Blog of Intellectual Capital

Sale of ClearEdge Power, Inc.

Pursuant to Gerbsman Partners email on May 1, 2014, regarding the sale of Assets and Intellectual Property of ClearEdge Power, Inc. (“ClearEdge”), ClearEdge and two of its subsidiaries (collectively, “ClearEdge Power”) filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code (“Bankruptcy Code”) in the United States Bankruptcy Court for Northern District of California, San Jose Division (Case No. 14-51955)

Gerbsman Partners – http://gerbsmanpartners.com – has been retained by ClearEdge (http://www.clearedgepower.com) to solicit interest for the acquisition of all or substantially all of ClearEdge’s assets, including its Intellectual Property (“IP”), in whole or in part (collectively, the “ClearEdge Assets”) and equipment, inventory and work-in-progress located at Clear Edge’s various facilities. Attached is a sales memorandum, patent list, fixed asset list and inventory list.

Please be advised that the ClearEdge Assets are being offered for sale pursuant Section 363 of the United States Bankruptcy Code. It is anticipated that the Bankruptcy Court will approve certain sale procedures within the next 30 days and sale procedures will set forth when and how bids, will be submitted, deposit requirements and if the bids are subject to overbids. Final Sale Procedures are subject to Court approval, which the ClearEdge expects in early June. Outlined below is a summarization of the basic provisions of the Bidding Process being reviewed by the Court.

IMPORTANT LEGAL NOTICE:

The information in this memorandum does not constitute the whole or any part of an offer or a contract.

The information contained in this memorandum relating to the ClearEdge Power Assets has been supplied by ClearEdge, by third parties and obtained from a variety of sources. It has not been independently investigated or verified by Gerbsman Partners or their respective agents.

Potential purchasers should not rely on any information contained in this memorandum or provided by Gerbsman Partners (or their respective staff, agents, and attorneys) in connection herewith, whether transmitted orally or in writing as a statement, opinion, or representation of fact. Interested parties should satisfy themselves through independent investigations as they or their legal and financial advisors see fit, as the Fixed Asset, Inventory and Patent lists may not be accurate.

Gerbsman Partners, and their respective staff and agents, (i) disclaim any and all implied warranties concerning the truth, accuracy, and completeness of any information provided in connection herewith and (ii) do not accept liability for the information, including that contained in this memorandum, whether that liability arises by reasons of ClearEdge Power’s or Gerbsman Partners’ negligence or otherwise.

Any sale of the ClearEdge Power Assets will be made pursuant to the Bankruptcy Code and will require approval of the United States Bankruptcy Court. All sales will be “as-is,” “where-is,” and on a “with all faults” basis, without any warranties, representations, or guarantees, either express or implied, of any kind, nature, or type whatsoever from, or on behalf of Gerbsman Partners. Without limiting the generality of the foregoing, Gerbsman Partners and their respective staff and agents, hereby expressly disclaim any and all implied warranties concerning the condition of the ClearEdge Power’s Assets and any portions thereof, including, but not limited to, environmental conditions, compliance with any government regulations or requirements, the implied warranties of habitability, merchantability, or fitness for a particular purpose.

Basic Provisions of The Bidding Process for Interested Buyers – Summarization waiting for approval by the United States Bankruptcy Court.

Due Diligence:

Interested and qualified parties will be required to sign a nondisclosure agreement in the form attached hereto as Exhibit A to have access to the due diligence documentation (the “Due Diligence Access”). Each interested party, as a consequence of the Due Diligence Access granted to it, shall be deemed to acknowledge and represent (i) that it has an opportunity to inspect and examine the ClearEdge Assets and to review all pertinent documents and information with respect thereto; (ii) that it is not relying upon any written or oral statements, representations, or warranties of Gerbsman Partners, or their respective staff, agents, or attorneys; and (iii) all such documents and reports have been provided solely for the convenience of the interested party, and Gerbsman Partners (and their respective, staff, agents, or attorneys) do not make any representations as to the accuracy or completeness of the same. Information provided may not be accurate.

Qualifying to Bid at Auction:

The following summarizes the basic provisions of the Bidding Procedures. For additional details, please refer to the Bidding Procedures which are available from Debtors’ counsel. The Bidding Procedures remain subject to further modification and to Bankruptcy Court approval.

All bidders who have executed a confidentiality agreement in a form acceptable to the Debtors may participate in the bidding process. Bids must identify, with specificity, which assets are included in the bid and shall be accompanied by a black-lined version of the form Purchase Agreement provided by the Debtors, showing all changes such that the Debtors may determine how the bid compares to the terms of the form Purchase Agreement. Bidders may collaborate to submit a joint bid but must disclose the identity of each bidder. Bidders shall submit their bids at or before the bid deadline of June 25, 2014 to the Debtors counsel and to Gerbsman Partners. Bids must also include, among other things: (1) a deposit of $250,000 and (2) evidence, including financial information, of the bidder’s financial ability to consummate the proposed sale transaction and to cure defaults and perform the obligations under any contract to be assumed as part of the bid. Bids that satisfy the above requirements and other requirements set forth in the bidding procedures shall be designated as Qualified Bids.

At any time prior to the sale hearing, the Debtors may designate a Qualified Bid as the “Stalking Horse Bid” and then negotiate and finalize the Purchase Agreement with the Stalking Horse Bidder. Upon such designation, the Debtors shall notify all Qualified Bidders of such designation and provide a copy of the Stalking Horse Purchase Agreement. The Stalking Horse Bidder shall be entitled to a break-up fee of $250,000.

The auction and sale hearing will take place on or about July 7, 2014, subject to the Court’s availability, at the Bankruptcy Court in courtroom 3070 before the Honorable Charles Novack, United States Bankruptcy Judge, 280 S. First Street, San Jose, CA 95113. Only parties who have submitted Qualified Bids will be allowed to participate in the auction.

Competing overbids at the auction must include a further markup of the Purchase Agreement. The initial overbid must be 500,000. Bids thereafter will be in minimum increments of at least $250,000.

For additional information, please see below and/or contact:
Stephen T O’Neill
Partner
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WWW.DORSEY.COM :: PALO ALTO :: BIO :: V-CARD
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D O R S E Y & W H I T N E Y LLP
305 Lytton Avenue
Palo Alto, CA 94301
P: 650.843.2719 F: 650.857.1288 C: 408.335.9540

Steven R. Gerbsman
Gerbsman Partners
(415) 505-4991
steve@gerbsmanpartners.com

Kenneth Hardesty
Gerbsman Partners
(408) 591-7528
ken@gerbsmanpartners.com