OPERATING AGREEMENT
OF
STONEBRIDGE CAMPUS HOLDINGS LLC
A Virginia Limited Liability Company
DRAFT — Subject to Review and Comment
Dated as of [●], 2025
Prepared by:
Calderwood & Harkness LLP 1900 K Street NW, Suite 800 Washington, DC 20006
Matter No. 1043-00002
CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED — DRAFT
This document is a draft prepared for discussion purposes and is subject to review and comment by all parties and their respective counsel. This document does not constitute a binding agreement unless and until executed by the parties identified herein. This document is protected by the attorney-client privilege and the work product doctrine and is not to be disclosed to any person or entity other than the intended recipients without the prior written consent of Calderwood & Harkness LLP.
OPERATING AGREEMENT OF STONEBRIDGE CAMPUS HOLDINGS LLC
This Operating Agreement (this "Agreement") of Stonebridge Campus Holdings LLC, a Virginia limited liability company (the "Company"), is entered into and effective as of [●], 2025, by Ironhaven Data Centers LLC, a Delaware limited liability company (the "Member" or "IHDC"), as the sole member of the Company.
RECITALS
WHEREAS, the Company is a Virginia limited liability company formed by the filing of Articles of Organization with the Virginia State Corporation Commission (the "SCC") pursuant to the Virginia Limited Liability Company Act, Title 13.1, Chapter 12 of the Code of Virginia, as amended from time to time (the "Act");
WHEREAS, the sole member of the Company is Ironhaven Data Centers LLC, a Delaware limited liability company, with its principal office at 44680 Prentice Drive, Suite 200, Ashburn, Virginia 20147, Federal Employer Identification Number 84-3291057, Virginia SCC Entity ID S7491283;
WHEREAS, IHDC is a portfolio company of Ridgeline Capital Partners Fund IV, LP, a Delaware limited partnership ("Ridgeline Fund IV"), which holds a ninety-two percent (92%) equity interest in IHDC through RCP Digital Holdings LLC, a Delaware limited liability company ("RCP Digital"), and the remaining eight percent (8%) interest in IHDC is held by Ironhaven Management Incentive Pool LLC, a Delaware limited liability company ("IHDC Incentive Pool");
WHEREAS, the Company is being formed as a single-purpose entity to serve as the owner, developer, and borrower in connection with the development of the Stonebridge Data Center Campus (the "Project"), a ground-up data center campus located on approximately eighty-one and four-tenths (81.4) acres in unincorporated Loudoun County, Virginia, at the intersection of Belmont Ridge Road and Stonebridge Boulevard, Ashburn, Virginia 20148;
WHEREAS, the Project encompasses the acquisition of (i) a sixty-two-acre (62.0-acre) parcel (Loudoun County Tax Map Reference /95-4A-1///) (the "Stonebridge Parcel") from Blackthorn Realty Group, Inc., a Virginia corporation, and (ii) a nineteen and four-tenths-acre (19.4-acre) parcel (Loudoun County Tax Map Reference /95-4A-2///) (the "Meridian Parcel") from Meridian Acres LLC, a Virginia limited liability company (the Stonebridge Parcel and the Meridian Parcel, collectively, the "Property"), together with the design, construction, and operation of four (4) data center buildings (Buildings A, B, C, and D, each approximately one hundred twenty thousand (120,000) square feet, with twenty-four megawatts (24 MW) of critical IT load per building, for a total of ninety-six megawatts (96 MW) and four hundred eighty thousand (480,000) square feet of gross floor area);
WHEREAS, the total Project budget is approximately Six Hundred Million Dollars ($600,000,000), consisting of approximately Two Hundred Ten Million Dollars ($210,000,000) in equity contributions and approximately Three Hundred Ninety Million Dollars ($390,000,000) in debt financing;
WHEREAS, the Company will be the borrower under a Three Hundred Ninety Million Dollar ($390,000,000) senior secured construction loan facility (the "Construction Loan") with Summit National Bank, N.A., as Administrative Agent, and the lending syndicate consisting of Summit National Bank, N.A., Cascade Commercial Lending Corp., and Harborview Trust Company (collectively, the "Lenders");
WHEREAS, this Agreement is entered into by the Member and is intended to comply with and be consistent with the requirements of the Construction Loan documents, including the single-purpose entity and separateness covenants required thereunder, and to set forth the governance, management, and operational framework for the Company during the development, construction, and operation of the Project;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Member hereby agrees as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined in this Section 1.1 shall have the meanings ascribed to them elsewhere in this Agreement.
"Act" means the Virginia Limited Liability Company Act, Title 13.1, Chapter 12 of the Code of Virginia, as amended from time to time, and any successor statute thereto.
"Administrative Agent" means Summit National Bank, N.A., a national banking association, in its capacity as administrative agent under the Construction Loan Agreement, with its principal office for purposes of this Agreement at 1275 Avenue of Commerce, 12th Floor, McLean, Virginia 22102, and its successors and assigns in such capacity.
