Sale of ClearEdge Power, Inc.

On May 1, 2014, ClearEdge Power, Inc. (“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.

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. Sale Procedures will be provided to interested parties as soon as they become available.

ClearEdge will use its best efforts to make its employees available to assist potential purchasers with due diligence and assist with a prompt and efficient transition at mutually convenient time.

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.

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.

This memorandum contains confidential information and is not to be supplied to any person without Gerbsman Partners’ prior consent. This memorandum and the information contained herein are subject to the non-disclosure agreement attached hereto as Exhibit A. Footnote (1)

SUMMARY OF HISTORICAL INFORMATION

ClearEdge Power, Inc. (“ClearEdge” or the “Company”) designs, manufactures, sells and services distributed generation fuel cell systems for commercial, industrial, utility and residential applications. The Company’s PureCell® fuel cell systems operate continuously in parallel with the electric utility, converting natural gas to electricity and useful heat through an ultra-clean electrochemical process. The PureCell systems can also continue to operate during a utility grid outage or, if appropriately configured, independent of the grid, providing a highly reliable source of electricity and heat to the customer’s facility. The Company’s value proposition for its customer base features three key elements: reduced utility expenses with an attractive economic payback, improved corporate sustainability through reduced greenhouse gas emissions, and highly reliable backup power capability to keep critical operations running.

ClearEdge fuel cell systems are based on an advanced and proven phosphoric acid fuel cell (“PAFC”) technology that features an industry-leading 10-year cell stack life. The Company manufactures and sells two systems that share common fuel cell stack components: a 5kW model (“PureCell® Model 5”) and a 400kW model (“PureCell® Model 400”). The individual systems can be combined with like power systems to scale to the ideal amount of power generation for the end user. The Company’s fuel cell solutions evolved from a 200 kW fuel cell power plant, the PureCell® system Model 200, that was in production from 1991 to 2008 and was installed at over 260 sites worldwide.

A major component of the Company’s business is providing comprehensive service for a fleet of over 125 operating fuel cell systems. All systems are remotely monitored 24/7 and the Company has developed a leading-edge prognostics health management system to identify potential problems, and corrective actions, before they occur. With over 11 million operating hours, more than 2 billion kWh of generated electricity, and a current fleet availability of 98%, ClearEdge’s fleet of phosphoric acid fuel cells has demonstrated world-class reliability and durability.

ClearEdge is headquartered in Sunnyvale, CA, and has a major engineering and manufacturing operation in South Windsor, CT and an engineering facility in Hillsboro, OR. In February 2013, ClearEdge acquired UTC Power, Inc., (“UTC Power”), formerly a subsidiary of United Technologies Corporation. ClearEdge acquired UTC Power largely to leverage advanced fuel cell technology, in which UTC Power invested nearly $1 billion over a 50-year period. The Company’s management team is made up of proven executives from the energy and high tech sectors. To date, over $130 million has been invested in ClearEdge and its Assets and Intellectual Property.

Target Markets:

The Company targets end user market segments that derive value from one or more of the following key product features: 1) continuous, highly-available power, such as telecommunications operations, data centers, high-technology industrials, supermarkets and hospitals, 2) highly-efficient, low cost electricity and heat, such as corporate campuses, mixed-use developments, multi-family housing, universities and schools, 3) ultra-clean, highly-reliable, continuous-duty distributed power, such as highly constrained utility territories, developing nations in need of massive power infrastructure development and markets that consider fuel cell power renewable such as South Korea and several U.S. states.

The geographic markets in the U.S. include states and utility regions that have a combination of high electric rates, low gas prices, and financial incentives that support the installation of fuel cells – currently California and the northeast and mid-Atlantic states. The Republic of South Korea is also a significant geographic market for ClearEdge fuel cells due to an on-going government initiative to motivate the installation of clean, distributed power.

Customers:

ClearEdge has strong customer relationships with blue-chip customers across a variety of vertical markets. A key factor in ClearEdge’s success has been the Company’s end-to-end customer support throughout the sales process, providing consultative services on applications and site design, turnkey project management and installation services, and comprehensive equipment services covering all aspects of the fuel cell system’s operation.

