Karen,
I write as counsel to Ironhaven Data Centers LLC ("IHDC") in connection with the proposed $390,000,000 senior secured construction loan facility for the Stonebridge Data Center Campus in Loudoun County, Virginia (C&H Matter No. 1043-00002; Summit Loan Commitment Reference CL-2025-VA-04418). We have completed our review of the term sheet circulated by Summit National Bank and Redmond & Calloway LLP on July 7, and I am pleased to transmit the attached redline markup and accompanying comment letter setting forth our proposed modifications. The comments have been reviewed and approved by the IHDC client team, including Priya Dasgupta (CFO) and Leonard Castellano (EVP, Development). We appreciate the collaborative approach you and Victor have taken throughout this process, and we remain focused on working toward execution of the commitment letter by the August 1, 2025 target date.
Our comments are organized by topic below. The attached redline and comment letter provide the full detail, but the following summary should facilitate your initial review.
**1. Change of Control Definition**
We acknowledge the mandatory prepayment trigger upon a "change of control" of the borrower (Stonebridge Campus Holdings LLC) or the guarantor (IHDC), and we understand the proposed definition — any transfer resulting in Ridgeline Capital Partners Fund IV, LP ("RCP Fund IV"), directly or indirectly, ceasing to hold at least 51% of the equity interests in the borrower or guarantor. We propose two modifications:
(a) The term "indirect" transfers should be measured only at the level of RCP Digital Holdings LLC (the intermediate holding company) and IHDC, and should not sweep in upstream fund-level transfers within the broader Ridgeline Capital Management LLC fund structure that do not affect the control chain below those entities. As drafted, the definition is overbroad and could be triggered by routine fund-level portfolio management or GP-level restructurings that have no bearing on the governance or capitalization of the project.
(b) We request a carve-out for permitted transfers among Ridgeline-affiliated funds (for example, transfers to successor funds managed by Ridgeline Capital Management LLC) and transfers to IHDC management through the existing profits-interest vehicle (Ironhaven Management Incentive Pool LLC, which currently holds the remaining 8%), in each case provided that RCP Fund IV (or its Ridgeline-managed affiliates) continues to hold at least 51%.
I also want to flag a coordination issue. The change of control definition in the term sheet will need to be harmonized with parallel provisions in the EPC Agreement with Titan-McAllister Construction Group, LLC (which contains a contractor consent right upon change of control of the owner) and the Large Load Service Agreement with Vantage Power Cooperative (which contains a termination right). Our goal is to avoid a circumstance in which a transfer that is permitted under the loan documents inadvertently triggers a cross-default or termination right under a project document that has been collaterally assigned to the lender. We are preparing a separate coordination memorandum on this point and will circulate it to all parties shortly.
**2. Borrower Entity and Structure**
We confirm that the borrower will be Stonebridge Campus Holdings LLC, a to-be-formed single-purpose Virginia limited liability company, wholly owned by IHDC. The articles of organization and operating agreement — incorporating customary single-purpose entity and separateness covenants — are being finalized and will be provided for lender review in advance of closing. We also confirm that IHDC will serve as guarantor, providing both a completion guaranty and a carry/payment guaranty.
**3. Facility Size and Syndicate**
We confirm our understanding of the $390,000,000 facility size, with Summit National Bank holding $180,000,000 (46.15%), Cascade Commercial Lending Corp. holding $130,000,000 (33.33%), and Harborview Trust Company holding $80,000,000 (20.51%). We have no objection to the syndicate composition.
**4. Interest Rate and Fees**
We acknowledge the proposed pricing at Term SOFR + 285 basis points with a SOFR floor of 0.50%, the 0.50% per annum unused commitment fee on undrawn commitments, and the 1.00% arrangement fee ($3,900,000). We have no substantive comments on pricing at this time. However, we do request confirmation of the SOFR determination methodology — specifically, whether the reference rate is 1-month or 3-month Term SOFR and the applicable lookback period — so that we can build the correct mechanics into the credit agreement drafting.