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" (including the correlative terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise. Without limiting the generality of the foregoing, with respect to the Member, the term "Affiliate" includes RCP Digital Holdings LLC, Ridgeline Capital Partners Fund IV, LP, Ridgeline Capital Management LLC (the general partner of Ridgeline Fund IV), Ironhaven Management Incentive Pool LLC, and any entity directly or indirectly owned or controlled by any of the foregoing.
"Agreement" means this Operating Agreement of the Company, as the same may be amended, supplemented, restated, or otherwise modified from time to time in accordance with its terms.
"Articles of Organization" means the Articles of Organization of the Company as filed with the Virginia State Corporation Commission, as the same may be amended, supplemented, or restated from time to time in accordance with the Act and this Agreement.
"Authorized Representative" means any Person designated by the Member as authorized to act on behalf of the Company in accordance with Section 4.2 of this Agreement.
"Borrower" means the Company in its capacity as borrower under the Construction Loan Agreement.
"Capital Account" means the capital account maintained for the Member in accordance with Section 3.4 of this Agreement and Treasury Regulation Section 1.704-1(b)(2)(iv).
"Capital Contribution" means any cash or property contributed by the Member to the capital of the Company, including the Initial Capital Contribution and any Additional Capital Contributions made pursuant to Article III of this Agreement.
"Certificate of Cancellation" means the certificate of cancellation of the Company filed with the Virginia State Corporation Commission upon the completion of winding up of the Company's affairs in accordance with Article XII of this Agreement and the Act.
"Change of Control" has the meaning set forth in Section 8.3 of this Agreement and, to the extent applicable, shall be interpreted consistently with the definition of "change of control" or analogous term in the Construction Loan Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute thereto. References to specific sections of the Code shall be deemed to include references to any corresponding provisions of any successor statute.
"Company" means Stonebridge Campus Holdings LLC, a Virginia limited liability company.
"Completion Guaranty" means the Completion Guaranty executed by IHDC in favor of the Administrative Agent, for the benefit of the Lenders, guaranteeing the lien-free completion of the Project in accordance with the plans and specifications approved under the Construction Loan Agreement.
"Construction Loan" means the Three Hundred Ninety Million Dollar ($390,000,000) senior secured construction loan facility among the Company, the Administrative Agent, and the Lenders, as evidenced by the Construction Loan Agreement and the other Loan Documents.
"Construction Loan Agreement" means the Construction Loan Agreement dated as of [●], 2025, among the Company, as Borrower, Summit National Bank, N.A. (with a commitment of One Hundred Eighty Million Dollars ($180,000,000)), as Administrative Agent and a Lender, Cascade Commercial Lending Corp. (with a commitment of One Hundred Thirty Million Dollars ($130,000,000)), as a Lender, and Harborview Trust Company (with a commitment of Eighty Million Dollars ($80,000,000)), as a Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Carry Guaranty" means the Carry Guaranty executed by IHDC in favor of the Administrative Agent, for the benefit of the Lenders, guaranteeing certain carrying costs during the construction and pre-stabilization period, as more fully described in the Loan Documents.
"Deed of Trust" means the Deed of Trust, Assignment of Leases and Rents, and Security Agreement executed by the Company in favor of the Administrative Agent, for the benefit of the Lenders, encumbering the Property and the improvements thereon, as recorded or to be recorded among the land records of Loudoun County, Virginia.
"EPC Agreement" means the Engineering, Procurement, and Construction Agreement between the Company and Titan-McAllister Construction Group, LLC, a Maryland limited liability company, with a Guaranteed Maximum Price of Four Hundred Twelve Million Dollars ($412,000,000), as the same may be amended, supplemented, or otherwise modified from time to time.
"Equity Contribution Agreement" means the Equity Contribution Agreement between Ridgeline Capital Partners Fund IV, LP and Ironhaven Data Centers LLC regarding the Two Hundred Ten Million Dollar ($210,000,000) equity commitment to the Project, as the same may be amended, supplemented, or otherwise modified from time to time.
"Event of Default" has the meaning ascribed to such term in the Construction Loan Agreement.
"Fiscal Year" means the calendar year or such other fiscal year as the Member may select in accordance with the Code and applicable Treasury Regulations.
"GAAP" means United States generally accepted accounting principles, consistently applied.
"Guaranteed Maximum Price" or "GMP" means the guaranteed maximum price of Four Hundred Twelve Million Dollars ($412,000,000) established under the EPC Agreement.
"Independent Director" or "Independent Manager" means a natural person who is not, and has never been, an officer, director, employee, member, manager, partner, equity holder, or creditor of the Company, the Member, or any Affiliate of the Company or the Member, and who satisfies the independence requirements and qualifications set forth in Section 4.4 of this Agreement and in the Loan Documents. The Independent Director may be provided by a nationally recognized provider of independent directors, such as Pemberton Industries, Hollowell Technologies, or a comparable provider.
