1043-00002 · Ironhaven Data Centers LLC · Construction/EPC

bond-review-memo.docx DOCUMENT Real Estate

5 / 83 ← → ✕

Contract analysis Extract to table

ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP INTERNAL MEMORANDUM

TO: Douglas Fairchild, Partner, Real Estate Practice Group

FROM: Grace Nakamura, Associate, Real Estate Practice Group

DATE: Draft — October 2025 (to be finalized prior to EPC contract execution target of October 20, 2025)

RE: Performance and Payment Bond Review — Titan-McAllister Construction Group, LLC / Stonebridge Data Center Campus

MATTER NO.: 1043-00002

CLIENT: Ironhaven Data Centers LLC

CLASSIFICATION: Attorney-Client Privileged / Work Product

Right-click to update Table of Contents

I. Executive Summary

The purpose of this memorandum is to review and analyze the forms of performance bond and payment bond to be issued by Great Basin Surety & Insurance Corp. ("Great Basin" or the "Surety"), a Wyoming corporation, on behalf of Titan-McAllister Construction Group, LLC ("TMCG" or the "Contractor") as principal, for the benefit of Stonebridge Campus Holdings LLC (the "Owner" or the "Obligee"), in connection with the Engineering, Procurement, and Construction Agreement (the "EPC Agreement") for the Stonebridge Data Center Campus located in Loudoun County, Virginia (the "Project").

Each bond is proposed in a penal sum of Four Hundred Twelve Million Dollars ($412,000,000), which is equal to one hundred percent (100%) of the Guaranteed Maximum Price ("GMP") under the EPC Agreement. The aggregate bonded amount for the performance bond and payment bond combined is therefore Eight Hundred Twenty-Four Million Dollars ($824,000,000).

This memorandum addresses the following areas of review:

1. EPC Agreement Compliance. Whether the bond forms comply with the requirements set forth in the EPC Agreement, including Exhibit D thereto (Insurance Requirements), which specifies the bond amounts, surety qualifications, and form requirements that the Contractor must satisfy as a condition to the issuance of the Notice to Proceed.

2. Construction Loan Agreement Compliance. Whether the bond forms satisfy the construction loan covenants and collateral requirements under the Construction Loan Agreement dated as of October 15, 2025 (the "Construction Loan Agreement"), by and among Stonebridge Campus Holdings LLC, as Borrower, and Summit National Bank, N.A., as Administrative Agent, together with the syndicate lenders party thereto, including requirements for surety consent to collateral assignment and any dual obligee endorsements.

3. Virginia Statutory Compliance. Whether the bond forms satisfy applicable requirements under Virginia law, including surety authorization to transact business in the Commonwealth of Virginia and the interplay between the payment bond and Virginia mechanics' lien statutes.

Based on the review described herein, the forms of performance bond and payment bond are substantially compliant with the requirements of the EPC Agreement and the Construction Loan Agreement, subject to the resolution of the open items identified in Section X of this memorandum. Several modifications and clarifications are recommended prior to the execution of the EPC Agreement, which is currently targeted for October 20, 2025, with the issuance of the Notice to Proceed targeted for November 1, 2025. This memorandum identifies those requested modifications, together with specific action items and a recommended timeline for resolution.

II. Background

A. The Project

The Stonebridge Data Center Campus (the "Project") is a ground-up development of a 96 megawatt ("MW") critical IT load data center campus situated across approximately 81.4 acres at the intersection of Belmont Ridge Road and Stonebridge Boulevard in unincorporated Loudoun County, Virginia 20148. The Project site consists of two contiguous parcels: the 62.0-acre Stonebridge Parcel and the 19.4-acre Meridian Parcel, which were assembled under separate purchase agreements by affiliates of Ironhaven Data Centers LLC ("IHDC" or the "Client") during 2023 and 2024.

The total project budget for the Stonebridge Data Center Campus, inclusive of land acquisition, hard costs, soft costs, financing costs, and contingencies, is approximately Six Hundred Million Dollars ($600,000,000). The Project is one of the largest single-phase data center developments currently under development in the Loudoun County market, which remains the most active data center corridor in the United States.

The Project scope encompasses the following major components:

• Four Data Center Buildings (Buildings A through D). Each building is approximately 120,000 square feet of shell space, designed to support 24 MW of critical IT load, for a combined total of approximately 480,000 gross square feet and 96 MW of critical IT load across all four buildings.

• Central Utility Plant ("CUP"). A centralized mechanical and electrical plant supporting the chilled water, power distribution, emergency generator, and uninterruptible power supply infrastructure serving all four data center buildings.

• Site Civil Work. Includes grading, stormwater management facilities, roadways, underground utilities, perimeter security fencing, and related site infrastructure improvements across both parcels.

• Structured Parking. A multi-level parking structure to serve the campus, including both employee and visitor parking, with capacity sufficient to support the projected staffing levels at full campus build-out.

The Project is being developed by Stonebridge Campus Holdings LLC, a single-purpose Virginia limited liability company wholly owned by IHDC, which was formed specifically to hold the Project assets and serve as the borrower under the construction loan facility. IHDC is a portfolio company of Ridgeline Capital Partners Fund IV, LP, a private equity fund focused on digital infrastructure assets. The Project will be managed on the owner's behalf by Kestrel Infrastructure Advisors, LLC ("Kestrel"), with Diane Prescott serving as the designated Owner's Representative.

B. The EPC Agreement

The EPC Agreement for the Stonebridge Data Center Campus is structured as a guaranteed maximum price contract between the following parties:

• Owner: Stonebridge Campus Holdings LLC, a Virginia limited liability company (to be formed prior to EPC execution; wholly owned by Ironhaven Data Centers LLC).

• Contractor: Titan-McAllister Construction Group, LLC ("TMCG"), a Maryland limited liability company, with its principal office located at 7900 Harkins Road, Suite 100, Lanham, Maryland 20706. TMCG's key personnel on the Project include Raymond Okafor, President, and Michelle Tran, Senior Vice President, Data Center Programs.

The material commercial terms of the EPC Agreement, as relevant to this bond review, are summarized as follows:

The EPC Agreement includes provisions governing, among other things, default and termination for cause, change order procedures, warranty obligations, and insurance and bonding requirements, each of which is relevant to the bond forms under review and is addressed in the applicable sections of this memorandum.

C. The Construction Loan

The Project is being financed in part through a Three Hundred Ninety Million Dollar ($390,000,000) senior secured construction loan facility (the "Construction Loan"), the key terms of which are summarized below:

The collateral package under the Construction Loan Agreement includes, among other items, a first-priority deed of trust on the Project site, an assignment of all rents and leases, an assignment of the EPC Agreement, an assignment of all project contracts, permits, and approvals, and, critically for purposes of this memorandum, an assignment of the Owner's rights under the performance bond and payment bond issued in connection with the EPC Agreement. The collateral assignment of the bonds, and the requirement for surety consent to such assignment, are discussed in detail in Sections IV and VI–VII below.

D. The Surety

Great Basin Surety & Insurance Corp. ("Great Basin"), a Wyoming corporation, has been designated as the surety for both the performance bond and the payment bond in connection with the Project. Great Basin has an existing relationship with TMCG and has served as TMCG's primary surety provider on multiple prior data center construction projects in the mid-Atlantic region.

It is important to note that Great Basin is also providing the builder's risk insurance policy for the Project, with coverage of $412,000,000 and a per-occurrence deductible of $250,000. This concentration of risk with a single surety/insurer is addressed in the surety qualification analysis in Section VIII of this memorandum.

TMCG's commercial general liability coverage is provided separately by Pinnacle Indemnity Insurance Co., with per-occurrence limits of $150,000,000, which is not issued through Great Basin.

The overall insurance program for the Project, including the bonds, is being coordinated through Northgate Insurance Brokerage, LLC, with William Keane serving as the designated Account Executive for the Project. Calderwood & Harkness has been in communication with Mr. Keane regarding the bond forms and surety qualifications.

III. Bond Requirements Under the EPC Agreement

A. Exhibit D — Insurance Requirements

Exhibit D to the EPC Agreement sets forth the insurance and bonding requirements applicable to the Contractor. As relevant to this review, Exhibit D specifies the following bond requirements:

Performance Bond:

The Contractor shall furnish, at its sole cost and expense, a performance bond in an amount equal to one hundred percent (100%) of the Guaranteed Maximum Price, which performance bond shall be issued by a surety company (i) authorized to do business in the Commonwealth of Virginia, (ii) rated at least "A-" with a Financial Size Category of at least "VIII" by A.M. Best Company, and (iii) in a form reasonably acceptable to Owner and Owner's lender. The performance bond shall name Stonebridge Campus Holdings LLC as the obligee thereunder.

Payment Bond:

The Contractor shall furnish, at its sole cost and expense, a payment bond in an amount equal to one hundred percent (100%) of the Guaranteed Maximum Price, which payment bond shall be issued by a surety company meeting the same qualification requirements as set forth above for the performance bond. The payment bond shall name Stonebridge Campus Holdings LLC as the obligee thereunder.

Based on a GMP of $412,000,000, each bond must be issued in a penal sum of $412,000,000. This has been confirmed in the draft bond forms received from Great Basin.

Exhibit D further provides that both bonds are to be delivered to the Owner prior to or simultaneously with the issuance of the Notice to Proceed. Because the NTP is targeted for November 1, 2025, and the EPC Agreement execution is targeted for October 20, 2025, the bonds should ideally be in final, fully executed form no later than the EPC execution date, with delivery confirmed prior to NTP issuance.

Exhibit D also requires that the bonds be in a form reasonably acceptable to both the Owner and the Owner's lender. This dual-approval requirement means that the bond forms must be circulated to, and approved by, Redmond & Calloway LLP on behalf of the lending syndicate prior to execution of the EPC Agreement. This coordination item is reflected in the action items set forth in Section X below.

B. EPC Agreement Substantive Provisions Relating to Bonds

In addition to the Exhibit D requirements, the body of the EPC Agreement contains several substantive provisions relating to the performance bond and payment bond that must be addressed in the bond forms:

1. Maintenance of Bonds. The EPC Agreement requires the Contractor to maintain both bonds in full force and effect throughout the construction period and continuing through the expiration of all warranty periods applicable to the work, which under the EPC Agreement range from twelve (12) to twenty-four (24) months following the date of Substantial Completion, depending on the category of work. The bond forms must reflect this extended duration requirement and should not expire prior to the expiration of all applicable warranty obligations.

2. Right to Claim Under Performance Bond. The EPC Agreement grants the Owner the right to make claims under the performance bond in the event the Contractor fails to perform its obligations, abandons the work, or is terminated for cause pursuant to the termination provisions of the EPC Agreement. The triggering events for a performance bond claim must be consistent with, and cross-referenced to, the default and termination provisions of the EPC Agreement to avoid any gap or ambiguity.

3. Right to Claim Under Payment Bond. The EPC Agreement contemplates that subcontractors, material suppliers, and laborers performing work on or furnishing materials to the Project shall have the right to make claims under the payment bond in accordance with the terms thereof. This is consistent with the standard AIA A312 payment bond structure and with Virginia construction industry practice.

4. Surety Rating Notification. The EPC Agreement requires the Contractor to notify the Owner promptly in the event that the Surety's A.M. Best rating falls below the minimum threshold of "A-" / Financial Size Category VIII. This notification obligation is important because a rating downgrade could trigger replacement surety requirements and could also constitute an event of default under the Construction Loan Agreement.

5. Replacement Surety Provisions. In the event that Great Basin's rating is downgraded below the required threshold, or in the event that Great Basin becomes insolvent or is placed in receivership or liquidation, the EPC Agreement requires the Contractor to obtain replacement bonds from a qualified substitute surety within a specified cure period (thirty (30) days from written notice by the Owner). The bond forms should not contain any provision that would conflict with or frustrate this replacement surety mechanism.

