1041-00001 · Thorngate Capital Partners · FTC Submissions

substantial-compliance-certification-letter.docx DOCUMENT Antitrust

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CALDERWOOD & HARKNESS LLP Attorneys at Law

1900 K Street NW, Suite 800 Washington, DC 20006 Telephone: (202) 555-7400 Facsimile: (202) 555-7401 www.calderwoodharkness.com

September 22, 2023

VIA ELECTRONIC SUBMISSION AND OVERNIGHT COURIER

Staff Attorney Mergers IV Division Bureau of Competition Federal Trade Commission 600 Pennsylvania Avenue NW Washington, DC 20580

Re: FTC File No. 231-0487 — Solara Digital Infrastructure Fund IV LP / Pinnacle Cloud Systems, Inc. Certification of Substantial Compliance with Second Request Dated May 29, 2023

Dear Staff Attorney:

I am Howard Bellamy, a partner in the Antitrust & Competition Group at Calderwood & Harkness LLP. I write on behalf of our client, Solara Digital Infrastructure LP ("Solara" or "SDILP"), a Delaware limited partnership with its principal offices at 200 Tatnall Street, Suite 1400, Wilmington, Delaware 19801. The purpose of this letter is to certify Solara's substantial compliance with the Request for Additional Information and Documentary Material (the "Second Request") issued by the Federal Trade Commission (the "Commission" or "FTC") on May 29, 2023, in connection with the proposed acquisition (the "Transaction") of Pinnacle Cloud Systems, Inc. ("Pinnacle") by Solara Digital Infrastructure Fund IV LP ("Fund IV"), acting through its wholly owned indirect subsidiary, PCS Acquisition Corp. ("PCS Acquisition"), a newly formed Delaware corporation.

The Transaction is governed by the Stock Purchase Agreement dated April 14, 2023 (the "SPA"), by and among Solara Digital Infrastructure Fund IV LP, PCS Acquisition Corp., Pinnacle Cloud Systems, Inc., Thorngate Capital Partners LP (in its capacity as Sellers' Representative), and the Sellers named therein (the "Sellers"). The Transaction contemplates the acquisition of 100% of the outstanding capital stock of Pinnacle at a total enterprise value of approximately $1.63 billion, consisting of approximately $1.19 billion in cash consideration and approximately $440 million in rollover equity (representing approximately 27% of enterprise value).

The parties submitted their respective Notification and Report Forms pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, 15 U.S.C. § 18a (the "HSR Act"), on April 28, 2023. The initial thirty-day waiting period under the HSR Act expired on May 28, 2023, as extended by one day by mutual agreement between Solara and the Commission. The Second Request was issued on May 29, 2023, and contains forty-seven (47) specifications directed to Solara. This certification is filed 116 days from the date of issuance of the Second Request.

The accompanying Declaration of Howard Bellamy in Support of Substantial Compliance Certification is submitted concurrently with this letter and provides additional detail concerning the factual bases for this certification.

I. SCOPE OF COMPLIANCE EFFORTS

A. Custodian Identification

In connection with its compliance efforts, Solara identified a total of eighteen (18) custodians on its side of the Transaction. Of these eighteen custodians, twelve (12) are current officers, employees, or partners of Solara Digital Infrastructure GP LLC ("Solara GP") and the Fund IV management and investment team. These twelve custodians include, among others, individuals with direct responsibility for deal origination, investment diligence, portfolio management, and strategic planning functions relevant to the forty-seven specifications contained in the Second Request.

The remaining six (6) custodians are current officers and senior management personnel of Meridian Workflow Solutions, Inc. ("Meridian"), a Delaware corporation headquartered at 350 North Clark Street, Suite 2200, Chicago, Illinois 60654. Meridian is an existing portfolio company of the Solara platform, having been acquired in November 2020 through Solara Digital Infrastructure Fund III LP ("Fund III"). The Meridian custodians include Chief Executive Officer Priya N. Raghavan, as well as other senior management personnel with direct responsibilities relevant to the specifications, including individuals overseeing product development, sales and marketing, competitive intelligence, and financial planning and analysis.

Custodian identification was conducted in consultation with Solara's Managing Partners, Graham A. Whitfield (Founding Partner & Chief Executive Officer) and Sandra K. Levinson (Co-Managing Partner & Chief Investment Officer), and with Meridian senior management. The identification process involved detailed interviews with each prospective custodian, review of organizational charts and reporting structures, and analysis of each individual's likely possession of documents responsive to one or more of the forty-seven specifications. Calderwood & Harkness attorneys conducted these custodian interviews between June 1 and June 7, 2023, and prepared written memoranda summarizing each custodian's roles, responsibilities, document sources, and potential relevance to the specifications.

We note that Pinnacle's compliance efforts, encompassing fourteen (14) custodians on the target side of the Transaction, are being handled separately by Hargrove, Pelletier & Stein LLP ("HPS"), counsel to Pinnacle and the Sellers. HPS's separate substantial compliance certification on behalf of Pinnacle is anticipated to be filed in the near term, as discussed further in Section III below.

B. Document Collection

Approximately 1,240,000 documents were collected from the eighteen identified custodians. These collections spanned multiple data sources, including email systems (Strathmore Data Systems and Outlook), shared network drives, collaboration platforms (including Meridian Solutions workspaces and Northgate Data Systems channels), personal devices (where applicable and with appropriate custodian consent and authorization), and cloud-based document repositories (including Aldermere Systems, Fenmore Services Inc., and Hollowell Health IT accounts used by certain custodians).

Document collection was conducted in accordance with a comprehensive custodian identification and collection protocol that was established on June 7, 2023, by Calderwood & Harkness attorneys Monica Reyes (Senior Associate), Elliot Nguyen (Associate), and Tamara J. Westbrook (Of Counsel, Litigation Technology & E-discovery). The protocol set forth detailed procedures for forensic preservation and collection of electronic data from each identified source, including chain-of-custody documentation, hash-value verification of collected data sets, and quality assurance checks to confirm the completeness and integrity of all collections.

E-discovery processing, hosting, and contract review attorney management were provided by Keymark Document Solutions LLC ("Keymark"), located at 7600 Leesburg Pike, Suite 320, Falls Church, Virginia 22043, under the direction of Daniel S. Fong, Project Manager. All collected documents were ingested, processed, and de-duplicated within Keymark's hosted Relativity environment, which served as the platform for all subsequent document review, privilege designation, production, and quality control activities.

C. Document Review and Production

After de-duplication and the application of search-term protocols and date-range filters developed in consultation with FTC Staff, the initial collection of approximately 1,240,000 documents was reduced to a review universe of approximately 487,000 documents. All 487,000 documents within this review universe were reviewed for responsiveness to the forty-seven specifications and for the applicability of any privilege or protection.

The document review was conducted by a team of twenty-two (22) contract review attorneys managed by Keymark, working under the direct supervision of Monica Reyes and Elliot Nguyen of Calderwood & Harkness. The review team was organized into specialized review groups corresponding to the major categories of specifications in the Second Request, and each group received written review guidelines and participated in live training sessions conducted by Calderwood & Harkness attorneys prior to the commencement of review. Quality control measures included random sampling of coding decisions by supervising attorneys, escalation protocols for documents raising complex privilege or responsiveness questions, and weekly calibration sessions to ensure consistency across review teams.

As a result of this comprehensive review effort, approximately 196,300 responsive, non-privileged documents have been produced to the Commission. These documents bear Bates numbers SDILP-2R-000001 through SDILP-2R-196300. Productions were made on a rolling basis beginning in July 2023, with the initial production delivered on July 14, 2023, and subsequent rolling productions delivered at approximately two-week intervals thereafter. The final production batches were delivered on or before September 20, 2023. All documents were produced in accordance with the FTC's production specifications, including the provision of native-format files and/or TIFF image files with extracted text and associated metadata load files.

D. Structured Data Submissions

Seven (7) structured data submissions have been provided to FTC Staff in response to the data-related specifications contained in the Second Request. These submissions encompass the following categories of data:

1. Sales Data. Historical contract-level revenue data for Solara portfolio companies, including Meridian, covering the period specified in the Second Request. This submission includes annual and quarterly revenue figures broken down by customer, product line, and contract type.

