After recording, return to: Hargrove, Liddell & Pace LLP 1750 K Street NW, Suite 900 Washington, DC 20006
Attention: Jonathan Breckinridge
Prepared for recording in the Office of the Clerk of the Circuit Court of Loudoun County, Virginia
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT, AND FIXTURE FILING
Tax Map Parcel No.: 087-23-5571
THIS INSTRUMENT CONTAINS A SECURITY AGREEMENT AND CONSTITUTES A FIXTURE FILING UNDER ARTICLES 8 AND 9 OF THE VIRGINIA UNIFORM COMMERCIAL CODE
THIS INSTRUMENT SECURES AN INDEBTEDNESS OF $45,000,000.00
Loan Reference: Construction Loan Agreement dated March 18, 2024
Borrower/Grantor:
Ironhaven Loudoun Edge LLC c/o Ironhaven Data Centers LLC 1900 Dominion Tower, Suite 400 Tysons Corner, VA 22182 (a Virginia limited liability company; EIN: 93-4178226; VA SCC Entity ID: S9103284)
Beneficiary/Lender:
Pinnacle Federal Savings Bank 800 Constitution Avenue NW, Suite 550 Washington, DC 20001
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT, AND FIXTURE FILING
Right-click to update Table of Contents
PREAMBLE AND INTRODUCTORY RECITALS
THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT, AND FIXTURE FILING (this "Deed of Trust") is made and entered into as of March 18, 2024 (the "Effective Date"), by and among:
GRANTOR:
IRONHAVEN LOUDOUN EDGE LLC, a Virginia limited liability company (a single-purpose, bankruptcy-remote entity), whose sole member is Ironhaven Data Centers LLC, a Virginia limited liability company, having its principal office at c/o Ironhaven Data Centers LLC, 1900 Dominion Tower, Suite 400, Tysons Corner, Virginia 22182, and whose registered agent for service of process in the Commonwealth of Virginia is Commonwealth Registered Agents Inc., 1021 E. Cary Street, Richmond, Virginia 23219 (hereinafter referred to as "Grantor");
TRUSTEE:
HARLAND S. KESSLER, an individual duly qualified to serve as a deed of trust trustee under Virginia Code § 55.1-300 et seq., with an address at 4100 Chain Bridge Road, Suite 310, Fairfax, Virginia 22030 (hereinafter referred to as "Trustee");
BENEFICIARY:
PINNACLE FEDERAL SAVINGS BANK, a federally chartered savings bank organized and existing under the laws of the United States of America, with its principal office at 800 Constitution Avenue NW, Suite 550, Washington, DC 20001 (hereinafter referred to as "Beneficiary").
RECITALS. A. Grantor is the owner in fee simple of certain real property located at 44350 Prentice Drive, Ashburn, Loudoun County, Virginia 20147, more particularly described in Exhibit A attached hereto and made a part hereof (the "Land"), consisting of approximately 3.2 acres, identified on the Loudoun County tax maps as Tax Map Parcel No. 087-23-5571. Grantor acquired the Land pursuant to that certain Special Warranty Deed recorded in the Office of the Clerk of the Circuit Court of Loudoun County, Virginia (the "Land Records"), among the land records of Loudoun County.
B. Grantor and Beneficiary have entered into that certain Construction Loan Agreement dated as of March 18, 2024 (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "Loan Agreement"), pursuant to which Beneficiary has agreed to make a construction-to-permanent loan to Grantor in the original principal amount of Forty-Five Million and 00/100 Dollars ($45,000,000.00) (the "Loan") for the purpose of financing the construction of an approximately 52,000 square foot data center facility with 4.5 MW critical IT load capacity, to be known as the "Loudoun Edge Facility" (the "Improvements"), upon the Land.
C. The Loan is evidenced by that certain Promissory Note dated as of March 18, 2024, in the original principal amount of Forty-Five Million and 00/100 Dollars ($45,000,000.00) (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "Note"), made by Grantor and payable to the order of Beneficiary, which Note sets forth the interest rate, repayment terms, maturity date, and other provisions governing the repayment of the Loan.
D. Grantor has entered into certain leases with respect to the Property, including without limitation (i) that certain Data Center Lease Agreement dated as of January 15, 2024, between Grantor, as landlord, and Sentinel Cloud Services, Inc., a Delaware corporation, as tenant, for approximately 22,000 square feet of space within the Improvements (the "Sentinel Lease"), and (ii) that certain Data Center Lease Agreement dated as of February 5, 2024, between Grantor, as landlord, and Ridgeline Federal Solutions LLC, a Virginia limited liability company, as tenant, for approximately 16,000 square feet of space within the Improvements (the "Ridgeline Lease"), each as more particularly described in Exhibit C attached hereto.
E. As a condition to Beneficiary's agreement to make the Loan, Beneficiary has required that Grantor execute and deliver this Deed of Trust, which constitutes a deed of trust, an assignment of leases and rents, a security agreement, and a fixture filing, all as more fully set forth herein, to secure the payment and performance of all Obligations (as hereinafter defined) of Grantor to Beneficiary arising under or in connection with the Loan Documents (as hereinafter defined).
NOW, THEREFORE, for and in consideration of the premises and the covenants and agreements herein set forth, and for the purpose of securing the Obligations, and in consideration of the sum of Ten and 00/100 Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor hereby agrees as follows:
ARTICLE I — DEFINITIONS
As used in this Deed of Trust, the following terms shall have the meanings set forth below. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Loan Agreement.
"Beneficiary" means Pinnacle Federal Savings Bank, a federally chartered savings bank, and its successors and assigns.