ClearEdge’s customers span a wide range of commercial and industrial sectors and include: Verizon, Samsung, CBS, First National Bank, Whole Foods Market, Coca-Cola, University of Connecticut, Saint Francis Hospital, Adventist Health, and Roche Pharmaceuticals. The Company also has several important utility customers including San Diego Gas & Electric and New York Power Authority in the U.S., and, GS Power, SK E&S, and Korea Southeast Power in South Korea. ClearEdge also has a field trial with BP in operation to power natural gas wellheads.

Intellectual Property:

As a result of over 50 years of fuel cell research and development, with nearly $1 billion of investments by UTC Power’s former parent United Technologies; ClearEdge has amassed a substantial body of intellectual property in the form of patents, trademarks, know-how and trade secrets. The Company currently has a total portfolio of 289 issued and pending patents and exclusive licenses. (see attached Patent and Licensing list).

The key intellectual property lies in the design, manufacture and operation of the fuel cell stack, as well as the design and integration of the highly efficient and complex fuel processing system. The Company’s intellectual property also includes the sophisticated embedded software control system that monitors and controls every aspect of the system. Key know-how exists for manufacturing methods, component design, system design, maintenance and serviceability, and applications such as fuel processing of biogas and digester gas. The Company has an exclusive license to patents that cover stationary solid oxide fuel cell (SOFC) and PEM fuel cell technology.

Current Situation:

ClearEdge has historically experienced strong growth and has been the leader in the field of stationary fuel cell systems. However, recent working capital constraints have created the opportunity for all or a portion of ClearEdge’s assets to be sold. The acquisition of these assets can enable the purchaser to realize significant short- and long-term value from the ClearEdge’s assets as ClearEdge maintains the ability to potentially scale within the context of sufficient working capital and a stronger balance sheet.

Financial data for ClearEdge is available during due diligence and is subject to an NDA.

The reasons why ClearEdge’s assets are attractive are:

1. Attractive Growth Industry – Distributed generation, clean energy industry which is experiencing tremendous growth due to the cost, environmental impact, and unreliability of the traditional utility service. ClearEdge’s proven, industry-leading fuel cell technology positions it for potential growth as the market for clean, distributed energy generation solutions continues to expand rapidly, as evidenced by Navigant Research’s projection for the stationary fuel cell market to grow at a CAGR of about 40% through 2018.

2. Market Position: ClearEdge is the only stationary fuel cell company that holds a significant share of the stationary fuel cell business in both major fuel cell markets of the U.S. and South Korea, and has the broadest range of solutions from residential to utility-scale applications.

3. Best in Class Technology – ClearEdge’s PAFC technology is the proven leader in cell stack durability (10 years) and system availability (98%), while maintaining competitive leveled cost of energy generation.

4. Excellent Relationships – ClearEdge’s strength has always been predicated on strong relationships, especially with its customers, with whom ClearEdge maintains long-term service agreements.

5. Diversified Base of Customers – ClearEdge has sold over 500 fuel cell systems in a wide range of commercial, industrial, institutional, residential and utility markets across a wide variety of geographies in the U.S. and South Korea. This allows the Company to avoid fluctuation in its revenues caused by adverse changes affecting any particular industry.

6. Third Party Financing Options – ClearEdge has worked with a group of outside financing sources for it product line.

7. Opportunity for Future Growth – Opportunities for growth can be realized by fully exploiting the market need for clean, continuous, reliable power solutions, and in taking advantage of the Intellectual property contained within its patent portfolio.

8. Potential Backlog and Pipeline: Prior to ceasing company operations, the Company had a strong sales pipeline for significant volume, in addition to a significant number of executed long-term service contracts. This information is available in the Due Diligence Documentation, and is subject to an NDA.