IV. Bond Requirements Under the Construction Loan Agreement

A. Conditions Precedent to Closing / First Advance

The Construction Loan Agreement (Summit National Bank, N.A. as Administrative Agent, Reference No. CL-2025-VA-04418) establishes the delivery of executed performance and payment bonds as a condition precedent to the first construction loan advance. This is a critical path item because the construction loan closing is targeted for October 15, 2025, and the first advance is expected to occur shortly thereafter. If the bond forms are not finalized and approved by lender's counsel prior to the construction loan closing, the initial advance could be delayed, which would in turn delay the issuance of the NTP and commencement of construction.

The Construction Loan Agreement specifically requires that:

(a) Both bonds shall be in form and substance satisfactory to the Administrative Agent and lender's counsel (Redmond & Calloway LLP);

(b) The surety issuing such bonds shall be rated at least "A-" with a Financial Size Category of at least "VIII" by A.M. Best Company; and

(c) Both bonds shall be delivered to the Administrative Agent (or its counsel) prior to the first construction loan advance.

The surety qualification requirement under the Construction Loan Agreement is aligned with the corresponding requirement in the EPC Agreement (Exhibit D), which eliminates a potential source of inconsistency. However, it is important to confirm independently that Great Basin currently meets this rating threshold, as discussed in Section VIII below.

B. Collateral Assignment

The Assignment of Contracts, Permits, and Approvals (the "Collateral Assignment"), which is one of the collateral documents executed in connection with the construction loan closing, includes an assignment by the Borrower (Stonebridge Campus Holdings LLC) to the Administrative Agent (for the benefit of the lending syndicate) of the Borrower's rights, title, and interest in and to, among other things, the performance bond and the payment bond. This collateral assignment is a security interest that becomes exercisable upon the occurrence and during the continuance of an event of default under the Construction Loan Agreement.

The collateral assignment raises two important issues that must be addressed in the bond forms:

Surety Consent to Assignment. The bond forms must include, or be accompanied by, an express consent by Great Basin to the collateral assignment of the bonds to the Administrative Agent for the benefit of the lending syndicate. Many standard surety bond forms, including the AIA A312 form, do not contain a pre-printed consent to assignment. Therefore, a separate surety consent letter or an endorsement to the bonds may be required. We have raised this issue with Northgate Insurance Brokerage and are awaiting confirmation from Great Basin regarding the form of consent.

Dual Obligee Rider or Endorsement. The Construction Loan Agreement should be reviewed to determine whether it requires a dual obligee rider (sometimes referred to as a "dual obligee endorsement") that would name Summit National Bank, N.A., as Administrative Agent, as an additional obligee under both bonds. A dual obligee rider provides the lender with a direct right of claim against the surety, in addition to the borrower/owner's rights, and is a common requirement in construction loan transactions of this nature and size. If a dual obligee rider is required, it should be requested from Great Basin promptly, as it will require the surety's underwriting approval and may affect the bond premium.

The distinction between a consent to assignment and a dual obligee rider is significant. A consent to assignment permits the owner to assign its rights under the bond to the lender as collateral, but the lender's rights are derivative of the owner's rights. A dual obligee rider, by contrast, gives the lender independent standing to make a claim under the bond. The Construction Loan Agreement may require one or both of these protections, and we recommend confirming the specific requirement with Redmond & Calloway LLP at the earliest opportunity.

C. Ongoing Covenants

The Construction Loan Agreement includes the following ongoing covenants applicable to the bonds:

1. Maintenance Covenant. The Borrower covenants to maintain the performance bond and payment bond in full force and effect throughout the draw period and the construction period, including any extensions thereof. This covenant is consistent with the corresponding obligation in the EPC Agreement.

2. Reporting Obligation. The Borrower is required to deliver evidence of bond renewal or continuation with each draw request, or on an annual basis (as specified in the Construction Loan Agreement), together with a certification that the surety continues to meet the applicable rating requirements. Compliance with this reporting obligation should be coordinated with the draw request procedures being administered by Kestrel Infrastructure Advisors.

3. Event of Default. A lapse of the bonds, or the insolvency, receivership, or liquidation of the surety, constitutes an event of default under the Construction Loan Agreement unless the Borrower obtains replacement bonds from a qualified substitute surety within the applicable cure period. This event of default trigger underscores the importance of the surety qualification and financial capacity analysis discussed in Section VIII below.

V. Virginia Statutory Considerations

This section addresses the applicability of Virginia statutory requirements to the performance bond and payment bond for the Project.

Virginia Public Procurement Act and the Virginia Little Miller Act. The Virginia Public Procurement Act, codified at Virginia Code §§ 2.2-4300 et seq., and the performance and payment bond requirements thereunder (Virginia Code §§ 2.2-4336 et seq.), apply to public construction projects — that is, projects undertaken by the Commonwealth of Virginia, its agencies, or its political subdivisions. The Stonebridge Data Center Campus is a private development project being undertaken by a private owner entity (Stonebridge Campus Holdings LLC) on privately held land. Accordingly, the Virginia Little Miller Act (the state-law analog to the federal Miller Act) does not technically apply to this Project.

Notwithstanding the inapplicability of the Little Miller Act, the bonds are contractually required under both the EPC Agreement and the Construction Loan Agreement. The bond forms should substantially comply with the AIA Document A312-2010 standard forms (or equivalent industry-standard forms) to ensure consistency with market expectations, facilitate claims administration, and provide the level of protection that the Owner and its lenders reasonably expect. Use of a proprietary Great Basin form, rather than the AIA A312, is not necessarily objectionable, but any deviations from the AIA A312 standard provisions should be identified, evaluated, and negotiated as appropriate.

Virginia Licensing and Authorization. Great Basin Surety & Insurance Corp. must be licensed and authorized to issue surety bonds in the Commonwealth of Virginia. The Virginia Bureau of Insurance, a division of the Virginia State Corporation Commission, maintains records of insurers and sureties authorized to transact business in the Commonwealth. We recommend that the firm independently verify Great Basin's Virginia authorization by searching the State Corporation Commission's records and obtaining a current certificate of authority or letter of good standing. If Great Basin is not currently authorized in Virginia, the bonds would not be enforceable, and a substitute surety would need to be engaged. We do not anticipate this to be an issue, as Great Basin has reportedly issued bonds on prior TMCG projects in Virginia, but confirmation is prudent given the magnitude of the obligations involved.

Mechanics' Lien Considerations. Virginia's mechanics' lien statutes, codified at Virginia Code §§ 43-1 et seq., provide subcontractors, material suppliers, and laborers with the right to file a mechanics' lien against the improved real property for the value of labor performed or materials furnished. The payment bond provides an alternative avenue of recovery for potential claimants, supplementing (but not displacing) these statutory lien rights.

From the Owner's and lenders' perspective, the payment bond serves an important function in reducing the risk that unpaid subcontractors or suppliers will file mechanics' liens against the Project site. Because the deed of trust securing the Construction Loan will be recorded prior to the commencement of construction, the deed of trust should be senior in priority to any subsequently filed mechanics' liens under Virginia's priority rules. However, mechanics' liens remain a practical concern because they can cloud title, delay lease-up or sale, and create administrative burdens. The availability of a robust payment bond incentivizes subcontractors and suppliers to pursue bond claims rather than lien claims, which inures to the benefit of both the Owner and the lending syndicate.

We note that Virginia mechanics' lien law requires general contractors and subcontractors to provide certain notices to the property owner and among themselves as a condition to perfecting a lien. These notice requirements are separate from, and independent of, the claim procedures under the payment bond. The bond forms should not contain any provision purporting to waive or modify the statutory lien rights of subcontractors or suppliers, as such provisions could be unenforceable or could create unintended consequences under Virginia law.

VI. Review of Form of Performance Bond

A. General Format and Conformance

The form of performance bond received from Great Basin is a proprietary Great Basin form, rather than the AIA Document A312-2010 Performance Bond. While proprietary forms are not uncommon among large national sureties, we recommend that the Owner request that the bond be issued on the AIA A312-2010 form, which is the prevailing industry standard for construction performance bonds and provides a well-understood framework for claims administration. If Great Basin insists on using its proprietary form, the provisions should be compared on a section-by-section basis against the AIA A312-2010 to identify any material deviations. This comparison is underway and the results will be incorporated into the final version of this memorandum.

The key identifying information in the performance bond form is summarized as follows:

We note that the Obligee entity, Stonebridge Campus Holdings LLC, may not yet be formally organized as a Virginia limited liability company. The address and organizational details for Stonebridge Holdings should be updated upon its formation, which we understand is being coordinated by our corporate colleagues. The bond form should not be executed until the Obligee entity is duly formed under Virginia law.

B. Key Provisions Reviewed

The following key provisions of the performance bond form have been reviewed:

Triggering Events / Conditions to Claim. The performance bond provides that the Owner may make a claim upon the occurrence of a "Contractor Default" under the EPC Agreement, including the Contractor's failure to perform its obligations, abandonment of the work, or termination of the Contractor for cause. We have cross-referenced the definition of "Contractor Default" in the bond form against the corresponding default and termination provisions of the EPC Agreement (Articles 14 and 15). The definitions appear to be generally aligned, but we recommend that the bond form either incorporate the EPC Agreement's definitions by reference or be revised to use identical terminology to avoid any ambiguity. Specifically, the bond form uses the phrase "material breach" in describing one category of triggering events, whereas the EPC Agreement uses the phrase "Contractor Event of Default," which is a defined term encompassing specific categories of default. These terms should be harmonized.

Surety's Options Upon Default. Consistent with standard practice, the performance bond grants the Surety the following options upon a valid claim by the Owner:

(i) Arrange for the Contractor (TMCG) to complete performance of the EPC Agreement, with the Surety providing such financial or other assistance as may be necessary;

(ii) Undertake to complete the work itself through a qualified completion contractor selected by the Surety, subject to the Owner's reasonable approval of such completion contractor;

(iii) Obtain bids or proposals from qualified contractors for completion of the work and, upon the Owner's concurrence, arrange for a contract between such contractor and the Owner, with the Surety making available sufficient funds to pay the cost of completion less the balance of the GMP remaining unpaid; or

(iv) Waive its right to perform under options (i) through (iii) above and pay to the Owner the penal sum of the bond (or such lesser amount as may represent the Owner's actual damages, subject to the penal sum cap).

These options are generally consistent with the AIA A312-2010 Performance Bond framework and are acceptable. However, the bond form as drafted grants the Surety a period of sixty (60) calendar days from receipt of the Owner's notice of claim to investigate the claim and elect among the foregoing options. We have a concern that a sixty-day investigation and election period is excessive, particularly given the compressed construction schedule and the time-sensitive nature of data center development. Under the AIA A312-2010 standard, the investigation and response period is typically forty-five (45) days, and many owners negotiate this period down to thirty (30) days. We recommend that the investigation and election period be reduced to thirty (30) calendar days to ensure that any delay arising from a Contractor default is minimized and that the Surety's response timeline is consistent with the cure periods and termination timelines in the EPC Agreement. This recommendation is reflected in the identified issues in Section VI.C below.

Notice Requirements. The performance bond specifies that all notices and claims must be sent by certified mail, return receipt requested, or by nationally recognized overnight courier, to the addresses set forth in the bond form. We have confirmed that the notice addresses and delivery methods are generally consistent with the notice provisions of the EPC Agreement (Article 22), with one exception: the EPC Agreement also permits notice by electronic mail to specified email addresses, whereas the bond form does not. While we do not believe that this discrepancy is material (because a formal bond claim would typically be made in writing via hard copy), we recommend that the bond form be updated to permit electronic notice as a supplementary method of delivery, consistent with the EPC Agreement.

The bond form requires that the Owner provide the Surety with written notice of a claimed Contractor default within ninety (90) days after the Owner first becomes aware of the default. This notice deadline is important because a failure to provide timely notice could be raised by the Surety as a defense to a claim. We have confirmed that the ninety-day notice period is reasonable and consistent with industry practice, although we note that certain EPC Agreement provisions (such as the Contractor's right to cure certain defaults within thirty (30) days after notice from the Owner) may create a practical delay in the Owner's ability to make a final determination of default and provide notice to the Surety. We do not recommend a change to the ninety-day notice period, but the Owner should be advised of the importance of providing timely notice to the Surety in the event of any Contractor default.