"Completion Guaranty" means that certain Completion Guaranty dated as of March 18, 2024, executed by Cobalt Ridge Capital Partners, LP, a Delaware limited partnership, in favor of Beneficiary, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Construction Contract" means that certain Guaranteed Maximum Price Construction Contract dated as of March 5, 2024, between Grantor and Marlowe Asset Management-Pacific Construction, Inc., a Virginia corporation, in the guaranteed maximum price amount of Thirty-Three Million Seven Hundred Fifty Thousand and 00/100 Dollars ($33,750,000.00), as the same may be amended, restated, supplemented, or otherwise modified from time to time with the prior written consent of Beneficiary.
"Deed of Trust" means this Deed of Trust, Assignment of Leases and Rents, Security Agreement, and Fixture Filing, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Environmental Indemnity" means that certain Environmental Indemnity Agreement dated as of March 18, 2024, executed by Ironhaven Data Centers LLC, a Virginia limited liability company, and Cobalt Ridge Capital Partners, LP, a Delaware limited partnership, in favor of Beneficiary, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Event of Default" means any event of default as defined in the Loan Agreement or in this Deed of Trust, in each case after the expiration of any applicable notice and cure periods expressly provided therein.
"Fixtures" means all fixtures, equipment, machinery, building systems, and other items of property now or hereafter permanently affixed to, attached to, installed in, or incorporated into the Land or the Improvements, including without limitation all data center infrastructure, mechanical, electrical, and plumbing systems ("MEP systems"), emergency generators, heating, ventilation, and air conditioning systems ("HVAC"), uninterruptible power supply systems ("UPS systems"), power distribution units, switchgear, transformers, automatic transfer switches, cooling distribution units, computer room air handling units, raised flooring systems, fire suppression systems, building management systems, and security systems, together with all replacements, substitutions, and additions thereto.
"Grantor" means Ironhaven Loudoun Edge LLC, a Virginia limited liability company, and its successors and permitted assigns.
"Improvements" means all buildings, structures, improvements, and appurtenances now or hereafter erected, constructed, or located on the Land, including without limitation the Loudoun Edge Facility, together with all additions, alterations, replacements, and restorations thereto.
"Intangible Property" means all permits, licenses, entitlements, governmental approvals, certificates of occupancy, certificates of compliance, plans, specifications, drawings, surveys, soil reports, environmental reports, engineering reports, construction contracts, architectural contracts, management agreements, service contracts, warranties, guarantees, indemnities, and general intangibles of every kind and nature, in each case to the extent related to, arising from, or used in connection with the ownership, development, construction, use, operation, management, leasing, maintenance, or enjoyment of the Property, or any part thereof.
"Land" means the real property described in Exhibit A attached hereto and made a part hereof, located at 44350 Prentice Drive, Ashburn, Loudoun County, Virginia 20147, identified on the Loudoun County tax maps as Tax Map Parcel No. 087-23-5571.
"Leases" means, collectively, all leases, subleases, licenses, concessions, and occupancy agreements, whether written or oral, now in existence or hereafter entered into, affecting or relating to all or any portion of the Property, including without limitation the Sentinel Lease and the Ridgeline Lease, together with all amendments, modifications, supplements, renewals, extensions, and replacements thereof, as more particularly described in Exhibit C attached hereto.
"Loan Agreement" means that certain Construction Loan Agreement dated as of March 18, 2024, between Grantor and Beneficiary, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Loan Documents" means, collectively, the Loan Agreement, the Note, this Deed of Trust, the Completion Guaranty, the Environmental Indemnity, the Collateral Assignment of Construction Contract, Plans, and Permits, the Cash Management Agreement, the Pledge Agreement, and all other documents, instruments, agreements, and certificates executed and delivered by Grantor or any other person or entity in connection with the Loan, as each of the foregoing may be amended, restated, supplemented, or otherwise modified from time to time.
"Note" means that certain Promissory Note dated as of March 18, 2024, in the original principal amount of Forty-Five Million and 00/100 Dollars ($45,000,000.00), made by Grantor and payable to the order of Beneficiary, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Obligations" means all indebtedness, obligations, and liabilities of Grantor to Beneficiary under or in connection with the Loan Documents, whether now existing or hereafter arising, whether direct or indirect, absolute or contingent, joint or several, due or to become due, and howsoever and whensoever arising, including without limitation all principal, interest (including interest accruing after the filing of any petition in bankruptcy, whether or not such interest is an allowable claim in such proceeding), fees, costs, expenses, charges, reimbursements, indemnifications, and other amounts due or to become due under the Loan Documents.
"Permitted Exceptions" means those exceptions to title listed and described in Exhibit B attached hereto and made a part hereof, as approved by Beneficiary.
"Personal Property" means all tangible and intangible personal property of Grantor, whether now owned or hereafter acquired, located on, affixed to, or used in connection with the Property or the ownership, operation, management, leasing, or maintenance thereof, including without limitation all furniture, furnishings, equipment, inventory, accounts, accounts receivable, chattel paper (whether tangible or electronic), instruments, documents, deposit accounts, letter-of-credit rights, commercial tort claims, investment property, general intangibles (including payment intangibles and software), goods, money, and all products, offspring, accessions, replacements, substitutions, and proceeds (including insurance proceeds and condemnation awards) of any of the foregoing.
"Property" means, collectively, the Land, the Improvements, the Fixtures, the Personal Property, the Intangible Property, the Leases, and the Rents.
"Rents" means all rents, income, receipts, revenues, royalties, issues, profits, and other sums of money of any kind now or hereafter payable to Grantor under the Leases or otherwise arising from or related to the Property, including without limitation all lease payments, tenant reimbursements, common area maintenance charges, operating expense reimbursements, tax escalations, percentage rents, parking revenues, and all other sums payable by any tenant, licensee, or other occupant of the Property or any portion thereof.