2. Pricing Data. Rate cards, discount schedules, and negotiated pricing terms for Meridian's product offerings, including subscription pricing tiers, volume discount structures, implementation and professional services fees, and any promotional or competitive pricing arrangements.

3. Customer Lists. Complete customer lists for Meridian, including customer names, contract start and end dates, annual contract values, and product modules licensed. To the extent within Solara's custody or control, Pinnacle-related customer data has also been provided.

4. Win/Loss Data. Competitive bid tracking records and customer acquisition and loss records maintained by Meridian's sales organization, including information regarding competitive encounters with Pinnacle and other identified competitors, win and loss reasons as recorded by Meridian sales personnel, and aggregate win/loss statistics.

5. Market Share Estimates. Internal estimates and third-party research reports regarding market size and competitive shares in the cloud-based institutional investment technology market, including portfolio analytics, risk modeling, order management, and compliance workflow software segments.

6. Financial Data. Historical and projected financial statements, budgets, operating plans, and strategic plans for Meridian, as well as Fund IV-level financial projections and investment memoranda relating to the Transaction.

7. Product Feature Matrices. Comparative functionality analyses of Meridian's platform and competing platforms, including internal product roadmaps, feature comparison charts, and competitive positioning documents.

These data submissions were prepared in consultation with Dr. Arvind Chakrabarti, Senior Economist in Calderwood & Harkness's Economic Consulting practice, and with Meridian management. Dr. Chakrabarti worked closely with Meridian's finance and business intelligence teams to ensure the accuracy and completeness of the structured data provided to the Commission.

E. Privilege Log

A detailed privilege log has been prepared and produced to FTC Staff identifying 4,872 documents or communications that have been withheld in whole or redacted in part on the basis of privilege or protection. The privilege log entries are categorized as follows:

• Attorney-Client Privilege: 3,641 entries (representing approximately 74.8% of the privilege log)

• Work Product Doctrine: 894 entries (representing approximately 18.4% of the privilege log)

• Joint Defense / Common Interest Privilege: 337 entries (representing approximately 6.8% of the privilege log)

The privilege log was prepared in accordance with the privilege review protocol established on June 15, 2023, and is consistent with the terms of the Clawback / Non-Waiver Agreement executed on June 9, 2023, between Calderwood & Harkness (on behalf of Solara) and FTC Staff. That agreement governs the treatment of any inadvertent production of privileged materials, pursuant to the principles of Federal Rule of Evidence 502(d) and consistent with the FTC Model Stipulated Protective Order applicable to this proceeding. Each privilege log entry includes the date of the document or communication, the names and titles of all authors, recipients, and persons copied, a description of the subject matter of the document or communication sufficient to enable the Commission to assess the claim of privilege, and the specific privilege or protection asserted.

Solara expressly reserves all rights to supplement or amend the privilege log as necessary, including without limitation to add entries for documents or communications identified subsequent to the date of this certification, to correct any inadvertent errors or omissions in existing log entries, and to assert or withdraw privilege claims as circumstances may warrant.

II. SPECIFICATION-BY-SPECIFICATION COMPLIANCE SUMMARY

Solara confirms that it has responded to each of the forty-seven (47) specifications contained in the Second Request. The specifications cover a broad range of documents and data relating to the following principal subject matter categories:

• Relevant Product and Geographic Markets. Specifications addressing the identification and definition of relevant product and geographic markets for portfolio analytics, risk modeling, order management, execution management, compliance workflow, ESG scoring, and performance attribution software, including documents reflecting Solara's and Meridian's views of the competitive landscape, market segmentation, and the boundaries of relevant markets.

• Competition Between Pinnacle, Meridian, and Third-Party Competitors. Specifications directed to documents and data reflecting the nature and extent of competition between Pinnacle and Meridian, as well as competition involving identified third-party competitors such as Westmark Services Inc., Severin Technologies, Penrose Holdings (a Stonefield Corporation), Westvale Group, Kestrel Partners LLC, Brightwater & Co., and Beaumont & Co., among others.

• Pricing, Customer Switching Costs, and Barriers to Entry. Specifications addressing pricing strategies, customer negotiation dynamics, the existence and magnitude of customer switching costs, data migration complexities, integration dependencies, contractual lock-in provisions, and barriers to entry and expansion in the relevant markets.

• Integration and Combination Planning Documents. Specifications calling for all documents and communications relating to the planned integration or combination of Pinnacle and Meridian following consummation of the Transaction, including synergy analyses, organizational integration plans, technology platform rationalization plans, and customer migration strategies.

• Financial Projections and Strategic Plans. Specifications directed to historical and forward-looking financial projections, budgets, operating plans, long-range strategic plans, and board and management presentations for Meridian and, to the extent within Solara's possession, custody, or control, for Pinnacle.

For each of the forty-seven specifications, Solara has identified and produced all responsive, non-privileged documents and data located through the compliance efforts described herein. In a limited number of instances involving specific specifications, Solara's search did not identify any responsive documents. In each such case, Solara has so noted in its specification-by-specification response log and has provided an explanation for the absence of responsive materials. These explanations generally reflect circumstances in which the subject matter of the specification pertained to activities or decisions that were handled exclusively by Pinnacle or by third parties outside of Solara's possession, custody, or control, rather than any limitation in the scope or diligence of Solara's search efforts.

Solara acknowledges its ongoing obligation to supplement its productions in the event that additional responsive materials are identified subsequent to the date of this certification. Calderwood & Harkness will continue to monitor for any such materials and will make supplemental productions to FTC Staff on a prompt basis should additional responsive documents or data come to Solara's attention.

III. COORDINATION WITH TARGET'S COUNSEL

Throughout the compliance process, Calderwood & Harkness has maintained regular coordination with Hargrove, Pelletier & Stein LLP, counsel to Pinnacle and the Sellers. The principal contacts at HPS for this engagement have been Catherine A. Pelletier, Lead Partner, and David L. Morrissette, Associate. This coordination has been directed at ensuring that the combined compliance efforts of Solara and Pinnacle provide complete coverage of all forty-seven specifications contained in the Second Request, including specifications that may call for documents or data in the possession of one party but not the other.

Pinnacle's separate substantial compliance certification is expected to be filed on or about October 6, 2023. HPS has confirmed that Pinnacle's compliance efforts are substantially complete and that the remaining steps consist primarily of final quality control review and preparation of the certification filing.

To the extent that certain specifications called for documents or data in the possession, custody, or control of Pinnacle rather than Solara, Solara has noted this in its specification-by-specification responses and has confirmed that Pinnacle's counsel is addressing such specifications in the course of Pinnacle's own compliance effort. Similarly, where specifications called for documents or data that may reside with both parties, Calderwood & Harkness and HPS have coordinated to avoid duplicative productions while ensuring that each party's production reflects the full scope of responsive materials within its respective possession, custody, or control.

IV. RESERVATION OF RIGHTS AND CONTINUING OBLIGATIONS

Solara expressly reserves all rights to supplement, correct, or amend its productions and privilege log at any time. This reservation encompasses, without limitation, the right to produce additional responsive documents identified through ongoing compliance monitoring, to correct any inadvertent errors or omissions in prior productions or privilege designations, and to amend the privilege log to reflect any changes in privilege assertions.

Solara acknowledges its continuing obligation under the Second Request and applicable law to produce responsive documents and data that may be identified after the date of this certification. Calderwood & Harkness will continue to exercise diligence in monitoring for any such materials and will make supplemental productions to FTC Staff promptly upon identification of any additional responsive documents or data.

Nothing in this certification, the accompanying Declaration, or any production made in connection with the Second Request constitutes or shall be construed as constituting a waiver of any privilege, protection, objection, or other right of Solara, Meridian, Fund IV, PCS Acquisition, or any other entity or individual affiliated with the Solara platform. All such rights are expressly reserved.

V. CERTIFICATION OF SUBSTANTIAL COMPLIANCE

Based on the foregoing, Solara Digital Infrastructure LP hereby certifies that it has substantially complied with the Request for Additional Information and Documentary Material (Second Request) issued by the Federal Trade Commission on May 29, 2023, in FTC File No. 231-0487.