Modifications / Change Orders. The bond form contains a provision stating that the bond automatically covers increases to the GMP resulting from change orders approved by the Owner in accordance with the EPC Agreement, provided that the cumulative increase in the GMP does not exceed twenty percent (20%) of the original GMP (i.e., the bond automatically adjusts up to a GMP of $494,400,000 without requiring a separate rider or endorsement). GMP increases in excess of the twenty percent threshold would require a formal bond rider or endorsement from the Surety, which may involve additional premium and underwriting review.

The twenty percent automatic adjustment threshold is within the range of market practice, although some sureties provide automatic adjustment up to twenty-five percent or without a cap. For a project of this size and complexity, where significant change orders are possible (particularly given the rapidly evolving technical specifications in the data center industry), we recommend negotiating for either (a) removal of the twenty percent cap entirely, or (b) an increase of the automatic adjustment threshold to at least twenty-five percent of the original GMP. This recommendation is reflected in Section VI.C below.

Duration / Term. The bond form provides that the performance bond remains in effect from the effective date of the bond through the date of "Final Acceptance" of the work by the Owner. The bond form defines "Final Acceptance" as the date on which the Owner issues a written certificate of final acceptance in accordance with the construction contract.

We have a concern that the bond's duration may not extend through the full warranty period under the EPC Agreement. As noted in Section III.B above, the EPC Agreement requires the Contractor to maintain bonds in full force and effect through the expiration of all warranty periods, which range from twelve (12) to twenty-four (24) months after Substantial Completion depending on the category of work. If "Final Acceptance" under the bond form occurs prior to the expiration of the warranty period (for example, if final acceptance occurs at or shortly after Final Completion, which precedes the expiration of the warranty period), there could be a gap in bond coverage during the warranty period. We recommend that the bond form be revised to provide that the bond remains in effect through the later of (a) Final Completion and acceptance of the work by the Owner, and (b) the expiration of all warranty periods under the EPC Agreement.

No-Offset Clause. The bond form includes a provision confirming that the Surety's obligations under the performance bond cannot be offset or reduced by any amounts that may be owed by the Owner to the Contractor under the EPC Agreement, including unpaid progress payments, retainage, or disputed amounts. This is an important protection for the Owner and is consistent with the AIA A312-2010 standard. No modification is recommended.

Governing Law. The bond form specifies that it is governed by and construed in accordance with the laws of the Commonwealth of Virginia, without regard to conflicts of law principles. This is consistent with the governing law provision of the EPC Agreement (Article 23) and is appropriate given that the Project is located in Virginia and the Obligee is a Virginia limited liability company. No modification is recommended.

C. Identified Issues / Recommended Modifications

Based on the foregoing review, the following issues have been identified with respect to the performance bond form, and the following modifications are recommended:

1. Surety Investigation and Election Period. The bond form provides the Surety with sixty (60) calendar days to investigate a claim and elect among its remedial options. We recommend that this period be reduced to thirty (30) calendar days from receipt of the Owner's notice of claim, consistent with the accelerated timelines typical of data center development and with the cure and termination periods under the EPC Agreement.

2. Definition of Triggering Events. The bond form uses the phrase "material breach" to describe certain triggering events, whereas the EPC Agreement uses the defined term "Contractor Event of Default." We recommend that the bond form be revised to incorporate or cross-reference the EPC Agreement's definitions to avoid ambiguity.

3. Change Order Coverage Threshold. The bond form automatically covers GMP increases up to twenty percent (20%) of the original GMP. We recommend negotiating for removal of this cap or, at minimum, an increase to twenty-five percent (25%).

4. Duration / Warranty Period Coverage. The bond form should be revised to provide that coverage extends through the later of (a) Final Completion and acceptance and (b) expiration of all warranty periods under the EPC Agreement (up to twenty-four (24) months after Substantial Completion).

5. Surety Consent to Collateral Assignment. The bond form does not include a consent to the collateral assignment of the Owner's rights under the bond to Summit National Bank, N.A. as Administrative Agent. A separate surety consent letter or endorsement is required.

6. Dual Obligee Rider. If required by the Construction Loan Agreement, a dual obligee rider naming Summit National Bank, N.A. as Administrative Agent as an additional obligee should be obtained from Great Basin.

7. Electronic Notice. The bond form should be updated to permit notice by electronic mail as a supplementary delivery method, consistent with the EPC Agreement.

VII. Review of Form of Payment Bond

A. General Format and Conformance

As with the performance bond, the form of payment bond received from Great Basin is a proprietary Great Basin form rather than the AIA Document A312-2010 Payment Bond. We recommend, consistent with the recommendation made above for the performance bond, that the Owner request issuance on the AIA A312-2010 form. If Great Basin insists on using its proprietary form, a section-by-section comparison against the AIA A312-2010 Payment Bond should be completed and any material deviations should be identified and negotiated.

The key identifying information in the payment bond form is summarized as follows:

The same observations regarding the formation status of Stonebridge Campus Holdings LLC and the need to update the Obligee's address apply equally to the payment bond form.

B. Key Provisions Reviewed

The following key provisions of the payment bond form have been reviewed:

Covered Claimants. The payment bond covers claims by "Claimants," which the bond form defines as any person or entity having a direct contract with TMCG (first-tier subcontractors and suppliers) or having a direct contract with a first-tier subcontractor of TMCG (second-tier subcontractors and suppliers) who has furnished labor, materials, or equipment used or reasonably required for use in the performance of the EPC Agreement. This definition is consistent with the AIA A312-2010 Payment Bond definition and covers the categories of claimants that are most likely to seek recovery on the Project.

We note that the bond form does not expressly extend coverage to third-tier and lower-tier subcontractors and suppliers — that is, entities that have contracted with second-tier subcontractors rather than directly with TMCG or a first-tier subcontractor. This limitation is standard in most payment bond forms and is generally considered acceptable. However, given the size and complexity of the Project, and the depth of the subcontracting chain that is typical in large-scale data center construction (where specialty equipment suppliers may be two or three tiers removed from the general contractor), the Owner may wish to consider whether broader claimant coverage is desirable. We flag this as a point for discussion but do not recommend a change at this time, as expanding the class of covered claimants could significantly increase the Surety's exposure and may not be commercially available at acceptable premium levels.

Claim Procedures. The payment bond requires Claimants to submit a written claim to the Surety and the Principal (TMCG) within one hundred twenty (120) days after the date on which the Claimant last performed labor or furnished materials for use in connection with the EPC Agreement. This 120-day period is within the range of industry practice (which typically ranges from 90 to 120 days) and is consistent with the AIA A312-2010 standard.

The bond form further provides that if the Surety does not pay or resolve a claim within sixty (60) days after receipt of the claim, the Claimant may institute an action against the Surety in any court of competent jurisdiction. The bond form specifies that any such action must be commenced within one (1) year after the date on which the Claimant last performed labor or furnished materials. This one-year limitation period is consistent with the AIA A312-2010 standard, although it is shorter than the general statute of limitations for breach of contract claims under Virginia law (five years under Virginia Code § 8.01-246(2) for written contracts). The shorter limitation period in the bond form is enforceable under Virginia law, provided that it is clearly stated and agreed to by the parties.

Notice requirements for second-tier claimants (i.e., entities that do not have a direct contract with TMCG) include a requirement that such claimants provide written notice to TMCG, the Surety, and the Owner within ninety (90) days after the date on which the claimant last performed labor or furnished materials. This preliminary notice requirement is a condition precedent to the second-tier claimant's right to recover under the bond and is consistent with standard payment bond practice.

Interplay with Virginia Mechanics' Lien Law. As discussed in Section V above, the payment bond supplements but does not displace the statutory mechanics' lien rights of subcontractors and suppliers under Virginia Code §§ 43-1 et seq. The bond form does not contain any provision purporting to waive or modify statutory lien rights, which is appropriate. The payment bond provides claimants with an alternative recovery mechanism that does not require the filing of a lien against the Project property, which serves the interests of both the Owner and the lending syndicate by reducing the risk of lien encumbrances on the Project site.

It bears noting that the deed of trust in favor of the construction lenders, which will be recorded prior to the commencement of construction, will be senior in priority to any mechanics' liens subsequently filed against the Project property. This priority structure means that, in a foreclosure scenario, the lenders' security interest would take precedence over the claims of lien claimants. The payment bond therefore provides an important layer of protection for the subcontractor and supplier community, incentivizing bond claims over lien claims and thereby reducing the practical risk of lien filings that could complicate the lenders' collateral position.

Modifications / Change Orders. The same analysis applicable to the performance bond applies to the payment bond. The payment bond form contains the same twenty percent (20%) automatic adjustment provision for GMP increases resulting from approved change orders. Our recommendation to negotiate for the removal or increase of this threshold applies equally to the payment bond.

Duration / Term. The payment bond form provides that it remains in effect for a period of one (1) year after the date of "Final Acceptance" of the work by the Owner. This one-year tail period is consistent with the AIA A312-2010 standard and provides a reasonable window for claimants to submit claims after the completion of the work. We recommend confirming that "Final Acceptance" under the bond form is defined consistently with the EPC Agreement's concept of "Final Completion" and that the one-year tail period is sufficient to satisfy the requirements of the Construction Loan Agreement.

Governing Law. The payment bond form, like the performance bond form, specifies Virginia law as the governing law, which is consistent with the EPC Agreement and appropriate for the Project. No modification is recommended.

C. Identified Issues / Recommended Modifications

Based on the foregoing review, the following issues have been identified with respect to the payment bond form, and the following modifications are recommended:

1. Claim Filing Deadlines. Confirm that the 120-day claim filing deadline and the one-year limitation period for bringing suit are consistent with Virginia norms and with the expectations of the Owner and the lending syndicate. While these periods are within standard industry ranges, the Owner may wish to extend the claim filing deadline to 150 days to provide additional protection to lower-tier claimants.

2. Exclusions. Review the payment bond form for any exclusions of specific classes of claimants (e.g., professional service providers, testing laboratories, or equipment lessors) that could leave certain Project participants without bond coverage. Any such exclusions should be identified and evaluated in the context of the Project's subcontracting structure.

3. Aggregate Exposure. The payment bond penal sum of $412,000,000 represents the aggregate limit of the Surety's liability under the payment bond. Confirm that this amount is sufficient to cover the anticipated subcontracting and supplier obligations under the EPC Agreement. Given that TMCG self-performs a limited portion of the work and subcontracts the substantial majority, the $412,000,000 penal sum (equal to 100% of the GMP) should provide adequate coverage.

4. Surety Financial Capacity. As noted in Section VIII below, Great Basin is providing both the performance bond and the payment bond, as well as the builder's risk policy, for the Project. The aggregate exposure to a single surety/insurer is significant, and the Surety's financial capacity to honor obligations under all three instruments simultaneously should be evaluated.

5. Change Order Coverage Threshold. Consistent with the recommendation for the performance bond, negotiate for removal or increase of the twenty percent automatic adjustment cap.

6. Surety Consent and Dual Obligee Rider. The same requirements applicable to the performance bond regarding surety consent to collateral assignment and the potential need for a dual obligee rider apply to the payment bond.

VIII. Surety Qualification and Financial Capacity

A. A.M. Best Rating

Both the EPC Agreement (Exhibit D) and the Construction Loan Agreement require that the surety issuing the performance bond and payment bond be rated at least "A-" with a Financial Size Category of at least "VIII" by A.M. Best Company. A Financial Size Category of VIII corresponds to a surplus of between $100 million and $250 million, which represents a minimum threshold of financial capacity for a surety providing bonds of the magnitude required for this Project.

We have not yet independently confirmed Great Basin's current A.M. Best rating. Our preliminary understanding, based on information provided by Northgate Insurance Brokerage, is that Great Basin is currently rated "A" (Excellent) with a Financial Size Category of "IX" (surplus of $250 million to $500 million), which would satisfy the contractual requirements. However, given the significance of this rating to the enforceability of the bonds and the compliance with both the EPC Agreement and the Construction Loan Agreement, we strongly recommend that the firm obtain a current rating confirmation letter or certificate directly from Great Basin, or independently verify the rating through A.M. Best's online rating service. This action item is reflected in Section X below.