"Initial Capital Contribution" means the initial capital contribution by the Member to the Company as described in Section 3.2 of this Agreement.
"Lenders" means Summit National Bank, N.A., Cascade Commercial Lending Corp., and Harborview Trust Company, collectively, and their respective successors and assigns.
"Line Extension Funding Agreement" means the Line Extension Funding Agreement between the Company and Vantage Power Cooperative regarding the Company's contribution of Eighteen Million Five Hundred Thousand Dollars ($18,500,000) toward the cost of electrical infrastructure extensions to serve the Project.
"LLSA" means the Large Load Service Agreement between the Company and Vantage Power Cooperative, as the same may be amended, supplemented, or otherwise modified from time to time, providing for the delivery of electrical power to the Project.
"Loan Documents" means, collectively, the Construction Loan Agreement, the Promissory Note, the Deed of Trust, Assignment of Leases and Rents, and Security Agreement, the Completion Guaranty, the Carry Guaranty, the Pledge Agreement, the Environmental Indemnity Agreement, and all other documents, instruments, and agreements executed and delivered by or on behalf of the Company or any guarantor in connection with the Construction Loan, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Loan-to-Cost Ratio" means, at any time of determination, the ratio of (a) the outstanding principal amount of the Construction Loan to (b) the total Project costs as determined in accordance with the Construction Loan Agreement, which shall not exceed sixty-five percent (65%).
"Major Decisions" has the meaning set forth in Section 4.5 of this Agreement.
"Member" means Ironhaven Data Centers LLC, a Delaware limited liability company, and any successor or permitted assignee thereof admitted as a member of the Company in accordance with this Agreement.
"Membership Interest" means the entire ownership interest of the Member in the Company, including, without limitation, the Member's right to share in the capital, profits, losses, and distributions of the Company, and the Member's right to vote on or consent to matters requiring the Member's approval under this Agreement, the Act, or the Articles of Organization.
"Meridian Parcel" means the approximately nineteen and four-tenths-acre (19.4-acre) parcel of land located in unincorporated Loudoun County, Virginia, described as Loudoun County Tax Map Reference /95-4A-2///, adjacent to the Stonebridge Parcel on the east, in Ashburn, Virginia 20148, to be acquired from Meridian Acres LLC, a Virginia limited liability company.
"Permitted Indebtedness" has the meaning set forth in Section 9.2 of this Agreement.
"Permitted Transfer" has the meaning set forth in Section 8.2 of this Agreement.
"Person" means any natural person, corporation, limited liability company, general or limited partnership, joint venture, estate, trust, association, unincorporated organization, governmental authority, or any other entity of any nature.
"Pledge Agreement" means the Pledge Agreement executed by the Member in favor of the Administrative Agent, for the benefit of the Lenders, pledging the Membership Interest as collateral security for the obligations under the Loan Documents.
"Project" means the Stonebridge Data Center Campus development, consisting of the acquisition of the Property and the design, entitlement, construction, equipping, commissioning, leasing, operation, and management of four (4) data center buildings (Buildings A, B, C, and D) on the Property, with an aggregate capacity of ninety-six megawatts (96 MW) of critical IT load and approximately four hundred eighty thousand (480,000) square feet of gross floor area, together with all related site improvements, utilities, access roads, stormwater management facilities, and other appurtenances.
"Property" means the Stonebridge Parcel and the Meridian Parcel, together comprising approximately eighty-one and four-tenths (81.4) acres in unincorporated Loudoun County, Virginia, at the intersection of Belmont Ridge Road and Stonebridge Boulevard, Ashburn, Virginia 20148.
"SCC" means the Virginia State Corporation Commission.
"SPE Provisions" means the single-purpose entity covenants, separateness covenants, and related provisions set forth in Article IX of this Agreement.
"Stonebridge Parcel" means the approximately sixty-two-acre (62.0-acre) parcel of land located in unincorporated Loudoun County, Virginia, described as Loudoun County Tax Map Reference /95-4A-1///, at the northeast corner of Belmont Ridge Road and Stonebridge Boulevard, Ashburn, Virginia 20148, to be acquired from Blackthorn Realty Group, Inc., a Virginia corporation.
"Transfer" means any direct or indirect sale, assignment, transfer, conveyance, pledge, hypothecation, encumbrance, gift, exchange, or other disposition of all or any portion of the Membership Interest, whether voluntary or involuntary, by operation of law or otherwise, including any transfer by foreclosure or deed in lieu of foreclosure. The term "Transfer" shall also include any direct or indirect transfer of equity interests in the Member if such transfer would result in a Change of Control.
"Treasury Regulations" means the regulations promulgated by the United States Department of the Treasury under the Code, as the same may be amended from time to time.
Section 1.2 — Rules of Construction
For purposes of this Agreement, the following rules of construction shall apply:
(a) The terms "herein," "hereof," "hereunder," "hereby," and similar terms refer to this Agreement as a whole, and not to any particular Article, Section, or provision.