Management Team at ClearEdge (for information purposes only)[2]:

David Wright – President & Chief Executive Officer – David Wright is the President and Chief Executive Officer of ClearEdge. Prior to joining ClearEdge, he served as Chief Executive Officer and Chairman of GridIron Systems from February 2010 to July 2011. Prior to that, David was Chairman and CEO of Verari Systems from July 2006 to November 2009. He was Executive Vice President, Office of the CEO, Strategic Alliances and Global Accounts at EMC Corporation from July 2004 until August 2006. From October 2000 to July 2004, he served as President, Chief Executive Officer and Chairman of the Board of Legato Systems before EMC acquired the company in 2004. Prior to joining Legato, David had a 13-year career with Amdahl Corporation, where he had served as President and Chief Executive Officer from 1997 to 2000. Before joining Amdahl, David spent 11 years with IBM, serving in a variety of staff and management positions. David graduated from Xavier University with a BS in physics and a minor in mathematics.

Neal Starling – Executive Vice President, Sales, Marketing & Installation Services Neal Starling joined ClearEdge as the Vice President of Sales and Marketing in January 2012. Neal has more than 25 years of leadership experience in the power and electronics business. Prior to joining ClearEdge, Neal managed the Electrical Distribution Channel and held the position of Vice President and General Manager for the Energy Division in North America for TE Connectivity, a $12 billion global company in the energy, consumer electronics, healthcare, automotive, aerospace and communications industries.

Neal has also held senior sales, marketing and general management roles for Emerson, Edison International and Entergy Corp, achieving the highest revenue growth and profitability levels across multiple divisions. Neal is a graduate of Troy University and Executive programs at the University of Michigan – Stephen M. Ross School of Business.

Gloria Fan – Chief Financial Officer Gloria Fan brings in 20 years of experience in providing financial, operational and business leadership to high technology companies to her position as Chief Financial Officer at ClearEdge. Prior to joining ClearEdge in 2013, Gloria worked at Pinecone Energies, where she worked to develop Pinecone’s business model, raised capital and assisted one of Pinecone’s portfolio companies in building an infrastructure and prepare its IPO.

Prior to Pinecone Energies, Inc., Gloria worked for Bridgelux as CFO for four years. She raised over $60 million for Bridgelux and participated in the strategic development of company’s business. Prior to Bridgelux, she spent 13 years in the telecommunications industry. She worked at UTStarcom as Vice President of Finance and Global Business Operations for seven years. During her tenure at UTStarcom, the company had its IPO and grew its revenue from $186 million to $2.8 billion a year. Prior to UTStarcom, Gloria spent six years in various senior finance positions with P-Com, during which time the company had its IPO and grew its revenue from $4 million to over $300 million a year. Gloria received the “CFO of the Year” award by Silicon Valley Business Journal in 2008.

Zakiul Kabir – Chief Technology Officer Zakiul Kabir joined ClearEdge as the VP of Engineering in March 2006 and currently serves as the Chief Technology Officer. He joined the Company from United Technologies where for more than 13 years he held a variety of engineering and management positions, including head of Systems Engineering for Transportation Applications at UTC Power. His technical expertise include systems design, analysis and integration of PEM and phosphoric acid fuel cells for transportation and stationary applications, fuel processor development, and systems integration.

Zakiul has been awarded several patents. He graduated from City University of New York and Bangladesh University of Engineering and Technology with a graduate and an undergraduate degree in Chemical Engineering. Zakiul also completed the SDM Graduate Certificate Program in Systems Engineering from Massachusetts Institute of Technology.

Dave Anderson – Vice President, Product Management and Strategy Dave Anderson is responsible for Product Management and Strategy for ClearEdge. All product definition, business development and partner activities are focused in his organization. Dave has many years of experience as a high tech executive in complex systems with a full range of products including hardware, software and services. He was SVP and CTO of Amdahl Corporation for many years where he was responsible for all product operations.
Dave also held the position of CEO at numerous companies in various areas of technologies. In recent years, Dave has specialized in working with fast growing companies to create and market products that best fit customer needs.

Sathya Motupally – Vice President, Engineering Dr. Sathya Motupally leads the engineering and technology function at ClearEdge. He has spent the past 12 years developing world class transportation and stationary fuel cell products and solutions. Under Dr. Motupally’ s leadership, the fuel cell team has developed engineering solutions for best-in-class fuel cell reliability, performance while achieving cost reduction. Prior to ClearEdge, Dr. Motupally worked at the Gillette Company where he led a mathematical modeling team tasked with systems research.

