COLLATERAL ASSIGNMENT OF CONSTRUCTION CONTRACT, PLANS, AND PERMITS
Dated as of March 18, 2024
by
IRONHAVEN LOUDOUN EDGE LLC, a Virginia limited liability company, as Assignor
in favor of
PINNACLE FEDERAL SAVINGS BANK, a federally chartered savings bank, as Assignee
THIS COLLATERAL ASSIGNMENT OF CONSTRUCTION CONTRACT, PLANS, AND PERMITS (this "Assignment") is made and entered into as of March 18, 2024, by and between:
IRONHAVEN LOUDOUN EDGE LLC, a Virginia limited liability company, with its principal office c/o Ironhaven Data Centers LLC, 1900 Dominion Tower, Suite 400, Tysons Corner, Virginia 22182 (EIN: 93-4178226; Virginia State Corporation Commission Entity ID: S9103284) ("Assignor");
and
PINNACLE FEDERAL SAVINGS BANK, a federally chartered savings bank organized under the laws of the United States, with its principal office at 800 Constitution Avenue NW, Suite 550, Washington, DC 20001 (RSSD ID: 1038742) ("Assignee").
Assignor and Assignee are sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
A. The Loan. Assignor and Assignee have entered into that certain Construction Loan Agreement dated as of March 18, 2024 (as amended, restated, supplemented, or otherwise modified from time to time, the "Loan Agreement"), pursuant to which Assignee has agreed to make a construction-to-permanent loan to Assignor in the maximum principal amount of Forty-Five Million and No/100 Dollars ($45,000,000.00) (the "Loan") for the construction of a data center facility known as the Loudoun Edge Facility (as more particularly described below). The Loan is evidenced by that certain Promissory Note dated as of March 18, 2024 made by Assignor in favor of Assignee in the principal amount of $45,000,000.00 (the "Note").
B. The Project. The Loan is being made to finance the development and construction of a 52,000 square foot, 4.5 MW critical IT load edge data center facility located at 44350 Prentice Drive, Ashburn, Loudoun County, Virginia 20147 (Loudoun County Tax Map Parcel No. 087-23-5571) (the "Project"), on certain real property more particularly described in the Deed of Trust (as defined below). The Project will serve as a purpose-built edge data center designed to support high-density computing workloads in the Northern Virginia data center corridor.
C. The Deed of Trust. The Loan is secured by, among other things, that certain Deed of Trust, Assignment of Leases and Rents, Security Agreement, and Fixture Filing dated as of March 18, 2024 (as amended, restated, supplemented, or otherwise modified from time to time, the "Deed of Trust"), recorded or to be recorded among the Land Records of the Clerk's Office of the Circuit Court of Loudoun County, Virginia, encumbering the real property on which the Project is being constructed (the "Property"). The Deed of Trust creates a first-priority lien on the Property in favor of the trustee thereunder for the benefit of Assignee.
D. The Construction Contract. Assignor has entered into that certain Guaranteed Maximum Price Construction Contract (as amended, restated, supplemented, or otherwise modified from time to time, the "Construction Contract") with Marlowe Asset Management-Pacific Construction, Inc., a Virginia corporation ("Contractor"), having its principal office at 22600 Gateway Center Drive, Suite 300, Sterling, Virginia 20166, pursuant to which Contractor has agreed to construct the Project for a guaranteed maximum price of Thirty-Three Million Seven Hundred Fifty Thousand and No/100 Dollars ($33,750,000.00), as more particularly described therein. The Construction Contract sets forth the terms and conditions of the Contractor's obligations with respect to the design-assist and construction of the Project, including the scope of work, schedule, payment terms, change order procedures, and warranty provisions. The Contractor's performance under the Construction Contract is bonded by both a performance bond and a payment bond issued by Allegiance Bond & Casualty Co., a surety company authorized to do business in the Commonwealth of Virginia.
E. Plans and Permits. In connection with the development and construction of the Project, Assignor has obtained or caused to be obtained certain architectural and engineering plans and specifications for the Project (collectively, the "Plans") prepared by licensed architects and engineers, and certain governmental permits, licenses, approvals, and entitlements necessary for the construction and operation of the Project, including without limitation Loudoun County Building Permit No. BLD-2024-001287, issued by Loudoun County, Virginia on February 28, 2024 (collectively, the "Permits"). The Plans and Permits are more particularly described in Exhibit D and Exhibit C attached hereto, respectively.
F. Security Requirement. The Loan Agreement requires, as a condition precedent to the initial advance under the Loan, that Assignor collaterally assign to Assignee all of Assignor's right, title, and interest in, to, and under the Construction Contract, the Plans, and the Permits as additional security for the full and timely payment and performance of all obligations of Assignor under the Loan Documents. This Assignment is being executed and delivered pursuant to such requirement and in consideration of Assignee's agreement to make the Loan.
G. Defined Terms. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Loan Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants and agreements set forth herein, the making of the Loan by Assignee, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Definitions. As used in this Assignment, the following terms shall have the meanings set forth below. Any term defined by reference to another document shall have the meaning ascribed to it in such document, as in effect on the date hereof or as subsequently amended in accordance with the terms of the Loan Agreement.
(a) "Assigned Documents" shall mean, collectively, the Construction Contract, the Plans, and the Permits, together with all amendments, modifications, supplements, extensions, and renewals thereof, and all proceeds arising therefrom.
(b) "Assignee" shall mean Pinnacle Federal Savings Bank, a federally chartered savings bank, and its successors and assigns.
(c) "Assignor" shall mean Ironhaven Loudoun Edge LLC, a Virginia limited liability company, and its successors and permitted assigns.
