MEMORANDUM
PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION
TO: Douglas Fairchild, Responsible Partner, Real Estate, Calderwood & Harkness LLP
FROM: Cynthia Ho, Lead Associate, Real Estate, Calderwood & Harkness LLP
DATE: March 20, 2025
RE: Stonebridge Data Center Campus — Project Entity Structure and Formation Recommendations
MATTER NO.: 1043-00002
CLIENT: Ironhaven Data Centers LLC
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I. Executive Summary
The purpose of this memorandum is to recommend and analyze the entity structure for the Stonebridge Data Center Campus (the "Stonebridge Campus" or the "Project"), a $600,000,000 ground-up data center development located in Loudoun County, Virginia. The Project represents a significant capital deployment by our client, Ironhaven Data Centers LLC ("IHDC"), and its ultimate equity sponsor, Ridgeline Capital Partners Fund IV, LP ("Ridgeline Fund IV"), and the organizational structure selected for the project-level entity will have cascading implications across the financing, construction, tax, and risk management dimensions of the transaction.
Our central recommendation is the formation of Stonebridge Campus Holdings LLC, a Virginia limited liability company, as the single-purpose borrower entity to hold the campus real property and serve as the counterparty to the construction loan, the engineering, procurement, and construction ("EPC") contract, and the utility service agreements. Stonebridge Campus Holdings LLC will be wholly owned by IHDC, which will serve as its sole member. This structure positions IHDC as the intermediate parent and guarantor while maintaining the project-level entity as a bankruptcy-remote, single-purpose vehicle consistent with market-standard project finance requirements.
This memorandum addresses the following principal topics:
• The full ownership chain from Ridgeline Capital Partners Fund IV, LP down through the project-level entity, including the intermediate holding company RCP Digital Holdings LLC and the management incentive vehicle Ironhaven Management Incentive Pool LLC;
• The rationale for selecting a Virginia limited liability company as the project-level entity, including considerations relating to real property conveyancing, lender preferences, and administrative simplicity;
• Single-purpose entity ("SPE") requirements anticipated from the construction lenders, namely Summit National Bank, N.A. (as Administrative Agent) and the lending syndicate comprising Cascade Commercial Lending Corp. and Harborview Trust Company;
• Formation mechanics, including the Articles of Organization, Operating Agreement, EIN application, and related authority documentation;
• The interaction between the entity structure and the anticipated collateral package for the construction financing; and
• Recommended next steps and open items requiring resolution prior to the April and September 2025 milestones.
The structure is specifically designed to satisfy anticipated lender requirements for a bankruptcy-remote, single-purpose borrower, preserve liability isolation between the Project and IHDC's existing data center portfolio, facilitate the Virginia data center sales tax exemption analysis under Va. Code § 58.1-609.3(18), and maintain flexibility for Ridgeline Capital Partners Fund IV, LP's fund-level investment management and potential future disposition strategies. We believe this structure is well aligned with current market practice for project-financed data center developments of comparable scale in the Northern Virginia corridor.
II. Background — Project Overview
To provide context for the entity structure analysis, we summarize below the key parameters of the Stonebridge Data Center Campus development.
Project Name: Stonebridge Data Center Campus
Location: The Project is situated at the northeast corner of Belmont Ridge Road and Stonebridge Boulevard, in unincorporated Loudoun County, Virginia 20148. The campus will comprise two contiguous parcels totaling approximately 81.4 acres:
• Stonebridge Parcel: 62.0 acres, Loudoun County Tax Map Reference /95-4A-1///, to be acquired from Blackthorn Realty Group, Inc. for a purchase price of $58,500,000; and
• Meridian Parcel: 19.4 acres, Loudoun County Tax Map Reference /95-4A-2///, to be acquired from Meridian Acres LLC for a purchase price of $19,400,000.
The combined land acquisition cost is $77,900,000. Both parcels are located within a portion of Loudoun County that has become a nationally recognized hub for data center development, with access to diverse fiber routes, multiple utility substations, and favorable zoning classifications.
Total Budget: The Project has a total development budget of $600,000,000, allocated as follows:
Capacity: Upon full build-out, the Stonebridge Campus will deliver 96 MW of critical IT load across four data center buildings (Buildings A through D), each designed to provide 24 MW of critical IT load. The total gross floor area of the campus is approximately 480,000 square feet. The design contemplates Tier III equivalent redundancy with concurrent maintainability across all critical systems.
Capital Stack: The Project will be capitalized with a combination of equity and senior secured construction debt as follows:
• Equity: $210,000,000 (35% of total project cost), contributed by Ridgeline Capital Partners Fund IV, LP through its wholly owned subsidiary RCP Digital Holdings LLC and, in turn, through IHDC to the project-level entity.
• Senior Secured Construction Loan: $390,000,000 (65% of total project cost), to be provided by a lending syndicate led by Summit National Bank, N.A. as Administrative Agent. The syndicate composition and individual commitments are as follows:
• Summit National Bank, N.A. — $180,000,000 (Administrative Agent)
• Cascade Commercial Lending Corp. — $130,000,000
• Harborview Trust Company — $80,000,000
Key Parties: The following parties are central to the Project and will interact directly or indirectly with the project-level entity:
• Blackthorn Realty Group, Inc. — Seller of the Stonebridge Parcel (62.0 acres; purchase price: $58,500,000)
• Meridian Acres LLC — Seller of the Meridian Parcel (19.4 acres; purchase price: $19,400,000)
• Titan-McAllister Construction Group, LLC ("TMCG") — EPC Contractor under a Guaranteed Maximum Price contract ($412,000,000 GMP)
• Vantage Power Cooperative ("VPC") — Utility provider under a Large Load Service Agreement ("LLSA") for 120 MVA of electrical service on a 10-year term (VPC Service Application No. LSA-2025-0091)
• Summit National Bank, N.A. — Administrative Agent and lead lender under the construction loan
• Sovereign Title Insurance Company — Title insurer (through Fidelitas Title & Escrow, Inc. as issuing agent)
Key Milestones: The Project timeline contemplates the following critical dates:
The entity formation and organizational documentation discussed in this memorandum should be completed well in advance of the PSA execution dates to provide maximum flexibility with respect to the identity of the purchasing entity and the mechanics of any assignment.