**5. Draw Period, Maturity, and Extension Option**
We acknowledge the 36-month draw period from the date of first advance and the 48-month maturity from closing. With respect to the 12-month extension option, we request the following clarifications and modifications:
(a) The extension conditions should not include a "no material adverse change" condition. In the alternative, if Summit requires a MAC-based condition, we propose that it be narrowly defined to encompass borrower-specific financial and project conditions (e.g., material deterioration in borrower's or guarantor's financial condition, material project cost overruns) rather than general market conditions, which are outside the borrower's control.
(b) We request that the extension fee, if any, be specified in the term sheet. We propose a cap of 0.25% of outstanding principal at the time of extension exercise.
(c) We propose that exercise of the extension be subject only to: (i) no event of default, (ii) payment of the extension fee, and (iii) delivery of an updated budget and construction schedule — and should not be subject to lender re-underwriting or the exercise of lender discretion.
**6. Minimum Equity Contribution Before First Draw**
We acknowledge the requirement that 25% of total equity ($52,500,000 out of $210,000,000 total equity) must be contributed before the first loan advance. We propose that equity already expended on land acquisition costs and pre-development soft costs count toward satisfaction of this requirement. Total land cost is $77,900,000, consisting of $58,500,000 for the Stonebridge Parcel and $19,400,000 for the Meridian Parcel. Both land closings are targeted for September 15, 2025 — one month prior to the October 15, 2025 loan closing target — meaning a substantial portion of the equity requirement will have been deployed well before the first draw request is submitted.
We request confirmation that equity contributions will be tracked on a cumulative basis from project inception, not solely from the loan closing date. This is consistent with the economic reality of the capital structure and standard market practice for sponsor-funded land acquisitions preceding construction loan closings.
**7. Draw Conditions**
We request that conditions to each draw advance be limited to customary construction loan conditions:
- Delivery of a draw request with supporting invoices and conditional lien waivers (unconditional waivers for previously funded amounts). - Confirmation of no event of default. - Updated title endorsement (date-down from Fidelitas Title & Escrow, Inc. / Sovereign Title Insurance Company). - Inspection report from lender's construction consultant (or, if acceptable to Summit, from the owner's representative, Kestrel Infrastructure Advisors, LLC). - Confirmation that the loan-to-cost ratio does not exceed 65%.
We object to any requirement that the borrower re-certify all representations and warranties in their entirety with each draw. We propose instead a bring-down limited to the material accuracy of the representations and warranties as of the draw date and the absence of any material adverse change in the financial condition of the borrower or guarantor. A full re-certification with every monthly requisition is operationally burdensome and inconsistent with market practice for facilities of this type.
With respect to hard-cost draws, we propose that the requisition process follow the payment application schedule set forth in the EPC Agreement with Titan-McAllister, including the applicable retainage structure (10% retainage until 50% completion, 5% thereafter).
**8. Financial Covenants**
We acknowledge the loan-to-cost ratio covenant of ≤ 65% and the debt service coverage ratio requirement of ≥ 1.25x at stabilization. We note that the DSCR covenant should be tested only post-stabilization, which we define as 85% leased (targeted for Q2 2028), and should not apply during the construction period when the project is not generating revenue. We also request that the LTC calculation methodology be specified in the term sheet — in particular, whether the denominator includes all project costs (hard costs, soft costs, financing costs, reserves) or only hard costs, and how contingency and reserve line items are treated.
**9. Collateral Package**
We confirm our understanding of the collateral package: first-priority deed of trust on both campus parcels (Stonebridge and Meridian, each in Loudoun County), assignment of leases and rents, pledge of 100% of borrower membership interests, assignment of the EPC Agreement with Titan-McAllister, assignment of the LLSA with Vantage Power Cooperative, and assignment of architect agreements and permits.
Two coordination items:
First, the collateral assignment of the EPC Agreement will require Titan-McAllister's consent to assignment. We are currently negotiating the consent-to-assignment provisions in the EPC Agreement with Titan-McAllister's counsel (Raymond Okafor and Michelle Tran), and we will keep Summit and Redmond & Calloway informed of progress on that front.