(d) "Construction Contract" shall mean that certain Guaranteed Maximum Price Construction Contract between Assignor, as owner, and Contractor, as contractor, dated on or about the date hereof, for the construction of the Project, as amended, modified, restated, or supplemented from time to time in accordance with the terms hereof and of the Loan Agreement, providing for a guaranteed maximum price of Thirty-Three Million Seven Hundred Fifty Thousand and No/100 Dollars ($33,750,000.00). The Construction Contract is more particularly described in Exhibit B attached hereto and incorporated herein by reference.
(e) "Contractor" shall mean Marlowe Asset Management-Pacific Construction, Inc., a Virginia corporation, having its principal office at 22600 Gateway Center Drive, Suite 300, Sterling, Virginia 20166, and its successors and permitted assigns.
(f) "Deed of Trust" shall have the meaning set forth in Recital C above.
(g) "Event of Default" shall have the meaning ascribed to such term in the Loan Agreement, including without limitation any failure to pay principal, interest, or other amounts when due, any breach of a covenant or representation, any bankruptcy or insolvency event, any default under any other Loan Document, and any other event or circumstance constituting an "Event of Default" under the Loan Agreement.
(h) "Independent Engineer" shall mean Whitmore & Associates, PC, a Virginia professional corporation (lead engineer: James A. Whitmore, PE, Virginia License No. 0402-035817), retained by Assignee pursuant to the Loan Agreement to inspect and certify construction progress, review draw requests, and provide periodic construction monitoring reports in connection with the Project.
(i) "Loan" shall mean the construction-to-permanent loan in the maximum principal amount of Forty-Five Million and No/100 Dollars ($45,000,000.00) made by Assignee to Assignor pursuant to the Loan Agreement.
(j) "Loan Agreement" shall mean that certain Construction Loan Agreement dated as of March 18, 2024, between Assignor and Assignee, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
(k) "Loan Documents" shall have the meaning ascribed to such term in the Loan Agreement, and shall include without limitation the Loan Agreement, the Note, the Deed of Trust, the Completion Guaranty executed by Cobalt Ridge Capital Partners, LP, the Environmental Indemnity Agreement, the Cash Management Agreement, and this Assignment, together with all other documents, instruments, certificates, and agreements now or hereafter executed and delivered in connection with the Loan.
(l) "Note" shall mean that certain Promissory Note in the principal amount of Forty-Five Million and No/100 Dollars ($45,000,000.00) dated as of March 18, 2024, made by Assignor in favor of Assignee, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
(m) "Outside Completion Date" shall mean September 30, 2025, as such date may be extended in accordance with the terms of the Loan Agreement.
(n) "Permits" shall have the meaning set forth in Recital E above, and shall include without limitation Loudoun County Building Permit No. BLD-2024-001287 issued on February 28, 2024, and all other governmental permits, licenses, certificates, approvals, authorizations, and entitlements relating to the construction, development, use, occupancy, or operation of the Project. A list of the Permits is set forth in Exhibit C attached hereto and incorporated herein by reference.
(o) "Plans" shall have the meaning set forth in Recital E above, and shall include all architectural drawings, engineering plans, specifications, shop drawings, as-built drawings, studies, reports, and related documents prepared in connection with the design and construction of the Project, as more particularly described in Exhibit D attached hereto and incorporated herein by reference.
(p) "Project" shall have the meaning set forth in Recital B above.
(q) "Property" shall have the meaning set forth in Recital C above, and shall mean the real property located at 44350 Prentice Drive, Ashburn, Loudoun County, Virginia 20147 (Tax Map Parcel No. 087-23-5571), as more particularly described in the Deed of Trust.
ARTICLE II — COLLATERAL ASSIGNMENT
Section 2.1 — Assignment. Assignor hereby irrevocably and unconditionally assigns, transfers, conveys, pledges, and sets over to Assignee, as additional collateral security for the full and timely payment and performance of all indebtedness, liabilities, and obligations of Assignor arising under or in connection with the Loan Documents, whether now existing or hereafter arising, whether direct or indirect, absolute or contingent, due or to become due (collectively, the "Secured Obligations"), all of Assignor's right, title, and interest in, to, and under the following:
(a) the Construction Contract, including without limitation all rights to receive performance thereunder from Contractor, all claims, counterclaims, setoffs, and causes of action arising out of or relating thereto, all warranties and guaranties provided by Contractor (including without limitation warranties relating to workmanship, materials, and latent defects), and all rights to enforce the guaranteed maximum price of Thirty-Three Million Seven Hundred Fifty Thousand and No/100 Dollars ($33,750,000.00), and all rights to receive any credits, refunds, or savings from unused contingency amounts, cost savings, or shared savings under the Construction Contract;
(b) the Plans, including without limitation all architectural drawings, engineering plans and calculations, specifications, shop drawings, as-built drawings, submittals, studies, surveys, reports, renderings, models, and related documents and data (whether in physical or electronic form) prepared in connection with the design and construction of the Project, together with all intellectual property rights, licenses, and permissions relating thereto, to the extent assignable;
(c) the Permits, including without limitation Loudoun County Building Permit No. BLD-2024-001287 issued by Loudoun County, Virginia on February 28, 2024, and all other governmental permits, licenses, certificates of occupancy, approvals, authorizations, consents, variances, waivers, and entitlements, whether issued by Loudoun County, the Commonwealth of Virginia, or any other governmental authority, relating to the construction, development, use, occupancy, or operation of the Project, to the extent assignable under applicable law;
(d) all amendments, modifications, supplements, extensions, renewals, replacements, and restatements of any of the foregoing, whether now existing or hereafter entered into or obtained; and
(e) all proceeds (including insurance proceeds), products, rents, revenues, income, and other amounts of any kind arising from, payable under, or otherwise relating to any of the foregoing, whether in the form of cash, instruments, accounts, contract rights, general intangibles, or other property.
The foregoing assignment is hereinafter referred to as the "Collateral Assignment."
