Halyard Capital, Meritage Funds, & Sweetwater Capital Launch Digital Fortress With Two Data Center Acquisitions

Digital Fortress, Inc., a newly formed operator of data center colocation facilities, announced today that it has acquired the data center businesses of digital.forest, Inc. and Fortress Colocation Services. Digital Fortress was formed by Halyard Capital, Meritage Funds and Sweetwater Capital as a platform to consolidate the data center colocation market in the Pacific Northwest. Mark Hughes, former Chief Financial Officer of Inflow Communications and Executive Vice President of Operations at SunGard Availability Services, has been appointed Executive Chairman. Terms of the transaction were not disclosed.

Headquartered in Seattle, WA, Digital Fortress provides colocation and related services with a focus on the underserved market of regional small to medium sized enterprises seeking to enhance their overall IT infrastructure capabilities through outsourcing. Large enterprise colocation customers from the Pacific Northwest, North America and beyond are also attracted to the Company’s facilities due to their ability to service high-density power applications with low-cost, green energy. The Company is also expanding through the development of new data center facilities. Digital Fortress is currently refurbishing an existing enterprise-class data center located in downtown Seattle, which will offer over 18,000 square feet of raised-floor space and will be ready for occupancy by July 2012.

“Digital Fortress differentiates its service offering by delivering high-density power applications serviced with a highly efficient and effective operating model,” said Executive Chairman Mark Hughes. “We believe this model delivers best-in-class infrastructure solutions comparable to nationally recognized competitors, but at a more attractive value to customers.”

“During the past few years, we have seen increasing demand in the market for high quality, power dense colocation services, driven by significant growth in digital information and enterprise migration towards IT outsourcing, as well as fundamental advancements in computing technology, which Digital Fortress is uniquely positioned to deliver” said Robert Pistilli, Vice President at Halyard Capital.

“Meritage is pleased to re-enter the data center market with the establishment of the Digital Fortress platform and to reconnect with Mark Hughes, Halyard and Sweetwater in the process. We have great confidence in this team’s ability to serve the needs of Digital Fortress’ growing base of true enterprise customers,” added Derek Pilling, Managing Director at Meritage Funds.

The investors received legal counsel from Edwards Wildman Palmer LLP. Webster Bank provided debt financing for the transactions. digital.forest, Inc. was advised by Media Venture Partners.

About Digital Fortress

Digital Fortress, Inc. is a leading provider of enterprise colocation and related services to large and medium-sized enterprise customers. The Company operates three data center facilities, principally located in the Pacific Northwest, drawing on the region’s low-cost, high-renewable energy content power sources. Digital Fortress specializes in serving customers with high-density power information technology applications.

About Halyard Capital

Halyard Capital is a New York-based private equity firm with over $600 million of capital under management, focused on leveraged buyout and growth equity investment opportunities within the media, communications and business services industries. The firm has extensive experience and a proven track record within these sectors, having invested in businesses that include Inflow Communications, EducationDynamics, Engauge, HCPro, NETGEAR, Presidio Networks, TRANZACT and Practice Insight. Additional information regarding Halyard’s strategy, principals and investments can be found at www.halyard.com.

About Meritage Funds

Founded in 1998, Meritage is a Denver-based manager of private investment funds. The Meritage team is a unique blend of investment and operating talent. Meritage contributes both capital and expertise to every investment, working as a partner with entrepreneurs to accelerate the growth of their businesses. In total, Meritage manages three investment funds representing more than $600 million of committed capital. We are currently investing Meritage Fund III and are actively seeking Growth Equity investment opportunities. For more information, visit www.meritagefunds.com.

About Sweetwater Capital

Founded in 2005, Sweetwater Capital is a family office private equity fund led by William J. Marraccini. Based in Red Bank, NJ, Sweetwater invests primarily in communications infrastructure service businesses, taking advantage of Mr. Marraccini’s distinguished track record as an entrepreneur and investor in many areas of wireless communications. Sweetwater backs talented and experienced management teams and prefers to be involved at an early stage in forming a platform to pursue a business plan. For additionally information, please contact lzarandona@sweetwatercapitalgroup.com.