The accompanying Declaration of Howard Bellamy in Support of Substantial Compliance Certification is submitted concurrently herewith and provides the factual basis for this certification. I respectfully request that the Commission accept this certification and begin the running of the applicable waiting period under Section 7A(e) of the Clayton Act, 15 U.S.C. § 18a(e), and Rule 803.20 of the HSR Act regulations, 16 C.F.R. § 803.20.

Should you have any questions regarding this certification or require any additional information, please do not hesitate to contact me directly at (202) 555-7412 or hbellamy@calderwoodharkness.com, or Monica Reyes at (202) 555-7438 or mreyes@calderwoodharkness.com.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Howard Bellamy Partner, Antitrust & Competition Group 1900 K Street NW, Suite 800 Washington, DC 20006 Telephone: (202) 555-7412

Email: hbellamy@calderwoodharkness.com

Counsel for Solara Digital Infrastructure LP

Enclosure: Declaration of Howard Bellamy in Support of Substantial Compliance Certification

cc: Graham A. Whitfield, Solara Digital Infrastructure GP LLC Sandra K. Levinson, Solara Digital Infrastructure GP LLC Catherine A. Pelletier, Hargrove, Pelletier & Stein LLP

DECLARATION OF HOWARD BELLAMY IN SUPPORT OF CERTIFICATION OF SUBSTANTIAL COMPLIANCE WITH SECOND REQUEST

FTC File No. 231-0487

Solara Digital Infrastructure Fund IV LP / Pinnacle Cloud Systems, Inc.

I, Howard Bellamy, hereby declare as follows:

1. I am a partner at Calderwood & Harkness LLP, located at 1900 K Street NW, Suite 800, Washington, DC 20006. I am a member of the firm's Antitrust & Competition Group and have practiced antitrust and competition law for over twenty-three years, with particular experience in Hart-Scott-Rodino Act compliance, merger investigations, and proceedings before the Federal Trade Commission and the Antitrust Division of the United States Department of Justice. I serve as the Responsible Partner and Billing Partner for Calderwood & Harkness's representation of Solara Digital Infrastructure LP ("Solara" or "SDILP") in connection with the investigation being conducted by the Federal Trade Commission (the "Commission" or "FTC") under FTC File No. 231-0487. Calderwood & Harkness was engaged for this representation pursuant to an engagement letter dated May 30, 2023, executed by Graham A. Whitfield, Founding Partner and Chief Executive Officer of Solara Digital Infrastructure GP LLC ("Solara GP"), the general partner of Solara. I have personal knowledge of the facts stated in this Declaration based on my direct supervision of all aspects of the compliance effort undertaken by Solara in response to the Second Request, and I am competent to testify to the matters set forth herein.

2. Solara Digital Infrastructure Fund IV LP ("Fund IV"), a Delaware limited partnership with approximately $4.2 billion in committed capital from institutional limited partners, proposes to acquire 100% of the outstanding capital stock of Pinnacle Cloud Systems, Inc. ("Pinnacle"), a Delaware corporation with its principal offices at 8700 Research Boulevard, Suite 500, Austin, Texas 78758. Pinnacle is a cloud-based software company that provides portfolio analytics, risk modeling, ESG (Environmental, Social, and Governance) scoring, and performance attribution solutions to institutional asset managers, pension funds, endowments, sovereign wealth funds, and insurance companies on a subscription Software-as-a-Service ("SaaS") basis. For the last twelve months ended March 31, 2023 (i.e., Q2 2022 through Q1 2023), Pinnacle reported revenue of approximately $387 million and EBITDA of approximately $74.6 million. As of the date of the Stock Purchase Agreement, Pinnacle employed approximately 1,420 employees across offices in Austin, Texas; New York, New York; London, England; and Bangalore, India. Pinnacle's senior management includes Nathaniel R. Okonkwo, Chief Executive Officer; Diane M. Hartwell, Chief Financial Officer; and Marcus E. Culberson, General Counsel.

The Transaction is valued at an aggregate enterprise value of approximately $1.63 billion, implying a revenue multiple of approximately 4.21x LTM revenue and an EBITDA multiple of approximately 21.85x LTM EBITDA. The consideration consists of approximately $1.19 billion in cash and approximately $440 million in rollover equity contributed by certain members of Pinnacle's management team and existing investors (representing approximately 26.99% of the total enterprise value). The acquisition is structured through PCS Acquisition Corp. (Employer Identification Number: 92-5038471), a newly formed Delaware corporation organized as a wholly owned indirect subsidiary of Fund IV for the purpose of effecting the Transaction.

The Commission's investigation, as reflected in the Second Request, has focused on two principal areas of competitive concern. First, the Commission has identified a potential horizontal overlap in the market for portfolio analytics software between Pinnacle and Meridian Workflow Solutions, Inc. ("Meridian"), an existing Solara portfolio company. Meridian, a Delaware corporation headquartered at 350 North Clark Street, Suite 2200, Chicago, Illinois 60654, was acquired in November 2020 by Solara Digital Infrastructure Fund III LP ("Fund III") at an enterprise value of $680 million. Meridian is a SaaS-based provider of trade order management, execution management, and compliance workflow software for buy-side institutional investors. Meridian reported last-twelve-month revenue of approximately $212 million, of which approximately $37.4 million (representing approximately 17.64% of total revenue) was attributable to Meridian's analytics module, which provides portfolio analytics functionality to Meridian's existing order management and compliance workflow customers. Second, the Commission has identified potential vertical concerns regarding data integration between Meridian's order management system and Pinnacle's performance attribution functions, and the possibility that the combined entity might have the ability and incentive to foreclose or disadvantage competitors in either market through data integration strategies.

The parties submitted their respective Notification and Report Forms under the HSR Act on April 28, 2023, accompanied by the applicable HSR filing fee of $450,000. The initial thirty-day waiting period under Section 7A(b)(1)(B) of the Clayton Act was scheduled to expire on May 28, 2023; pursuant to a mutual agreement between Solara and the Commission's Bureau of Competition, the waiting period was extended by one day to May 29, 2023. On May 29, 2023, the Commission issued the Second Request to Solara, containing forty-seven (47) specifications directed to documents and data in Solara's possession, custody, or control.

3. The Calderwood & Harkness team responsible for managing Solara's compliance with the Second Request consists of the following individuals: Howard Bellamy, Partner (billing rate: $1,650 per hour); Monica Reyes, Senior Associate, Year 7 (billing rate: $1,050 per hour); Elliot Nguyen, Associate, Year 4 (billing rate: $825 per hour); Tamara J. Westbrook, Of Counsel, Litigation Technology & E-discovery (billing rate: $975 per hour); and Dr. Arvind Chakrabarti, Senior Economist, Calderwood & Harkness Economic Consulting (billing rate: $1,200 per hour). In addition to the Calderwood & Harkness team, Solara retained Keymark Document Solutions LLC ("Keymark"), located at 7600 Leesburg Pike, Suite 320, Falls Church, Virginia 22043, as its e-discovery vendor for this engagement. The Keymark engagement is managed by Daniel S. Fong, Project Manager, who has overseen all aspects of document processing, hosting, and contract review attorney management. A team of twenty-two (22) contract review attorneys, recruited and managed by Keymark, conducted first-level document review in Keymark's hosted Relativity platform under the supervision of Calderwood & Harkness attorneys.

The total estimated costs of Solara's compliance with the Second Request are approximately $7.56 million, consisting of approximately $5.74 million in Calderwood & Harkness legal fees (encompassing attorney time for custodian identification, search term development, review supervision, privilege analysis, production management, data submission preparation, and coordination with FTC Staff and Pinnacle's counsel) and approximately $1.82 million in Keymark vendor costs (encompassing document processing, Relativity hosting, contract review attorney fees, and production formatting and delivery).

4. As set forth in the cover letter accompanying this Declaration, Solara identified a total of eighteen (18) custodians on its side of the Transaction. Twelve (12) of these custodians are current officers, employees, or partners of Solara GP and the Fund IV management and investment team. The remaining six (6) custodians are current officers and senior management personnel of Meridian, including Chief Executive Officer Priya N. Raghavan, as well as other individuals with direct responsibilities for product development, sales and marketing, competitive strategy, and financial planning and analysis functions relevant to the specifications.