III. Current Ownership Structure of IHDC
Understanding the full ownership chain above the project-level entity is essential for structuring the entity correctly, satisfying lender change-of-control requirements, and ensuring that the flow of equity capital from Ridgeline Fund IV to the Project is properly documented. Set forth below is a description of each entity in the ownership chain, from the fund level down to the client.
A. Ridgeline Capital Partners Fund IV, LP
Ridgeline Capital Partners Fund IV, LP is a Delaware limited partnership with approximately $3.8 billion in committed capital from institutional limited partners. Ridgeline Fund IV is the ultimate equity sponsor of the Project and the source of the $210,000,000 equity contribution. The fund focuses on digital infrastructure, data centers, and adjacent technology real estate investments across the United States.
The general partner of Ridgeline Fund IV is Ridgeline Capital Management LLC, a Delaware limited liability company. Ridgeline Capital Management LLC is responsible for all investment decisions, capital allocation, and fund-level management on behalf of Ridgeline Fund IV.
The managing partner relevant to the Stonebridge Campus investment is Julian Hargrove, who leads the data center vertical within Ridgeline Capital Management LLC. The Stonebridge Campus investment has been assigned Ridgeline Fund IV Investment ID: RCP-IV-2025-DC-07. The expected total equity contribution for the Stonebridge Campus is $210,000,000, representing the entirety of the non-debt portion of the capital stack.
B. RCP Digital Holdings LLC
RCP Digital Holdings LLC is a Delaware limited liability company that serves as the intermediate holding company between Ridgeline Fund IV and IHDC. RCP Digital Holdings LLC is wholly owned by Ridgeline Capital Partners Fund IV, LP and holds 92% of the membership interests in IHDC.
The purpose of RCP Digital Holdings LLC is to aggregate Ridgeline Fund IV's digital infrastructure and data center investments in a dedicated holding vehicle, thereby facilitating portfolio-level management, consolidated financial reporting across the digital infrastructure vertical, and potential future dispositions of individual platform companies or portfolios of assets. This intermediate holding structure is consistent with standard institutional private equity practice, where fund-level limited partnerships hold platform investments through one or more intermediate vehicles organized around investment themes or sectors.
C. Ironhaven Management Incentive Pool LLC
Ironhaven Management Incentive Pool LLC is a Delaware limited liability company that holds the remaining 8% membership interest in IHDC. This entity serves as the management profits interest and carried-interest vehicle for IHDC's senior management team, designed to align management incentives with fund-level returns and promote long-term value creation across the IHDC portfolio.
The participants in the Ironhaven Management Incentive Pool LLC include the following senior IHDC personnel:
• Marcus Thorne — Chief Executive Officer
• Priya Dasgupta — Chief Financial Officer
• Leonard Castellano — Executive Vice President, Development
• Other senior IHDC personnel as designated under the Incentive Pool LLC's operating agreement
The 8% interest held by the Incentive Pool LLC consists of profits interests (as that term is understood under Revenue Procedure 93-27 and subsequent IRS guidance), which participate in distributions above certain return thresholds as defined in the IHDC Operating Agreement. The structure of these profits interests is not directly relevant to the formation of the project-level entity, but it is noted here for completeness and because the lender's change of control analysis will examine the full ownership chain.
D. Ironhaven Data Centers LLC
Ironhaven Data Centers LLC is a Delaware limited liability company headquartered at 44680 Prentice Drive, Suite 200, Ashburn, Virginia 20147. IHDC is registered with the Virginia State Corporation Commission under Entity ID S7491283 and holds Employer Identification Number 84-3291057.
IHDC currently operates three existing data center facilities in Northern Virginia totaling approximately 42 MW of critical IT load. These existing facilities are held directly by IHDC or through other project-level subsidiaries not relevant to this memorandum. IHDC is an established operator in the Northern Virginia data center market and brings significant institutional knowledge, vendor relationships, and operational expertise to the Stonebridge Campus development.
For purposes of the Stonebridge Campus, IHDC will serve in two critical capacities:
1. Sole Member: IHDC will be the sole member of the to-be-formed Stonebridge Campus Holdings LLC, with 100% of the membership interests in the project-level entity.
2. Guarantor: IHDC will provide a completion guaranty and a carry guaranty (also referred to as a payment guaranty for interest and carrying costs) to the construction lenders. These guaranties will be direct obligations of IHDC, not of Stonebridge Campus Holdings LLC, and will be secured in part by the pledge of IHDC's 100% membership interest in the project-level entity.
E. Ownership Diagram
The following text-format diagram illustrates the complete ownership chain from the fund level down to the project-level entity:
Ridgeline Capital Partners Fund IV, LP (Delaware LP) GP: Ridgeline Capital Management LLC (Delaware LLC)
↓ 100% ownership
RCP Digital Holdings LLC (Delaware LLC — Intermediate Holdco)
↓ 92% membership interest
Ironhaven Management Incentive Pool LLC (Delaware LLC)
↓ 8% membership interest (profits interests)
→ Ironhaven Data Centers LLC (Delaware LLC; HQ: Ashburn, VA) Virginia SCC ID: S7491283
↓ 100% ownership — Sole Member
STONEBRIDGE CAMPUS HOLDINGS LLC (Virginia LLC — To Be Formed) Single-Purpose Borrower Entity
This ownership chain reflects a straightforward fund-to-project structure with only two intervening entities between the fund (Ridgeline Fund IV) and the project-level borrower (Stonebridge Campus Holdings LLC). The structure is intentionally lean, which simplifies the change of control analysis, reduces administrative burden, and facilitates the efficient flow of equity capital from the fund to the Project.
IV. Recommended Structure — Formation of Stonebridge Campus Holdings LLC
A. Overview and Rationale
We recommend the formation of a new Virginia limited liability company to serve as the project-level entity for the Stonebridge Campus. The key attributes of the recommended entity are as follows:
• Entity Name: Stonebridge Campus Holdings LLC
• Entity Type: Virginia limited liability company, formed under the Virginia Limited Liability Company Act, Va. Code § 13.1-1000 et seq.