"Trustee" means Harland S. Kessler, an individual, and any successor trustee appointed in accordance with the provisions of this Deed of Trust and applicable Virginia law.
ARTICLE II — GRANTING CLAUSES
Section 2.1 — Grant of Lien and Security Interest
Grantor does hereby irrevocably GRANT, BARGAIN, SELL, CONVEY, ASSIGN, TRANSFER, MORTGAGE, PLEDGE, SET OVER, and DELIVER unto Trustee, IN TRUST, WITH POWER OF SALE, for the use and benefit of Beneficiary, and does hereby grant to Beneficiary a first-priority lien on and security interest in, all of Grantor's right, title, and interest in and to the following described property, whether now owned or hereafter acquired (collectively, the "Trust Estate"):
(a) The Land, being the real property located at 44350 Prentice Drive, Ashburn, Loudoun County, Virginia 20147, identified on the Loudoun County tax maps as Tax Map Parcel No. 087-23-5571, and more particularly described in Exhibit A attached hereto and incorporated herein by this reference;
(b) All Improvements now or hereafter erected, constructed, or placed on the Land, including without limitation the Loudoun Edge Facility (an approximately 52,000 square foot data center facility designed for 4.5 MW critical IT load capacity), together with all additions, alterations, replacements, substitutions, and restorations thereto;
(c) All Fixtures, whether now owned or hereafter acquired, including without limitation all data center infrastructure, MEP systems, generators, HVAC systems, UPS systems, power distribution equipment, switchgear, transformers, automatic transfer switches, raised flooring, fire suppression systems, building management systems, security systems, and all other items of property that are or may become fixtures affixed to or incorporated into the Land or the Improvements;
(d) All easements, rights-of-way, strips, gores, water rights, riparian rights, and all appurtenances, privileges, tenements, hereditaments, and other rights and benefits belonging or in any way appertaining to the Land or the Improvements, including without limitation all rights of ingress and egress, drainage rights, and air rights;
(e) All streets, alleys, passages, ways, and other rights used or available for use in connection with or as a means of access to the Land or any portion thereof, whether public or private;
(f) All of the estate, right, title, interest, claim, and demand whatsoever of Grantor, either in law or in equity, in possession or expectancy, of, in, and to the Land and the Improvements, and every part and parcel thereof, with the appurtenances thereto;
(g) All right, title, and interest of Grantor in and to any land lying within the right-of-way of any street, road, or avenue, open or proposed, in front of, behind, or adjacent to the Land, to the center line thereof, and all right, title, and interest of Grantor in and to any strips or gores of land adjacent to or lying between the Land and any adjacent parcels;
(h) All after-acquired title to or reversionary interest in the Land or the Improvements, it being the intention of the parties that, if at the time of the execution and delivery of this Deed of Trust, Grantor has only an equitable estate in the Land, and thereafter acquires legal title thereto, such legal title shall thereupon become and be subject to the lien of this Deed of Trust;
together with all proceeds, products, replacements, additions, substitutions, and accessions of or to any of the foregoing.
TO HAVE AND TO HOLD the Trust Estate, together with all rights, privileges, and appurtenances thereunto belonging or in anywise appertaining, unto Trustee, and to Trustee's successors and assigns, in trust, forever, for the uses, purposes, and trusts herein set forth; subject, however, to the terms of this Deed of Trust.
Section 2.2 — Purpose of Grant
The grant, conveyance, assignment, and transfer made in Section 2.1 are made for the purpose of securing the following (collectively, the "Secured Obligations"):
(a) The full and prompt payment by Grantor of all principal in the amount of Forty-Five Million and 00/100 Dollars ($45,000,000.00), and all interest thereon, as and when the same shall become due and payable under the Note and the Loan Agreement, whether at stated maturity, by reason of acceleration, or otherwise;
(b) The full and prompt payment by Grantor of all fees payable under the Loan Documents, including without limitation: (i) the origination fee in the amount of Three Hundred Thirty-Seven Thousand Five Hundred and 00/100 Dollars ($337,500.00), (ii) the unused line fee equal to twenty-five basis points (0.25%) per annum on the average daily undrawn commitment amount during the construction period, (iii) the exit fee equal to twenty-five basis points (0.25%) of the outstanding principal balance at the time of conversion from construction loan to permanent loan, (iv) the extension fee equal to fifty basis points (0.50%) of the outstanding principal balance due upon any extension of the maturity date, and (v) all other fees, charges, and amounts described in the Loan Documents;
(c) The full and prompt payment by Grantor of all costs, expenses, advances, and other sums payable by Grantor under this Deed of Trust, the Loan Agreement, the Note, and the other Loan Documents, including without limitation all taxes, insurance premiums, protective advances, reasonable attorneys' fees, appraisal fees, inspection fees, and title insurance premiums;
(d) The full and prompt performance and observance by Grantor of all covenants, agreements, terms, conditions, and provisions contained in this Deed of Trust, the Loan Agreement, the Note, and each of the other Loan Documents; and
(e) The full and prompt payment and performance of all other Obligations of Grantor under the Loan Documents, whether now existing or hereafter arising.
Section 2.3 — Defeasance
Upon the full and final payment and satisfaction of all Obligations, and provided that no further obligation of Beneficiary to advance funds under the Loan Agreement remains outstanding, Beneficiary shall request Trustee to reconvey the Property to Grantor by executing and delivering to Grantor a release or reconveyance of this Deed of Trust in form suitable for recording in the Land Records of Loudoun County, Virginia, and Beneficiary shall execute and deliver such UCC-3 termination statements and other instruments as may be necessary to release the security interests granted hereunder. The costs and expenses of any such release, reconveyance, and termination, including recording fees and the fees of Trustee, shall be borne by Grantor.