The custodian identification and collection protocol was finalized on June 7, 2023, following a series of detailed interviews with each identified custodian and with Solara and Meridian management. The protocol specified the data sources to be collected for each custodian, the preservation procedures to be followed, and the technical parameters for forensic collection. Document collections were made from the following categories of data sources: email systems (Strathmore Data Systems and Outlook accounts), shared network drives (including departmental and team-level drives), collaboration platforms (Meridian Solutions workspaces and Northgate Data Systems channels in which custodians participated), personal devices (where applicable and with custodian authorization, including laptops and mobile devices), and cloud-based document repositories (including Aldermere Systems sites, Fenmore Services Inc. accounts, and Hollowell Health IT accounts). In total, approximately 1,240,000 documents were collected from the eighteen custodians across all identified data sources.

5. Following collection, all documents were ingested into Keymark's hosted Relativity environment for processing and de-duplication. After de-duplication using MD5 hash values at the family-group level, and after the application of agreed-upon search terms, date-range restrictions, and file-type filtering protocols, the initial collection of approximately 1,240,000 documents was reduced to a review universe of approximately 487,000 documents. The date-range restrictions generally spanned from January 1, 2019, to the present, a period selected to cover the timeframe of pre-acquisition planning and relevant competitive history as contemplated by the specifications. Search terms were developed by Calderwood & Harkness attorneys in consultation with Dr. Chakrabarti and were designed to capture documents likely to be responsive to the forty-seven specifications while reducing the volume of clearly non-responsive material within the review universe.

All 487,000 documents within the review universe were reviewed for responsiveness to one or more of the forty-seven specifications and for the applicability of the attorney-client privilege, the work product doctrine, the joint defense or common interest privilege, and any other applicable privilege or protection. The review was supervised by Monica Reyes and Elliot Nguyen of Calderwood & Harkness, who implemented quality control sampling protocols to ensure the accuracy and consistency of reviewer coding decisions. These protocols included random sampling of approximately 10% of all reviewer coding decisions, with escalation and re-review procedures for documents presenting complex issues of responsiveness, privilege, or confidentiality.

6. As a result of the document review process described above, approximately 196,300 responsive, non-privileged documents have been produced to the Commission. These documents bear consecutive Bates numbers SDILP-2R-000001 through SDILP-2R-196300. Productions were made on a rolling basis, with the initial production delivered to FTC Staff on July 14, 2023, and subsequent rolling productions delivered at approximately two-week intervals over the following approximately ten-week period. The final production batches were delivered on or before September 20, 2023. All documents were produced in the format specified by the Commission's production specifications, including native-format files where required (such as for spreadsheets and presentations) and TIFF image format with extracted text (OCR where necessary) and associated metadata, delivered via load files compatible with FTC review platforms. Each production was accompanied by a transmittal letter identifying the Bates range of the documents produced and any specific production notes relevant to individual specifications.

7. In addition to the documentary productions described above, seven (7) structured data submissions have been provided to FTC Staff in response to the data-related specifications contained in the Second Request. These submissions cover the following categories: (1) sales data, including historical contract-level revenue data for Solara portfolio companies, with particular focus on Meridian; (2) pricing data, including rate cards, discount schedules, and negotiated pricing terms for Meridian's product offerings; (3) customer lists, including complete customer rosters for Meridian and, to the extent within Solara's possession, custody, or control, Pinnacle-related customer data; (4) win/loss data, including competitive bid tracking records and customer acquisition and loss data maintained by Meridian's sales organization; (5) market share estimates, including internal estimates and third-party research regarding market size and competitive shares in the cloud-based institutional investment technology market; (6) financial data, including historical and projected financial statements, budgets, and strategic plans for Meridian and Fund IV-level financial projections and investment memoranda; and (7) product feature matrices, including comparative functionality analyses of Meridian's platform and identified competing platforms.

These data submissions span both Meridian-specific data and, to the extent within Solara's possession, custody, or control, Pinnacle-related data. The submissions were prepared with the assistance of Dr. Arvind Chakrabarti, Senior Economist at Calderwood & Harkness, and in coordination with Meridian management (including Meridian's finance, business intelligence, and sales operations teams) and Redstone Advisory Group LLC, the financial advisor to Solara on the Transaction, under the direction of Elaine C. Davenport, Managing Director. Dr. Chakrabarti and his team worked closely with Meridian and Redstone to ensure the accuracy, completeness, and consistency of all structured data provided to the Commission, including the reconciliation of data from multiple internal systems and the preparation of detailed data dictionaries and methodology explanations accompanying each submission.

8. A detailed privilege log has been prepared and produced to FTC Staff identifying a total of 4,872 documents or communications that have been withheld in whole or redacted in part on the basis of applicable privilege or protection. The 4,872 privilege log entries are categorized as follows: 3,641 entries asserting the attorney-client privilege (representing approximately 74.8% of all log entries); 894 entries asserting protection under the work product doctrine (representing approximately 18.4% of all log entries); and 337 entries asserting the joint defense or common interest privilege (representing approximately 6.8% of all log entries). Where a single document or communication was withheld or redacted on the basis of more than one privilege or protection, the log entry reflects all applicable bases.

Privilege determinations were made in accordance with the privilege review protocol established on June 15, 2023, which was developed by Calderwood & Harkness attorneys and implemented through the Relativity platform used for the document review. The privilege review protocol set forth detailed criteria for the identification and classification of privileged materials, including guidance on the application of the attorney-client privilege, the work product doctrine, and the joint defense and common interest doctrines in the context of a private equity sponsor's acquisition of a target company and the related antitrust review process.

The Clawback / Non-Waiver Agreement executed on June 9, 2023, between Calderwood & Harkness (on behalf of Solara) and FTC Staff governs the treatment of any inadvertent production of privileged materials. That agreement is consistent with the principles of Federal Rule of Evidence 502(d) and the FTC Model Stipulated Protective Order applicable to this investigation, and provides that any inadvertent production of privileged materials shall not constitute a waiver of any applicable privilege or protection.

9. Throughout the compliance process, Calderwood & Harkness has maintained regular coordination with Hargrove, Pelletier & Stein LLP, counsel to Pinnacle and the Sellers. The principal contacts at HPS for this engagement have been Catherine A. Pelletier, Lead Partner, and David L. Morrissette, Associate. This coordination has been directed at ensuring comprehensive coverage of all forty-seven specifications contained in the Second Request, including the identification of specifications that call for documents or data residing primarily or exclusively with Pinnacle rather than with Solara, and the allocation of responsibility for responding to such specifications. Pinnacle identified fourteen (14) custodians on its side of the Transaction, and HPS has managed all aspects of Pinnacle's custodian identification, document collection, review, and production separately from and independently of Solara's compliance effort. Pinnacle's substantial compliance certification is expected to be filed on or about October 6, 2023.

10. Based on my direct supervision of the compliance effort described herein, I affirm that Solara has conducted a diligent and good-faith search for all documents and data responsive to the Second Request. The compliance effort has involved the identification of all reasonably likely sources of responsive materials, the comprehensive collection and preservation of documents and data from those sources, the careful and thorough review of all collected materials for responsiveness and privilege, and the timely production of all responsive, non-privileged materials to the Commission. Solara acknowledges its continuing obligation under the Second Request and applicable law to identify and produce responsive documents and data that may come to Solara's attention after the date of this certification. All reasonable steps have been taken to identify, collect, review, and produce responsive materials within the scope of the Second Request, and Solara is committed to fulfilling its ongoing obligations in connection with this investigation.

11. I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct to the best of my knowledge, information, and belief.

Executed on this 22nd day of September, 2023, at Washington, District of Columbia.