B. Aggregate Exposure with Great Basin

A significant consideration in this review is the concentration of risk with Great Basin as a single surety/insurer across multiple lines of coverage for the Project. Specifically, Great Basin is providing:

(a) Performance Bond — $412,000,000 penal sum;

(b) Payment Bond — $412,000,000 penal sum; and

The aggregate potential exposure of Great Basin across all three instruments is substantial. While the performance bond and payment bond exposures are theoretical maximums (the actual liability under each bond is limited to the Owner's or claimants' actual damages, subject to the penal sum caps), and while the builder's risk exposure is subject to the occurrence of an insured loss, the simultaneous obligation to honor claims under multiple instruments could strain the Surety's financial capacity in a worst-case scenario.

We recommend the following measures to address this concentration risk:

1. Reinsurance Confirmation. Request confirmation from Great Basin (through Northgate Insurance Brokerage or directly) regarding the existence and adequacy of reinsurance arrangements supporting Great Basin's obligations under the bonds and the builder's risk policy. A reinsurance treaty or facultative placement that covers a substantial portion of Great Basin's exposure on this Project would provide additional comfort regarding the Surety's ability to perform.

2. Lender Input. Discuss the concentration issue with the lending syndicate and Redmond & Calloway LLP to determine whether the lenders have specific requirements or concerns regarding the single-surety/insurer structure. The lenders may require a diversification of surety or insurer exposure as a condition to the first advance or as an ongoing covenant.

3. Market Practice. Consult with William Keane at Northgate Insurance Brokerage regarding market practice for data center construction projects of this size. In our experience, it is not uncommon for a single surety to provide both the performance bond and payment bond, but the combination of bond exposure with builder's risk exposure through the same entity is less typical and warrants additional scrutiny.

C. Virginia Authorization

As discussed in Section V above, Great Basin must be licensed and authorized to transact surety business in the Commonwealth of Virginia. We recommend verifying Great Basin's authorization through the Virginia Bureau of Insurance, which is a division of the Virginia State Corporation Commission. The State Corporation Commission maintains an online database of authorized insurers and sureties, which can be searched by entity name or NAIC code. If Great Basin is not currently authorized in Virginia, the bonds may not be enforceable under Virginia law, and a substitute surety authorized to do business in Virginia would need to be engaged. This is a critical compliance item that should be confirmed at the earliest opportunity.

IX. Cross-Reference and Coordination Items

A. EPC Agreement Alignment

The bond forms must be fully coordinated with the EPC Agreement to avoid inconsistencies that could create ambiguity in claims administration or impair the Owner's rights under the bonds. The following alignment items have been identified:

1. Defined Terms. The bond forms should use defined terms that are consistent with, or incorporate by reference, the defined terms in the EPC Agreement. Key terms that must be aligned include "Substantial Completion," "Final Completion," "Contractor Event of Default," "Termination for Cause," "Change Order," "Guaranteed Maximum Price," and "Warranty Period." Any discrepancy between the bond form definitions and the EPC Agreement definitions could create gaps in coverage or disputes regarding the scope of the Surety's obligations.

2. Contract Reference. The bond forms should reference the correct EPC Agreement date (October 20, 2025, subject to confirmation upon execution) and the correct GMP amount ($412,000,000). These references should be verified prior to execution of the bonds.

3. Change of Control Provisions. The EPC Agreement contains change of control provisions that are relevant to the bond analysis. Specifically, the EPC Agreement provides that (a) TMCG has a consent right with respect to any change of control of the Owner entity, and (b) the Owner has a termination right in the event of a change of control of TMCG. It is important to confirm that the bond forms do not contain provisions that would release the Surety from its obligations in the event of a change of control of either the Owner or the Contractor. A change of control of TMCG, in particular, could affect the Surety's indemnity rights against the Principal, which could in turn affect the Surety's willingness to perform. The bond forms should be reviewed to confirm that the Surety's obligations are not conditioned on or affected by changes in the ownership or control of the Principal.

B. Construction Loan Agreement Alignment

The bond forms must also be coordinated with the Construction Loan Agreement to ensure that all conditions precedent, collateral requirements, and ongoing covenants are satisfied. The following alignment items have been identified:

1. Conditions Precedent. The bond forms, once finalized, must satisfy the conditions precedent set forth in the Construction Loan Agreement for the delivery of executed bonds. Lender's counsel (Redmond & Calloway LLP, Victor Redmond) should review and approve the final bond forms as part of the condition-precedent satisfaction process.

2. Surety Consent to Collateral Assignment. As discussed in Section IV.B above, the Collateral Assignment includes an assignment of the Owner's rights under the bonds. The bond forms must include, or be accompanied by, a surety consent to this assignment. This consent should be in a form satisfactory to the Administrative Agent and lender's counsel.

3. Dual Obligee Rider. If the Construction Loan Agreement requires a dual obligee rider naming Summit National Bank, N.A. as Administrative Agent, the rider should be obtained from Great Basin and attached to both bonds.

4. Change of Control / Mandatory Prepayment. The Construction Loan Agreement includes a mandatory prepayment trigger in the event that Ridgeline Capital Partners Fund IV, LP ceases to hold at least fifty-one percent (51%) of the equity interests in the Borrower or the Guarantor. This change of control provision operates at the equity sponsor level and is distinct from the EPC Agreement's change of control provisions, which operate at the Owner and Contractor entity levels. We should confirm that the bond forms do not contain provisions that would be triggered by, or create inconsistencies with, the Construction Loan Agreement's change of control / mandatory prepayment mechanism. In particular, if a mandatory prepayment event occurs and the construction loan is accelerated, the lenders (as assignees of the bonds under the Collateral Assignment) should retain the ability to make claims under the bonds to the same extent as the Owner.

C. Insurance Program Coordination

The bond review should be coordinated with the broader insurance program review being conducted in connection with the EPC Agreement and the Construction Loan Agreement:

1. Insurance Requirements Compliance Matrix. An Insurance Requirements Compliance Matrix comparing the insurance and bonding requirements of the EPC Agreement (Exhibit D) and the Construction Loan Agreement is being prepared separately. The bond review in this memorandum should be cross-referenced with that matrix to ensure consistency and to identify any gaps.

2. Bond / Builder's Risk Coordination. Both the performance bond and the builder's risk insurance policy are issued by Great Basin with coverage limits of $412,000,000. The performance bond does not include a deductible (the Surety's obligation under the performance bond is subject only to the penal sum cap), whereas the builder's risk policy has a $250,000 per-occurrence deductible. These instruments serve different purposes — the performance bond protects against Contractor default, while the builder's risk policy protects against physical loss or damage to the work during construction — but their interaction should be understood. For example, if a Contractor default results in damage to the work, the Owner may have claims under both the performance bond and the builder's risk policy. Coordination of these claims with a single surety/insurer may simplify administration but also raises the aggregate exposure concentration concern discussed in Section VIII.B above.

3. Certificate of Insurance Review. A separate Certificate of Insurance Review Letter is being prepared for delivery to TMCG requesting evidence of all required coverages under the EPC Agreement, including the bonds, CGL coverage (Pinnacle Indemnity Insurance Co., $150,000,000 per occurrence), and other required policies. The bond review in this memorandum should be coordinated with that letter to ensure that all bond-related documentary requirements are captured.

X. Open Items and Action Items

The following open items and action items have been identified and should be resolved prior to the execution of the EPC Agreement (target: October 20, 2025) and the issuance of the Notice to Proceed (target: November 1, 2025):

XI. Conclusion and Recommendation

Subject to the resolution of the open items identified in Section X above, the forms of performance bond and payment bond to be issued by Great Basin Surety & Insurance Corp. on behalf of Titan-McAllister Construction Group, LLC are substantially compliant with the requirements of (a) the EPC Agreement, including Exhibit D — Insurance Requirements, (b) the Construction Loan Agreement with Summit National Bank, N.A. as Administrative Agent, and (c) applicable Virginia law. The bond amounts are correct, the named parties are appropriate (subject to updating the Obligee entity details upon formation), and the general structure and provisions of both bonds are consistent with industry standards for construction bonds on projects of this type and scale.

However, as detailed in Sections VI.C, VII.C, VIII, and X of this memorandum, several modifications and clarifications are recommended to bring the bond forms into full alignment with the EPC Agreement and Construction Loan Agreement requirements, and to address identified risks relating to surety cure periods, change order coverage thresholds, bond duration, surety consent to collateral assignment, and aggregate exposure concentration.

We recommend the following next steps:

1. Circulation to Owner's Representative. The final bond forms, together with Calderwood & Harkness's recommended modifications, should be circulated to Kestrel Infrastructure Advisors, LLC (Diane Prescott, Owner's Representative) for project-level review and concurrence.

2. Circulation to Lender's Counsel. The bond forms should be circulated to Redmond & Calloway LLP (Victor Redmond) for lender's counsel review and sign-off, which is required as a condition precedent to the first construction loan advance.

3. Coordination with EPC Agreement Mark-Up. Cynthia Ho of Calderwood & Harkness is leading the negotiation and mark-up of the EPC Agreement. The bond review comments should be coordinated with her team to ensure that any modifications to the bond forms are reflected in conforming changes to the EPC Agreement (including Exhibit D) and vice versa.

4. Transmission of Comments. We request authority to transmit our comments and requested modifications to TMCG's counsel and to Great Basin (through Northgate Insurance Brokerage) as necessary to resolve the open items identified in this memorandum in advance of the October 20, 2025 EPC execution date.

We are available to discuss this memorandum and the recommended next steps at your convenience. Given the compressed timeline for EPC execution and construction loan closing, we recommend scheduling a call or meeting at the earliest practicable date to finalize the bond review and authorize the transmission of comments.

This memorandum is a draft prepared for internal use and is subject to revision. It is protected by the attorney-client privilege and the work product doctrine.

Appendices / Attachments (Referenced)

The following appendices and attachments are referenced in this memorandum:

Appendix A: Form of Performance Bond (Great Basin Surety & Insurance Corp.) — To be attached upon receipt of final form from Northgate Insurance Brokerage

Appendix B: Form of Payment Bond (Great Basin Surety & Insurance Corp.) — To be attached upon receipt of final form from Northgate Insurance Brokerage

Appendix C: Exhibit D to EPC Agreement — Insurance Requirements (cross-reference copy) — Attached

Appendix D: Relevant Excerpts from Construction Loan Agreement — Conditions Precedent (Section 4.02), Collateral Assignment (Section 5.14), and Bond Covenants (Section 6.08) — Attached

Calderwood & Harkness LLP	1200 New York Avenue, N.W., Suite 800	Washington, DC 20005	(202) 555-4200
Term	Detail
Contract Type	Guaranteed Maximum Price (GMP)
GMP Amount	$412,000,000
Per-Building GMP Allocation	$103,000,000 per building (4 buildings)
Cost square Foot (GMP Basis)	$858.33 per square foot
Cost per MW (GMP Basis)	$4,291,667 per MW
Construction Duration	24 months from Notice to Proceed
NTP Target Date	November 1, 2025
Substantial Completion — Building A	August 1, 2027
Substantial Completion — Buildings B, C, D	November 1, 2027
EPC Agreement Execution Target	October 20, 2025
Term	Detail
Facility Amount	$390,000,000
Administrative Agent & Lead Arranger	Summit National Bank, N.A. (Karen Ellsworth, Managing Director, Real Estate Finance)
Syndicate Participant — Summit National Bank, N.A.	$180,000,000 (46.15%)
Syndicate Participant — Cascade Commercial Lending Corp.	$130,000,000 (33.33%)
Syndicate Participant — Harborview Trust Company	$80,000,000 (20.51%)
Lender's Counsel	Redmond & Calloway LLP (Victor Redmond, Partner)
Construction Loan Closing Target	October 15, 2025
Element	As Stated in Bond Form	Conformance
Penal Sum	$412,000,000	Confirmed — matches 1

ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP INTERNAL MEMORANDUM
TO: Douglas Fairchild, Partner, Real Estate Practice Group
FROM: Grace Nakamura, Associate, Real Estate Practice Group
DATE: Draft — October 2025 (to be finalized prior to EPC contract execution target of October 20, 2025)
RE: Performance and Payment Bond Review — Titan-McAllister Construction Group, LLC / Stonebridge Data Center Campus
MATTER NO.: 1043-00002
CLIENT: Ironhaven Data Centers LLC
CLASSIFICATION: Attorney-Client Privileged / Work Product
Right-click to update Table of Contents
I. Executive Summary
The purpose of this memorandum is to review and analyze the forms of performance bond and payment bond to be issued by Great Basin Surety & Insurance Corp. ("Great Basin" or the "Surety"), a Wyoming corporation, on behalf of Titan-McAllister Construction Group, LLC ("TMCG" or the "Contractor") as principal, for the benefit of Stonebridge Campus Holdings LLC (the "Owner" or the "Obligee"), in connection with the Engineering, Procurement, and Construction Agreement (the "EPC Agreement") for the Stonebridge Data Center Campus located in Loudoun County, Virginia (the "Project").
Each bond is proposed in a penal sum of Four Hundred Twelve Million Dollars ($412,000,000), which is equal to one hundred percent (100%) of the Guaranteed Maximum Price ("GMP") under the EPC Agreement. The aggregate bonded amount for the performance bond and payment bond combined is therefore Eight Hundred Twenty-Four Million Dollars ($824,000,000).
This memorandum addresses the following areas of review:
1. EPC Agreement Compliance. Whether the bond forms comply with the requirements set forth in the EPC Agreement, including Exhibit D thereto (Insurance Requirements), which specifies the bond amounts, surety qualifications, and form requirements that the Contractor must satisfy as a condition to the issuance of the Notice to Proceed.
2. Construction Loan Agreement Compliance. Whether the bond forms satisfy the construction loan covenants and collateral requirements under the Construction Loan Agreement dated as of October 15, 2025 (the "Construction Loan Agreement"), by and among Stonebridge Campus Holdings LLC, as Borrower, and Summit National Bank, N.A., as Administrative Agent, together with the syndicate lenders party thereto, including requirements for surety consent to collateral assignment and any dual obligee endorsements.
3. Virginia Statutory Compliance. Whether the bond forms satisfy applicable requirements under Virginia law, including surety authorization to transact business in the Commonwealth of Virginia and the interplay between the payment bond and Virginia mechanics' lien statutes.
Based on the review described herein, the forms of performance bond and payment bond are substantially compliant with the requirements of the EPC Agreement and the Construction Loan Agreement, subject to the resolution of the open items identified in Section X of this memorandum. Several modifications and clarifications are recommended prior to the execution of the EPC Agreement, which is currently targeted for October 20, 2025, with the issuance of the Notice to Proceed targeted for November 1, 2025. This memorandum identifies those requested modifications, together with specific action items and a recommended timeline for resolution.
II. Background
A. The Project
The Stonebridge Data Center Campus (the "Project") is a ground-up development of a 96 megawatt ("MW") critical IT load data center campus situated across approximately 81.4 acres at the intersection of Belmont Ridge Road and Stonebridge Boulevard in unincorporated Loudoun County, Virginia 20148. The Project site consists of two contiguous parcels: the 62.0-acre Stonebridge Parcel and the 19.4-acre Meridian Parcel, which were assembled under separate purchase agreements by affiliates of Ironhaven Data Centers LLC ("IHDC" or the "Client") during 2023 and 2024.
The total project budget for the Stonebridge Data Center Campus, inclusive of land acquisition, hard costs, soft costs, financing costs, and contingencies, is approximately Six Hundred Million Dollars ($600,000,000). The Project is one of the largest single-phase data center developments currently under development in the Loudoun County market, which remains the most active data center corridor in the United States.
The Project scope encompasses the following major components:
• Four Data Center Buildings (Buildings A through D). Each building is approximately 120,000 square feet of shell space, designed to support 24 MW of critical IT load, for a combined total of approximately 480,000 gross square feet and 96 MW of critical IT load across all four buildings.
• Central Utility Plant ("CUP"). A centralized mechanical and electrical plant supporting the chilled water, power distribution, emergency generator, and uninterruptible power supply infrastructure serving all four data center buildings.
• Site Civil Work. Includes grading, stormwater management facilities, roadways, underground utilities, perimeter security fencing, and related site infrastructure improvements across both parcels.
• Structured Parking. A multi-level parking structure to serve the campus, including both employee and visitor parking, with capacity sufficient to support the projected staffing levels at full campus build-out.
The Project is being developed by Stonebridge Campus Holdings LLC, a single-purpose Virginia limited liability company wholly owned by IHDC, which was formed specifically to hold the Project assets and serve as the borrower under the construction loan facility. IHDC is a portfolio company of Ridgeline Capital Partners Fund IV, LP, a private equity fund focused on digital infrastructure assets. The Project will be managed on the owner's behalf by Kestrel Infrastructure Advisors, LLC ("Kestrel"), with Diane Prescott serving as the designated Owner's Representative.
B. The EPC Agreement
The EPC Agreement for the Stonebridge Data Center Campus is structured as a guaranteed maximum price contract between the following parties:
• Owner: Stonebridge Campus Holdings LLC, a Virginia limited liability company (to be formed prior to EPC execution; wholly owned by Ironhaven Data Centers LLC).
• Contractor: Titan-McAllister Construction Group, LLC ("TMCG"), a Maryland limited liability company, with its principal office located at 7900 Harkins Road, Suite 100, Lanham, Maryland 20706. TMCG's key personnel on the Project include Raymond Okafor, President, and Michelle Tran, Senior Vice President, Data Center Programs.
The material commercial terms of the EPC Agreement, as relevant to this bond review, are summarized as follows:
The EPC Agreement includes provisions governing, among other things, default and termination for cause, change order procedures, warranty obligations, and insurance and bonding requirements, each of which is relevant to the bond forms under review and is addressed in the applicable sections of this memorandum.
C. The Construction Loan
The Project is being financed in part through a Three Hundred Ninety Million Dollar ($390,000,000) senior secured construction loan facility (the "Construction Loan"), the key terms of which are summarized below:
The collateral package under the Construction Loan Agreement includes, among other items, a first-priority deed of trust on the Project site, an assignment of all rents and leases, an assignment of the EPC Agreement, an assignment of all project contracts, permits, and approvals, and, critically for purposes of this memorandum, an assignment of the Owner's rights under the performance bond and payment bond issued in connection with the EPC Agreement. The collateral assignment of the bonds, and the requirement for surety consent to such assignment, are discussed in detail in Sections IV and VI–VII below.
D. The Surety
Great Basin Surety & Insurance Corp. ("Great Basin"), a Wyoming corporation, has been designated as the surety for both the performance bond and the payment bond in connection with the Project. Great Basin has an existing relationship with TMCG and has served as TMCG's primary surety provider on multiple prior data center construction projects in the mid-Atlantic region.
It is important to note that Great Basin is also providing the builder's risk insurance policy for the Project, with coverage of $412,000,000 and a per-occurrence deductible of $250,000. This concentration of risk with a single surety/insurer is addressed in the surety qualification analysis in Section VIII of this memorandum.
TMCG's commercial general liability coverage is provided separately by Pinnacle Indemnity Insurance Co., with per-occurrence limits of $150,000,000, which is not issued through Great Basin.
The overall insurance program for the Project, including the bonds, is being coordinated through Northgate Insurance Brokerage, LLC, with William Keane serving as the designated Account Executive for the Project. Calderwood & Harkness has been in communication with Mr. Keane regarding the bond forms and surety qualifications.
III. Bond Requirements Under the EPC Agreement
A. Exhibit D — Insurance Requirements
Exhibit D to the EPC Agreement sets forth the insurance and bonding requirements applicable to the Contractor. As relevant to this review, Exhibit D specifies the following bond requirements:
Performance Bond:
The Contractor shall furnish, at its sole cost and expense, a performance bond in an amount equal to one hundred percent (100%) of the Guaranteed Maximum Price, which performance bond shall be issued by a surety company (i) authorized to do business in the Commonwealth of Virginia, (ii) rated at least "A-" with a Financial Size Category of at least "VIII" by A.M. Best Company, and (iii) in a form reasonably acceptable to Owner and Owner's lender. The performance bond shall name Stonebridge Campus Holdings LLC as the obligee thereunder.
Payment Bond:
The Contractor shall furnish, at its sole cost and expense, a payment bond in an amount equal to one hundred percent (100%) of the Guaranteed Maximum Price, which payment bond shall be issued by a surety company meeting the same qualification requirements as set forth above for the performance bond. The payment bond shall name Stonebridge Campus Holdings LLC as the obligee thereunder.
Based on a GMP of $412,000,000, each bond must be issued in a penal sum of $412,000,000. This has been confirmed in the draft bond forms received from Great Basin.
Exhibit D further provides that both bonds are to be delivered to the Owner prior to or simultaneously with the issuance of the Notice to Proceed. Because the NTP is targeted for November 1, 2025, and the EPC Agreement execution is targeted for October 20, 2025, the bonds should ideally be in final, fully executed form no later than the EPC execution date, with delivery confirmed prior to NTP issuance.
Exhibit D also requires that the bonds be in a form reasonably acceptable to both the Owner and the Owner's lender. This dual-approval requirement means that the bond forms must be circulated to, and approved by, Redmond & Calloway LLP on behalf of the lending syndicate prior to execution of the EPC Agreement. This coordination item is reflected in the action items set forth in Section X below.
B. EPC Agreement Substantive Provisions Relating to Bonds
In addition to the Exhibit D requirements, the body of the EPC Agreement contains several substantive provisions relating to the performance bond and payment bond that must be addressed in the bond forms:
1. Maintenance of Bonds. The EPC Agreement requires the Contractor to maintain both bonds in full force and effect throughout the construction period and continuing through the expiration of all warranty periods applicable to the work, which under the EPC Agreement range from twelve (12) to twenty-four (24) months following the date of Substantial Completion, depending on the category of work. The bond forms must reflect this extended duration requirement and should not expire prior to the expiration of all applicable warranty obligations.
2. Right to Claim Under Performance Bond. The EPC Agreement grants the Owner the right to make claims under the performance bond in the event the Contractor fails to perform its obligations, abandons the work, or is terminated for cause pursuant to the termination provisions of the EPC Agreement. The triggering events for a performance bond claim must be consistent with, and cross-referenced to, the default and termination provisions of the EPC Agreement to avoid any gap or ambiguity.
3. Right to Claim Under Payment Bond. The EPC Agreement contemplates that subcontractors, material suppliers, and laborers performing work on or furnishing materials to the Project shall have the right to make claims under the payment bond in accordance with the terms thereof. This is consistent with the standard AIA A312 payment bond structure and with Virginia construction industry practice.
4. Surety Rating Notification. The EPC Agreement requires the Contractor to notify the Owner promptly in the event that the Surety's A.M. Best rating falls below the minimum threshold of "A-" / Financial Size Category VIII. This notification obligation is important because a rating downgrade could trigger replacement surety requirements and could also constitute an event of default under the Construction Loan Agreement.
5. Replacement Surety Provisions. In the event that Great Basin's rating is downgraded below the required threshold, or in the event that Great Basin becomes insolvent or is placed in receivership or liquidation, the EPC Agreement requires the Contractor to obtain replacement bonds from a qualified substitute surety within a specified cure period (thirty (30) days from written notice by the Owner). The bond forms should not contain any provision that would conflict with or frustrate this replacement surety mechanism.
IV. Bond Requirements Under the Construction Loan Agreement
A. Conditions Precedent to Closing / First Advance
The Construction Loan Agreement (Summit National Bank, N.A. as Administrative Agent, Reference No. CL-2025-VA-04418) establishes the delivery of executed performance and payment bonds as a condition precedent to the first construction loan advance. This is a critical path item because the construction loan closing is targeted for October 15, 2025, and the first advance is expected to occur shortly thereafter. If the bond forms are not finalized and approved by lender's counsel prior to the construction loan closing, the initial advance could be delayed, which would in turn delay the issuance of the NTP and commencement of construction.
The Construction Loan Agreement specifically requires that:
(a) Both bonds shall be in form and substance satisfactory to the Administrative Agent and lender's counsel (Redmond & Calloway LLP);
(b) The surety issuing such bonds shall be rated at least "A-" with a Financial Size Category of at least "VIII" by A.M. Best Company; and