Section 2.2 — Security Assignment Only. This Assignment is made and accepted for collateral security purposes only, and shall not be construed as a present, absolute, or unconditional assignment of the Assigned Documents. Unless and until an Event of Default shall have occurred and be continuing under the Loan Agreement, Assignee shall have no obligation or liability under any of the Assigned Documents by reason of this Assignment, and Assignor shall remain solely liable for and shall perform, observe, and comply with all of its covenants, agreements, and obligations under the Assigned Documents in accordance with the terms thereof. Nothing contained herein shall be construed as (i) an assumption by Assignee of any obligation, liability, or duty of Assignor under the Assigned Documents, (ii) a consent by Assignee to any term or condition of the Assigned Documents, or (iii) an acknowledgment by Assignee of any obligation to Contractor, any subcontractor, any design professional, or any governmental authority. Assignee shall not be deemed to be a mortgagee in possession or to have assumed any obligation under the Assigned Documents unless and until Assignee shall have expressly assumed the same in writing following the occurrence of an Event of Default.
Section 2.3 — No Impairment of Assignor's Rights Prior to Default. Until the occurrence and continuance of an Event of Default under the Loan Agreement, Assignor shall retain all rights and benefits under the Assigned Documents, including without limitation the right to:
(a) enforce the Construction Contract against Contractor and exercise all remedies available to Assignor thereunder;
(b) direct, supervise, coordinate, and administer the work under the Construction Contract, including the selection and coordination of subcontractors;
(c) submit draw requests and applications for payment under the Construction Contract, and approve, negotiate, and execute change orders, in each case in accordance with the procedures set forth in the Loan Agreement;
(d) make use of the Plans for the design, construction, completion, and operation of the Project; and
(e) exercise all rights under the Permits in connection with the construction, development, and operation of the Project;
provided, however, that Assignor shall not, without the prior written consent of Assignee (which consent may be granted, withheld, conditioned, or delayed in Assignee's sole and absolute discretion):
(i) amend, modify, supplement, restate, or terminate the Construction Contract in any material respect, or consent to any such amendment, modification, supplement, restatement, or termination;
(ii) reduce the guaranteed maximum price under the Construction Contract below Thirty-Three Million Seven Hundred Fifty Thousand and No/100 Dollars ($33,750,000.00), or agree to any change in the scope, schedule, or payment terms of the Construction Contract that would result in a material diminution in the value of the Project or a material increase in the cost of the Project;
(iii) waive, release, or compromise any material right, claim, or cause of action under the Construction Contract, including any warranty, indemnification obligation, or right to liquidated damages; or
(iv) consent to the assignment, transfer, or subcontracting of the Construction Contract, or any material portion thereof, by Contractor to any party other than subcontractors previously approved by Assignee in writing.
ARTICLE III — REPRESENTATIONS AND WARRANTIES OF ASSIGNOR
Section 3.1 — Representations and Warranties. Assignor hereby represents and warrants to Assignee as of the date hereof and as of the date of each advance under the Loan, that the following statements are true, correct, and complete:
(a) Valid Existence. Assignor is a limited liability company duly organized, validly existing, and in good standing under the laws of the Commonwealth of Virginia, holding Virginia State Corporation Commission Entity ID: S9103284. Ironhaven Data Centers LLC, a Virginia limited liability company (Virginia State Corporation Commission Entity ID: S7842196), is the sole member and manager of Assignor. Assignor has all requisite limited liability company power and authority to own and operate its properties, to conduct its business as currently conducted, and to enter into, execute, deliver, and perform its obligations under this Assignment and the other Loan Documents to which it is a party.
(b) Due Authorization. The execution, delivery, and performance of this Assignment and the other Loan Documents to which Assignor is a party have been duly authorized by all necessary limited liability company action on the part of Assignor, including all required authorizations, approvals, and consents by Ironhaven Data Centers LLC in its capacity as sole member and manager of Assignor. No further action, consent, or approval of any person, entity, governmental authority, or other third party is required for the due execution, delivery, and performance by Assignor of this Assignment.
(c) Enforceability. This Assignment constitutes the legal, valid, and binding obligation of Assignor, enforceable against Assignor in accordance with its terms, subject only to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and other similar laws of general applicability affecting the enforcement of creditors' rights generally, and subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).
(d) Construction Contract in Full Force and Effect. The Construction Contract is in full force and effect and has not been amended, modified, supplemented, or restated except as disclosed to Assignee in writing prior to the date hereof. The Construction Contract constitutes the entire agreement between Assignor and Contractor with respect to the construction of the Project, and there are no other agreements, contracts, understandings, or side letters between Assignor and Contractor relating to the construction of the Project that have not been disclosed to Assignee. True, correct, and complete copies of the Construction Contract (including all exhibits, schedules, and attachments thereto) have been delivered to Assignee and the Independent Engineer.
(e) GMP Amount. The guaranteed maximum price under the Construction Contract is Thirty-Three Million Seven Hundred Fifty Thousand and No/100 Dollars ($33,750,000.00). As of the date hereof, no change orders have been executed that would increase or decrease the guaranteed maximum price.
(f) No Default Under Construction Contract. Neither Assignor nor, to Assignor's actual knowledge after due inquiry, Contractor is in default under the Construction Contract, and no event or condition has occurred or exists which, with the giving of notice, the lapse of time, or both, would constitute a default by either Assignor or Contractor under the Construction Contract. There are no pending or, to Assignor's actual knowledge, threatened claims, disputes, controversies, or litigation arising out of or related to the Construction Contract.
(g) No Prior Assignment. Assignor has not previously assigned, transferred, conveyed, pledged, hypothecated, or encumbered its right, title, or interest in, to, or under the Construction Contract, the Plans, or the Permits, in whole or in part, and the Assigned Documents are free and clear of all liens, claims, security interests, pledges, charges, and encumbrances of any kind or nature whatsoever, other than the lien and security interest created by this Assignment in favor of Assignee. Assignor has full right, power, and authority to make this Assignment without the consent of any other person or entity, except for the consent of Contractor, which has been obtained as set forth in Exhibit A attached hereto.