________________________________________

Howard Bellamy Partner, Antitrust & Competition Group Calderwood & Harkness LLP 1900 K Street NW, Suite 800 Washington, DC 20006 Telephone: (202) 555-7412

Email: hbellamy@calderwoodharkness.com

Date: September 22, 2023

CALDERWOOD & HARKNESS LLP Attorneys at Law
1900 K Street NW, Suite 800 Washington, DC 20006 Telephone: (202) 555-7400 Facsimile: (202) 555-7401 www.calderwoodharkness.com
September 22, 2023
VIA ELECTRONIC SUBMISSION AND OVERNIGHT COURIER
Staff Attorney Mergers IV Division Bureau of Competition Federal Trade Commission 600 Pennsylvania Avenue NW Washington, DC 20580
Re: FTC File No. 231-0487 — Solara Digital Infrastructure Fund IV LP / Pinnacle Cloud Systems, Inc. Certification of Substantial Compliance with Second Request Dated May 29, 2023
Dear Staff Attorney:
I am Howard Bellamy, a partner in the Antitrust & Competition Group at Calderwood & Harkness LLP. I write on behalf of our client, Solara Digital Infrastructure LP ("Solara" or "SDILP"), a Delaware limited partnership with its principal offices at 200 Tatnall Street, Suite 1400, Wilmington, Delaware 19801. The purpose of this letter is to certify Solara's substantial compliance with the Request for Additional Information and Documentary Material (the "Second Request") issued by the Federal Trade Commission (the "Commission" or "FTC") on May 29, 2023, in connection with the proposed acquisition (the "Transaction") of Pinnacle Cloud Systems, Inc. ("Pinnacle") by Solara Digital Infrastructure Fund IV LP ("Fund IV"), acting through its wholly owned indirect subsidiary, PCS Acquisition Corp. ("PCS Acquisition"), a newly formed Delaware corporation.
The Transaction is governed by the Stock Purchase Agreement dated April 14, 2023 (the "SPA"), by and among Solara Digital Infrastructure Fund IV LP, PCS Acquisition Corp., Pinnacle Cloud Systems, Inc., Thorngate Capital Partners LP (in its capacity as Sellers' Representative), and the Sellers named therein (the "Sellers"). The Transaction contemplates the acquisition of 100% of the outstanding capital stock of Pinnacle at a total enterprise value of approximately $1.63 billion, consisting of approximately $1.19 billion in cash consideration and approximately $440 million in rollover equity (representing approximately 27% of enterprise value).
The parties submitted their respective Notification and Report Forms pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, 15 U.S.C. § 18a (the "HSR Act"), on April 28, 2023. The initial thirty-day waiting period under the HSR Act expired on May 28, 2023, as extended by one day by mutual agreement between Solara and the Commission. The Second Request was issued on May 29, 2023, and contains forty-seven (47) specifications directed to Solara. This certification is filed 116 days from the date of issuance of the Second Request.
The accompanying Declaration of Howard Bellamy in Support of Substantial Compliance Certification is submitted concurrently with this letter and provides additional detail concerning the factual bases for this certification.
I. SCOPE OF COMPLIANCE EFFORTS
A. Custodian Identification
In connection with its compliance efforts, Solara identified a total of eighteen (18) custodians on its side of the Transaction. Of these eighteen custodians, twelve (12) are current officers, employees, or partners of Solara Digital Infrastructure GP LLC ("Solara GP") and the Fund IV management and investment team. These twelve custodians include, among others, individuals with direct responsibility for deal origination, investment diligence, portfolio management, and strategic planning functions relevant to the forty-seven specifications contained in the Second Request.
The remaining six (6) custodians are current officers and senior management personnel of Meridian Workflow Solutions, Inc. ("Meridian"), a Delaware corporation headquartered at 350 North Clark Street, Suite 2200, Chicago, Illinois 60654. Meridian is an existing portfolio company of the Solara platform, having been acquired in November 2020 through Solara Digital Infrastructure Fund III LP ("Fund III"). The Meridian custodians include Chief Executive Officer Priya N. Raghavan, as well as other senior management personnel with direct responsibilities relevant to the specifications, including individuals overseeing product development, sales and marketing, competitive intelligence, and financial planning and analysis.
Custodian identification was conducted in consultation with Solara's Managing Partners, Graham A. Whitfield (Founding Partner & Chief Executive Officer) and Sandra K. Levinson (Co-Managing Partner & Chief Investment Officer), and with Meridian senior management. The identification process involved detailed interviews with each prospective custodian, review of organizational charts and reporting structures, and analysis of each individual's likely possession of documents responsive to one or more of the forty-seven specifications. Calderwood & Harkness attorneys conducted these custodian interviews between June 1 and June 7, 2023, and prepared written memoranda summarizing each custodian's roles, responsibilities, document sources, and potential relevance to the specifications.
We note that Pinnacle's compliance efforts, encompassing fourteen (14) custodians on the target side of the Transaction, are being handled separately by Hargrove, Pelletier & Stein LLP ("HPS"), counsel to Pinnacle and the Sellers. HPS's separate substantial compliance certification on behalf of Pinnacle is anticipated to be filed in the near term, as discussed further in Section III below.
B. Document Collection
Approximately 1,240,000 documents were collected from the eighteen identified custodians. These collections spanned multiple data sources, including email systems (Strathmore Data Systems and Outlook), shared network drives, collaboration platforms (including Meridian Solutions workspaces and Northgate Data Systems channels), personal devices (where applicable and with appropriate custodian consent and authorization), and cloud-based document repositories (including Aldermere Systems, Fenmore Services Inc., and Hollowell Health IT accounts used by certain custodians).
Document collection was conducted in accordance with a comprehensive custodian identification and collection protocol that was established on June 7, 2023, by Calderwood & Harkness attorneys Monica Reyes (Senior Associate), Elliot Nguyen (Associate), and Tamara J. Westbrook (Of Counsel, Litigation Technology & E-discovery). The protocol set forth detailed procedures for forensic preservation and collection of electronic data from each identified source, including chain-of-custody documentation, hash-value verification of collected data sets, and quality assurance checks to confirm the completeness and integrity of all collections.
E-discovery processing, hosting, and contract review attorney management were provided by Keymark Document Solutions LLC ("Keymark"), located at 7600 Leesburg Pike, Suite 320, Falls Church, Virginia 22043, under the direction of Daniel S. Fong, Project Manager. All collected documents were ingested, processed, and de-duplicated within Keymark's hosted Relativity environment, which served as the platform for all subsequent document review, privilege designation, production, and quality control activities.
C. Document Review and Production
After de-duplication and the application of search-term protocols and date-range filters developed in consultation with FTC Staff, the initial collection of approximately 1,240,000 documents was reduced to a review universe of approximately 487,000 documents. All 487,000 documents within this review universe were reviewed for responsiveness to the forty-seven specifications and for the applicability of any privilege or protection.
The document review was conducted by a team of twenty-two (22) contract review attorneys managed by Keymark, working under the direct supervision of Monica Reyes and Elliot Nguyen of Calderwood & Harkness. The review team was organized into specialized review groups corresponding to the major categories of specifications in the Second Request, and each group received written review guidelines and participated in live training sessions conducted by Calderwood & Harkness attorneys prior to the commencement of review. Quality control measures included random sampling of coding decisions by supervising attorneys, escalation protocols for documents raising complex privilege or responsiveness questions, and weekly calibration sessions to ensure consistency across review teams.
As a result of this comprehensive review effort, approximately 196,300 responsive, non-privileged documents have been produced to the Commission. These documents bear Bates numbers SDILP-2R-000001 through SDILP-2R-196300. Productions were made on a rolling basis beginning in July 2023, with the initial production delivered on July 14, 2023, and subsequent rolling productions delivered at approximately two-week intervals thereafter. The final production batches were delivered on or before September 20, 2023. All documents were produced in accordance with the FTC's production specifications, including the provision of native-format files and/or TIFF image files with extracted text and associated metadata load files.
D. Structured Data Submissions
Seven (7) structured data submissions have been provided to FTC Staff in response to the data-related specifications contained in the Second Request. These submissions encompass the following categories of data:
1.  Sales Data. Historical contract-level revenue data for Solara portfolio companies, including Meridian, covering the period specified in the Second Request. This submission includes annual and quarterly revenue figures broken down by customer, product line, and contract type.
2.  Pricing Data. Rate cards, discount schedules, and negotiated pricing terms for Meridian's product offerings, including subscription pricing tiers, volume discount structures, implementation and professional services fees, and any promotional or competitive pricing arrangements.