(c) Both bonds shall be delivered to the Administrative Agent (or its counsel) prior to the first construction loan advance.
The surety qualification requirement under the Construction Loan Agreement is aligned with the corresponding requirement in the EPC Agreement (Exhibit D), which eliminates a potential source of inconsistency. However, it is important to confirm independently that Great Basin currently meets this rating threshold, as discussed in Section VIII below.
B. Collateral Assignment
The Assignment of Contracts, Permits, and Approvals (the "Collateral Assignment"), which is one of the collateral documents executed in connection with the construction loan closing, includes an assignment by the Borrower (Stonebridge Campus Holdings LLC) to the Administrative Agent (for the benefit of the lending syndicate) of the Borrower's rights, title, and interest in and to, among other things, the performance bond and the payment bond. This collateral assignment is a security interest that becomes exercisable upon the occurrence and during the continuance of an event of default under the Construction Loan Agreement.
The collateral assignment raises two important issues that must be addressed in the bond forms:
Surety Consent to Assignment. The bond forms must include, or be accompanied by, an express consent by Great Basin to the collateral assignment of the bonds to the Administrative Agent for the benefit of the lending syndicate. Many standard surety bond forms, including the AIA A312 form, do not contain a pre-printed consent to assignment. Therefore, a separate surety consent letter or an endorsement to the bonds may be required. We have raised this issue with Northgate Insurance Brokerage and are awaiting confirmation from Great Basin regarding the form of consent.
Dual Obligee Rider or Endorsement. The Construction Loan Agreement should be reviewed to determine whether it requires a dual obligee rider (sometimes referred to as a "dual obligee endorsement") that would name Summit National Bank, N.A., as Administrative Agent, as an additional obligee under both bonds. A dual obligee rider provides the lender with a direct right of claim against the surety, in addition to the borrower/owner's rights, and is a common requirement in construction loan transactions of this nature and size. If a dual obligee rider is required, it should be requested from Great Basin promptly, as it will require the surety's underwriting approval and may affect the bond premium.
The distinction between a consent to assignment and a dual obligee rider is significant. A consent to assignment permits the owner to assign its rights under the bond to the lender as collateral, but the lender's rights are derivative of the owner's rights. A dual obligee rider, by contrast, gives the lender independent standing to make a claim under the bond. The Construction Loan Agreement may require one or both of these protections, and we recommend confirming the specific requirement with Redmond & Calloway LLP at the earliest opportunity.
C. Ongoing Covenants
The Construction Loan Agreement includes the following ongoing covenants applicable to the bonds:
1. Maintenance Covenant. The Borrower covenants to maintain the performance bond and payment bond in full force and effect throughout the draw period and the construction period, including any extensions thereof. This covenant is consistent with the corresponding obligation in the EPC Agreement.
2. Reporting Obligation. The Borrower is required to deliver evidence of bond renewal or continuation with each draw request, or on an annual basis (as specified in the Construction Loan Agreement), together with a certification that the surety continues to meet the applicable rating requirements. Compliance with this reporting obligation should be coordinated with the draw request procedures being administered by Kestrel Infrastructure Advisors.
3. Event of Default. A lapse of the bonds, or the insolvency, receivership, or liquidation of the surety, constitutes an event of default under the Construction Loan Agreement unless the Borrower obtains replacement bonds from a qualified substitute surety within the applicable cure period. This event of default trigger underscores the importance of the surety qualification and financial capacity analysis discussed in Section VIII below.
V. Virginia Statutory Considerations
This section addresses the applicability of Virginia statutory requirements to the performance bond and payment bond for the Project.
Virginia Public Procurement Act and the Virginia Little Miller Act. The Virginia Public Procurement Act, codified at Virginia Code §§ 2.2-4300 et seq., and the performance and payment bond requirements thereunder (Virginia Code §§ 2.2-4336 et seq.), apply to public construction projects — that is, projects undertaken by the Commonwealth of Virginia, its agencies, or its political subdivisions. The Stonebridge Data Center Campus is a private development project being undertaken by a private owner entity (Stonebridge Campus Holdings LLC) on privately held land. Accordingly, the Virginia Little Miller Act (the state-law analog to the federal Miller Act) does not technically apply to this Project.
Notwithstanding the inapplicability of the Little Miller Act, the bonds are contractually required under both the EPC Agreement and the Construction Loan Agreement. The bond forms should substantially comply with the AIA Document A312-2010 standard forms (or equivalent industry-standard forms) to ensure consistency with market expectations, facilitate claims administration, and provide the level of protection that the Owner and its lenders reasonably expect. Use of a proprietary Great Basin form, rather than the AIA A312, is not necessarily objectionable, but any deviations from the AIA A312 standard provisions should be identified, evaluated, and negotiated as appropriate.
Virginia Licensing and Authorization. Great Basin Surety & Insurance Corp. must be licensed and authorized to issue surety bonds in the Commonwealth of Virginia. The Virginia Bureau of Insurance, a division of the Virginia State Corporation Commission, maintains records of insurers and sureties authorized to transact business in the Commonwealth. We recommend that the firm independently verify Great Basin's Virginia authorization by searching the State Corporation Commission's records and obtaining a current certificate of authority or letter of good standing. If Great Basin is not currently authorized in Virginia, the bonds would not be enforceable, and a substitute surety would need to be engaged. We do not anticipate this to be an issue, as Great Basin has reportedly issued bonds on prior TMCG projects in Virginia, but confirmation is prudent given the magnitude of the obligations involved.
Mechanics' Lien Considerations. Virginia's mechanics' lien statutes, codified at Virginia Code §§ 43-1 et seq., provide subcontractors, material suppliers, and laborers with the right to file a mechanics' lien against the improved real property for the value of labor performed or materials furnished. The payment bond provides an alternative avenue of recovery for potential claimants, supplementing (but not displacing) these statutory lien rights.
From the Owner's and lenders' perspective, the payment bond serves an important function in reducing the risk that unpaid subcontractors or suppliers will file mechanics' liens against the Project site. Because the deed of trust securing the Construction Loan will be recorded prior to the commencement of construction, the deed of trust should be senior in priority to any subsequently filed mechanics' liens under Virginia's priority rules. However, mechanics' liens remain a practical concern because they can cloud title, delay lease-up or sale, and create administrative burdens. The availability of a robust payment bond incentivizes subcontractors and suppliers to pursue bond claims rather than lien claims, which inures to the benefit of both the Owner and the lending syndicate.
We note that Virginia mechanics' lien law requires general contractors and subcontractors to provide certain notices to the property owner and among themselves as a condition to perfecting a lien. These notice requirements are separate from, and independent of, the claim procedures under the payment bond. The bond forms should not contain any provision purporting to waive or modify the statutory lien rights of subcontractors or suppliers, as such provisions could be unenforceable or could create unintended consequences under Virginia law.
VI. Review of Form of Performance Bond
A. General Format and Conformance
The form of performance bond received from Great Basin is a proprietary Great Basin form, rather than the AIA Document A312-2010 Performance Bond. While proprietary forms are not uncommon among large national sureties, we recommend that the Owner request that the bond be issued on the AIA A312-2010 form, which is the prevailing industry standard for construction performance bonds and provides a well-understood framework for claims administration. If Great Basin insists on using its proprietary form, the provisions should be compared on a section-by-section basis against the AIA A312-2010 to identify any material deviations. This comparison is underway and the results will be incorporated into the final version of this memorandum.
The key identifying information in the performance bond form is summarized as follows:
We note that the Obligee entity, Stonebridge Campus Holdings LLC, may not yet be formally organized as a Virginia limited liability company. The address and organizational details for Stonebridge Holdings should be updated upon its formation, which we understand is being coordinated by our corporate colleagues. The bond form should not be executed until the Obligee entity is duly formed under Virginia law.
B. Key Provisions Reviewed
The following key provisions of the performance bond form have been reviewed:
Triggering Events / Conditions to Claim. The performance bond provides that the Owner may make a claim upon the occurrence of a "Contractor Default" under the EPC Agreement, including the Contractor's failure to perform its obligations, abandonment of the work, or termination of the Contractor for cause. We have cross-referenced the definition of "Contractor Default" in the bond form against the corresponding default and termination provisions of the EPC Agreement (Articles 14 and 15). The definitions appear to be generally aligned, but we recommend that the bond form either incorporate the EPC Agreement's definitions by reference or be revised to use identical terminology to avoid any ambiguity. Specifically, the bond form uses the phrase "material breach" in describing one category of triggering events, whereas the EPC Agreement uses the phrase "Contractor Event of Default," which is a defined term encompassing specific categories of default. These terms should be harmonized.
Surety's Options Upon Default. Consistent with standard practice, the performance bond grants the Surety the following options upon a valid claim by the Owner:
(i) Arrange for the Contractor (TMCG) to complete performance of the EPC Agreement, with the Surety providing such financial or other assistance as may be necessary;
(ii) Undertake to complete the work itself through a qualified completion contractor selected by the Surety, subject to the Owner's reasonable approval of such completion contractor;
(iii) Obtain bids or proposals from qualified contractors for completion of the work and, upon the Owner's concurrence, arrange for a contract between such contractor and the Owner, with the Surety making available sufficient funds to pay the cost of completion less the balance of the GMP remaining unpaid; or
(iv) Waive its right to perform under options (i) through (iii) above and pay to the Owner the penal sum of the bond (or such lesser amount as may represent the Owner's actual damages, subject to the penal sum cap).
These options are generally consistent with the AIA A312-2010 Performance Bond framework and are acceptable. However, the bond form as drafted grants the Surety a period of sixty (60) calendar days from receipt of the Owner's notice of claim to investigate the claim and elect among the foregoing options. We have a concern that a sixty-day investigation and election period is excessive, particularly given the compressed construction schedule and the time-sensitive nature of data center development. Under the AIA A312-2010 standard, the investigation and response period is typically forty-five (45) days, and many owners negotiate this period down to thirty (30) days. We recommend that the investigation and election period be reduced to thirty (30) calendar days to ensure that any delay arising from a Contractor default is minimized and that the Surety's response timeline is consistent with the cure periods and termination timelines in the EPC Agreement. This recommendation is reflected in the identified issues in Section VI.C below.
Notice Requirements. The performance bond specifies that all notices and claims must be sent by certified mail, return receipt requested, or by nationally recognized overnight courier, to the addresses set forth in the bond form. We have confirmed that the notice addresses and delivery methods are generally consistent with the notice provisions of the EPC Agreement (Article 22), with one exception: the EPC Agreement also permits notice by electronic mail to specified email addresses, whereas the bond form does not. While we do not believe that this discrepancy is material (because a formal bond claim would typically be made in writing via hard copy), we recommend that the bond form be updated to permit electronic notice as a supplementary method of delivery, consistent with the EPC Agreement.
The bond form requires that the Owner provide the Surety with written notice of a claimed Contractor default within ninety (90) days after the Owner first becomes aware of the default. This notice deadline is important because a failure to provide timely notice could be raised by the Surety as a defense to a claim. We have confirmed that the ninety-day notice period is reasonable and consistent with industry practice, although we note that certain EPC Agreement provisions (such as the Contractor's right to cure certain defaults within thirty (30) days after notice from the Owner) may create a practical delay in the Owner's ability to make a final determination of default and provide notice to the Surety. We do not recommend a change to the ninety-day notice period, but the Owner should be advised of the importance of providing timely notice to the Surety in the event of any Contractor default.