(h) Permits Current and Valid. All Permits required for the commencement and prosecution of construction of the Project as contemplated by the Plans and the Construction Contract have been obtained, are in full force and effect, and are not subject to any pending or, to Assignor's actual knowledge after due inquiry, threatened revocation, suspension, cancellation, modification, or limitation. Without limiting the generality of the foregoing, Loudoun County Building Permit No. BLD-2024-001287 was issued by the Loudoun County Department of Building and Development on February 28, 2024, and is in full force and effect as of the date hereof. No proceeding is pending or, to Assignor's knowledge, threatened before any governmental authority that could result in the revocation, suspension, or material modification of any Permit.
(i) Bonding. The Contractor's obligations under the Construction Contract are secured by a performance bond and a payment bond, each issued by Allegiance Bond & Casualty Co., a surety company duly licensed and authorized to issue surety bonds in the Commonwealth of Virginia. The performance bond and payment bond are each in an amount not less than the guaranteed maximum price of $33,750,000.00 and name Assignor as the obligee. True, correct, and complete copies of such bonds have been delivered to Assignee.
(j) Insurance. Builder's risk insurance is maintained in connection with the Project by Atlas Property & Casualty Insurance Company under Policy No. BRA-2024-00417, providing coverage in an amount not less than Forty-Eight Million and No/100 Dollars ($48,000,000.00) on a replacement cost basis, inclusive of soft costs. Such insurance policy names Assignee as additional insured and loss payee, and complies with the insurance requirements set forth in the Loan Agreement. Such insurance policy is in full force and effect, all premiums due thereunder have been paid, and no notice of cancellation, non-renewal, or material modification has been received by Assignor.
(k) Zoning Compliance. The Property is zoned PD-IP (Planned Development — Industrial Park) under the Loudoun County Revised 1993 Zoning Ordinance (as amended), and the construction and intended use of the Project as a data center facility is a permitted use under such zoning classification. Zoning compliance has been confirmed by that certain zoning compliance letter dated on or about February 2024 prepared by Fenwick, Gallo & Stein LLP (Patricia Gallo, Partner), a true, correct, and complete copy of which has been delivered to Assignee. The Project does not violate or conflict with any applicable zoning, land use, building, environmental, or other governmental regulation, ordinance, or restriction.
ARTICLE IV — COVENANTS OF ASSIGNOR
Assignor hereby covenants and agrees with Assignee that, from and after the date hereof and until the Secured Obligations have been indefeasibly paid and performed in full and the Loan Agreement has been terminated, Assignor shall comply with the following covenants:
Section 4.1 — Performance of Construction Contract. Assignor shall diligently and faithfully perform, observe, and comply with all of its covenants, agreements, and obligations under the Construction Contract in accordance with the terms thereof. Assignor shall cause the Contractor to prosecute the work under the Construction Contract with due diligence and in a good and workmanlike manner, in accordance with the Plans and the Permits, and in compliance with all applicable federal, state, and local laws, regulations, codes, and ordinances. Assignor shall use commercially reasonable efforts to cause the Project to be substantially completed in accordance with the Plans and the Permits on or before the Outside Completion Date of September 30, 2025. In the event that Assignor becomes aware that substantial completion of the Project will not be achieved by the Outside Completion Date, Assignor shall promptly notify Assignee in writing and shall provide Assignee with a detailed explanation of the cause of the delay and a proposed remediation plan.
Section 4.2 — Maintenance of Permits. Assignor shall maintain all Permits in full force and effect throughout the construction period and shall promptly apply for, obtain, and maintain any additional Permits that may become required in connection with the construction, development, use, or occupancy of the Project. Assignor shall promptly renew or replace any Permit that expires or is revoked during the construction period, and shall not take any action or fail to take any action that could reasonably be expected to result in the revocation, suspension, cancellation, or material modification of any Permit. Assignor shall promptly deliver to Assignee copies of all Permits obtained after the date hereof.
Section 4.3 — No Amendment or Termination. Assignor shall not, without the prior written consent of Assignee (which consent shall not be unreasonably withheld, conditioned, or delayed with respect to non-material matters, but may be granted, withheld, conditioned, or delayed in Assignee's sole and absolute discretion with respect to material matters):
(a) materially amend, modify, supplement, restate, or terminate the Construction Contract, or consent to any such material amendment, modification, supplement, restatement, or termination;
(b) reduce the guaranteed maximum price under the Construction Contract below Thirty-Three Million Seven Hundred Fifty Thousand and No/100 Dollars ($33,750,000.00), or agree to any change in the guaranteed maximum price that is not offset by a corresponding reduction in the scope of work approved by Assignee;
(c) waive, release, or compromise any material provision, right, claim, or cause of action under the Construction Contract, including without limitation any warranty, indemnification obligation, right to liquidated damages, or right to withhold payment; or
(d) replace the Contractor or consent to the assignment or transfer of the Construction Contract by Contractor to any other person or entity.