• Jurisdiction of Formation: Commonwealth of Virginia
• Sole Member: Ironhaven Data Centers LLC
• Purpose: Serve as the single-purpose borrower and project-level entity for the Stonebridge Data Center Campus, including the ownership, development, construction, operation, leasing, and management of the campus real property and all activities incidental thereto
• EIN: To be obtained upon formation through IRS Form SS-4
The selection of Virginia as the jurisdiction of formation is driven by several considerations. First, the Project is located in Loudoun County, Virginia, and the project-level entity will hold fee simple title to the campus parcels. Forming the entity in the situs state simplifies real property conveyancing by eliminating any need for foreign qualification of the property-owning entity and ensures that the entity is subject to the same legal framework that governs its real property interests. Second, construction lenders in real estate project finance transactions generally prefer (and in many cases require) that the borrower entity be organized under the laws of the state in which the collateral real property is situated. Based on our preliminary discussions with Karen Ellsworth at Summit National Bank, N.A. and our review of the indicative term sheet, we anticipate that this preference will be reflected in the construction loan documentation. Third, forming the entity in Virginia avoids the need for foreign qualification filings, annual report fees in a second jurisdiction, and the administrative complexity of maintaining good standing in both a formation state and a qualification state. Finally, the Virginia Limited Liability Company Act provides a flexible and well-developed statutory framework for single-member manager-managed LLCs, and Virginia practitioners and courts are well familiar with the types of SPE covenants and operating agreement provisions that will be required here.
B. Roles and Contractual Relationships of Stonebridge Campus Holdings LLC
Upon formation, Stonebridge Campus Holdings LLC will serve as the central project-level entity through which all major contractual relationships for the Stonebridge Campus will be established and maintained. The entity will occupy the following roles:
Real Property Owner. Both the Stonebridge Parcel (62.0 acres) and the Meridian Parcel (19.4 acres) will be conveyed to Stonebridge Campus Holdings LLC at the land closings currently scheduled for September 15, 2025. The Stonebridge Parcel will be conveyed via special warranty deed from Blackthorn Realty Group, Inc., and the Meridian Parcel will be conveyed via special warranty deed from Meridian Acres LLC. The purchase and sale agreements for each parcel will initially be executed by IHDC (with assignment rights), and IHDC will assign and assume the PSAs to Stonebridge Campus Holdings LLC prior to the scheduled land closings. The mechanics and timing of these assignments are discussed further in Section X below.
Borrower. Stonebridge Campus Holdings LLC will be the borrower under the $390,000,000 senior secured construction loan agreement with Summit National Bank, N.A. as Administrative Agent and the lending syndicate. As borrower, Stonebridge Campus Holdings LLC will be obligated for all principal, interest, fees, and other amounts payable under the construction loan and will grant the collateral security described in Section VII below.
Owner/Developer under EPC Contract. Stonebridge Campus Holdings LLC will be the counterparty to the Engineering, Procurement, and Construction Agreement with Titan-McAllister Construction Group, LLC. The EPC Agreement will be structured on a Guaranteed Maximum Price basis with a GMP of $412,000,000 and will govern the design, engineering, procurement, construction, testing, and commissioning of all four data center buildings and associated campus infrastructure.
Service Agreement Counterparty. Stonebridge Campus Holdings LLC will be the counterparty under the Large Load Service Agreement with Vantage Power Cooperative for the provision of 120 MVA of electrical service to the campus on a 10-year term. The LLSA has been assigned VPC Service Application No. LSA-2025-0091. The LLSA will govern the terms and conditions of electrical service delivery, including substation construction, metering, rate schedules, and service reliability commitments.
Grantor under Deed of Trust. Stonebridge Campus Holdings LLC will grant a first-priority deed of trust on both campus parcels in Loudoun County, Virginia, in favor of a trustee for the benefit of Summit National Bank, N.A. as Administrative Agent, securing all obligations under the construction loan.
Easement Grantor/Grantee. Stonebridge Campus Holdings LLC will be a party to cross-access and utility easements between the Stonebridge Parcel and the Meridian Parcel, ensuring unified campus operations and infrastructure connectivity between the two parcels. In addition, Stonebridge Campus Holdings LLC will grant a substation easement on the Meridian Parcel in favor of Vantage Power Cooperative to accommodate VPC's construction and operation of a dedicated electrical substation serving the campus.
By consolidating all of these contractual relationships in a single project-level entity, the structure provides clarity for lenders, contractors, and utility providers as to the identity of their counterparty and ensures that all project-level assets, revenues, and obligations are housed in one vehicle.
C. Benefits of the Structure
The formation of Stonebridge Campus Holdings LLC as a Virginia single-purpose entity wholly owned by IHDC offers the following principal benefits:
1. Liability Isolation. The single-purpose entity structure shields IHDC's existing three data center facilities (totaling 42 MW of critical IT load) and other corporate assets from project-level construction risks, including construction defect claims, contractor liens, environmental liabilities, and general operational risks associated with the Stonebridge Campus. In the event of a casualty, default, or other adverse event at the project level, IHDC's other assets and operations would not be directly exposed to claims of Stonebridge Campus Holdings LLC's creditors (subject, of course, to IHDC's guaranty obligations). Conversely, the project-level entity's assets are insulated from any claims against IHDC arising from its other operations, which is of particular importance to the construction lenders in evaluating their collateral position.
2. Lender Requirements. The structure satisfies expected SPE covenants from Summit National Bank, N.A. and the lending syndicate. As discussed in greater detail in Section V below, construction lenders in project finance transactions of this magnitude routinely require the borrower to be organized and operated as a single-purpose entity with specific organizational covenants designed to reduce bankruptcy risk and prevent substantive consolidation with affiliates. The formation of a new, clean entity with no prior operating history, liabilities, or contractual obligations ensures that the SPE covenants can be embedded in the entity's organizational documents from inception.