ARTICLE III — ASSIGNMENT OF LEASES AND RENTS
Section 3.1 — Absolute Assignment
Grantor hereby absolutely and unconditionally assigns, transfers, conveys, and sets over to Beneficiary all of Grantor's right, title, and interest in, to, and under all Leases and all Rents, whether now existing or hereafter arising, as further security for the Obligations. This assignment constitutes a present, absolute, and unconditional assignment, and not merely an assignment for additional security or the granting of a security interest. It is the intention of the parties that the assignment contained in this Section 3.1 shall be immediately effective and operative, and that Beneficiary shall immediately have all rights, powers, privileges, and remedies of an assignee with respect to the Leases and the Rents, subject only to the revocable license granted in Section 3.2 below.
Without limiting the generality of the foregoing, the presently existing Leases assigned hereunder include the following:
(i) That certain Data Center Lease Agreement dated as of January 15, 2024, between Grantor, as landlord, and Sentinel Cloud Services, Inc., a Delaware corporation, as tenant, for approximately 22,000 square feet (with 1.9 MW critical IT load allocation), for a term of ten (10) years on a triple-net (NNN) basis, at an annual base rent of Four Million Nine Hundred Fifty Thousand and 00/100 Dollars ($4,950,000.00) (approximately $225.00 per square foot) (the "Sentinel Lease"); and
(ii) That certain Data Center Lease Agreement dated as of February 5, 2024, between Grantor, as landlord, and Ridgeline Federal Solutions LLC, a Virginia limited liability company, as tenant, for approximately 16,000 square feet (with 1.4 MW critical IT load allocation), for a term of seven (7) years on a triple-net (NNN) basis, at an annual base rent of Three Million Three Hundred Sixty Thousand and 00/100 Dollars ($3,360,000.00) (approximately $210.00 per square foot) (the "Ridgeline Lease").
As of the date hereof, the total pre-leased area of the Improvements is approximately 38,000 square feet, representing approximately 73.1% of the total 52,000 square feet of leasable area within the Improvements, with total committed annual base rent of Eight Million Three Hundred Ten Thousand and 00/100 Dollars ($8,310,000.00). Additional information regarding existing Leases is set forth in Exhibit C attached hereto.
Section 3.2 — Revocable License to Collect Rents
Notwithstanding the absolute assignment of Leases and Rents contained in Section 3.1, Beneficiary hereby grants to Grantor a revocable license to collect, receive, use, and enjoy the Rents in accordance with the Loan Documents, subject to the terms and conditions of this Deed of Trust. Such license shall be automatically and immediately revoked, without the necessity of any notice or demand by Beneficiary, upon the occurrence and during the continuance of any Event of Default hereunder or under any other Loan Document. Upon any such revocation, Beneficiary shall be entitled, without limitation, to collect all Rents directly from tenants and other persons obligated to pay the same, to enter into possession of the Property for purposes of collecting Rents, and to exercise all rights and remedies available to a landlord or lessor under the Leases and applicable law.
Section 3.3 — Cash Management
The Loan Agreement and that certain Cash Management Agreement of even date herewith (the "Cash Management Agreement"), among Grantor, Beneficiary, and the depository bank named therein, establish certain lockbox and cash management procedures governing the collection, deposit, and disbursement of Rents. Without limiting the provisions of the Cash Management Agreement, Grantor acknowledges and agrees that, following conversion of the Loan from the construction phase to the permanent phase (the "Conversion"), a springing cash sweep mechanism shall be activated at such time as the debt service coverage ratio ("DSCR") for the Property, calculated on a trailing twelve-month basis, falls below 1.20 to 1.00 (1.20x). During the pendency of any such cash sweep period, all Rents in excess of the amounts required to pay debt service, budgeted operating expenses, required tax and insurance escrows, and approved capital reserves shall be swept to a cash collateral account held by or for the benefit of Beneficiary and applied in accordance with the terms of the Cash Management Agreement and the Loan Agreement.
Section 3.4 — Restrictions on Leases
Grantor shall not, without the prior written consent of Beneficiary (which consent shall not be unreasonably withheld, conditioned, or delayed, except as otherwise provided in the Loan Agreement):
(a) Enter into any new lease, sublease, license, or occupancy agreement affecting the Property, or modify, amend, supplement, extend, renew, or terminate any existing Lease in any material respect;
(b) Accept prepayment of rent or any other sum payable under any Lease for more than one (1) month in advance of the date upon which such rent or other sum is due and payable;
(c) Waive, excuse, condone, discount, set off, compromise, or in any manner release or discharge any tenant from any obligation, covenant, or agreement under any Lease, or consent to or acquiesce in any failure by any tenant to perform any such obligation, covenant, or agreement;
(d) Consent to any assignment of any Lease by any tenant, or to any subletting of all or any portion of the premises demised under any Lease, except as may be expressly permitted under the terms of such Lease without the consent of the landlord; or
(e) Subordinate any Lease to any lien, encumbrance, or other interest, except as expressly required by the terms of such Lease or as may be approved in writing by Beneficiary.
Section 3.5 — Tenant Notifications
Beneficiary may at any time after the occurrence and during the continuance of an Event of Default, without further consent from Grantor, (a) notify any or all tenants and other parties obligated to pay Rents under the Leases of the existence of this assignment and direct such tenants and parties to make all future payments of Rents directly to Beneficiary or its designated agent, (b) collect, receive, and receipt for all Rents, (c) exercise all rights of Grantor under the Leases (including the right to enforce the terms thereof), and (d) apply the Rents so collected to the Obligations in such order and manner as Beneficiary may determine in its sole discretion, after deducting all costs and expenses incurred in connection with the collection thereof, including reasonable attorneys' fees.