Section 4.4 — Notice of Default. Assignor shall promptly, and in any event within five (5) business days, notify Assignee in writing of the occurrence or existence of any of the following:
(a) any default or event of default by Contractor under the Construction Contract, or any written notice of default delivered to or received from Contractor;
(b) any dispute, controversy, claim, or litigation between Assignor and Contractor arising out of or related to the Construction Contract, the Plans, the Permits, or the Project, including without limitation any dispute regarding the scope of work, the schedule, change orders, payment, or the quality of materials or workmanship;
(c) any mechanic's lien, materialman's lien, or other statutory or common law lien claim filed by any subcontractor, materialman, laborer, supplier, or other person against the Property or any improvements thereon arising out of or related to the construction of the Project;
(d) any revocation, suspension, cancellation, modification, or threatened revocation, suspension, cancellation, or modification of any Permit, or any notice of violation or citation issued by any governmental authority in connection with the Project;
(e) any material casualty, loss, damage, or destruction affecting the Project or the Property, or any condemnation or eminent domain proceeding or threat thereof affecting the Property; or
(f) any event or circumstance that could reasonably be expected to result in a material delay in the completion of the Project beyond the Outside Completion Date, a material increase in the cost of the Project, or a material adverse change in the condition of the Project.
Section 4.5 — Inspection Rights. Assignor shall permit Assignee and the Independent Engineer (Whitmore & Associates, PC, lead engineer: James A. Whitmore, PE) and their respective agents, representatives, and consultants to enter upon the Property and inspect the Project and the work in progress at all reasonable times during normal business hours and upon not less than twenty-four (24) hours' prior notice to Assignor (or without prior notice upon the occurrence of an Event of Default). Assignor shall make available to Assignee and the Independent Engineer, upon request, the Plans, the Permits, and all books, records, contracts, invoices, lien waivers, inspection reports, test results, and other documents and information relating to the construction of the Project. No inspection by Assignee or the Independent Engineer shall constitute a waiver of any default or an approval of any work, and neither Assignee nor the Independent Engineer shall have any obligation or liability arising from any inspection or failure to inspect.
Section 4.6 — Draw Procedures. All draw requests under the Construction Contract shall be submitted by Assignor in accordance with the draw procedures set forth in the Loan Agreement, including without limitation the following requirements:
(a) each draw request shall be accompanied by a certification by the Contractor as to the percentage of completion of the work and the amount of the requested draw;
(b) each draw request shall be reviewed and approved by the Independent Engineer prior to any advance by Assignee;
(c) retainage in an amount equal to ten percent (10%) of each progress payment shall be withheld and held by Assignee in accordance with the Loan Agreement until final completion and acceptance of the work; and
(d) all draw requests shall be submitted on the form required by the Loan Agreement and shall be accompanied by such supporting documentation as Assignee or the Independent Engineer may reasonably require, including partial lien waivers from Contractor and all subcontractors and suppliers.
Section 4.7 — No Liens. Assignor shall not permit any mechanic's lien, materialman's lien, judgment lien, or other lien or encumbrance to attach to, be filed against, or otherwise encumber the Property or the Project arising out of or related to the Construction Contract, the construction of the Project, or the furnishing of labor, materials, equipment, or services in connection therewith. In the event that any such lien or claim of lien is filed, Assignor shall, within thirty (30) days after receiving notice thereof, either (a) cause such lien to be released and discharged of record, (b) bond over such lien by posting a surety bond in form and amount satisfactory to Assignee, or (c) provide Assignee with such other security or assurance as Assignee may reasonably require. Failure to comply with this Section 4.7 within such thirty (30) day period shall constitute an Event of Default under the Loan Agreement.
Section 4.8 — Copies of Notices and Correspondence. Assignor shall promptly deliver to Assignee copies of all material notices, correspondence, reports, change orders, requests for information, submittals, certificates of substantial or final completion, punch lists, warranty claims, and other communications given or received by Assignor under or in connection with the Construction Contract. Without limiting the foregoing, Assignor shall deliver to Assignee copies of all change orders (whether or not material) within five (5) business days after execution thereof.
ARTICLE V — RIGHTS AND REMEDIES OF ASSIGNEE UPON DEFAULT
Section 5.1 — Exercise of Assignment. Upon the occurrence and during the continuance of an Event of Default (as such term is defined in the Loan Agreement), Assignee shall have the right, but not the obligation, to exercise all of the rights, powers, and privileges of Assignor under the Assigned Documents, and to take such actions as Assignee, in its sole and absolute discretion, deems necessary or appropriate to protect its interests in the Assigned Documents and the Project. Without limiting the generality of the foregoing, upon the occurrence and during the continuance of an Event of Default, Assignee shall have the right to:
(a) take over, assume, and enforce the Construction Contract, or any portion thereof, and to cause the completion of the Project in accordance with the Plans and the Permits, either directly or through a designee, agent, receiver, or other representative appointed by Assignee or by a court of competent jurisdiction;
(b) enforce the Construction Contract directly against Contractor, including without limitation the right to demand strict performance by Contractor, to enforce the guaranteed maximum price of $33,750,000.00, to exercise all remedies available to Assignor thereunder (including the right to terminate the Construction Contract and pursue damages), and to exercise all rights under the performance bond and payment bond issued by Allegiance Bond & Casualty Co.;
(c) use the Plans, and to license, sublicense, or otherwise grant rights in the Plans to third parties, for the purpose of completing, modifying, repairing, operating, leasing, financing, refinancing, selling, or otherwise disposing of the Project, without any additional compensation to the architects, engineers, or other design professionals who prepared the Plans;
(d) exercise all rights under the Permits in connection with the completion, operation, use, occupancy, leasing, financing, or disposition of the Project, including the right to apply for renewals, extensions, or modifications of the Permits in the name of Assignor or otherwise;
(e) engage, at Assignor's expense, substitute or additional contractors, subcontractors, architects, engineers, consultants, and other professionals to complete the Project or any portion thereof, on such terms and conditions as Assignee deems appropriate;
(f) make draw requests and applications for payment under the Construction Contract, receive and apply payments, and direct the disbursement of funds on behalf of Assignor, including the release of retainage; and
(g) pursue, enforce, settle, or compromise any and all claims, counterclaims, setoffs, and causes of action against Contractor, any subcontractor, any surety, any design professional, or any other person or entity arising under or in connection with the Assigned Documents, and to collect, receive, and apply all damages, awards, settlements, and other amounts recovered in connection therewith.