3.  Customer Lists. Complete customer lists for Meridian, including customer names, contract start and end dates, annual contract values, and product modules licensed. To the extent within Solara's custody or control, Pinnacle-related customer data has also been provided.
4.  Win/Loss Data. Competitive bid tracking records and customer acquisition and loss records maintained by Meridian's sales organization, including information regarding competitive encounters with Pinnacle and other identified competitors, win and loss reasons as recorded by Meridian sales personnel, and aggregate win/loss statistics.
5.  Market Share Estimates. Internal estimates and third-party research reports regarding market size and competitive shares in the cloud-based institutional investment technology market, including portfolio analytics, risk modeling, order management, and compliance workflow software segments.
6.  Financial Data. Historical and projected financial statements, budgets, operating plans, and strategic plans for Meridian, as well as Fund IV-level financial projections and investment memoranda relating to the Transaction.
7.  Product Feature Matrices. Comparative functionality analyses of Meridian's platform and competing platforms, including internal product roadmaps, feature comparison charts, and competitive positioning documents.
These data submissions were prepared in consultation with Dr. Arvind Chakrabarti, Senior Economist in Calderwood & Harkness's Economic Consulting practice, and with Meridian management. Dr. Chakrabarti worked closely with Meridian's finance and business intelligence teams to ensure the accuracy and completeness of the structured data provided to the Commission.
E. Privilege Log
A detailed privilege log has been prepared and produced to FTC Staff identifying 4,872 documents or communications that have been withheld in whole or redacted in part on the basis of privilege or protection. The privilege log entries are categorized as follows:
•  Attorney-Client Privilege: 3,641 entries (representing approximately 74.8% of the privilege log)
•  Work Product Doctrine: 894 entries (representing approximately 18.4% of the privilege log)
•  Joint Defense / Common Interest Privilege: 337 entries (representing approximately 6.8% of the privilege log)
The privilege log was prepared in accordance with the privilege review protocol established on June 15, 2023, and is consistent with the terms of the Clawback / Non-Waiver Agreement executed on June 9, 2023, between Calderwood & Harkness (on behalf of Solara) and FTC Staff. That agreement governs the treatment of any inadvertent production of privileged materials, pursuant to the principles of Federal Rule of Evidence 502(d) and consistent with the FTC Model Stipulated Protective Order applicable to this proceeding. Each privilege log entry includes the date of the document or communication, the names and titles of all authors, recipients, and persons copied, a description of the subject matter of the document or communication sufficient to enable the Commission to assess the claim of privilege, and the specific privilege or protection asserted.
Solara expressly reserves all rights to supplement or amend the privilege log as necessary, including without limitation to add entries for documents or communications identified subsequent to the date of this certification, to correct any inadvertent errors or omissions in existing log entries, and to assert or withdraw privilege claims as circumstances may warrant.
II. SPECIFICATION-BY-SPECIFICATION COMPLIANCE SUMMARY
Solara confirms that it has responded to each of the forty-seven (47) specifications contained in the Second Request. The specifications cover a broad range of documents and data relating to the following principal subject matter categories:
•  Relevant Product and Geographic Markets. Specifications addressing the identification and definition of relevant product and geographic markets for portfolio analytics, risk modeling, order management, execution management, compliance workflow, ESG scoring, and performance attribution software, including documents reflecting Solara's and Meridian's views of the competitive landscape, market segmentation, and the boundaries of relevant markets.
•  Competition Between Pinnacle, Meridian, and Third-Party Competitors. Specifications directed to documents and data reflecting the nature and extent of competition between Pinnacle and Meridian, as well as competition involving identified third-party competitors such as Westmark Services Inc., Severin Technologies, Penrose Holdings (a Stonefield Corporation), Westvale Group, Kestrel Partners LLC, Brightwater & Co., and Beaumont & Co., among others.
•  Pricing, Customer Switching Costs, and Barriers to Entry. Specifications addressing pricing strategies, customer negotiation dynamics, the existence and magnitude of customer switching costs, data migration complexities, integration dependencies, contractual lock-in provisions, and barriers to entry and expansion in the relevant markets.
•  Integration and Combination Planning Documents. Specifications calling for all documents and communications relating to the planned integration or combination of Pinnacle and Meridian following consummation of the Transaction, including synergy analyses, organizational integration plans, technology platform rationalization plans, and customer migration strategies.
•  Financial Projections and Strategic Plans. Specifications directed to historical and forward-looking financial projections, budgets, operating plans, long-range strategic plans, and board and management presentations for Meridian and, to the extent within Solara's possession, custody, or control, for Pinnacle.
For each of the forty-seven specifications, Solara has identified and produced all responsive, non-privileged documents and data located through the compliance efforts described herein. In a limited number of instances involving specific specifications, Solara's search did not identify any responsive documents. In each such case, Solara has so noted in its specification-by-specification response log and has provided an explanation for the absence of responsive materials. These explanations generally reflect circumstances in which the subject matter of the specification pertained to activities or decisions that were handled exclusively by Pinnacle or by third parties outside of Solara's possession, custody, or control, rather than any limitation in the scope or diligence of Solara's search efforts.
Solara acknowledges its ongoing obligation to supplement its productions in the event that additional responsive materials are identified subsequent to the date of this certification. Calderwood & Harkness will continue to monitor for any such materials and will make supplemental productions to FTC Staff on a prompt basis should additional responsive documents or data come to Solara's attention.
III. COORDINATION WITH TARGET'S COUNSEL
Throughout the compliance process, Calderwood & Harkness has maintained regular coordination with Hargrove, Pelletier & Stein LLP, counsel to Pinnacle and the Sellers. The principal contacts at HPS for this engagement have been Catherine A. Pelletier, Lead Partner, and David L. Morrissette, Associate. This coordination has been directed at ensuring that the combined compliance efforts of Solara and Pinnacle provide complete coverage of all forty-seven specifications contained in the Second Request, including specifications that may call for documents or data in the possession of one party but not the other.
Pinnacle's separate substantial compliance certification is expected to be filed on or about October 6, 2023. HPS has confirmed that Pinnacle's compliance efforts are substantially complete and that the remaining steps consist primarily of final quality control review and preparation of the certification filing.
To the extent that certain specifications called for documents or data in the possession, custody, or control of Pinnacle rather than Solara, Solara has noted this in its specification-by-specification responses and has confirmed that Pinnacle's counsel is addressing such specifications in the course of Pinnacle's own compliance effort. Similarly, where specifications called for documents or data that may reside with both parties, Calderwood & Harkness and HPS have coordinated to avoid duplicative productions while ensuring that each party's production reflects the full scope of responsive materials within its respective possession, custody, or control.
IV. RESERVATION OF RIGHTS AND CONTINUING OBLIGATIONS
Solara expressly reserves all rights to supplement, correct, or amend its productions and privilege log at any time. This reservation encompasses, without limitation, the right to produce additional responsive documents identified through ongoing compliance monitoring, to correct any inadvertent errors or omissions in prior productions or privilege designations, and to amend the privilege log to reflect any changes in privilege assertions.
Solara acknowledges its continuing obligation under the Second Request and applicable law to produce responsive documents and data that may be identified after the date of this certification. Calderwood & Harkness will continue to exercise diligence in monitoring for any such materials and will make supplemental productions to FTC Staff promptly upon identification of any additional responsive documents or data.
Nothing in this certification, the accompanying Declaration, or any production made in connection with the Second Request constitutes or shall be construed as constituting a waiver of any privilege, protection, objection, or other right of Solara, Meridian, Fund IV, PCS Acquisition, or any other entity or individual affiliated with the Solara platform. All such rights are expressly reserved.
V. CERTIFICATION OF SUBSTANTIAL COMPLIANCE
Based on the foregoing, Solara Digital Infrastructure LP hereby certifies that it has substantially complied with the Request for Additional Information and Documentary Material (Second Request) issued by the Federal Trade Commission on May 29, 2023, in FTC File No. 231-0487.