3. Clean Collateral Package. The structure provides lenders with a first-priority lien on the campus parcels and associated personal property without competition from IHDC's other creditors or operations. Because Stonebridge Campus Holdings LLC will have no assets other than the campus real property and related project assets, and no liabilities other than those arising from the construction loan and project-level obligations, the lenders' collateral package will be free from the complexity and risk associated with lending to a multi-asset operating company.
4. Transactional Efficiency. The single-purpose entity structure facilitates potential future sale, refinancing, or securitization of the campus as a standalone asset. If Ridgeline Fund IV or IHDC determines at any future date that it wishes to sell the Stonebridge Campus, the transaction can be structured as a sale of the membership interests in Stonebridge Campus Holdings LLC (a "change of control" transaction) or a sale of the underlying real property assets, in each case without the need to disentangle the campus from IHDC's other operations or assets. This flexibility is particularly valuable in the data center sector, where asset-level and platform-level transactions are common and significant premium values may be achieved through a well-structured disposition process.
5. Tax Planning. The formation of a dedicated project-level entity enables the structuring of pass-through tax elections at the entity level and facilitates the qualification analysis for the Virginia data center sales tax exemption under Va. Code § 58.1-609.3(18). The exemption requires, among other things, a minimum capital investment of $150,000,000 over a five-year period and the creation of a minimum of 50 new jobs. The estimated sales tax savings associated with the exemption are approximately $15,900,000 over the qualification period. Detailed analysis of the tax classification election (disregarded entity versus partnership treatment), the sales tax exemption qualification, and related tax matters will be provided by Sylvia Hartwell in separate memoranda. The entity structure recommended herein is designed to preserve flexibility for those analyses and to avoid any structural impediments to achieving optimal tax positioning.
6. Title Insurance. Owner's title insurance policies to be issued by Sovereign Title Insurance Company (through Fidelitas Title & Escrow, Inc. as issuing agent) will name Stonebridge Campus Holdings LLC as the insured owner of the campus parcels. The lender's title insurance policy, in an amount not less than $390,000,000, will name Summit National Bank, N.A. as Administrative Agent as the insured lender. Having a single, clean project-level entity as the record owner of both parcels simplifies the title insurance underwriting process and avoids the complications that can arise when multiple entities or individuals hold interests in the insured real property.
V. Single-Purpose Entity Covenants — Construction Lender Requirements
A. General SPE Framework
Construction lenders in project-finance transactions of this scale routinely require the borrower to be organized and operated as a "single-purpose entity" or "special purpose entity." The SPE framework is a cornerstone of real estate project finance and is designed to achieve two fundamental objectives. First, the SPE covenants reduce the risk that the borrower will become subject to a voluntary or involuntary bankruptcy proceeding by limiting the entity's activities, indebtedness, and exposure to liabilities unrelated to the project. Second, the SPE covenants are intended to ensure that, in the event a bankruptcy proceeding is commenced, a court would not order the substantive consolidation of the borrower entity with an affiliate (such as IHDC), which would expose the project-level assets to claims of the affiliate's creditors and potentially impair the lenders' collateral position.
The SPE covenants will be embedded directly in the Operating Agreement of Stonebridge Campus Holdings LLC and will also be cross-referenced (and in many cases repeated verbatim) in the construction loan agreement. This dual embedding ensures that the covenants are enforceable both as organizational restrictions and as contractual obligations to the lenders, and that any breach of the covenants constitutes an event of default under the construction loan.
B. Anticipated SPE Covenant Terms
Based on preliminary discussions with Karen Ellsworth, Managing Director at Summit National Bank, N.A., and our review of the indicative term sheet dated February 28, 2025 (Reference No. CL-2025-VA-04418), the following SPE covenants are expected to be required. We note that the final form of these covenants will be negotiated with lender's counsel, Redmond & Calloway LLP (Victor Redmond, lead partner), once the construction loan documentation process formally commences. The covenants described below reflect our expectation based on the term sheet and market-standard practice:
1. Sole Purpose. The entity's sole purpose shall be to own, develop, construct, operate, lease, and manage the Stonebridge Data Center Campus and to engage in activities that are incidental, necessary, or appropriate thereto. The entity shall not engage in any other business or activity.
2. No Other Assets or Business. The entity shall not own any assets other than the campus real property (comprising the Stonebridge Parcel and the Meridian Parcel), related personal property (including data center equipment, fixtures, and tenant improvements), permits, governmental approvals, contracts related to the campus, and bank accounts and reserves held in connection with the construction loan and the operation of the campus.
3. No Other Indebtedness. The entity shall not incur any indebtedness other than (a) the construction loan (and any permitted refinancing thereof), (b) trade payables incurred in the ordinary course of business not exceeding a specified threshold and not outstanding for more than a specified period (to be negotiated, but typically in the range of 60 to 90 days past the invoice date), and (c) other permitted indebtedness as specifically defined in the construction loan agreement. This covenant is critical to ensuring that the lenders' position is not diluted by the borrower's assumption of additional debt obligations.
4. No Commingling. The entity shall maintain its own separate bank accounts, books of account, records, and financial statements, all of which shall be distinct from those of IHDC, RCP Digital Holdings LLC, Ridgeline Capital Partners Fund IV, LP, and any other affiliate. The entity's funds shall not be commingled with the funds of any other person or entity. This covenant is one of the most important separateness provisions, as commingling of funds is frequently cited by courts as a factor supporting substantive consolidation.
5. No Guarantees of Third-Party Obligations. The entity shall not guarantee, become obligated for, or hold itself out as being responsible for the debts or obligations of any other person or entity. This covenant prevents the project-level entity from assuming contingent liabilities unrelated to the project.
6. Adequate Capitalization. The entity shall maintain adequate capital in light of its contemplated business operations and anticipated liabilities. The adequacy of capitalization will be assessed in the context of the equity contribution schedule and the construction draw timeline, with the expectation that the entity will be funded with sufficient equity to operate as an independent going concern.