Modifications / Change Orders. The bond form contains a provision stating that the bond automatically covers increases to the GMP resulting from change orders approved by the Owner in accordance with the EPC Agreement, provided that the cumulative increase in the GMP does not exceed twenty percent (20%) of the original GMP (i.e., the bond automatically adjusts up to a GMP of $494,400,000 without requiring a separate rider or endorsement). GMP increases in excess of the twenty percent threshold would require a formal bond rider or endorsement from the Surety, which may involve additional premium and underwriting review.
The twenty percent automatic adjustment threshold is within the range of market practice, although some sureties provide automatic adjustment up to twenty-five percent or without a cap. For a project of this size and complexity, where significant change orders are possible (particularly given the rapidly evolving technical specifications in the data center industry), we recommend negotiating for either (a) removal of the twenty percent cap entirely, or (b) an increase of the automatic adjustment threshold to at least twenty-five percent of the original GMP. This recommendation is reflected in Section VI.C below.
Duration / Term. The bond form provides that the performance bond remains in effect from the effective date of the bond through the date of "Final Acceptance" of the work by the Owner. The bond form defines "Final Acceptance" as the date on which the Owner issues a written certificate of final acceptance in accordance with the construction contract.
We have a concern that the bond's duration may not extend through the full warranty period under the EPC Agreement. As noted in Section III.B above, the EPC Agreement requires the Contractor to maintain bonds in full force and effect through the expiration of all warranty periods, which range from twelve (12) to twenty-four (24) months after Substantial Completion depending on the category of work. If "Final Acceptance" under the bond form occurs prior to the expiration of the warranty period (for example, if final acceptance occurs at or shortly after Final Completion, which precedes the expiration of the warranty period), there could be a gap in bond coverage during the warranty period. We recommend that the bond form be revised to provide that the bond remains in effect through the later of (a) Final Completion and acceptance of the work by the Owner, and (b) the expiration of all warranty periods under the EPC Agreement.
No-Offset Clause. The bond form includes a provision confirming that the Surety's obligations under the performance bond cannot be offset or reduced by any amounts that may be owed by the Owner to the Contractor under the EPC Agreement, including unpaid progress payments, retainage, or disputed amounts. This is an important protection for the Owner and is consistent with the AIA A312-2010 standard. No modification is recommended.
Governing Law. The bond form specifies that it is governed by and construed in accordance with the laws of the Commonwealth of Virginia, without regard to conflicts of law principles. This is consistent with the governing law provision of the EPC Agreement (Article 23) and is appropriate given that the Project is located in Virginia and the Obligee is a Virginia limited liability company. No modification is recommended.
C. Identified Issues / Recommended Modifications
Based on the foregoing review, the following issues have been identified with respect to the performance bond form, and the following modifications are recommended:
1. Surety Investigation and Election Period. The bond form provides the Surety with sixty (60) calendar days to investigate a claim and elect among its remedial options. We recommend that this period be reduced to thirty (30) calendar days from receipt of the Owner's notice of claim, consistent with the accelerated timelines typical of data center development and with the cure and termination periods under the EPC Agreement.
2. Definition of Triggering Events. The bond form uses the phrase "material breach" to describe certain triggering events, whereas the EPC Agreement uses the defined term "Contractor Event of Default." We recommend that the bond form be revised to incorporate or cross-reference the EPC Agreement's definitions to avoid ambiguity.
3. Change Order Coverage Threshold. The bond form automatically covers GMP increases up to twenty percent (20%) of the original GMP. We recommend negotiating for removal of this cap or, at minimum, an increase to twenty-five percent (25%).
4. Duration / Warranty Period Coverage. The bond form should be revised to provide that coverage extends through the later of (a) Final Completion and acceptance and (b) expiration of all warranty periods under the EPC Agreement (up to twenty-four (24) months after Substantial Completion).
5. Surety Consent to Collateral Assignment. The bond form does not include a consent to the collateral assignment of the Owner's rights under the bond to Summit National Bank, N.A. as Administrative Agent. A separate surety consent letter or endorsement is required.
6. Dual Obligee Rider. If required by the Construction Loan Agreement, a dual obligee rider naming Summit National Bank, N.A. as Administrative Agent as an additional obligee should be obtained from Great Basin.
7. Electronic Notice. The bond form should be updated to permit notice by electronic mail as a supplementary delivery method, consistent with the EPC Agreement.
VII. Review of Form of Payment Bond
A. General Format and Conformance
As with the performance bond, the form of payment bond received from Great Basin is a proprietary Great Basin form rather than the AIA Document A312-2010 Payment Bond. We recommend, consistent with the recommendation made above for the performance bond, that the Owner request issuance on the AIA A312-2010 form. If Great Basin insists on using its proprietary form, a section-by-section comparison against the AIA A312-2010 Payment Bond should be completed and any material deviations should be identified and negotiated.
The key identifying information in the payment bond form is summarized as follows:
The same observations regarding the formation status of Stonebridge Campus Holdings LLC and the need to update the Obligee's address apply equally to the payment bond form.
B. Key Provisions Reviewed
The following key provisions of the payment bond form have been reviewed:
Covered Claimants. The payment bond covers claims by "Claimants," which the bond form defines as any person or entity having a direct contract with TMCG (first-tier subcontractors and suppliers) or having a direct contract with a first-tier subcontractor of TMCG (second-tier subcontractors and suppliers) who has furnished labor, materials, or equipment used or reasonably required for use in the performance of the EPC Agreement. This definition is consistent with the AIA A312-2010 Payment Bond definition and covers the categories of claimants that are most likely to seek recovery on the Project.
We note that the bond form does not expressly extend coverage to third-tier and lower-tier subcontractors and suppliers — that is, entities that have contracted with second-tier subcontractors rather than directly with TMCG or a first-tier subcontractor. This limitation is standard in most payment bond forms and is generally considered acceptable. However, given the size and complexity of the Project, and the depth of the subcontracting chain that is typical in large-scale data center construction (where specialty equipment suppliers may be two or three tiers removed from the general contractor), the Owner may wish to consider whether broader claimant coverage is desirable. We flag this as a point for discussion but do not recommend a change at this time, as expanding the class of covered claimants could significantly increase the Surety's exposure and may not be commercially available at acceptable premium levels.
Claim Procedures. The payment bond requires Claimants to submit a written claim to the Surety and the Principal (TMCG) within one hundred twenty (120) days after the date on which the Claimant last performed labor or furnished materials for use in connection with the EPC Agreement. This 120-day period is within the range of industry practice (which typically ranges from 90 to 120 days) and is consistent with the AIA A312-2010 standard.
The bond form further provides that if the Surety does not pay or resolve a claim within sixty (60) days after receipt of the claim, the Claimant may institute an action against the Surety in any court of competent jurisdiction. The bond form specifies that any such action must be commenced within one (1) year after the date on which the Claimant last performed labor or furnished materials. This one-year limitation period is consistent with the AIA A312-2010 standard, although it is shorter than the general statute of limitations for breach of contract claims under Virginia law (five years under Virginia Code § 8.01-246(2) for written contracts). The shorter limitation period in the bond form is enforceable under Virginia law, provided that it is clearly stated and agreed to by the parties.
Notice requirements for second-tier claimants (i.e., entities that do not have a direct contract with TMCG) include a requirement that such claimants provide written notice to TMCG, the Surety, and the Owner within ninety (90) days after the date on which the claimant last performed labor or furnished materials. This preliminary notice requirement is a condition precedent to the second-tier claimant's right to recover under the bond and is consistent with standard payment bond practice.
Interplay with Virginia Mechanics' Lien Law. As discussed in Section V above, the payment bond supplements but does not displace the statutory mechanics' lien rights of subcontractors and suppliers under Virginia Code §§ 43-1 et seq. The bond form does not contain any provision purporting to waive or modify statutory lien rights, which is appropriate. The payment bond provides claimants with an alternative recovery mechanism that does not require the filing of a lien against the Project property, which serves the interests of both the Owner and the lending syndicate by reducing the risk of lien encumbrances on the Project site.
It bears noting that the deed of trust in favor of the construction lenders, which will be recorded prior to the commencement of construction, will be senior in priority to any mechanics' liens subsequently filed against the Project property. This priority structure means that, in a foreclosure scenario, the lenders' security interest would take precedence over the claims of lien claimants. The payment bond therefore provides an important layer of protection for the subcontractor and supplier community, incentivizing bond claims over lien claims and thereby reducing the practical risk of lien filings that could complicate the lenders' collateral position.
Modifications / Change Orders. The same analysis applicable to the performance bond applies to the payment bond. The payment bond form contains the same twenty percent (20%) automatic adjustment provision for GMP increases resulting from approved change orders. Our recommendation to negotiate for the removal or increase of this threshold applies equally to the payment bond.
Duration / Term. The payment bond form provides that it remains in effect for a period of one (1) year after the date of "Final Acceptance" of the work by the Owner. This one-year tail period is consistent with the AIA A312-2010 standard and provides a reasonable window for claimants to submit claims after the completion of the work. We recommend confirming that "Final Acceptance" under the bond form is defined consistently with the EPC Agreement's concept of "Final Completion" and that the one-year tail period is sufficient to satisfy the requirements of the Construction Loan Agreement.
Governing Law. The payment bond form, like the performance bond form, specifies Virginia law as the governing law, which is consistent with the EPC Agreement and appropriate for the Project. No modification is recommended.
C. Identified Issues / Recommended Modifications
Based on the foregoing review, the following issues have been identified with respect to the payment bond form, and the following modifications are recommended:
1. Claim Filing Deadlines. Confirm that the 120-day claim filing deadline and the one-year limitation period for bringing suit are consistent with Virginia norms and with the expectations of the Owner and the lending syndicate. While these periods are within standard industry ranges, the Owner may wish to extend the claim filing deadline to 150 days to provide additional protection to lower-tier claimants.
2. Exclusions. Review the payment bond form for any exclusions of specific classes of claimants (e.g., professional service providers, testing laboratories, or equipment lessors) that could leave certain Project participants without bond coverage. Any such exclusions should be identified and evaluated in the context of the Project's subcontracting structure.
3. Aggregate Exposure. The payment bond penal sum of $412,000,000 represents the aggregate limit of the Surety's liability under the payment bond. Confirm that this amount is sufficient to cover the anticipated subcontracting and supplier obligations under the EPC Agreement. Given that TMCG self-performs a limited portion of the work and subcontracts the substantial majority, the $412,000,000 penal sum (equal to 100% of the GMP) should provide adequate coverage.
4. Surety Financial Capacity. As noted in Section VIII below, Great Basin is providing both the performance bond and the payment bond, as well as the builder's risk policy, for the Project. The aggregate exposure to a single surety/insurer is significant, and the Surety's financial capacity to honor obligations under all three instruments simultaneously should be evaluated.
5. Change Order Coverage Threshold. Consistent with the recommendation for the performance bond, negotiate for removal or increase of the twenty percent automatic adjustment cap.
6. Surety Consent and Dual Obligee Rider. The same requirements applicable to the performance bond regarding surety consent to collateral assignment and the potential need for a dual obligee rider apply to the payment bond.
VIII. Surety Qualification and Financial Capacity
A. A.M. Best Rating
Both the EPC Agreement (Exhibit D) and the Construction Loan Agreement require that the surety issuing the performance bond and payment bond be rated at least "A-" with a Financial Size Category of at least "VIII" by A.M. Best Company. A Financial Size Category of VIII corresponds to a surplus of between $100 million and $250 million, which represents a minimum threshold of financial capacity for a surety providing bonds of the magnitude required for this Project.