Section 3.6 — Beneficiary Not a Mortgagee in Possession
Neither the assignment contained in this Article III nor the exercise by Beneficiary of any of its rights or remedies hereunder shall be deemed to make Beneficiary a "mortgagee in possession" of the Property or to impose upon Beneficiary any obligation or liability of Grantor as landlord or owner of the Property, including without limitation any obligation to manage, operate, maintain, or repair the Property or to perform or comply with any of the terms or provisions of the Leases, unless and until Beneficiary has taken actual, physical possession of the Property through the appointment of a receiver or otherwise. In no event shall Beneficiary be liable for any waste committed by any tenant or any other person, or for any dangerous or defective condition of the Property, or for any negligence in the management, upkeep, repair, or control of the Property.
ARTICLE IV — SECURITY AGREEMENT AND FIXTURE FILING
Section 4.1 — Grant of Security Interest
As additional security for the Obligations, Grantor hereby grants to Beneficiary a first-priority security interest in and lien upon all Personal Property and Fixtures, whether now owned or hereafter acquired by Grantor, located on, affixed to, or used in connection with the Property, or the ownership, operation, management, leasing, or maintenance thereof. Without limiting the generality of the foregoing, the collateral subject to this security agreement includes:
(a) All data center infrastructure, including without limitation all mechanical, electrical, and plumbing systems, emergency generators (including three (3) 2.5 MW diesel generators, together rated at 7.5 MW aggregate capacity), HVAC systems, computer room air handling units, cooling distribution units, chilled water systems, cooling towers, UPS systems, static transfer switches, power distribution units ("PDUs"), switchgear, transformers, automatic transfer switches, bus duct systems, electrical cabling and wiring, fiber optic cabling, structured cabling systems, raised flooring systems, and all associated control systems, monitoring equipment, and building management systems;
(b) All fire detection and suppression systems, including clean-agent fire suppression, pre-action sprinkler systems, smoke detection systems, and associated alarm and monitoring equipment;
(c) All security systems, including access control systems, surveillance cameras, intrusion detection systems, biometric readers, and associated monitoring and recording equipment;
(d) All furniture, furnishings, fixtures, and equipment ("FF&E") located on or within the Property;
(e) All inventory, equipment, accounts, chattel paper (whether tangible or electronic), instruments, documents, deposit accounts, letter-of-credit rights, investment property, general intangibles (including payment intangibles and software), and goods;
(f) All products, offspring, accessions, replacements, substitutions, additions, and proceeds (including insurance proceeds and condemnation awards) of any and all of the foregoing.
Grantor and Beneficiary intend that this security agreement shall be governed by Article 9 of the Virginia Uniform Commercial Code (Virginia Code Title 8.9A) and, to the extent applicable, by Article 8 thereof, and that Beneficiary shall have all the rights and remedies of a secured party thereunder.
Section 4.2 — Fixture Filing
This instrument constitutes a fixture filing within the meaning of Virginia Code § 8.9A-502 with respect to all goods that are or may become Fixtures as described herein. For purposes of this fixture filing, the following information is provided:
Name and address of Debtor (Grantor): Ironhaven Loudoun Edge LLC c/o Ironhaven Data Centers LLC 1900 Dominion Tower, Suite 400 Tysons Corner, Virginia 22182
Organizational ID: Virginia State Corporation Commission Entity ID: S9103284
Employer Identification Number (EIN): 93-4178226
Jurisdiction of Organization: Commonwealth of Virginia
Type of Organization: Limited Liability Company
Name and address of Secured Party (Beneficiary): Pinnacle Federal Savings Bank 800 Constitution Avenue NW, Suite 550 Washington, DC 20001
Description of Real Property to which Fixtures relate: As set forth in Exhibit A attached hereto and incorporated herein by this reference.
Record Owner of Real Property: Ironhaven Loudoun Edge LLC
Section 4.3 — UCC Financing Statements
Grantor hereby authorizes Beneficiary, without any further action or consent by Grantor, to file one or more UCC-1 financing statements (and any amendments or continuations thereof) with the Virginia State Corporation Commission and any other appropriate filing office or recording office, describing the collateral subject to this security agreement, in such form as Beneficiary may determine in its sole discretion, including any financing statement that describes the collateral as "all assets" or "all personal property" of Grantor. Grantor further agrees to execute and deliver to Beneficiary, promptly upon Beneficiary's request, any continuation statements, amendments, assignments, or additional financing statements as Beneficiary may request from time to time to maintain and perfect the security interest granted hereunder. Grantor shall pay all filing fees and costs incurred in connection with the filing of any such financing statements.
Section 4.4 — Proceeds
The security interest granted hereunder extends to and covers all proceeds, products, offspring, accessions, replacements, substitutions, additions, and returns of, and to, the Personal Property, Fixtures, and all other collateral described in this Article IV, in whatever form, including without limitation cash proceeds, non-cash proceeds, insurance proceeds, condemnation awards, and any other proceeds resulting from the sale, exchange, collection, or other disposition of any collateral. Without limiting the foregoing, in the event any collateral is destroyed, damaged, lost, or otherwise disposed of, all insurance proceeds, condemnation awards, and other amounts receivable by Grantor with respect thereto shall constitute proceeds subject to the security interest granted herein and shall be applied or held in accordance with the terms of this Deed of Trust and the other Loan Documents.
ARTICLE V — REPRESENTATIONS AND WARRANTIES OF GRANTOR
Grantor hereby represents and warrants to Beneficiary and Trustee, as of the date hereof and as of each date on which any advance is made under the Loan Agreement, as follows:
Section 5.1 — Title
Grantor holds good, marketable, and insurable fee simple title to the Land and the Improvements, subject only to the Permitted Exceptions as set forth in Exhibit B attached hereto. The Property is free and clear of all liens, claims, encumbrances, mortgages, deeds of trust, security interests, easements, restrictions, and other matters affecting title, other than (a) the Permitted Exceptions and (b) the lien and security interest of this Deed of Trust. No person or entity other than Grantor has any right, title, or interest in the Property, except for the rights of tenants under the Leases as described herein and in Exhibit C.