7. Separate Identity. The entity shall hold itself out to the public and to all third parties as a legal entity separate and distinct from IHDC and all other affiliates. The entity shall maintain its own stationery, business cards (if applicable), and signage. The entity shall file separate tax returns (or be reported as a disregarded entity on IHDC's tax returns, as applicable). The entity shall not permit any affiliate to pay its obligations or expenses, and the entity shall not pay the obligations or expenses of any affiliate, except as specifically permitted under the Operating Agreement and the construction loan documents. All transactions between the entity and any affiliate shall be conducted on an arm's-length basis and shall be evidenced by written agreements.
8. Compliance with Organizational Documents. The entity shall at all times conduct its affairs strictly in accordance with its Articles of Organization and Operating Agreement and shall observe all organizational formalities, including the holding of meetings (or adoption of written consents) as required by the Operating Agreement and applicable law.
9. No Dissolution or Winding Up. The entity shall not dissolve, liquidate, or wind up its affairs without the prior written consent of the construction lenders (acting through the Administrative Agent). This covenant ensures that the lenders' collateral position is not disrupted by a voluntary dissolution of the borrower entity during the term of the construction loan.
10. Independent Director/Manager. Depending on the final requirements of Summit National Bank, N.A. and the lending syndicate, the entity may be required to appoint at least one independent manager whose affirmative vote is required for certain material actions, including (a) the filing of a voluntary bankruptcy petition under any chapter of the United States Bankruptcy Code, (b) consenting to an involuntary bankruptcy petition filed against the entity, (c) seeking or consenting to the dissolution of the entity, and (d) any motion or proceeding seeking the substantive consolidation of the entity with any other person or entity. The independent manager requirement is a common feature of SPE structures in larger transactions and provides an additional layer of protection against affiliate-driven bankruptcy filings. This requirement remains a point for negotiation with Summit National Bank and Redmond & Calloway LLP (Victor Redmond). We will need to confirm whether this requirement will be imposed and, if so, identify an appropriate independent manager service provider (such as Hollowell Technologies, Pemberton Industries, or another nationally recognized independent director provider).
11. Restriction on Transfers. No direct or indirect transfer, pledge, hypothecation, or encumbrance of the membership interests in the entity shall be permitted except as expressly authorized under the construction loan documents. This restriction will accommodate the pledge of IHDC's 100% membership interest in Stonebridge Campus Holdings LLC to Summit National Bank, N.A. as Administrative Agent, as described in Section VII.B below.
12. No Merger or Consolidation. The entity shall not merge with, be consolidated with, or be converted into any other entity or form of organization. This covenant ensures the continued separate legal existence of the borrower entity throughout the term of the construction loan.
C. Change of Control Provisions
The construction loan agreement is expected to include a mandatory prepayment trigger upon any "change of control" of the borrower (Stonebridge Campus Holdings LLC) or the guarantor (IHDC). Based on our review of the indicative term sheet and our preliminary discussions with Summit National Bank, the anticipated definition of "change of control" is as follows:
Any transaction or series of related transactions resulting in Ridgeline Capital Partners Fund IV, LP (directly or indirectly) ceasing to hold at least 51% of the economic and voting equity interests in the borrower or the guarantor.
The current ownership chain — Ridgeline Fund IV (100%) → RCP Digital Holdings LLC (100%) → 92% interest in IHDC → IHDC (100%) → Stonebridge Campus Holdings LLC — satisfies this threshold, as Ridgeline Fund IV indirectly holds approximately 92% of the equity interests in IHDC and, through IHDC, 100% of the equity interests in the borrower. However, this chain must be maintained without disruption throughout the term of the construction loan. Any proposed transfer at any level in the ownership chain that would cause Ridgeline Fund IV's indirect interest to fall below the 51% threshold would trigger a mandatory prepayment obligation unless waived by the requisite lenders.
In addition to the construction loan change of control provisions, the EPC Agreement with Titan-McAllister Construction Group, LLC is also expected to contain a change of control clause. Under the anticipated terms, TMCG will have a right to consent (not to be unreasonably withheld, conditioned, or delayed) to any change of control of the project owner entity (Stonebridge Campus Holdings LLC). Reciprocally, the owner will have a termination right upon a change of control of TMCG. These provisions are standard in EPC agreements of this scale and are designed to ensure that both parties have confidence in the identity, financial capacity, and operational capabilities of their respective counterparties throughout the construction period.
The LLSA with Vantage Power Cooperative may also contain change of control or assignment provisions that must be analyzed and coordinated with the corresponding provisions in the construction loan and EPC agreement. Harmonization of change of control definitions, notification requirements, consent rights, and cure periods across the construction loan documents, EPC Agreement, and LLSA will be critical to avoiding unintended triggers or cross-default scenarios. This harmonization exercise will be addressed in a separate coordination memorandum to be prepared once the principal transaction documents are in advanced draft form.
D. Separateness Covenants Relative to IHDC
While IHDC is the sole member of Stonebridge Campus Holdings LLC and will provide the completion guaranty and carry guaranty to the construction lenders, the two entities must be maintained as operationally and legally distinct throughout the term of the construction loan and, as a practical matter, for the entire life of the project-level entity. The maintenance of separateness between the parent entity (IHDC) and the project-level entity (Stonebridge Campus Holdings LLC) is essential to the integrity of the SPE structure and to the enforceability of the lenders' collateral position.
IHDC personnel — including Marcus Thorne (CEO), Priya Dasgupta (CFO), and Leonard Castellano (EVP, Development) — may serve as managers, officers, or authorized signatories of Stonebridge Campus Holdings LLC. This overlapping management is common in single-purpose entity structures and does not, by itself, undermine the separateness of the entities. However, corporate and organizational formalities must be scrupulously observed at all times. When acting on behalf of Stonebridge Campus Holdings LLC, these individuals must clearly identify the capacity in which they are acting, and all correspondence, contracts, and other documents executed on behalf of the project-level entity must reflect the name and identity of Stonebridge Campus Holdings LLC.
All intercompany transactions between IHDC and Stonebridge Campus Holdings LLC — including, without limitation, management fees, development fees, shared services arrangements, cost allocations, and any other financial transactions — must be conducted on arm's-length terms and documented by written agreements. The pricing of any such intercompany services should be benchmarked to market rates and supported by appropriate documentation. Failure to maintain arm's-length intercompany transactions is one of the principal factors courts consider in substantive consolidation analyses and can also give rise to fraudulent transfer claims.