Second, the collateral assignment of the LLSA will similarly require Vantage Power Cooperative's consent, which we will pursue in parallel.
We also request that the deed of trust include standard carve-outs for lender's consent to easements, specifically: (i) the substation easement in favor of VPC on the Meridian Parcel and (ii) the cross-access and utility easements between the Stonebridge and Meridian Parcels. These easements are integral to the project's infrastructure and will need to be recorded in the ordinary course of development.
**10. Conditions Precedent to Closing — ZMOD Approval Sequencing**
The term sheet lists ZMOD approval as a condition precedent to loan closing. We want to flag a sequencing issue. Land closings are targeted for September 15, 2025, the loan closing target is October 15, 2025, and the ZMOD application (expected Docket No. ZMOD-2025-0038) is scheduled for hearing before the Loudoun County Board of Supervisors in October 2025. Depending on the Board's hearing calendar, ZMOD approval may occur very close to — or potentially shortly after — the loan closing target date.
We propose one of two approaches: (a) a mechanism for conditional closing with a post-closing ZMOD approval covenant and a defined cure period (e.g., 30 days post-closing), during which draw requests would be limited to soft costs and pre-construction activities; or (b) extension of the outside closing date to November 15, 2025 to accommodate the ZMOD timeline. We are open to discussing other structures that address Summit's underwriting requirements while preserving schedule flexibility.
For context, our firm and Ashcroft & Wynn, P.C. (Thomas Ashcroft, local zoning counsel) are confident the ZMOD application will proceed on schedule for the October hearing. Cornerstone Land Use Consulting, LLC (Alan Mercer) has confirmed, based on the pre-application conference with Loudoun County staff, that there are no material entitlement risks.
**11. Insurance Requirements**
We are coordinating with Northgate Insurance Brokerage, LLC (William Keane) to ensure the insurance program satisfies lender requirements. Builder's risk coverage of $412,000,000 has been secured through Great Basin Surety & Insurance Corp. with a $250,000 deductible per occurrence. We are also evaluating an Owner-Controlled Insurance Program (OCIP), which preliminary analysis suggests could yield 12–15% savings over the traditional program structure; we will provide Summit with program details once finalized.
We request that Summit provide its detailed insurance requirements at the earliest opportunity so that we can cross-reference them against the EPC Agreement's Exhibit D insurance specifications and prepare a comprehensive compliance matrix for all parties' review.
**12. Environmental**
Phase I Environmental Site Assessments on both parcels have been completed by Pendleton Environmental Associates, Inc. (Dr. Renata Volkov). A Phase II ESA for the Stonebridge Parcel — addressing potential residual pesticide contamination in the approximately 4.2-acre northwest quadrant attributable to former agricultural use — was completed as of July 1, 2025. We will share the Phase II results with Summit and Redmond & Calloway once the environmental indemnity agreement is finalized. The environmental indemnity agreement (joint and several from Stonebridge Campus Holdings LLC and IHDC) is currently in draft and will be circulated to Victor and his team shortly.
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I have attached the following for your review:
1. Redline markup of the Construction Loan Term Sheet (Word) 2. Comment letter summarizing C&H's proposed modifications (PDF) 3. Updated project timeline and milestone schedule (PDF), reflecting key dates including the September 15, 2025 land closings, October 2025 ZMOD approval, October 15, 2025 loan closing, and November 1, 2025 NTP
We would welcome a call early next week — ideally with you, Victor, and the IHDC team — to walk through these comments and identify a path toward finalizing the commitment letter by August 1. I am happy to circulate a proposed agenda in advance to make the best use of everyone's time.
Thank you, Karen, and thank you, Victor, for the constructive engagement throughout this process. We look forward to continuing to work together on this.
Best regards,
Douglas R. Fairchild Partner Calderwood & Harkness LLP 1900 K Street NW, Suite 800 Washington, DC 20006 T: (202) 555-4100 E: dfairchild@calderwoodharkness.com
*Cynthia Ho (Lead Associate, cho@calderwoodharkness.com, (202) 555-4127) will serve as the day-to-day contact for document exchange and scheduling.*