(b) References to any Article, Section, Exhibit, or Schedule are references to Articles, Sections, Exhibits, or Schedules of or to this Agreement unless otherwise specified.
(c) The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation."
(d) The singular shall include the plural, and the plural shall include the singular, as the context requires.
(e) References to any statute or regulation are to that statute or regulation as amended from time to time, and include any successor statute or regulation.
(f) References to "dollars" or "$" are to lawful currency of the United States of America.
(g) The headings and captions in this Agreement are for convenience of reference only and shall not be used in interpreting, construing, or enforcing any provision hereof.
ARTICLE II — FORMATION AND ORGANIZATION
Section 2.1 — Formation
The Company was formed as a Virginia limited liability company upon the filing of the Articles of Organization with the Virginia State Corporation Commission pursuant to the Act. A copy of the Articles of Organization as filed is attached hereto as Exhibit A and incorporated herein by reference. The Virginia SCC Entity ID shall be assigned upon such filing, and the Company's Federal Employer Identification Number shall be obtained upon formation. The Member hereby ratifies and confirms the filing of the Articles of Organization and all actions taken in connection therewith.
Section 2.2 — Name
The name of the Company is "Stonebridge Campus Holdings LLC." The Company shall conduct all of its business and affairs under this name and no other name, unless otherwise required by applicable law or approved by the Member in writing. The Company shall take all steps necessary to protect and preserve its right to use such name in the Commonwealth of Virginia and in any other jurisdiction in which the Company is qualified to do business.
Section 2.3 — Registered Office and Registered Agent
The registered office of the Company in the Commonwealth of Virginia shall be at such address as is set forth in the Articles of Organization, or at such other address in the Commonwealth of Virginia as the Member may designate from time to time in accordance with the Act. The registered agent of the Company shall be the Person designated in the Articles of Organization, or such other Person as the Member may designate from time to time in accordance with the Act. The Member shall ensure that the Company at all times maintains a registered office and a registered agent in the Commonwealth of Virginia as required by the Act.
Section 2.4 — Principal Office
The principal office of the Company shall be at 44680 Prentice Drive, Suite 200, Ashburn, Virginia 20147, which is co-located with the headquarters of IHDC, or at such other location as the Member may designate from time to time by written notice to the Administrative Agent in accordance with the Construction Loan Agreement. The Company shall maintain all of its books and records at its principal office or at such other location as the Member may designate, subject to compliance with the Act and the Loan Documents.
Section 2.5 — Purpose
The sole purpose of the Company is to:
(a) Acquire, own, hold, develop, improve, lease, operate, manage, finance, refinance, and dispose of the Property, including the Stonebridge Parcel (Loudoun County Tax Map Reference /95-4A-1///) and the Meridian Parcel (Loudoun County Tax Map Reference /95-4A-2///), located in unincorporated Loudoun County, Virginia;
(b) Construct, develop, equip, commission, and operate the Project, consisting of the Stonebridge Data Center Campus, including four (4) data center buildings (Buildings A, B, C, and D) with an aggregate capacity of ninety-six megawatts (96 MW) of critical IT load and approximately four hundred eighty thousand (480,000) square feet of gross floor area, together with all related site improvements, utility infrastructure, access roads, stormwater management facilities, and appurtenances;
(c) Enter into, perform, and exercise rights and remedies under the Construction Loan Agreement, the other Loan Documents, the EPC Agreement, the LLSA, the Line Extension Funding Agreement, and all other agreements, contracts, documents, and instruments related to the acquisition, development, construction, financing, leasing, operation, and management of the Property and the Project;
(d) Borrow money and issue evidences of indebtedness, and secure any such indebtedness by mortgage, deed of trust, pledge, or other lien on the Property and the assets of the Company, in each case solely in connection with the Project and as permitted by the Loan Documents; and
(e) Engage in all activities and do all things incidental to, necessary for, or appropriate in furtherance of, the foregoing purposes.
The Company shall not engage in any business, activity, or purpose other than the foregoing. This limitation on the Company's purpose is a material term of this Agreement and is required by and consistent with the Construction Loan Agreement and the other Loan Documents. The Member acknowledges and agrees that this single-purpose limitation is a condition to the willingness of the Lenders to extend credit to the Company under the Construction Loan.
Section 2.6 — Term
The Company shall have perpetual existence and shall continue until dissolved in accordance with Article XII of this Agreement and the Act. The duration of the Company shall not be affected by the completion of the Project, the retirement of the Construction Loan, or any other event, unless such event constitutes an event of dissolution under Article XII.
Section 2.7 — Governing Law
This Agreement and the rights and obligations of the Member hereunder shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia, including the Act, without regard to any conflicts-of-law principles that would require the application of the laws of any other jurisdiction.