The accompanying Declaration of Howard Bellamy in Support of Substantial Compliance Certification is submitted concurrently herewith and provides the factual basis for this certification. I respectfully request that the Commission accept this certification and begin the running of the applicable waiting period under Section 7A(e) of the Clayton Act, 15 U.S.C. § 18a(e), and Rule 803.20 of the HSR Act regulations, 16 C.F.R. § 803.20.
Should you have any questions regarding this certification or require any additional information, please do not hesitate to contact me directly at (202) 555-7412 or hbellamy@calderwoodharkness.com, or Monica Reyes at (202) 555-7438 or mreyes@calderwoodharkness.com.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Howard Bellamy Partner, Antitrust & Competition Group 1900 K Street NW, Suite 800 Washington, DC 20006 Telephone: (202) 555-7412
Email: hbellamy@calderwoodharkness.com
Counsel for Solara Digital Infrastructure LP
Enclosure: Declaration of Howard Bellamy in Support of Substantial Compliance Certification
cc: Graham A. Whitfield, Solara Digital Infrastructure GP LLC Sandra K. Levinson, Solara Digital Infrastructure GP LLC Catherine A. Pelletier, Hargrove, Pelletier & Stein LLP
DECLARATION OF HOWARD BELLAMY IN SUPPORT OF CERTIFICATION OF SUBSTANTIAL COMPLIANCE WITH SECOND REQUEST
FTC File No. 231-0487
Solara Digital Infrastructure Fund IV LP / Pinnacle Cloud Systems, Inc.
I, Howard Bellamy, hereby declare as follows:
1. I am a partner at Calderwood & Harkness LLP, located at 1900 K Street NW, Suite 800, Washington, DC 20006. I am a member of the firm's Antitrust & Competition Group and have practiced antitrust and competition law for over twenty-three years, with particular experience in Hart-Scott-Rodino Act compliance, merger investigations, and proceedings before the Federal Trade Commission and the Antitrust Division of the United States Department of Justice. I serve as the Responsible Partner and Billing Partner for Calderwood & Harkness's representation of Solara Digital Infrastructure LP ("Solara" or "SDILP") in connection with the investigation being conducted by the Federal Trade Commission (the "Commission" or "FTC") under FTC File No. 231-0487. Calderwood & Harkness was engaged for this representation pursuant to an engagement letter dated May 30, 2023, executed by Graham A. Whitfield, Founding Partner and Chief Executive Officer of Solara Digital Infrastructure GP LLC ("Solara GP"), the general partner of Solara. I have personal knowledge of the facts stated in this Declaration based on my direct supervision of all aspects of the compliance effort undertaken by Solara in response to the Second Request, and I am competent to testify to the matters set forth herein.
2. Solara Digital Infrastructure Fund IV LP ("Fund IV"), a Delaware limited partnership with approximately $4.2 billion in committed capital from institutional limited partners, proposes to acquire 100% of the outstanding capital stock of Pinnacle Cloud Systems, Inc. ("Pinnacle"), a Delaware corporation with its principal offices at 8700 Research Boulevard, Suite 500, Austin, Texas 78758. Pinnacle is a cloud-based software company that provides portfolio analytics, risk modeling, ESG (Environmental, Social, and Governance) scoring, and performance attribution solutions to institutional asset managers, pension funds, endowments, sovereign wealth funds, and insurance companies on a subscription Software-as-a-Service ("SaaS") basis. For the last twelve months ended March 31, 2023 (i.e., Q2 2022 through Q1 2023), Pinnacle reported revenue of approximately $387 million and EBITDA of approximately $74.6 million. As of the date of the Stock Purchase Agreement, Pinnacle employed approximately 1,420 employees across offices in Austin, Texas; New York, New York; London, England; and Bangalore, India. Pinnacle's senior management includes Nathaniel R. Okonkwo, Chief Executive Officer; Diane M. Hartwell, Chief Financial Officer; and Marcus E. Culberson, General Counsel.
The Transaction is valued at an aggregate enterprise value of approximately $1.63 billion, implying a revenue multiple of approximately 4.21x LTM revenue and an EBITDA multiple of approximately 21.85x LTM EBITDA. The consideration consists of approximately $1.19 billion in cash and approximately $440 million in rollover equity contributed by certain members of Pinnacle's management team and existing investors (representing approximately 26.99% of the total enterprise value). The acquisition is structured through PCS Acquisition Corp. (Employer Identification Number: 92-5038471), a newly formed Delaware corporation organized as a wholly owned indirect subsidiary of Fund IV for the purpose of effecting the Transaction.
The Commission's investigation, as reflected in the Second Request, has focused on two principal areas of competitive concern. First, the Commission has identified a potential horizontal overlap in the market for portfolio analytics software between Pinnacle and Meridian Workflow Solutions, Inc. ("Meridian"), an existing Solara portfolio company. Meridian, a Delaware corporation headquartered at 350 North Clark Street, Suite 2200, Chicago, Illinois 60654, was acquired in November 2020 by Solara Digital Infrastructure Fund III LP ("Fund III") at an enterprise value of $680 million. Meridian is a SaaS-based provider of trade order management, execution management, and compliance workflow software for buy-side institutional investors. Meridian reported last-twelve-month revenue of approximately $212 million, of which approximately $37.4 million (representing approximately 17.64% of total revenue) was attributable to Meridian's analytics module, which provides portfolio analytics functionality to Meridian's existing order management and compliance workflow customers. Second, the Commission has identified potential vertical concerns regarding data integration between Meridian's order management system and Pinnacle's performance attribution functions, and the possibility that the combined entity might have the ability and incentive to foreclose or disadvantage competitors in either market through data integration strategies.
The parties submitted their respective Notification and Report Forms under the HSR Act on April 28, 2023, accompanied by the applicable HSR filing fee of $450,000. The initial thirty-day waiting period under Section 7A(b)(1)(B) of the Clayton Act was scheduled to expire on May 28, 2023; pursuant to a mutual agreement between Solara and the Commission's Bureau of Competition, the waiting period was extended by one day to May 29, 2023. On May 29, 2023, the Commission issued the Second Request to Solara, containing forty-seven (47) specifications directed to documents and data in Solara's possession, custody, or control.
3. The Calderwood & Harkness team responsible for managing Solara's compliance with the Second Request consists of the following individuals: Howard Bellamy, Partner (billing rate: $1,650 per hour); Monica Reyes, Senior Associate, Year 7 (billing rate: $1,050 per hour); Elliot Nguyen, Associate, Year 4 (billing rate: $825 per hour); Tamara J. Westbrook, Of Counsel, Litigation Technology & E-discovery (billing rate: $975 per hour); and Dr. Arvind Chakrabarti, Senior Economist, Calderwood & Harkness Economic Consulting (billing rate: $1,200 per hour). In addition to the Calderwood & Harkness team, Solara retained Keymark Document Solutions LLC ("Keymark"), located at 7600 Leesburg Pike, Suite 320, Falls Church, Virginia 22043, as its e-discovery vendor for this engagement. The Keymark engagement is managed by Daniel S. Fong, Project Manager, who has overseen all aspects of document processing, hosting, and contract review attorney management. A team of twenty-two (22) contract review attorneys, recruited and managed by Keymark, conducted first-level document review in Keymark's hosted Relativity platform under the supervision of Calderwood & Harkness attorneys.
The total estimated costs of Solara's compliance with the Second Request are approximately $7.56 million, consisting of approximately $5.74 million in Calderwood & Harkness legal fees (encompassing attorney time for custodian identification, search term development, review supervision, privilege analysis, production management, data submission preparation, and coordination with FTC Staff and Pinnacle's counsel) and approximately $1.82 million in Keymark vendor costs (encompassing document processing, Relativity hosting, contract review attorney fees, and production formatting and delivery).
4. As set forth in the cover letter accompanying this Declaration, Solara identified a total of eighteen (18) custodians on its side of the Transaction. Twelve (12) of these custodians are current officers, employees, or partners of Solara GP and the Fund IV management and investment team. The remaining six (6) custodians are current officers and senior management personnel of Meridian, including Chief Executive Officer Priya N. Raghavan, as well as other individuals with direct responsibilities for product development, sales and marketing, competitive strategy, and financial planning and analysis functions relevant to the specifications.
The custodian identification and collection protocol was finalized on June 7, 2023, following a series of detailed interviews with each identified custodian and with Solara and Meridian management. The protocol specified the data sources to be collected for each custodian, the preservation procedures to be followed, and the technical parameters for forensic collection. Document collections were made from the following categories of data sources: email systems (Strathmore Data Systems and Outlook accounts), shared network drives (including departmental and team-level drives), collaboration platforms (Meridian Solutions workspaces and Northgate Data Systems channels in which custodians participated), personal devices (where applicable and with custodian authorization, including laptops and mobile devices), and cloud-based document repositories (including Aldermere Systems sites, Fenmore Services Inc. accounts, and Hollowell Health IT accounts). In total, approximately 1,240,000 documents were collected from the eighteen custodians across all identified data sources.