We recommend that IHDC and Stonebridge Campus Holdings LLC adopt and implement a separateness procedures protocol, to be maintained by IHDC's legal and finance teams, documenting the specific steps to be taken to ensure ongoing compliance with the separateness covenants. This protocol should address, at a minimum, the maintenance of separate bank accounts, the execution of intercompany agreements, the observance of organizational formalities, and the proper identification of the entity in all third-party communications.
VI. Formation Mechanics and Timeline
A. Articles of Organization
We will prepare and file Articles of Organization for Stonebridge Campus Holdings LLC with the Virginia State Corporation Commission (the "Virginia SCC") pursuant to Va. Code § 13.1-1003. The Articles of Organization will set forth the required statutory information, including the name of the limited liability company, the registered office address, the name of the registered agent, and the name and address of the organizer.
The organizer of Stonebridge Campus Holdings LLC will be Ironhaven Data Centers LLC. A registered agent will be designated at the time of filing. We recommend utilizing a Virginia-based registered agent service (such as Pemberton Industries, Ashgrove Services Inc., or another reputable service provider with offices in Virginia) to serve as the registered agent and maintain a registered office address in the Commonwealth. The selection of a professional registered agent ensures reliable service of process and compliance with Virginia SCC annual reporting requirements.
The Virginia SCC charges a standard LLC formation filing fee of $100 for the filing of Articles of Organization. We will include a cover letter to the Virginia SCC to accompany the filing, requesting expedited processing to ensure that the entity is formed promptly. Expedited processing is available for an additional fee and typically results in formation within one to two business days.
The target filing date for the Articles of Organization is on or before April 15, 2025 — coinciding with the anticipated execution date of the Stonebridge PSA. Although the initial purchase and sale agreements will be executed by IHDC (with a right to assign to a designee or affiliate), forming the entity prior to PSA execution provides maximum flexibility. If the parties determine that it is preferable for Stonebridge Campus Holdings LLC to execute the PSAs directly, the entity will be in existence and available to do so. If, alternatively, IHDC executes the PSAs and subsequently assigns them to the project-level entity, the entity will be in existence to receive the assignment.
B. Operating Agreement
We will draft a comprehensive Operating Agreement for Stonebridge Campus Holdings LLC that will serve as the primary governing document of the entity. The Operating Agreement will be executed by IHDC as the sole member and will incorporate the SPE covenants outlined in Section V above, as well as the standard governance, financial, and operational provisions appropriate for a single-member, manager-managed Virginia LLC serving as a project-finance borrower.
The key provisions of the Operating Agreement will include the following:
• Sole Member: IHDC shall be the sole member of the entity with 100% of the membership interests.
• Manager(s): The entity shall be manager-managed. Marcus Thorne (CEO of IHDC) shall serve as the initial manager, with authority for IHDC to designate additional or replacement managers as provided in the Operating Agreement.
• Purpose Limitation: The entity's purpose shall be strictly limited to the ownership, development, construction, operation, leasing, and management of the Stonebridge Data Center Campus and activities incidental thereto. The entity shall not engage in any business or activity other than such purpose.
• Capital Contribution Obligations and Mechanics: The Operating Agreement will address the mechanics and timing of equity capital contributions from IHDC to the entity, including coordination with the Equity Contribution Agreement between Ridgeline Fund IV and IHDC that governs the upstream flow of equity capital.
• Distribution Provisions and Restrictions: Distributions from the entity to IHDC will be subject to restrictions during the term of the construction loan, as required by the construction loan documents. The Operating Agreement will incorporate a distribution lockbox or waterfall mechanism consistent with the lenders' requirements.
• SPE/Separateness Covenants: The complete set of single-purpose entity and separateness covenants described in Section V above will be incorporated directly into the Operating Agreement.
• Transfer Restrictions on Membership Interests: No transfer, pledge, or encumbrance of the membership interests shall be permitted except as specifically authorized, including the pledge to Summit National Bank, N.A. as Administrative Agent under the Pledge Agreement.
• Springing Independent Manager Provision: If required by the construction lenders, the Operating Agreement will include a springing or permanent independent manager provision. We recommend drafting this provision in a "springing" format that activates upon the occurrence of specified triggering events (e.g., the entity becoming insolvent or the filing of an involuntary bankruptcy petition), unless the lenders require a permanent independent manager at all times.
• Bankruptcy-Remote Provisions: The Operating Agreement will include provisions restricting the entity from filing a voluntary bankruptcy petition or consenting to an involuntary bankruptcy petition without the affirmative vote of the independent manager (if applicable) and/or the prior written consent of the construction lenders.
• Books and Records; Fiscal Year; Tax Matters: The entity shall maintain complete and accurate books of account and records. The fiscal year shall end on December 31. A tax matters member (or partnership representative, if applicable) shall be designated in accordance with the Internal Revenue Code and applicable regulations.
• Indemnification and Exculpation: Standard indemnification and exculpation provisions for the manager(s) and sole member, subject to customary carve-outs for fraud, willful misconduct, and gross negligence.
• Governing Law: The Operating Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia, without regard to principles of conflicts of law.
We anticipate circulating an initial draft of the Operating Agreement to IHDC management within approximately two weeks of the filing of the Articles of Organization. The draft will be subject to review and comment by IHDC management (Marcus Thorne, Priya Dasgupta, and Leonard Castellano), as well as coordination with lender's counsel (Redmond & Calloway LLP) to confirm that the SPE covenant language is acceptable to the construction lenders.
C. EIN and Tax Registration
Promptly after receiving confirmation of the filing of the Articles of Organization from the Virginia SCC, we will file IRS Form SS-4 (Application for Employer Identification Number) to obtain an Employer Identification Number for Stonebridge Campus Holdings LLC. The EIN is required for the entity to open bank accounts, file tax returns, and enter into contractual relationships.