ARTICLE III — MEMBERSHIP INTEREST; CAPITAL CONTRIBUTIONS
Section 3.1 — Sole Member
Ironhaven Data Centers LLC is the sole member of the Company and holds one hundred percent (100%) of the Membership Interest in the Company. IHDC is a Delaware limited liability company with its principal office at 44680 Prentice Drive, Suite 200, Ashburn, Virginia 20147, Federal Employer Identification Number 84-3291057, Virginia SCC Entity ID S7491283. The Member's Membership Interest is set forth in the books and records of the Company. No other Person has been or is admitted as a member of the Company as of the date of this Agreement.
Section 3.2 — Initial Capital Contribution
The Member shall make an initial capital contribution to the Company (the "Initial Capital Contribution") in such amount, at such time, and in such form as determined by the Member, subject to the requirements and conditions set forth in the Equity Contribution Agreement and the Construction Loan Agreement. The amount and form of the Initial Capital Contribution are described in Exhibit B attached hereto and incorporated herein by reference.
The Member acknowledges that the total equity commitment for the Project is Two Hundred Ten Million Dollars ($210,000,000), which equity shall be contributed to the Company by the Member in accordance with the draw schedule and funding requirements established under the Equity Contribution Agreement and the Construction Loan Agreement. The Construction Loan Agreement requires that a minimum equity contribution of Fifty-Two Million Five Hundred Thousand Dollars ($52,500,000), representing twenty-five percent (25%) of the total equity commitment of Two Hundred Ten Million Dollars ($210,000,000), be made by the Member and deposited into the Company's equity account prior to the first draw of loan proceeds under the Construction Loan.
Capital contributions to be made by the Member shall be funded by IHDC from equity provided to IHDC by Ridgeline Capital Partners Fund IV, LP through RCP Digital Holdings LLC, in accordance with the capital call and draw sequencing procedures established under the Ridgeline Fund IV limited partnership agreement and the Equity Contribution Agreement.
Section 3.3 — Additional Capital Contributions
The Member may, but except as set forth in this Section 3.3 shall not be obligated to, make additional capital contributions to the Company from time to time as needed for the development, construction, operation, and management of the Project (each, an "Additional Capital Contribution"). No Additional Capital Contributions shall be required of the Member except as follows:
(a) As required under the Equity Contribution Agreement to fund the total equity commitment of Two Hundred Ten Million Dollars ($210,000,000);
(b) As necessary to satisfy conditions precedent to draws under the Construction Loan Agreement, including any equity "first-in" or equity co-investment requirements;
(c) As necessary to fund cost overruns or budget shortfalls to the extent not covered by contingency reserves, in accordance with the terms of the Completion Guaranty; and
(d) As otherwise determined by the Member in its sole discretion.
The timing and sequencing of Additional Capital Contributions shall be coordinated with Ridgeline Fund IV draw schedules and the construction draw schedule under the Construction Loan Agreement. The Member shall deliver written notice to the Administrative Agent of each Additional Capital Contribution in accordance with the reporting requirements of the Construction Loan Agreement.
Section 3.4 — Capital Account
A single capital account (the "Capital Account") shall be maintained for the Member in accordance with the provisions of Treasury Regulation Section 1.704-1(b)(2)(iv) and the principles set forth in Section 704(b) of the Code. The Capital Account shall be:
(a) Increased by the amount of cash and the fair market value of any property (net of any liabilities assumed or taken subject to) contributed by the Member to the Company;
(b) Increased by the amount of all items of income, gain, and credit allocated to the Member;
(c) Decreased by the amount of cash and the fair market value of any property (net of any liabilities assumed or taken subject to) distributed by the Company to the Member; and
(d) Decreased by the amount of all items of loss, deduction, and expense allocated to the Member.
The Capital Account shall be adjusted in all other respects in accordance with the rules of Treasury Regulation Section 1.704-1(b)(2)(iv).
Section 3.5 — No Interest on Capital Contributions
No interest shall be paid or accrued on or with respect to any Capital Contribution made by the Member to the Company. The Member acknowledges that its return on Capital Contributions shall be solely through allocations of profits and losses pursuant to Article VI and distributions pursuant to Article VII.
Section 3.6 — Return of Capital
The Member shall not have the right to withdraw or demand a return of any Capital Contribution except as expressly provided in Article VII (Distributions) and Article XII (Dissolution and Winding Up) of this Agreement. No provision of this Agreement shall be construed to create any obligation on the part of the Company to return Capital Contributions to the Member at any particular time or in any particular amount, except upon dissolution and winding up of the Company in accordance with Article XII. The Member's right to return of Capital Contributions shall at all times be subordinate to the rights of creditors of the Company, including the Lenders.
ARTICLE IV — MANAGEMENT
Section 4.1 — Member-Managed
The Company shall be a member-managed limited liability company. IHDC, as the sole Member, shall have full, complete, and exclusive power and authority to manage, control, and direct the business and affairs of the Company, and shall have all powers and rights necessary, appropriate, or advisable to effectuate and carry out the purposes and business of the Company as set forth in Section 2.5 of this Agreement. The Member shall have the authority to bind the Company and to execute, deliver, and perform all agreements, contracts, documents, instruments, certificates, and filings on behalf of the Company.
