identification. IHDC Frankfurt's German tax identification number (Steuernummer) is 045/127/98321. Its EU VAT identification number (USt-IdNr.) is DE347891205.
(e) Capacity and Authority. IHDC Frankfurt has full legal capacity and corporate authority to enter into, execute, and deliver this Agreement and each German Security Document to which it is a party, and to perform its obligations hereunder and thereunder. The execution, delivery, and performance of this Agreement and the German Security Documents have been duly authorized by all necessary corporate action, including any required shareholder resolutions of IHDC (as sole quotaholder) authorizing entry into the Credit Agreement and the German Security Documents.
(f) No Violation. The execution, delivery, and performance by IHDC Frankfurt of this Agreement and the German Security Documents do not and will not (i) violate or conflict with the articles of association (Gesellschaftsvertrag) of IHDC Frankfurt, (ii) violate any law, regulation, order, judgment, or decree applicable to IHDC Frankfurt, or (iii) result in a breach of, or constitute a default under, any material contractual obligation to which IHDC Frankfurt is a party or by which it or its assets may be bound.
(g) Shareholder Approvals. The shareholder resolutions of IHDC (as sole quotaholder of IHDC Frankfurt) required to authorize IHDC Frankfurt's entry into this Agreement, the Credit Agreement (in its capacity as Co-Borrower), and each German Security Document to which it is a party have been duly adopted and remain in full force and effect.
(h) No Insolvency. IHDC Frankfurt is not subject to any insolvency proceedings (Insolvenzverfahren) under the German Insolvency Code (Insolvenzordnung, "InsO"), nor have any applications for the opening of insolvency proceedings been filed against IHDC Frankfurt. No grounds for opening insolvency proceedings (including illiquidity (Zahlungsunfähigkeit) within the meaning of § 17 InsO, imminent illiquidity (drohende Zahlungsunfähigkeit) within the meaning of § 18 InsO, or over-indebtedness (Überschuldung) within the meaning of § 19 InsO) currently exist.
(i) Binding Obligations. This Agreement and each German Security Document to which IHDC Frankfurt is a party constitute its legal, valid, and binding obligations, enforceable against IHDC Frankfurt in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and subject to general principles of equity.
5.2 Representations and Warranties of Ironhaven Data Centers LLC (as Pledgor of Shares)
IHDC hereby represents and warrants to the Security Trustee as of the date hereof as follows:
(a) Due Organization and Good Standing. IHDC is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware, United States of America.
(b) Sole Owner. IHDC is the sole owner of 100% of the quotas (Geschäftsanteile) in the share capital (Stammkapital) of IHDC Frankfurt. IHDC's ownership of such quotas is recorded in the shareholders' list (Gesellschafterliste) filed with the commercial register of the Amtsgericht Frankfurt am Main.
(c) Power and Authority. IHDC has full power and authority to pledge the quotas in IHDC Frankfurt and to enter into this Agreement and the Anteilsverpfändungsvertrag. All necessary corporate, member, or equivalent authorizations (including any required resolutions of the board of managers or members of IHDC) have been duly obtained.
(d) Free and Clear. The quotas in IHDC Frankfurt are free and clear of any liens, pledges, encumbrances, charges, or third-party rights of any kind, other than the share pledge in favor of the Security Trustee pursuant to the Anteilsverpfändungsvertrag.
(e) No Restrictions on Transfer or Pledge. There are no restrictions on the transfer or pledge of the quotas in IHDC Frankfurt (whether under the articles of association of IHDC Frankfurt, by operation of law, or by contract) that have not been waived or complied with in connection with the Anteilsverpfändungsvertrag.
(f) Binding Obligations. This Agreement and the Anteilsverpfändungsvertrag constitute legal, valid, and binding obligations of IHDC, enforceable against IHDC in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and subject to general principles of equity.
5.3 OFAC and Sanctions Representations
Each of the Security Provider and the Pledgor of Shares hereby represents and warrants to the Security Trustee as of the date hereof as follows:
(a) Neither the Security Provider nor the Pledgor of Shares, nor any of their respective directors, officers, managing directors, or (to the knowledge of the relevant entity after reasonable inquiry) beneficial owners, is a person that is, or is owned or controlled by persons that are:
(i) the target of any sanctions administered or enforced by the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC"), including any person listed on the Specially Designated Nationals and blocked Persons List (the "SDN List") or the Sectoral Sanctions Identifications List;
(ii) the target of any sanctions imposed by the European Union, including those under Council Regulation (EU) No 269/2014 as amended, Council Regulation (EU) No 833/2014 as amended, or any other EU restrictive measures regulation;
(iii) the target of any sanctions implemented by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, "BaFin") under the German Anti-Money Laundering Act (Geldwäschegesetz, "GwG") or any other applicable German sanctions legislation; or
(iv) the target of any sanctions administered by the UK Office of Financial Sanctions Implementation ("OFSI") or otherwise under the UK Sanctions and Anti-Money Laundering Act 2018.
(b) No part of the proceeds of the Credit Agreement have been or will be used, directly or indirectly, in violation of any applicable sanctions laws, nor will such proceeds be lent, contributed, or otherwise made available to any subsidiary, joint venture partner, or other person for the purpose of financing the activities or business of any person that is, at the time of such funding, the target of any sanctions referred to in paragraph (a) above.
(c) Each of the Security Provider and the Pledgor of Shares has implemented and maintains in effect policies and procedures designed to ensure compliance with applicable sanctions laws and anti-money laundering laws and regulations.
SECTION 6 — COVENANTS (*VERPFLICHTUNGEN*)
6.1 Preservation of Security
6.1.1 The Security Provider shall not, without the prior written consent of the Security Trustee (acting on instructions of the Administrative Agent), take or permit any action that would impair, jeopardize, or diminish the value, priority, or enforceability of any German Security Document or the security interests created thereunder. Without limiting the generality of the foregoing, the Security Provider shall not:
(a) create, assume, incur, or permit to exist any lien, encumbrance, security interest, charge, preferential arrangement, or other third-party right (Drittrecht) over any collateral subject to the German Security Documents, other than Permitted Liens as defined in the Credit Agreement;