We have not yet independently confirmed Great Basin's current A.M. Best rating. Our preliminary understanding, based on information provided by Northgate Insurance Brokerage, is that Great Basin is currently rated "A" (Excellent) with a Financial Size Category of "IX" (surplus of $250 million to $500 million), which would satisfy the contractual requirements. However, given the significance of this rating to the enforceability of the bonds and the compliance with both the EPC Agreement and the Construction Loan Agreement, we strongly recommend that the firm obtain a current rating confirmation letter or certificate directly from Great Basin, or independently verify the rating through A.M. Best's online rating service. This action item is reflected in Section X below.
B. Aggregate Exposure with Great Basin
A significant consideration in this review is the concentration of risk with Great Basin as a single surety/insurer across multiple lines of coverage for the Project. Specifically, Great Basin is providing:
(a) Performance Bond — $412,000,000 penal sum;
(b) Payment Bond — $412,000,000 penal sum; and
(c) Builder's Risk Insurance Policy — $412,000,000 coverage limit (with $250,000 per-occurrence deductible).
The aggregate potential exposure of Great Basin across all three instruments is substantial. While the performance bond and payment bond exposures are theoretical maximums (the actual liability under each bond is limited to the Owner's or claimants' actual damages, subject to the penal sum caps), and while the builder's risk exposure is subject to the occurrence of an insured loss, the simultaneous obligation to honor claims under multiple instruments could strain the Surety's financial capacity in a worst-case scenario.
We recommend the following measures to address this concentration risk:
1. Reinsurance Confirmation. Request confirmation from Great Basin (through Northgate Insurance Brokerage or directly) regarding the existence and adequacy of reinsurance arrangements supporting Great Basin's obligations under the bonds and the builder's risk policy. A reinsurance treaty or facultative placement that covers a substantial portion of Great Basin's exposure on this Project would provide additional comfort regarding the Surety's ability to perform.
2. Lender Input. Discuss the concentration issue with the lending syndicate and Redmond & Calloway LLP to determine whether the lenders have specific requirements or concerns regarding the single-surety/insurer structure. The lenders may require a diversification of surety or insurer exposure as a condition to the first advance or as an ongoing covenant.
3. Market Practice. Consult with William Keane at Northgate Insurance Brokerage regarding market practice for data center construction projects of this size. In our experience, it is not uncommon for a single surety to provide both the performance bond and payment bond, but the combination of bond exposure with builder's risk exposure through the same entity is less typical and warrants additional scrutiny.
C. Virginia Authorization
As discussed in Section V above, Great Basin must be licensed and authorized to transact surety business in the Commonwealth of Virginia. We recommend verifying Great Basin's authorization through the Virginia Bureau of Insurance, which is a division of the Virginia State Corporation Commission. The State Corporation Commission maintains an online database of authorized insurers and sureties, which can be searched by entity name or NAIC code. If Great Basin is not currently authorized in Virginia, the bonds may not be enforceable under Virginia law, and a substitute surety authorized to do business in Virginia would need to be engaged. This is a critical compliance item that should be confirmed at the earliest opportunity.
IX. Cross-Reference and Coordination Items
A. EPC Agreement Alignment
The bond forms must be fully coordinated with the EPC Agreement to avoid inconsistencies that could create ambiguity in claims administration or impair the Owner's rights under the bonds. The following alignment items have been identified:
1. Defined Terms. The bond forms should use defined terms that are consistent with, or incorporate by reference, the defined terms in the EPC Agreement. Key terms that must be aligned include "Substantial Completion," "Final Completion," "Contractor Event of Default," "Termination for Cause," "Change Order," "Guaranteed Maximum Price," and "Warranty Period." Any discrepancy between the bond form definitions and the EPC Agreement definitions could create gaps in coverage or disputes regarding the scope of the Surety's obligations.
2. Contract Reference. The bond forms should reference the correct EPC Agreement date (October 20, 2025, subject to confirmation upon execution) and the correct GMP amount ($412,000,000). These references should be verified prior to execution of the bonds.
3. Change of Control Provisions. The EPC Agreement contains change of control provisions that are relevant to the bond analysis. Specifically, the EPC Agreement provides that (a) TMCG has a consent right with respect to any change of control of the Owner entity, and (b) the Owner has a termination right in the event of a change of control of TMCG. It is important to confirm that the bond forms do not contain provisions that would release the Surety from its obligations in the event of a change of control of either the Owner or the Contractor. A change of control of TMCG, in particular, could affect the Surety's indemnity rights against the Principal, which could in turn affect the Surety's willingness to perform. The bond forms should be reviewed to confirm that the Surety's obligations are not conditioned on or affected by changes in the ownership or control of the Principal.
B. Construction Loan Agreement Alignment
The bond forms must also be coordinated with the Construction Loan Agreement to ensure that all conditions precedent, collateral requirements, and ongoing covenants are satisfied. The following alignment items have been identified:
1. Conditions Precedent. The bond forms, once finalized, must satisfy the conditions precedent set forth in the Construction Loan Agreement for the delivery of executed bonds. Lender's counsel (Redmond & Calloway LLP, Victor Redmond) should review and approve the final bond forms as part of the condition-precedent satisfaction process.
2. Surety Consent to Collateral Assignment. As discussed in Section IV.B above, the Collateral Assignment includes an assignment of the Owner's rights under the bonds. The bond forms must include, or be accompanied by, a surety consent to this assignment. This consent should be in a form satisfactory to the Administrative Agent and lender's counsel.
3. Dual Obligee Rider. If the Construction Loan Agreement requires a dual obligee rider naming Summit National Bank, N.A. as Administrative Agent, the rider should be obtained from Great Basin and attached to both bonds.
4. Change of Control / Mandatory Prepayment. The Construction Loan Agreement includes a mandatory prepayment trigger in the event that Ridgeline Capital Partners Fund IV, LP ceases to hold at least fifty-one percent (51%) of the equity interests in the Borrower or the Guarantor. This change of control provision operates at the equity sponsor level and is distinct from the EPC Agreement's change of control provisions, which operate at the Owner and Contractor entity levels. We should confirm that the bond forms do not contain provisions that would be triggered by, or create inconsistencies with, the Construction Loan Agreement's change of control / mandatory prepayment mechanism. In particular, if a mandatory prepayment event occurs and the construction loan is accelerated, the lenders (as assignees of the bonds under the Collateral Assignment) should retain the ability to make claims under the bonds to the same extent as the Owner.
C. Insurance Program Coordination
The bond review should be coordinated with the broader insurance program review being conducted in connection with the EPC Agreement and the Construction Loan Agreement:
1. Insurance Requirements Compliance Matrix. An Insurance Requirements Compliance Matrix comparing the insurance and bonding requirements of the EPC Agreement (Exhibit D) and the Construction Loan Agreement is being prepared separately. The bond review in this memorandum should be cross-referenced with that matrix to ensure consistency and to identify any gaps.
2. Bond / Builder's Risk Coordination. Both the performance bond and the builder's risk insurance policy are issued by Great Basin with coverage limits of $412,000,000. The performance bond does not include a deductible (the Surety's obligation under the performance bond is subject only to the penal sum cap), whereas the builder's risk policy has a $250,000 per-occurrence deductible. These instruments serve different purposes — the performance bond protects against Contractor default, while the builder's risk policy protects against physical loss or damage to the work during construction — but their interaction should be understood. For example, if a Contractor default results in damage to the work, the Owner may have claims under both the performance bond and the builder's risk policy. Coordination of these claims with a single surety/insurer may simplify administration but also raises the aggregate exposure concentration concern discussed in Section VIII.B above.
3. Certificate of Insurance Review. A separate Certificate of Insurance Review Letter is being prepared for delivery to TMCG requesting evidence of all required coverages under the EPC Agreement, including the bonds, CGL coverage (Pinnacle Indemnity Insurance Co., $150,000,000 per occurrence), and other required policies. The bond review in this memorandum should be coordinated with that letter to ensure that all bond-related documentary requirements are captured.
X. Open Items and Action Items
The following open items and action items have been identified and should be resolved prior to the execution of the EPC Agreement (target: October 20, 2025) and the issuance of the Notice to Proceed (target: November 1, 2025):
XI. Conclusion and Recommendation
Subject to the resolution of the open items identified in Section X above, the forms of performance bond and payment bond to be issued by Great Basin Surety & Insurance Corp. on behalf of Titan-McAllister Construction Group, LLC are substantially compliant with the requirements of (a) the EPC Agreement, including Exhibit D — Insurance Requirements, (b) the Construction Loan Agreement with Summit National Bank, N.A. as Administrative Agent, and (c) applicable Virginia law. The bond amounts are correct, the named parties are appropriate (subject to updating the Obligee entity details upon formation), and the general structure and provisions of both bonds are consistent with industry standards for construction bonds on projects of this type and scale.
However, as detailed in Sections VI.C, VII.C, VIII, and X of this memorandum, several modifications and clarifications are recommended to bring the bond forms into full alignment with the EPC Agreement and Construction Loan Agreement requirements, and to address identified risks relating to surety cure periods, change order coverage thresholds, bond duration, surety consent to collateral assignment, and aggregate exposure concentration.
We recommend the following next steps:
1. Circulation to Owner's Representative. The final bond forms, together with Calderwood & Harkness's recommended modifications, should be circulated to Kestrel Infrastructure Advisors, LLC (Diane Prescott, Owner's Representative) for project-level review and concurrence.
2. Circulation to Lender's Counsel. The bond forms should be circulated to Redmond & Calloway LLP (Victor Redmond) for lender's counsel review and sign-off, which is required as a condition precedent to the first construction loan advance.
3. Coordination with EPC Agreement Mark-Up. Cynthia Ho of Calderwood & Harkness is leading the negotiation and mark-up of the EPC Agreement. The bond review comments should be coordinated with her team to ensure that any modifications to the bond forms are reflected in conforming changes to the EPC Agreement (including Exhibit D) and vice versa.
4. Transmission of Comments. We request authority to transmit our comments and requested modifications to TMCG's counsel and to Great Basin (through Northgate Insurance Brokerage) as necessary to resolve the open items identified in this memorandum in advance of the October 20, 2025 EPC execution date.
We are available to discuss this memorandum and the recommended next steps at your convenience. Given the compressed timeline for EPC execution and construction loan closing, we recommend scheduling a call or meeting at the earliest practicable date to finalize the bond review and authorize the transmission of comments.
This memorandum is a draft prepared for internal use and is subject to revision. It is protected by the attorney-client privilege and the work product doctrine.
Appendices / Attachments (Referenced)
The following appendices and attachments are referenced in this memorandum:
Appendix A: Form of Performance Bond (Great Basin Surety & Insurance Corp.) — To be attached upon receipt of final form from Northgate Insurance Brokerage
Appendix B: Form of Payment Bond (Great Basin Surety & Insurance Corp.) — To be attached upon receipt of final form from Northgate Insurance Brokerage
Appendix C: Exhibit D to EPC Agreement — Insurance Requirements (cross-reference copy) — Attached
Appendix D: Relevant Excerpts from Construction Loan Agreement — Conditions Precedent (Section 4.02), Collateral Assignment (Section 5.14), and Bond Covenants (Section 6.08) — Attached
Calderwood & Harkness LLP | 1200 New York Avenue, N.W., Suite 800 | Washington, DC 20005 | (202) 555-4200
Term | Detail
Contract Type | Guaranteed Maximum Price (GMP)
GMP Amount | $412,000,000
Per-Building GMP Allocation | $103,000,000 per building (4 buildings)
Cost square Foot (GMP Basis) | $858.33 per square foot
Cost per MW (GMP Basis) | $4,291,667 per MW
Construction Duration | 24 months from Notice to Proceed
NTP Target Date | November 1, 2025
Substantial Completion — Building A | August 1, 2027
Substantial Completion — Buildings B, C, D | November 1, 2027
EPC Agreement Execution Target | October 20, 2025
Term | Detail
Facility Amount | $390,000,000
Administrative Agent & Lead Arranger | Summit National Bank, N.A. (Karen Ellsworth, Managing Director, Real Estate Finance)
Syndicate Participant — Summit National Bank, N.A. | $180,000,000 (46.15%)
Syndicate Participant — Cascade Commercial Lending Corp. | $130,000,000 (33.33%)
Syndicate Participant — Harborview Trust Company | $80,000,000 (20.51%)
Lender's Counsel | Redmond & Calloway LLP (Victor Redmond, Partner)
Construction Loan Closing Target | October 15, 2025
Element | As Stated in Bond Form | Conformance
Penal Sum | $412,000,000 | Confirmed — matches 1

ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP INTERNAL MEMORANDUM

MATTER NO.: 1043-00002

Record

Parties

Dates

Amounts