Dr. Motupally received his Ph.D. in chemical engineering from the University of South Carolina and an MBA from Carnegie Mellon University. He is an elected member of the Connecticut Academy of Science and Engineering.

Bill Ferone – Vice President, Worldwide Service and Support William “Bill” Ferone joined ClearEdge as Vice President of Worldwide Service and Support in 2013. Bill is an executive with considerable experience in building and managing Field Operations functions from the ground up. He has run Service for Amdahl, Bay Networks and Nortel and a number of start-up companies. At ClearEdge, Bill is responsible for the Worldwide Service and Support team.

Katrina Fritz – Vice President, External Affairs & Corporate Strategy As the Vice President of External Affairs & Corporate Strategy at ClearEdge, Katrina Fritz is responsible for leading the company’s strategic planning and government relations initiatives. She actively represents ClearEdge’s interests in policy and regulatory affairs that impact fuel cells and the clean energy sector. Katrina joined ClearEdge in 2013 with the company’s acquisition of UTC Power. Katrina joined UTC Power in September 2010 after six years with Plug Power, where she was Vice President of Business Development and Government Relations. Before her tenure at Plug Power, Katrina served as Director of Operations for the Wright Fuel Cell Group at Case Western Reserve University. Prior to Case Western, Katrina held positions in marketing and organizational development for SCO UNIX, a software company in Santa Cruz, California and Watford, United Kingdom.

Katrina serves on the Board of Directors of the Fuel Cell and Hydrogen Energy Association, the Connecticut Fuel Cell and Hydrogen Coalition and the Advisory Board to the Pacific Clean Energy Application Center at University of California, Berkeley. She is also an active member and former Chair of the Alliance for Clean Energy New York Board of Directors and the Industry Advisory Panel to the California Stationary Fuel Cell Collaborative Katrina received a BA from the University of Michigan and an MBA from Case Western Reserve University.

Board of Directors:

James Kohlberg – Chairman – Chairman of Kohlberg and Company
David Wright – CEO of ClearEdge
Phil Angelides – Pres. Riverview Capital Investments
Ken DeFontes, Jr – retired CEO of Baltimore Gas and Electric
John Eastburn – Kohlberg Ventures
Andy Geisse – CEO of ATT Business Solutions
Frank Marshall – Partner at Timark LP and Big Basin Partners, x-VP Engineering at Cisco

The Bidding Process for Interested Buyers – To be provided as soon as the process is approved 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.

Qualifying to Bid at Auction:

As previously discussed, ClearEdge’s Assets will be sold pursuant to certain sale procedures approved by the Bankruptcy Court. The Sale Procedures will be made available to interested parties as soon as they are approved by the Bankruptcy Court. Please note that at a minimum, the sales procedures will require that any person or other entity making a bid must be prepared to provide independent confirmation that they possess the financial resources to complete the purchase where applicable. In order to qualify to bid at the public auction sale, all initial bids must be accompanied by a refundable deposit check in an amount to be determined by the Bankruptcy Court. Please note that ClearEdge will require that all sales, transfer, and recording taxes, stamp taxes, or similar taxes, if any, relating to the sale of the ClearEdge Assets shall be the sole responsibility of the Successful Bidder.

For additional information, please see below and/or contact:

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

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

James Skelton
(949) 466-7303
jim@gerbsmanpartners.com

[1] INTERESTED PARTIES SHOULD SATISFY THEMSELVES THROUGH INDEPENDENT INVESTIGATIONS AS THEY OR THEIR LEGAL AND FINANCIAL ADVISORS SEE FIT. Any sale of the ClearEdge Assets will be made on an “as-is,” “where-is,” and “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 ClearEdge and Gerbsman Partners. Without limiting the generality of the foregoing, ClearEdge and Gerbsman Partners and their respective staff and agents, hereby expressly disclaim any and all implied warranties concerning the condition of the ClearEdge 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.

[2] The biographical information concerning the current management of Clearedge is included for information purposes only. Although this sale is being conducted with Clearedge’s cooperation, this sale is strictly an asset sale pursuant to Section 363 of the United States Bankruptcy Code. Clearedge has no arrangement pursuant to which buyer of the Clearedge assets could be assured of the future services of any Clearedge officers or employees.

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