Section 5.2 — Organization and Authority
Grantor is a limited liability company duly organized, validly existing, and in good standing under the laws of the Commonwealth of Virginia, with Virginia State Corporation Commission Entity ID S9103284. The sole member of Grantor is Ironhaven Data Centers LLC, a Virginia limited liability company (VA SCC Entity ID: S7842196), which is in turn approximately eighty-two percent (82%) owned, directly or indirectly, by Cobalt Ridge Capital Partners, LP, a Delaware limited partnership.
Grantor is a single-purpose, bankruptcy-remote entity formed for the sole purpose of owning, constructing, developing, operating, leasing, and maintaining the Property, and for engaging in activities incidental thereto. Grantor has full power, authority, and legal right to execute and deliver this Deed of Trust, to grant the liens and security interests contemplated hereby, and to perform its obligations hereunder and under each of the other Loan Documents to which it is a party. The execution, delivery, and performance of this Deed of Trust and the other Loan Documents by Grantor have been duly authorized by all necessary action on the part of Grantor and its members, and no further consent, approval, or authorization of any person or entity is required.
Section 5.3 — No Conflicts
The execution, delivery, and performance by Grantor of this Deed of Trust and the other Loan Documents to which Grantor is a party do not and will not (a) violate or conflict with the certificate of formation, operating agreement, or other organizational documents of Grantor, (b) violate or conflict with any law, statute, regulation, order, judgment, writ, injunction, or decree of any governmental authority applicable to Grantor or the Property, (c) violate or conflict with, result in a breach of, or constitute (with or without notice or the passage of time) a default under, any indenture, agreement, or other instrument to which Grantor is a party or by which Grantor or the Property is bound, or (d) result in the creation or imposition of any lien, charge, or encumbrance upon the Property, other than the lien and security interest created by this Deed of Trust.
Section 5.4 — Compliance with Laws
The Property, and Grantor's ownership, use, and operation thereof, comply in all material respects with all applicable federal, state, and local laws, ordinances, rules, regulations, codes, and orders, including without limitation all building codes, fire codes, zoning ordinances, and environmental laws. Without limiting the foregoing:
(a) The Property is currently 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 Property as a data center facility is a permitted use under such zoning classification; and
(b) Building Permit No. BLD-2024-001287 has been duly issued by Loudoun County, Virginia, on February 28, 2024, authorizing the construction of the Improvements on the Land in accordance with approved plans and specifications. Such building permit is in full force and effect, has not been revoked, suspended, or modified, and all conditions precedent to the issuance thereof have been satisfied.
Section 5.5 — Environmental
To the best of Grantor's knowledge, no Hazardous Substances (as defined in the Loan Agreement) have been used, generated, manufactured, stored, treated, released, discharged, or disposed of on, under, in, or about the Property, except in compliance with all applicable Environmental Laws (as defined in the Loan Agreement). Grantor has delivered to Beneficiary a copy of that certain Phase I Environmental Site Assessment dated February 16, 2024, prepared by Apex Environmental Consultants, LLC (Project No. AEC-2024-0183), which assessment did not identify any recognized environmental conditions, controlled recognized environmental conditions, or historical recognized environmental conditions affecting the Property.
Section 5.6 — Leases
True, correct, and complete copies of all existing Leases (including all amendments, supplements, and side letters thereto) have been delivered to Beneficiary. Each such Lease is in full force and effect and has not been further amended, modified, or supplemented except as disclosed to Beneficiary in writing. No default or event of default exists under any Lease on the part of Grantor (as landlord) or, to Grantor's knowledge, on the part of any tenant, and no event has occurred that, with the giving of notice or the passage of time, or both, would constitute a default under any Lease.
Section 5.7 — Taxes and Assessments
All real property taxes, assessments, water and sewer charges, and other governmental charges and impositions currently due and payable with respect to the Property have been paid in full. No special assessments are currently pending or, to Grantor's knowledge, threatened against the Property.
Section 5.8 — Insurance
Grantor maintains all insurance coverages required under the Loan Agreement, including without limitation builder's risk insurance issued by Atlas Property & Casualty Insurance Company under Policy No. BRA-2024-00417, providing replacement cost coverage in the amount of not less than Forty-Eight Million and 00/100 Dollars ($48,000,000.00), with Beneficiary named as loss payee and additional insured. All such insurance policies are in full force and effect, and all premiums currently due thereunder have been paid.
Section 5.9 — Appraisal
The as-stabilized appraised value of the Property is Seventy-Four Million Five Hundred Thousand and 00/100 Dollars ($74,500,000.00), as set forth in the appraisal report dated February 12, 2024, prepared by Graystone Appraisal Group LLC, a copy of which has been delivered to Beneficiary. Such appraisal was prepared in compliance with the Uniform Standards of Professional Appraisal Practice ("USPAP") and the requirements of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"). Based on such appraised value, the loan-to-value ratio for the Loan is approximately 60.4%.
Section 5.10 — Separateness
Grantor is a single-purpose entity and has at all times since its formation complied with all separateness covenants and requirements set forth in its operating agreement and in the Loan Agreement. Without limiting the foregoing, Grantor (a) has not engaged in any business or activity other than the ownership, development, construction, operation, leasing, and maintenance of the Property, (b) has not commingled its assets or funds with those of any other person or entity, (c) maintains separate books, records, and financial statements, (d) holds itself out to the public as a legal entity separate and apart from any other person or entity, (e) has not incurred any indebtedness other than the Loan and trade payables incurred in the ordinary course of business, and (f) maintains at least one independent manager or member, as required by its operating agreement.