In addition to obtaining a federal EIN, we will complete any required Virginia tax registration filings, including registration with the Virginia Department of Taxation for state income tax (if applicable) and sales and use tax purposes. The sales and use tax registration is particularly important in light of the anticipated qualification for the Virginia data center sales tax exemption under Va. Code § 58.1-609.3(18).
Regarding tax classification, as a single-member LLC, Stonebridge Campus Holdings LLC will be classified as a disregarded entity for federal income tax purposes by default under Treasury Regulation § 301.7701-3(b)(1)(ii). This means that the entity's income, deductions, and credits will be reported on IHDC's federal income tax return, and the entity will not file a separate federal partnership or corporate return. If circumstances warrant a different classification — for example, if an election to be treated as a partnership (by admitting a second member or making a check-the-box election) or as a corporation would be advantageous from a tax planning perspective — that determination will be made in consultation with Sylvia Hartwell and will be addressed in her separate tax memorandum.
D. Foreign Qualification
Foreign qualification is not required for Stonebridge Campus Holdings LLC. The entity will be formed under the laws of the Commonwealth of Virginia, which is the same state in which the Project is located and in which the entity will conduct all of its business activities. Accordingly, there is no need for the entity to qualify as a foreign limited liability company in any other jurisdiction.
E. Secretary's Certificate / Authority Documentation
In connection with the formation of Stonebridge Campus Holdings LLC and the commencement of the Project, we will prepare the following authority documentation:
Secretary's Certificate of IHDC. We will prepare a Secretary's Certificate of IHDC (or, if IHDC does not have an officer serving in a secretary capacity, a certificate of the sole member or authorized representative) certifying and authorizing (a) the formation of Stonebridge Campus Holdings LLC as a wholly owned subsidiary of IHDC, (b) IHDC's entry into the Operating Agreement of Stonebridge Campus Holdings LLC as its sole member, and (c) the designation of authorized signatories to execute documents on behalf of both IHDC and Stonebridge Campus Holdings LLC in connection with the Project. This certificate will be required by title companies, lenders, and other transaction counterparties as evidence of the entity's authority to enter into the various project agreements.
Board/Member Consent Resolutions of IHDC. We will prepare member consent resolutions (or manager resolutions, as applicable under IHDC's Operating Agreement) authorizing the Stonebridge Campus development and all related transactions, including the execution of the purchase and sale agreements, the EPC Agreement, the LLSA, the construction loan documents, the Equity Contribution Agreement, and all other agreements, instruments, and documents related to the Project. These resolutions will be broad in scope and will authorize the designated officers and representatives of IHDC to take all actions necessary or advisable to effectuate the Project on behalf of both IHDC and Stonebridge Campus Holdings LLC.
VII. Collateral Structure — Interaction with Financing
A. Lender Collateral Package
Stonebridge Campus Holdings LLC, as borrower under the $390,000,000 construction loan, will be required to grant a comprehensive collateral package to Summit National Bank, N.A. as Administrative Agent for the benefit of the lending syndicate. The collateral package will include the following components:
1. Deed of Trust. Stonebridge Campus Holdings LLC will grant a first-priority deed of trust (with assignment of rents) on both the Stonebridge Parcel (62.0 acres; Loudoun County Tax Map Ref. /95-4A-1///) and the Meridian Parcel (19.4 acres; Loudoun County Tax Map Ref. /95-4A-2///), for a combined 81.4 acres in Loudoun County, Virginia. The deed of trust will be recorded in the Loudoun County Circuit Court Clerk's Office and will constitute a first-priority lien on the campus real property, subject only to customary permitted exceptions (e.g., real estate taxes not yet due and payable, utility easements, and other standard encumbrances to be approved by the lenders and their counsel). Virginia utilizes a deed of trust (rather than a mortgage) as the standard real property security instrument, and the trustee under the deed of trust will be a Virginia-qualified individual or entity designated by the lenders.
2. Assignment of Leases and Rents. Stonebridge Campus Holdings LLC will execute an assignment of all tenant leases, rents, revenues, and income from the campus in favor of the Administrative Agent. While the Project is initially a development-stage asset without existing tenants, this assignment will cover all future leases and tenant revenues generated by the campus upon stabilization and will serve as additional collateral for the construction loan. The assignment will typically be structured as an absolute assignment with a license-back to the borrower to collect rents so long as no event of default has occurred and is continuing.
3. Assignment of Contracts, Permits, and Approvals. Stonebridge Campus Holdings LLC will execute a collateral assignment of all material project contracts, including the EPC Agreement with Titan-McAllister Construction Group, LLC, the Large Load Service Agreement with Vantage Power Cooperative, all architect and engineering agreements, and all governmental permits, licenses, approvals, and entitlements relating to the campus. The collateral assignment will give the lenders the right to step into and assume these contracts and permits in the event of a borrower default, subject to any required third-party consents. The EPC Agreement will need to include a form of consent to assignment or acknowledgment from TMCG recognizing the lenders' collateral assignment and agreeing to perform in favor of the lenders upon the exercise of remedies.
4. Security Interest in Personal Property. Stonebridge Campus Holdings LLC will grant a security interest in all personal property, equipment, fixtures, inventory, accounts, and other assets of the entity. This security interest will be perfected by the filing of a UCC-1 financing statement with the Virginia SCC (as the entity's state of organization) covering all assets of the borrower. The UCC-1 filing will be broad in scope, covering all personal property categories specified in Article 9 of the Uniform Commercial Code.
B. Pledge of Membership Interests
In addition to the project-level collateral described above, IHDC will pledge 100% of its membership interests in Stonebridge Campus Holdings LLC to Summit National Bank, N.A. as Administrative Agent under a separate Pledge and Security Agreement. This "mezzanine-level" pledge provides the lenders with an additional layer of security and gives them the ability to exercise remedies at the equity level — specifically, the right to sell, transfer, or foreclose upon IHDC's membership interests in the borrower entity — as an alternative to real property foreclosure under the deed of trust. Foreclosure at the equity level can, in certain circumstances, be a faster and more efficient remedy than real property foreclosure, particularly in jurisdictions with lengthy statutory foreclosure timelines. The pledge will be perfected by the delivery of the pledged interests (or a control agreement, as applicable) and by the filing of a UCC-1 financing statement against IHDC with the Delaware Secretary of State (as IHDC's state of organization).