Notwithstanding the foregoing, the Member's power and authority to manage the Company shall be subject to, and exercised in compliance with, (a) the SPE Provisions set forth in Article IX of this Agreement, (b) the requirements of the Loan Documents, including any restrictions on the Company's activities, operations, and business set forth therein, (c) the requirement for Independent Director consent with respect to Major Decisions as set forth in Section 4.5 of this Agreement, and (d) the Act.
Section 4.2 — Authorized Representatives
The following persons are hereby designated as Authorized Representatives of the Company, each of whom is authorized to act on behalf of the Company and to execute, deliver, and perform any and all agreements, contracts, documents, instruments, certificates, and filings on behalf of the Company, subject to the limitations set forth in this Agreement and the Loan Documents:
(a) Marcus Thorne, Chief Executive Officer of IHDC;
(b) Priya Dasgupta, Chief Financial Officer of IHDC; and
(c) Leonard Castellano, Executive Vice President of Development of IHDC.
The Member may from time to time designate additional Authorized Representatives, or revoke the designation of any Authorized Representative, by written resolution of the Member. Any such designation or revocation shall be effective upon delivery of written notice thereof to the Administrative Agent and any other party entitled to notice under the Loan Documents. Each Authorized Representative shall act in accordance with the directions of the Member and within the scope of authority delegated by the Member.
Section 4.3 — Officers
The Member may, in its discretion, appoint one or more officers of the Company, including a President, one or more Vice Presidents, a Secretary, a Treasurer, and such other officers as the Member may determine from time to time. Officers shall be appointed by written resolution of the Member and shall serve at the pleasure of the Member. Any officer may be removed at any time, with or without cause, by written resolution of the Member. One Person may hold two or more offices simultaneously. Officers of the Company shall have such duties and powers as are customarily associated with their respective titles and as may be delegated to them by the Member from time to time.
The initial officers of the Company shall be designated by written resolution of the Member promptly upon formation of the Company. Until such time as officers are designated, the Authorized Representatives identified in Section 4.2 shall have the authority to act on behalf of the Company in all respects.
Section 4.4 — Independent Director / Independent Manager
(a) Requirement. The Company shall at all times while any obligations are outstanding under the Loan Documents have at least one (1) Independent Director (or Independent Manager). The Independent Director shall be a natural person who meets the following independence qualifications:
(i) The Independent Director is not, and has never been, an officer, director, employee, member, manager, partner, or equity holder of the Company, the Member, or any Affiliate of the Company or the Member;
(ii) The Independent Director is not, and has never been, a creditor, supplier, or customer of the Company, the Member, or any Affiliate of the Company or the Member, other than in the Independent Director's capacity as Independent Director of the Company or of other special-purpose entities unrelated to the Member or its Affiliates;
(iii) The Independent Director is not, and has never been, a family member of any officer, director, employee, member, manager, partner, or equity holder of the Company, the Member, or any Affiliate of the Company or the Member; and
(iv) The Independent Director satisfies any additional independence requirements set forth in the Loan Documents.
(b) Role and Duties. The Independent Director shall have the duty to consider the interests of the Company and its creditors, including the Lenders, in connection with any Major Decision submitted for the Independent Director's approval pursuant to Section 4.5. The Independent Director shall not have any fiduciary duty to the Member or any other Person in connection with any Major Decision; rather, the Independent Director's duty in connection with any Major Decision shall be to consider the interests of the Company and its creditors. The Independent Director shall have no authority to act on behalf of the Company or to manage the Company's business, except as expressly set forth in Section 4.5 with respect to Major Decisions.
(c) Removal and Replacement. The Independent Director shall not be removed, replaced, or substituted without the prior written consent of the Administrative Agent. If the Independent Director resigns, is incapacitated, or is otherwise unable or unwilling to serve, the Member shall promptly appoint a replacement Independent Director meeting the qualifications set forth in this Section 4.4 and shall provide written notice of such appointment to the Administrative Agent. No such appointment shall be effective without the prior written consent of the Administrative Agent.
(d) Compensation. The Independent Director shall not be compensated by the Company other than reasonable fees for service in such capacity, which fees shall be consistent with market rates for independent directors of single-purpose entities and shall not create any interest, financial or otherwise, in the Company, the Member, or any Affiliate that would impair the Independent Director's independence.
(e) Agreement. The Independent Director shall execute an Independent Director Agreement in substantially the form attached hereto as Exhibit D, setting forth the duties, compensation, independence qualifications, and removal procedures applicable to the Independent Director, consistent with the requirements of the Construction Loan Agreement.