In connection with the exercise of any rights under this Section 5.1, Assignee may, but shall not be obligated to, advance funds for the completion of the Project, and any such advances shall be secured by the Deed of Trust and the other Loan Documents and shall constitute additional Secured Obligations.
Section 5.2 — No Obligation to Assume or Perform. The exercise by Assignee of any rights under this Article V, including without limitation the assumption or enforcement of the Construction Contract, shall not constitute an assumption by Assignee of any obligations, liabilities, or duties of Assignor under the Assigned Documents or otherwise, unless Assignee expressly assumes such obligations in writing. Assignee shall not be deemed to be a party to the Construction Contract or any other Assigned Document by reason of this Assignment or the exercise of any rights hereunder, and shall have no liability to Contractor, any subcontractor, any design professional, any materialman, any laborer, any governmental authority, or any other person or entity by reason of the exercise of such rights. Nothing contained herein shall impose on Assignee any duty to exercise any rights under this Article V or to complete the Project.
Section 5.3 — Cumulative Remedies. The rights and remedies of Assignee under this Assignment are cumulative and shall be in addition to, and not in limitation of, all other rights and remedies available to Assignee under the Loan Documents, at law, in equity, or otherwise. Without limiting the generality of the foregoing, Assignee may exercise its rights and remedies under this Assignment concurrently with, or independently of, its rights and remedies under the Deed of Trust, the Completion Guaranty executed by Cobalt Ridge Capital Partners, LP, as guarantor, in favor of Assignee, the Environmental Indemnity Agreement, the Cash Management Agreement, and all other Loan Documents. The exercise of any right or remedy by Assignee hereunder shall not preclude the simultaneous or subsequent exercise of any other right or remedy. No failure or delay by Assignee in exercising any right or remedy shall operate as a waiver thereof, and no single or partial exercise of any right or remedy shall preclude any other or further exercise thereof or the exercise of any other right or remedy.
Section 5.4 — Application of Proceeds. Any and all amounts received by Assignee upon or in connection with the exercise of remedies under this Assignment, whether from Contractor, any subcontractor, any surety, any insurer, any governmental authority, or any other source, shall be applied in accordance with the terms and conditions set forth in the Loan Agreement and the other Loan Documents, including the order of application provisions contained therein.
ARTICLE VI — FURTHER ASSURANCES
Section 6.1 — Further Assurances. Assignor shall, from time to time, at Assignor's sole cost and expense, promptly execute and deliver to Assignee such additional instruments, documents, certificates, and agreements, and shall take such further actions, as Assignee may reasonably request in order to carry out the purposes and intent of this Assignment, to perfect and protect Assignee's security interest in the Assigned Documents, and to enable Assignee to exercise and enforce its rights and remedies hereunder. Without limiting the generality of the foregoing, Assignor shall:
(a) execute and deliver such Uniform Commercial Code financing statements (including UCC-1 financing statements) and continuation statements as Assignee may request, in form suitable for filing in the offices of the Virginia State Corporation Commission and in such other jurisdictions as Assignee may deem appropriate, to perfect and maintain perfection of Assignee's security interest in the Assigned Documents to the extent the Assigned Documents constitute personal property or general intangibles under the Virginia Uniform Commercial Code;
(b) execute and deliver such estoppel certificates, consents, and acknowledgments as Assignee may reasonably request from time to time; and
(c) cooperate with Assignee in obtaining any consents, approvals, or authorizations from Contractor, governmental authorities, or other third parties that may be necessary or advisable to effectuate or enforce this Assignment.
Section 6.2 — Power of Attorney. Assignor hereby irrevocably constitutes and appoints Assignee, and any officer or agent of Assignee, as Assignor's true and lawful attorney-in-fact, coupled with an interest, with full power of substitution, to execute, deliver, and file, in Assignor's name and on Assignor's behalf, upon the occurrence and during the continuance of an Event of Default under the Loan Agreement, any and all documents, instruments, agreements, notices, and filings that may be necessary or desirable to effectuate this Assignment or to exercise Assignee's rights hereunder. Without limiting the generality of the foregoing, such power of attorney shall include the power and authority to:
(a) execute and file UCC financing statements and continuation statements;
(b) execute and deliver amendments, modifications, or assignments of the Construction Contract, the Plans, or the Permits;
(c) execute and deliver notices to Contractor, subcontractors, design professionals, and governmental authorities;
(d) execute and file applications for Permits, renewals of Permits, and transfers of Permits;
(e) endorse and negotiate checks, drafts, and other instruments payable to Assignor in connection with the Assigned Documents; and
(f) take any and all other actions that Assignee deems necessary or appropriate to protect and preserve the Assigned Documents and Assignee's security interest therein.
This power of attorney is irrevocable, is coupled with an interest, and shall survive the dissolution, liquidation, or incapacity of Assignor. Assignor hereby ratifies and confirms all actions taken by Assignee pursuant to this power of attorney.
ARTICLE VII — MISCELLANEOUS PROVISIONS
Section 7.1 — Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if (a) delivered personally, (b) sent by registered or certified mail, return receipt requested, postage prepaid, (c) sent by nationally recognized overnight courier service (such as Sundial Data Systems or UPS), or (d) sent by electronic mail (with confirmation of receipt), addressed as follows:
If to Assignor:
Ironhaven Loudoun Edge LLC c/o Ironhaven Data Centers LLC 1900 Dominion Tower, Suite 400 Tysons Corner, Virginia 22182
Attention: General Counsel
Telephone: (703) 555-4200
Email: legal@ironhavendc.com
with a copy to (which shall not constitute notice):
Calderwood & Harkness LLP 2001 M Street NW, Suite 1200 Washington, DC 20036
Attention: Angela Fontaine, Esq.