ARTICLE VI — COVENANTS OF GRANTOR
Grantor hereby covenants and agrees with Beneficiary and Trustee as follows:
Section 6.1 — Payment of Obligations
Grantor shall punctually pay or cause to be paid all amounts due and payable under the Note, this Deed of Trust, the Loan Agreement, and each of the other Loan Documents, at the times and in the manner specified therein, including without limitation:
(a) All principal in the aggregate amount of Forty-Five Million and 00/100 Dollars ($45,000,000.00), together with all accrued and unpaid interest thereon, which shall accrue at a rate equal to (i) during the construction period, the Secured Overnight Financing Rate ("SOFR") plus two hundred seventy-five basis points (2.75%) per annum, and (ii) upon Conversion to the permanent loan phase, the Five-Year U.S. Treasury Rate plus two hundred twenty-five basis points (2.25%) per annum (in each case, as more particularly described in the Note and the Loan Agreement);
(b) All fees, including the origination fee, unused line fee, exit fee, extension fee, and all other fees described in the Loan Agreement; and
(c) All costs, expenses, charges, advances, reimbursements, and other amounts due or to become due under the Loan Documents, as and when the same become due and payable.
Section 6.2 — Maintenance and Repair
Grantor shall, at its sole cost and expense, maintain and keep the Property, including all Improvements and Fixtures, in good order, condition, and repair, and in a tenantable and fully operational condition consistent with prudent industry practices for comparable data center facilities. Grantor shall not commit or permit any waste upon or about the Property, and shall not do or suffer to be done anything that would impair, diminish, or otherwise adversely affect the value of the Property or the lien and security interest of this Deed of Trust. Grantor shall promptly comply with all applicable laws, ordinances, rules, regulations, codes, and orders of any governmental authority having jurisdiction over the Property, including without limitation all building codes, fire codes, electrical codes, and environmental laws.
Section 6.3 — Insurance Covenants
Grantor shall maintain at all times, at its sole cost and expense, insurance coverages in the types, amounts, and with the carriers required under the Loan Agreement, including without limitation:
(a) During the construction period, builder's risk insurance on an "all-risk" or "special form" basis, covering the full replacement cost of the Improvements under construction. As of the date hereof, such coverage is maintained under Policy No. BRA-2024-00417 issued by Atlas Property & Casualty Insurance Company, providing replacement cost coverage of Forty-Eight Million and 00/100 Dollars ($48,000,000.00);
(b) Upon completion of construction and occupancy of the Improvements, commercial property insurance on an "all-risk" or "special form" basis, including coverage for flood (if applicable), earthquake, business income and extra expense, equipment breakdown, and such other coverages as required by the Loan Agreement, covering the full replacement cost of the Improvements and Fixtures;
(c) Commercial general liability insurance with limits of not less than those required by the Loan Agreement, covering claims for bodily injury, personal injury, and property damage arising out of the ownership, operation, or maintenance of the Property;
(d) Such other insurance as may be required under the Loan Agreement, including without limitation workers' compensation insurance, umbrella/excess liability insurance, environmental liability insurance, and terrorism risk insurance.
Beneficiary shall be named as additional insured and loss payee (pursuant to a standard mortgagee clause or lender's loss payable endorsement) on all property, builder's risk, and business income insurance policies. All insurance policies shall contain a provision requiring not less than thirty (30) days' prior written notice to Beneficiary before any cancellation, material change, or non-renewal thereof (ten (10) days for non-payment of premiums). Grantor shall not take any action, or fail to take any action, that would void or make voidable any insurance policy required to be maintained hereunder.
Section 6.4 — Taxes and Assessments
Grantor shall pay, or cause to be paid, before the same become delinquent, all real property taxes, general and special assessments, water and sewer charges, and all other governmental charges, impositions, and levies of every kind and nature that may be assessed, levied, or imposed against the Property, or any part thereof. Grantor shall deliver to Beneficiary, promptly upon request, evidence of the payment of such taxes, assessments, and charges. If required by the Loan Agreement, Grantor shall make monthly deposits with Beneficiary for taxes and insurance in accordance with the escrow provisions of the Loan Agreement.
Section 6.5 — Protection of Beneficiary's Security
Grantor shall not, without the prior written consent of Beneficiary:
(a) Create, incur, assume, or permit to exist any lien, mortgage, deed of trust, security interest, encumbrance, or other charge upon the Property or any part thereof, other than Permitted Exceptions and the lien and security interest of this Deed of Trust;
(b) Sell, transfer, convey, assign, or otherwise dispose of all or any part of the Property, or any interest therein (whether legal, equitable, or beneficial), or permit any change in the ownership or control of Grantor, except as expressly permitted by the Loan Agreement;
(c) Demolish, remove, or materially alter any Improvements or Fixtures, except as permitted in connection with the construction of the Improvements in accordance with the approved plans and specifications, or in connection with replacements and substitutions made in the ordinary course of business with items of equal or greater quality and value;
(d) Change the use of the Property from data center purposes, or permit the Property to be used for any purpose other than as a data center facility and related purposes; or
(e) Initiate or consent to any zoning reclassification, variance, or conditional use proceeding affecting the Property without the prior written consent of Beneficiary.
Section 6.6 — Compliance with Loan Documents
Grantor shall faithfully and punctually comply with and perform all terms, covenants, conditions, agreements, and provisions contained in the Loan Agreement and each of the other Loan Documents to which Grantor is a party, and shall cause each guarantor, indemnitor, and other party to the Loan Documents to comply with and perform their respective obligations thereunder.