Section 4.5 — Actions Requiring Independent Director Consent
The following actions (collectively, "Major Decisions") shall require the prior affirmative written consent of the Independent Director, in addition to any other approvals required under this Agreement, the Act, or the Loan Documents:
(a) The filing by the Company of any voluntary petition for bankruptcy, insolvency, reorganization, arrangement, or relief under any federal or state bankruptcy or insolvency law, including Title 11 of the United States Code (the "Bankruptcy Code"), or any corresponding provision of any successor statute;
(b) The consent by the Company to the filing of any involuntary petition against the Company under the Bankruptcy Code or any analogous state law, or the consent by the Company to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, or similar official of the Company or of any substantial part of the Company's assets;
(c) The dissolution, liquidation, or winding up of the Company, in whole or in part, whether voluntary or involuntary;
(d) The merger, consolidation, or conversion of the Company into any other entity, or the participation by the Company in any share exchange or similar transaction;
(e) Any amendment to this Agreement or to the Articles of Organization that would modify, alter, or eliminate any of the SPE Provisions set forth in Article IX of this Agreement or the transfer restrictions set forth in Article VIII of this Agreement, or that would otherwise be inconsistent with the requirements of the Loan Documents;
(f) Any Transfer of all or any portion of the Membership Interest in violation of Article VIII of this Agreement; and
(g) Any transaction not in the ordinary course of the Company's business that would materially impair the rights of the Administrative Agent or any of the Lenders under the Loan Documents, or that would be reasonably likely to have a material adverse effect on the ability of the Company to perform its obligations under the Loan Documents.
In determining whether to provide consent to any Major Decision, the Independent Director shall consider the interests of the Company and its creditors, including the Lenders, and shall not be required to consider the interests or desires of the Member or any Affiliate of the Member. The Independent Director shall have no obligation to provide consent to any Major Decision and may withhold consent in the Independent Director's sole and absolute discretion.
Section 4.6 — Third-Party Reliance
Any Person dealing with the Company may rely upon the authority of any Authorized Representative to execute, deliver, and perform any agreement, contract, document, instrument, certificate, or filing on behalf of the Company, without inquiry into any internal limitations on such Authorized Representative's authority, and without the need to verify or confirm the approvals required under this Agreement, including the approval of the Independent Director. The Company shall be bound by the acts of its Authorized Representatives within the scope of their apparent authority, and no third party shall be required to determine whether the provisions of this Agreement have been complied with in connection with any transaction with the Company.
ARTICLE V — RIGHTS AND OBLIGATIONS OF THE MEMBER
Section 5.1 — Liability of the Member
The Member shall not be personally liable for the debts, obligations, or liabilities of the Company solely by reason of being a member or manager of the Company. The liability of the Member for the obligations of the Company shall be limited to the Member's Capital Contributions and any undistributed profits and assets of the Company, except as otherwise provided by the Act or as the Member may otherwise voluntarily agree in writing.
Notwithstanding the foregoing, the Member acknowledges and agrees that IHDC has executed the Completion Guaranty and the Carry Guaranty in favor of the Administrative Agent, for the benefit of the Lenders, in connection with the Construction Loan. The Member's liability under the Completion Guaranty and the Carry Guaranty shall be as set forth therein and shall not be limited or affected by this Section 5.1. Nothing in this Agreement shall be construed to limit, modify, or discharge the Member's obligations under the Completion Guaranty, the Carry Guaranty, or any other guaranty or agreement executed by the Member in connection with the Loan Documents.
Section 5.2 — Duties of the Member
The Member shall manage the Company in accordance with the fiduciary duties set forth under the Act, including the duty of care and the duty of loyalty, subject to any modifications of such duties that are permitted under the Act and that are set forth in this Agreement. The Member shall act in good faith and in a manner reasonably believed to be in the best interests of the Company. Without limiting the generality of the foregoing, the Member shall:
(a) Cause the Company to comply with the SPE Provisions and separateness covenants set forth in Article IX of this Agreement;
(b) Cause the Company to comply with its obligations under the Loan Documents, the EPC Agreement, the LLSA, the Line Extension Funding Agreement, and all other material agreements to which the Company is a party;
(c) Cause the Company to maintain adequate insurance coverage for the Property and the Project in accordance with the requirements of the Construction Loan Agreement;
(d) Cause the Company to maintain complete and accurate books and records as required by Article X of this Agreement; and
(e) Cause the Company to pay its debts, obligations, and liabilities from its own funds as they become due and payable.
Section 5.3 — No Right to Partition
The Member shall have no right to seek or obtain partition by court decree or otherwise of any property of the Company. The Member hereby waives any such right, and this waiver shall be binding upon the Member and its successors, assigns, heirs, and legal representatives. This provision is not intended to limit the ability of the Company to sell, dispose of, or distribute any property in accordance with this Agreement and the Act.
ARTICLE VI — ALLOCATIONS OF PROFITS AND LOSSES
Section 6.1 — Allocation of Profits and Losses
All items of income, gain, loss, deduction, and credit of the Company for each Fiscal Year (and each portion thereof) shall be allocated one hundred percent (100%) to the Member, as the sole member of the Company. This allocation reflects the Member's one hundred percent (100%) ownership of the Membership Interest and is intended to be consistent with the economic arrangement of the parties and the requirements of Section 704(b) of the Code and the Treasury Regulations promulgated thereunder.