Telephone: (202) 555-7800
Email: afontaine@calderwoodharkness.com
If to Assignee:
Pinnacle Federal Savings Bank 800 Constitution Avenue NW, Suite 550 Washington, DC 20001
Attention: Thomas R. Whitfield, Senior Vice President, Technology & Data Center Lending
Telephone: (202) 555-3100
Email: twhitfield@pinnaclefed.com
with a copy to (which shall not constitute notice):
Hargrove, Liddell & Pace LLP 1750 K Street NW, Suite 900 Washington, DC 20006
Attention: Jonathan Breckinridge, Esq.
Telephone: (202) 555-9400
Email: jbreckinridge@hlplaw.com
Any notice delivered personally shall be deemed received upon delivery. Any notice sent by registered or certified mail shall be deemed received three (3) business days after deposit in the United States mail. Any notice sent by overnight courier shall be deemed received on the next business day after deposit with the courier service. Any notice sent by electronic mail shall be deemed received upon confirmation of receipt. Either Party may change its address for notice purposes by giving written notice to the other Party in accordance with this Section 7.1.
Section 7.2 — Governing Law. This Assignment and the rights and obligations of the Parties hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the Commonwealth of Virginia (including the Virginia Uniform Commercial Code, as applicable), without giving effect to any choice of law or conflict of law provision or rule (whether of the Commonwealth of Virginia or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the Commonwealth of Virginia. Each Party hereby irrevocably submits to the exclusive jurisdiction of the federal and state courts located in Loudoun County, Virginia, or the United States District Court for the Eastern District of Virginia, Alexandria Division, for the purpose of any action, suit, or proceeding arising out of or relating to this Assignment, and each Party hereby irrevocably waives any objection to venue or any claim of inconvenient forum with respect to any such action, suit, or proceeding.
Section 7.3 — Successors and Assigns. This Assignment shall be binding upon and shall inure to the benefit of the Parties and their respective heirs, executors, administrators, legal representatives, successors, and assigns. Assignor may not assign, transfer, or delegate its rights, interests, or obligations under this Assignment without the prior written consent of Assignee, and any purported assignment without such consent shall be void and of no force or effect. Assignee may assign, transfer, or participate its rights and interests under this Assignment, in whole or in part, without the consent of Assignor, in connection with any assignment, transfer, or participation of the Loan or any interest therein in accordance with the Loan Agreement.
Section 7.4 — Severability. If any provision of this Assignment, or the application thereof to any person, entity, or circumstance, is held by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions of this Assignment, and the application of such provision to other persons, entities, or circumstances, shall not in any way be affected or impaired thereby, and such provision shall be reformed, construed, and enforced to the maximum extent permitted by applicable law so as to render such provision valid and enforceable.
Section 7.5 — Amendments and Waivers. No amendment, modification, supplement, restatement, or waiver of any provision of this Assignment, and no consent to any departure by Assignor therefrom, shall be effective unless the same shall be in writing and signed by Assignee, and in the case of any amendment, modification, supplement, or restatement, also signed by Assignor. Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it is given.
Section 7.6 — Entire Agreement. This Assignment, together with the other Loan Documents and the Assigned Documents, constitutes the entire agreement of the Parties with respect to the subject matter hereof and supersedes all prior negotiations, discussions, agreements, understandings, representations, and warranties, whether oral or written, with respect to such subject matter.
Section 7.7 — Counterparts. This Assignment may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of this Assignment by facsimile transmission or by electronic transmission in portable document format (.pdf) shall be as effective as delivery of a manually executed original counterpart.
Section 7.8 — Headings. The article and section headings contained in this Assignment are for convenience of reference only, are not intended to be a part of or to affect the meaning or interpretation of this Assignment, and shall not be considered in construing or interpreting any provision hereof.
Section 7.9 — Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, CLAIM, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS ASSIGNMENT, THE OTHER LOAN DOCUMENTS, THE ASSIGNED DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, WHETHER BASED ON CONTRACT, TORT, STRICT LIABILITY, OR ANY OTHER THEORY. EACH PARTY ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO THE OTHER PARTY'S ENTERING INTO THIS ASSIGNMENT, THAT EACH PARTY HAS BEEN REPRESENTED BY COUNSEL IN CONNECTION WITH THIS WAIVER, AND THAT EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO THIS ASSIGNMENT.
Section 7.10 — Relationship to Loan Documents. This Assignment is one of the "Loan Documents" referred to in the Loan Agreement and is executed and delivered pursuant to the requirements thereof. This Assignment is subject to, and shall be construed in accordance with, the terms and conditions of the Loan Agreement. In the event of any conflict, inconsistency, or ambiguity between the terms and provisions of this Assignment and the terms and provisions of the Loan Agreement, the terms and provisions of the Loan Agreement shall govern and control. The lien, security interest, and assignment created by this Assignment shall secure all of the Secured Obligations, and shall be in addition to, and not in substitution for, the security provided by the Deed of Trust and the other Loan Documents.
[Remainder of page intentionally left blank; signature pages follow.]
IN WITNESS WHEREOF, the Parties hereto have caused this Collateral Assignment of Construction Contract, Plans, and Permits to be duly executed and delivered as of the date first written above.
ASSIGNOR:
IRONHAVEN LOUDOUN EDGE LLC, a Virginia limited liability company
By: Ironhaven Data Centers LLC,
a Virginia limited liability company, its sole member
By: ________
Name: ________
Title: ________
Date: March 18, 2024
ASSIGNEE:
PINNACLE FEDERAL SAVINGS BANK, a federally chartered savings bank
By: ________
Name: Thomas R. Whitfield
Title: Senior Vice President, Technology & Data Center Lending
Date: March 18, 2024
EXHIBIT A
CONSENT AND ACKNOWLEDGMENT OF CONTRACTOR
This Consent and Acknowledgment of Contractor (this "Consent") is executed and delivered as of March 18, 2024, by Marlowe Asset Management-Pacific Construction, Inc., a Virginia corporation ("Contractor"), having its principal office at 22600 Gateway Center Drive, Suite 300, Sterling, Virginia 20166, in connection with that certain Collateral Assignment of Construction Contract, Plans, and Permits dated as of March 18, 2024 (the "Assignment"), made by Ironhaven Loudoun Edge LLC, a Virginia limited liability company ("Assignor"), in favor of Pinnacle Federal Savings Bank, a federally chartered savings bank ("Assignee").