Section 6.7 — Construction Covenants
Grantor shall cause construction of the Improvements to be prosecuted diligently and continuously, and to be completed in a good and workmanlike manner, in substantial accordance with (a) the plans and specifications approved by Beneficiary, (b) the terms and conditions of the Guaranteed Maximum Price Construction Contract with Marlowe Asset Management-Pacific Construction, Inc. (in the guaranteed maximum price amount of $33,750,000.00), (c) Building Permit No. BLD-2024-001287 and all other applicable permits and approvals, and (d) all applicable federal, state, and local laws, ordinances, rules, regulations, codes, and orders. Construction shall be completed on or before the Outside Completion Date of September 30, 2025, as such date may be extended only in accordance with the terms of the Loan Agreement. Grantor shall permit and facilitate periodic inspections of the Property and the progress of construction by Beneficiary and its designees, including the independent engineer, Whitmore & Associates, PC (James A. Whitmore, PE), and shall cooperate fully with such inspections and promptly address any deficiencies identified.
Section 6.8 — Leasing Covenants
Grantor shall comply with all restrictions on Leases set forth in Section 3.4 of this Deed of Trust and the applicable provisions of the Loan Agreement. Grantor shall use commercially reasonable efforts to lease the remaining available space within the Improvements, which as of the date hereof consists of approximately 14,000 square feet (representing approximately 26.9% of the total 52,000 square feet of leasable area), on terms and conditions approved by Beneficiary in accordance with the Loan Agreement. Grantor shall keep Beneficiary informed of all leasing activity and shall deliver to Beneficiary copies of all letters of intent, proposals, and draft leases promptly upon the execution or receipt thereof.
Section 6.9 — Financial Covenants (Post-Conversion)
Following the Conversion, Grantor shall comply with all financial covenants set forth in the Loan Agreement, including without limitation:
(a) A minimum debt service coverage ratio of 1.30 to 1.00 (1.30x), tested quarterly on a trailing twelve-month basis;
(b) A maximum loan-to-value ratio of 70%, tested annually based on an updated appraisal obtained at Beneficiary's request and at Grantor's expense; and
(c) A minimum liquidity of Five Million and 00/100 Dollars ($5,000,000.00) at the Borrower level, tested quarterly and consisting of unrestricted cash and cash equivalents held in deposit accounts at Beneficiary or at such other depository institutions as may be approved by Beneficiary.
Section 6.10 — SPE Covenants
Grantor shall at all times maintain its status as a single-purpose, bankruptcy-remote entity in accordance with its operating agreement and the Loan Agreement. Without limiting the foregoing, Grantor shall:
(a) Not engage in any business or activity other than the ownership, development, construction, operation, leasing, maintenance, and management of the Property and activities incidental thereto;
(b) Not commingle its assets or funds with those of any other person or entity, including its members, managers, affiliates, or any other related party;
(c) Maintain separate books of account, records, and financial statements, separate from those of any other person or entity;
(d) Hold itself out to the public as a legal entity separate and distinct from any other person or entity, and conduct its business in its own name;
(e) Not incur any indebtedness other than the Loan and trade payables incurred in the ordinary course of business and paid within sixty (60) days of the date incurred;
(f) Not dissolve, liquidate, wind up, consolidate, or merge with any other entity;
(g) Not guarantee, become obligated for, or hold itself out as responsible for the debts or obligations of any other person or entity;
(h) Maintain at least one (1) independent manager or independent member, as applicable, in accordance with the requirements of its operating agreement; and
(i) Observe all formalities required under Virginia law for a limited liability company, including holding required meetings (or obtaining required written consents) and maintaining organizational records.
Section 6.11 — Environmental Covenants
Grantor shall not cause or permit any Hazardous Substances (as defined in the Loan Agreement) to be used, generated, manufactured, stored, treated, released, discharged, or disposed of on, under, in, or about the Property, or transported to or from the Property, in violation of any applicable Environmental Law (as defined in the Loan Agreement). Grantor shall promptly notify Beneficiary in writing of any of the following: (a) any release or threatened release of Hazardous Substances on, under, or about the Property, (b) any notice, claim, demand, or order received by Grantor from any governmental authority or other person relating to any actual or alleged violation of Environmental Laws at the Property, and (c) any environmental condition at the Property that could reasonably be expected to have a material adverse effect on the value of the Property or the lien and security interest of this Deed of Trust. Grantor's obligations with respect to environmental matters are further set forth in the Environmental Indemnity Agreement, the terms and provisions of which are incorporated herein by reference.
Section 6.12 — Further Assurances
Grantor shall, at its sole cost and expense, execute and deliver to Beneficiary such further documents, instruments, and agreements, and take such further actions, as Beneficiary may from time to time reasonably request, in order to (a) carry out more effectively the purposes of this Deed of Trust and the other Loan Documents, (b) perfect, protect, maintain, and enforce the first-priority lien and security interest created hereby, (c) subject to the lien and security interest of this Deed of Trust any property intended to be covered hereby, and (d) better assure, convey, grant, assign, transfer, and confirm to Beneficiary the rights granted or intended to be granted to Beneficiary hereunder.
ARTICLE VII — CASUALTY AND CONDEMNATION
Section 7.1 — Casualty
In the event of any damage to or destruction of the Property or any part thereof, by fire, flood, wind, or any other cause or casualty, Grantor shall:
(a) Promptly give written notice thereof to Beneficiary, describing the nature and extent of such damage or destruction in reasonable detail;
(b) Promptly commence and diligently pursue the repair, restoration, or rebuilding of the Property to substantially its condition immediately prior to such damage or destruction, in accordance with the terms and conditions of the Loan Agreement;