C. Guaranties
IHDC — not Stonebridge Campus Holdings LLC — will provide the following guaranties to the construction lenders:
• Completion Guaranty: IHDC will guarantee the completion of the Project in accordance with the approved plans, specifications, and budget. The completion guaranty ensures that the construction lenders have recourse to IHDC's broader balance sheet and operations in the event that the project-level entity is unable to complete construction due to cost overruns, contractor defaults, or other unforeseen circumstances. The completion guaranty will typically burn off upon the achievement of defined completion milestones, including substantial completion, receipt of a certificate of occupancy, and commencement of stabilized operations.
• Carry Guaranty / Payment Guaranty: IHDC will guarantee the payment of interest, fees, and carrying costs during the construction draw period. This guaranty provides the lenders with assurance that debt service and carrying costs will be paid even if the borrower's construction draws are delayed or if the project generates insufficient revenue to cover its carrying costs during the development phase.
No guaranty from Ridgeline Capital Partners Fund IV, LP or RCP Digital Holdings LLC is anticipated at the entity level. However, Ridgeline Fund IV may provide a side letter or comfort letter to the lenders confirming the availability of committed capital for the Project and confirming compliance with the change of control provisions. The form and substance of any such side letter will be negotiated with the lenders and their counsel.
D. Minimum Equity Before First Draw
The construction loan is expected to require a minimum equity contribution to be funded by the borrower before the first loan advance. Based on the indicative term sheet, the minimum pre-funding equity requirement is 25% of total equity, which equals $52,500,000 (25% × $210,000,000). This equity must be contributed to Stonebridge Campus Holdings LLC and reflected in its capital accounts before the first construction draw can be made.
The equity will flow through the ownership chain as follows: Ridgeline Capital Partners Fund IV, LP → RCP Digital Holdings LLC → IHDC → Stonebridge Campus Holdings LLC. Each step in this chain will be governed by the applicable organizational documents and, at the fund level, by the Equity Contribution Agreement between Ridgeline Fund IV and IHDC, which will govern the mechanics, timing, and conditions of capital calls.
The Equity Contribution Agreement will specify the process by which IHDC may draw on Ridgeline Fund IV's commitment to fund the equity contributions, including notice requirements, funding periods, and any conditions to funding (such as the absence of a material adverse change). We anticipate that the construction lenders will require a copy of the Equity Contribution Agreement and may require representations or assurances regarding the enforceability of Ridgeline Fund IV's commitment to fund.
VIII. Tax Considerations — Preliminary Notes
While a comprehensive tax analysis is beyond the scope of this entity formation memorandum, the following preliminary tax considerations are relevant to the formation of Stonebridge Campus Holdings LLC and should be addressed in coordination with tax counsel. Detailed tax analysis will be provided by Sylvia Hartwell, of counsel in our tax practice group, in separate memoranda covering the following topics:
Tax Classification. A determination of the recommended tax classification for Stonebridge Campus Holdings LLC — specifically, whether the entity should be treated as a disregarded entity for federal income tax purposes (the default classification for a single-member LLC) or whether an alternative classification (such as partnership treatment, which would require the admission of a second member, or corporate treatment via a check-the-box election) would be advantageous. The disregarded entity classification is generally preferred for single-purpose borrower entities in this context, as it avoids the administrative burden of a separate tax return and allows the entity's income and deductions to flow directly to IHDC's return, but the analysis must account for any state tax implications and the interplay with the management incentive structure at the IHDC level.
Virginia Data Center Sales Tax Exemption. Qualification analysis for the Virginia data center sales tax exemption under Va. Code § 58.1-609.3(18). The exemption is available for data centers meeting certain minimum thresholds, including a minimum capital investment of $150,000,000 over a five-year period and the creation of a minimum of 50 new jobs. The Stonebridge Campus, with a total budget of $600,000,000, would comfortably satisfy the capital investment threshold. The estimated sales tax savings associated with the exemption are approximately $15,900,000 over the qualification period. Qualification for the exemption requires a formal application to the Virginia Economic Development Partnership and compliance with reporting and certification requirements. The entity structure must support the exemption application, and Stonebridge Campus Holdings LLC should be positioned as the qualifying entity.
Cost Segregation Study. The scope and timing of a cost segregation study for the Stonebridge Campus, which is expected to reclassify approximately $45,000,000 of construction costs from real property to accelerated depreciation classes (5-year, 7-year, and 15-year property). A properly conducted cost segregation study can generate significant present-value tax benefits through accelerated depreciation deductions. The cost segregation study should be commissioned prior to or concurrent with the commencement of construction to ensure that construction cost documentation is structured to support the reclassification analysis.
Loudoun County Data Center Equipment Tax. Loudoun County imposes a data center computer equipment tax at a rate of $1.25 per $100 of assessed value. The assessment methodology, equipment classification, and projected tax liability for the Stonebridge Campus will be analyzed and projected as part of the overall tax planning for the Project.
The entity structure should be finalized in coordination with Sylvia Hartwell and Fielding & Associates, CPAs (Robert Fielding, CPA), IHDC's outside accounting firm, to ensure optimal tax positioning and to avoid any structural decisions that could impair tax benefits or create unintended tax consequences.
IX. Organizational Chart — Summary
The following organizational chart summarizes the complete ownership and entity structure from the fund level to the project-level borrower, incorporating the recommended formation of Stonebridge Campus Holdings LLC:
RIDGELINE CAPITAL PARTNERS FUND IV, LP (Delaware LP) General Partner: Ridgeline Capital Management LLC (Delaware LLC) ~$3.8B committed capital
↓ 100% ownership
RCP DIGITAL HOLDINGS LLC (Delaware LLC — Intermediate Holdco) Aggregates Ridgeline Fund IV digital infrastructure investments
↓ 92% membership interest
IRONHAVEN MANAGEMENT INCENTIVE POOL LLC (Delaware LLC) Management profits interests / carried interest vehicle
↓ 8% membership interest (profits interests)