Contractor hereby consents to and acknowledges the Assignment and agrees as follows:
(a) Construction Contract Confirmed. Contractor hereby confirms that the Guaranteed Maximum Price Construction Contract (the "Construction Contract") between Assignor, as owner, and Contractor, as contractor, for the construction of the Loudoun Edge Facility — a 52,000 square foot, 4.5 MW critical IT load edge data center facility located at 44350 Prentice Drive, Ashburn, Loudoun County, Virginia 20147 — is in full force and effect and has not been amended, modified, supplemented, or restated except as disclosed to Assignee in writing. The Construction Contract provides for a guaranteed maximum price of Thirty-Three Million Seven Hundred Fifty Thousand and No/100 Dollars ($33,750,000.00). True, correct, and complete copies of the Construction Contract, including all exhibits, schedules, change orders, and attachments thereto, have been provided to Assignee.
(b) No Default. Contractor hereby confirms that neither Contractor nor, to Contractor's actual knowledge after due inquiry, Assignor is in default under the Construction Contract, and no event or condition has occurred or exists which, with the giving of notice, the lapse of time, or both, would constitute a default by either Contractor or Assignor under the Construction Contract. There are no pending or, to Contractor's actual knowledge, threatened claims, disputes, or controversies between Contractor and Assignor arising out of or related to the Construction Contract.
(c) No Prior Assignment. Contractor hereby confirms that it has not received written notice of any prior assignment, transfer, pledge, or encumbrance of the Construction Contract or any interest therein, other than the Assignment in favor of Assignee.
(d) Consent to Assignment. Contractor hereby consents to the collateral assignment by Assignor to Assignee of all of Assignor's right, title, and interest in, to, and under the Construction Contract, the Plans, and the Permits, as security for the Loan, as more particularly described in the Assignment. Contractor acknowledges that this consent is given as a material inducement to Assignee to make the Loan and that Assignee is relying on this consent in connection therewith.
(e) Agreement to Perform for Assignee. Contractor agrees that, upon receipt of written notice from Assignee that an Event of Default has occurred under the Loan Agreement and that Assignee is exercising its rights under the Assignment, Contractor shall:
(i) recognize Assignee (or its designee, successor, or assign) as the successor to Assignor's rights under the Construction Contract;
(ii) continue to perform all of its obligations under the Construction Contract for the benefit of Assignee (or its designee, successor, or assign) in the same manner and with the same degree of care and diligence as if performing for Assignor;
(iii) accept instructions, directions, and approvals from Assignee (or its designee, successor, or assign) in the same manner and to the same extent as if given by Assignor, including without limitation instructions regarding the prosecution of the work, the submission of draw requests, the approval of subcontractors, and the execution of change orders; and
(iv) not terminate the Construction Contract or suspend performance thereunder on account of any default by Assignor without first providing Assignee with written notice of such default and affording Assignee a reasonable period of not less than thirty (30) days (or such longer period as may be reasonably necessary to effectuate a cure, provided that Assignee has commenced cure efforts within such thirty (30) day period and is diligently pursuing the same) within which to cure such default or to assume the Construction Contract;
provided, however, that Assignee (or its designee) shall cure any then-existing monetary default by Assignor under the Construction Contract within a reasonable period not to exceed thirty (30) days after assuming the Construction Contract, and shall cure any then-existing non-monetary default within a reasonable period after assuming the Construction Contract.
(f) No Modification Without Consent. Contractor agrees that it shall not agree to or enter into any material amendment, modification, supplement, restatement, or termination of the Construction Contract, or any reduction in the guaranteed maximum price, without the prior written consent of Assignee. For purposes of this paragraph, "material" shall include, without limitation, any change that would (i) increase or decrease the guaranteed maximum price by more than $250,000 in the aggregate, (ii) extend the date of substantial completion by more than thirty (30) days, (iii) materially change the scope of work, or (iv) modify the warranty, indemnification, insurance, or bonding provisions of the Construction Contract.
(g) Copies of Notices. Contractor agrees to deliver to Assignee, concurrently with delivery to Assignor, copies of all material notices of default, notices of termination, claims, demands, and written disputes delivered to or received from Assignor under the Construction Contract. Such copies shall be delivered to Assignee at the address set forth for Assignee in the Assignment.
(h) Bonding Confirmed. Contractor hereby confirms that performance and payment bonds have been issued by Allegiance Bond & Casualty Co. in connection with the Construction Contract, each in an amount not less than the guaranteed maximum price of $33,750,000.00, and that such bonds are in full force and effect as of the date hereof.
This Consent shall be binding upon Contractor and its successors and assigns, and shall inure to the benefit of Assignee and its successors and assigns. This Consent shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia.
All notices to Contractor under this Consent or the Assignment shall be delivered to:
Marlowe Asset Management-Pacific Construction, Inc. 22600 Gateway Center Drive, Suite 300 Sterling, Virginia 20166
Attention: Robert Castellano, President
Telephone: (703) 555-6700
Email: rcastellano@unpacificpacific.com
CONTRACTOR:
Marlowe Asset Management-PACIFIC CONSTRUCTION, INC., a Virginia corporation
By: ________
Name: Robert "Rob" Castellano
Title: President
Date: March 18, 2024