Section 6.2 — Tax Allocations
(a) Consistency with Economic Allocations. All items of income, gain, loss, deduction, and credit for federal, state, and local income tax purposes shall be allocated to the Member in a manner consistent with the allocations of the corresponding items of book income, gain, loss, deduction, and credit set forth in Section 6.1, except as otherwise required by Section 704(c) of the Code and the Treasury Regulations promulgated thereunder.
(b) Disregarded Entity Status. The Company intends to be treated as a disregarded entity for federal income tax purposes, as the Company is a single-member limited liability company that has not elected to be treated as a corporation for federal income tax purposes. As a disregarded entity, the Company's items of income, gain, loss, deduction, and credit shall be reported on the federal income tax return of the Member. The Member shall not cause the Company to make an election under Treasury Regulation Section 301.7701-3 to be treated as a corporation for federal income tax purposes without the prior written consent of the Administrative Agent.
(c) State Tax Implications. The state income tax implications of the Company's activities in Virginia and in any other jurisdiction in which the Company conducts business or is otherwise required to file tax returns shall be coordinated with Fielding & Associates, CPAs (Robert Fielding, CPA, engagement partner), in consultation with the tax advisors of IHDC and Ridgeline Fund IV.
Section 6.3 — Tax Elections and Returns
(a) Tax Returns. The Member shall cause all required federal, state, and local tax returns and information returns of the Company (or, to the extent the Company is a disregarded entity, the relevant portions of the Member's tax returns) to be timely prepared and filed, in compliance with all applicable laws and regulations. All tax returns shall be prepared on a basis consistent with the Company's treatment as a disregarded entity for federal income tax purposes, unless the Member determines otherwise in consultation with its tax advisors and the Administrative Agent.
(b) Tax Elections. The Member shall make all tax elections on behalf of the Company as are deemed necessary or appropriate by the Member, in consultation with IHDC's tax advisors, including Fielding & Associates, CPAs, and the tax professionals at Calderwood & Harkness LLP (Sylvia Hartwell), who have prepared an entity structure analysis for the Company and the broader Ironhaven platform.
(c) Cooperation. The Member shall cooperate with the Administrative Agent and the Lenders in connection with any tax-related inquiries, requests for information, or audit proceedings relating to the Company or the Project.
ARTICLE VII — DISTRIBUTIONS
Section 7.1 — Distributions Generally
Distributions of cash or other property of the Company shall be made to the Member at such times and in such amounts as the Member shall determine, in the Member's sole discretion, subject to the following limitations:
(a) The Company shall maintain adequate reserves for current and anticipated operating expenses, debt service obligations (including payments of principal, interest, fees, and other amounts due under the Loan Documents), capital expenditures, and contingencies, taking into account the Company's budget and cash flow projections for the Project;
(b) No distribution shall be made if such distribution would violate any restriction, condition, or covenant set forth in the Construction Loan Agreement or the other Loan Documents, including any cash management, lockbox, or cash sweep provisions applicable during the construction or pre-stabilization period; and
(c) No distribution shall be made if, after giving effect to such distribution, the Company would be unable to pay its debts as they become due in the ordinary course of its business, or the Company's total liabilities (other than liabilities for which recourse is limited to specific property of the Company) would exceed the fair value of the Company's total assets, in each case as determined in accordance with Section 13.1-1036 of the Act or any successor provision thereof.
All distributions shall be made to the Member in proportion to the Member's one hundred percent (100%) Membership Interest.
Section 7.2 — Distribution Restrictions Under Loan Documents
Notwithstanding anything in this Agreement to the contrary, no distributions shall be made by the Company to the Member if:
(a) An Event of Default has occurred and is continuing under the Construction Loan Agreement, or if any event has occurred that, with the giving of notice or the passage of time, or both, would constitute an Event of Default under the Construction Loan Agreement;
(b) The Company has not satisfied the Debt Service Coverage Ratio of at least 1.25 to 1.00 (1.25x) for the applicable measurement period, which Debt Service Coverage Ratio shall be tested at stabilization and thereafter as set forth in the Construction Loan Agreement; or
(c) Such distribution would cause the Company to exceed the Loan-to-Cost Ratio covenant of sixty-five percent (65%) (i.e., would cause the outstanding principal amount of the Construction Loan to exceed sixty-five percent (65%) of total Project costs as determined under the Construction Loan Agreement), or would otherwise violate any financial covenant in the Construction Loan Agreement.
During the construction and pre-stabilization period, the prior written consent of the Administrative Agent may be required for any distribution to the Member, and no distribution shall be made during such period except in compliance with the terms and conditions of the Construction Loan Agreement and the other Loan Documents. The Member acknowledges that the Loan Documents may impose additional restrictions on distributions not specifically described herein, and the Company shall comply with all such restrictions.
Section 7.3 — Tax Distributions