5. Following collection, all documents were ingested into Keymark's hosted Relativity environment for processing and de-duplication. After de-duplication using MD5 hash values at the family-group level, and after the application of agreed-upon search terms, date-range restrictions, and file-type filtering protocols, the initial collection of approximately 1,240,000 documents was reduced to a review universe of approximately 487,000 documents. The date-range restrictions generally spanned from January 1, 2019, to the present, a period selected to cover the timeframe of pre-acquisition planning and relevant competitive history as contemplated by the specifications. Search terms were developed by Calderwood & Harkness attorneys in consultation with Dr. Chakrabarti and were designed to capture documents likely to be responsive to the forty-seven specifications while reducing the volume of clearly non-responsive material within the review universe.
All 487,000 documents within the review universe were reviewed for responsiveness to one or more of the forty-seven specifications and for the applicability of the attorney-client privilege, the work product doctrine, the joint defense or common interest privilege, and any other applicable privilege or protection. The review was supervised by Monica Reyes and Elliot Nguyen of Calderwood & Harkness, who implemented quality control sampling protocols to ensure the accuracy and consistency of reviewer coding decisions. These protocols included random sampling of approximately 10% of all reviewer coding decisions, with escalation and re-review procedures for documents presenting complex issues of responsiveness, privilege, or confidentiality.
6. As a result of the document review process described above, approximately 196,300 responsive, non-privileged documents have been produced to the Commission. These documents bear consecutive Bates numbers SDILP-2R-000001 through SDILP-2R-196300. Productions were made on a rolling basis, with the initial production delivered to FTC Staff on July 14, 2023, and subsequent rolling productions delivered at approximately two-week intervals over the following approximately ten-week period. The final production batches were delivered on or before September 20, 2023. All documents were produced in the format specified by the Commission's production specifications, including native-format files where required (such as for spreadsheets and presentations) and TIFF image format with extracted text (OCR where necessary) and associated metadata, delivered via load files compatible with FTC review platforms. Each production was accompanied by a transmittal letter identifying the Bates range of the documents produced and any specific production notes relevant to individual specifications.
7. In addition to the documentary productions described above, seven (7) structured data submissions have been provided to FTC Staff in response to the data-related specifications contained in the Second Request. These submissions cover the following categories: (1) sales data, including historical contract-level revenue data for Solara portfolio companies, with particular focus on Meridian; (2) pricing data, including rate cards, discount schedules, and negotiated pricing terms for Meridian's product offerings; (3) customer lists, including complete customer rosters for Meridian and, to the extent within Solara's possession, custody, or control, Pinnacle-related customer data; (4) win/loss data, including competitive bid tracking records and customer acquisition and loss data maintained by Meridian's sales organization; (5) market share estimates, including internal estimates and third-party research regarding market size and competitive shares in the cloud-based institutional investment technology market; (6) financial data, including historical and projected financial statements, budgets, and strategic plans for Meridian and Fund IV-level financial projections and investment memoranda; and (7) product feature matrices, including comparative functionality analyses of Meridian's platform and identified competing platforms.
These data submissions span both Meridian-specific data and, to the extent within Solara's possession, custody, or control, Pinnacle-related data. The submissions were prepared with the assistance of Dr. Arvind Chakrabarti, Senior Economist at Calderwood & Harkness, and in coordination with Meridian management (including Meridian's finance, business intelligence, and sales operations teams) and Redstone Advisory Group LLC, the financial advisor to Solara on the Transaction, under the direction of Elaine C. Davenport, Managing Director. Dr. Chakrabarti and his team worked closely with Meridian and Redstone to ensure the accuracy, completeness, and consistency of all structured data provided to the Commission, including the reconciliation of data from multiple internal systems and the preparation of detailed data dictionaries and methodology explanations accompanying each submission.
8. A detailed privilege log has been prepared and produced to FTC Staff identifying a total of 4,872 documents or communications that have been withheld in whole or redacted in part on the basis of applicable privilege or protection. The 4,872 privilege log entries are categorized as follows: 3,641 entries asserting the attorney-client privilege (representing approximately 74.8% of all log entries); 894 entries asserting protection under the work product doctrine (representing approximately 18.4% of all log entries); and 337 entries asserting the joint defense or common interest privilege (representing approximately 6.8% of all log entries). Where a single document or communication was withheld or redacted on the basis of more than one privilege or protection, the log entry reflects all applicable bases.
Privilege determinations were made in accordance with the privilege review protocol established on June 15, 2023, which was developed by Calderwood & Harkness attorneys and implemented through the Relativity platform used for the document review. The privilege review protocol set forth detailed criteria for the identification and classification of privileged materials, including guidance on the application of the attorney-client privilege, the work product doctrine, and the joint defense and common interest doctrines in the context of a private equity sponsor's acquisition of a target company and the related antitrust review process.
The Clawback / Non-Waiver Agreement executed on June 9, 2023, between Calderwood & Harkness (on behalf of Solara) and FTC Staff governs the treatment of any inadvertent production of privileged materials. That agreement is consistent with the principles of Federal Rule of Evidence 502(d) and the FTC Model Stipulated Protective Order applicable to this investigation, and provides that any inadvertent production of privileged materials shall not constitute a waiver of any applicable privilege or protection.
9. Throughout the compliance process, Calderwood & Harkness has maintained regular coordination with Hargrove, Pelletier & Stein LLP, counsel to Pinnacle and the Sellers. The principal contacts at HPS for this engagement have been Catherine A. Pelletier, Lead Partner, and David L. Morrissette, Associate. This coordination has been directed at ensuring comprehensive coverage of all forty-seven specifications contained in the Second Request, including the identification of specifications that call for documents or data residing primarily or exclusively with Pinnacle rather than with Solara, and the allocation of responsibility for responding to such specifications. Pinnacle identified fourteen (14) custodians on its side of the Transaction, and HPS has managed all aspects of Pinnacle's custodian identification, document collection, review, and production separately from and independently of Solara's compliance effort. Pinnacle's substantial compliance certification is expected to be filed on or about October 6, 2023.
10. Based on my direct supervision of the compliance effort described herein, I affirm that Solara has conducted a diligent and good-faith search for all documents and data responsive to the Second Request. The compliance effort has involved the identification of all reasonably likely sources of responsive materials, the comprehensive collection and preservation of documents and data from those sources, the careful and thorough review of all collected materials for responsiveness and privilege, and the timely production of all responsive, non-privileged materials to the Commission. Solara acknowledges its continuing obligation under the Second Request and applicable law to identify and produce responsive documents and data that may come to Solara's attention after the date of this certification. All reasonable steps have been taken to identify, collect, review, and produce responsive materials within the scope of the Second Request, and Solara is committed to fulfilling its ongoing obligations in connection with this investigation.
11. I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct to the best of my knowledge, information, and belief.
Executed on this 22nd day of September, 2023, at Washington, District of Columbia.
________________________________________
Howard Bellamy Partner, Antitrust & Competition Group Calderwood & Harkness LLP 1900 K Street NW, Suite 800 Washington, DC 20006 Telephone: (202) 555-7412
Email: hbellamy@calderwoodharkness.com
Date: September 22, 2023

CALDERWOOD & HARKNESS LLP Attorneys at Law

VIA ELECTRONIC SUBMISSION AND OVERNIGHT COURIER

I. SCOPE OF COMPLIANCE EFFORTS

II. SPECIFICATION-BY-SPECIFICATION COMPLIANCE SUMMARY

III. COORDINATION WITH TARGET'S COUNSEL

IV. RESERVATION OF RIGHTS AND CONTINUING OBLIGATIONS

V. CERTIFICATION OF SUBSTANTIAL COMPLIANCE

CALDERWOOD & HARKNESS LLP

Record

Parties

Dates

Amounts