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SALE OF ASSETS OF ACTIVE RESPONSE GROUP INC.
Gerbsman Partners (www.gerbsmanpartners.com) has been retained by Hercules Technology Growth Capital (“Hercules”), the senior secured lender to Active Response Group, Inc., (“ARG”), (www.activeresponsegroup.com) to solicit interest for the acquisition of all or substantially all of ARG’s assets, including its Intellectual Property (“IP”), in whole or in part (collectively, the “ARG Assets”).

Please be advised that the ARG Assets are being offered for sale pursuant to Section 9-610 of the Uniform Commercial Code. Purchasers of the ARG Assets will receive all of ARG’s right, title, and interest in the purchased portion of Hercules’ collateral, which consists of substantially all of ARG’s assets, as provided in the Uniform Commercial Code.

The sale is being conducted with the cooperation of Hercules and ARG. ARG has advised Hercules that it will use its best efforts to make its employees available to assist 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 ARG Assets has been supplied by third parties and obtained from a variety of sources. It has not been independently investigated or verified by Hercules or Gerbsman Partners or their respective agents.

Potential purchasers should not rely on any information contained in this memorandum or provided by Hercules or Gerbsman Partners (or their respective staff, agents, and attorneys) in connection herewith, whether transmitted orally or in writing (the “information”), as a statement, opinion, or representation of fact. Please further note that all information provided herein relating to the operations of ARG’s business and its market positions relates to periods on or prior to March 31, 2009. Interested parties should satisfy themselves through independent investigations as they or their legal and financial advisors see fit.

Hercules and Gerbsman Partners, and their respective staff, agents, and attorneys, (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 Hercules’s or Gerbsman Partners’ negligence or otherwise.

Any sale of the ARG 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, Hercules and Gerbsman Partners. Without limiting the generality of the foregoing, Hercules and Gerbsman Partners, and their respective staff, agents, and attorneys, hereby expressly disclaim any and all implied warranties concerning the condition of the ARG 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 Hercules or Gerbsman Partners’ prior consent.

SUMMARY OF HISTORICAL INFORMATION[1]

ARG is an online marketing solutions company specializing in lead generation and customer acquisition. ARG leverages deep vertical knowledge, a database of 20 million consumer records and a proprietary technology platform to deliver qualified leads and closed transactions to advertisers on a pay for performance basis. ARG employs a ‘wide-net’, promotional approach to generate consumer registrations from over 400 proprietary websites. These registrations are converted into qualified leads and sales. At its apex, the company generated over 1.5 million consumer registrations each month.

The company is well-positioned to capitalize on several industry trends – the migration of direct marketers from offline to online; the increased emphasis on accountability and ROI which has fueled the growth of the pay for performance space; and the increased focus on targeting and segmentation.

ARG is a privately held company. ARG (founded in 2000 as eWOMP, Inc.) is headquartered in New York, New York, with Technology offices in Boulder Colorado. To date, ARG has secured over $5 million in equity financing. $2.6 in a Series A secured by eWOMP with the remainder funded by the Company’s CEO, CFO, Board of Directors and a group of sophisticated private investors. The company also raised over $10MM in venture debt financing from Hercules Technology Growth Capital.

Target Market:
Per the IAB, lead generation is the fastest growing segment of the online advertising industry. Lead generation is estimated to grow to $3.7 billion by 2011, up from $1.8 billion in 2007.

Customers:
ARG’s clients range across a broad set of industries, covering over 80 distinct product and service categories. ARG operates a performance driven marketplace and its customer base is vertically agnostic, which allows it to maximize revenue across its strong client base of direct clients, agencies and networks, such as ValueClick, AOL, Q Interactive, IAC, Pfizer, Glaxo Smith Kline, R.J. Reynolds, and Netflix. The accounts receivable base of ARG is diverse, as no client represents over 10% of its accounts receivable balance.

Proprietary Lead Generation Technology – Intellectual Property
ARG’s internally developed software platform, Active Marketing Platform (“AMP”) is a scalable technology solution that enables the company to execute its business model with tremendous efficiency. ARG’s technology dynamically optimizes ROI by measuring the difference between attracting customers to ARG’s sites and the revenue generated from media sources – at a granular level – enabling real time media decisions. The company’s technology is customizable for individual clients to meet specific needs in order strike the optimal balance between quantity and quality. The company’s platform was designed with an open architecture to be both flexible and expandable. An example of the expandability of the platform is a recent development of a module that powers call centers. This enables ARG to utilize an outsourced call center, but maintain operational visibility and manage risk.

ARG technology platform is differentiated from its competitors such as Web Clients, World Avenue, Q Interactive in that AMP takes a consumer centric approach focused on maximizing the value of every customer interaction by serving the optimal ‘basket of offers’ to a distinct consumer based on user-generated, behavioral and attributed data. This data fuels a genetic algorithm that gets smarter over time to maximize the number of times a registrant opts in to an offer.

ARG is further differentiated by its ability to quickly deploy multiple lead generation websites with different and unique branding elements, extend into a call center environment and maximize media dollars spent/minimize risk based on performance at a granular level. ARG has developed several proprietary tools that enables dialing-up or dialing down media sources based on quality and ROI metrics. This ability to ‘feed the winners and starve the losers’ on the fly, yields higher revenue per registrant, produces higher quality for advertisers and results in lower fraud.

THE FOLLOWING FINANCIAL DATA IS PRESENTED FOR INFORMATIONAL PURPOSES ONLY. PAST PERFORMANCE MAY NOT BE INDICATIVE OF FUTURE RESULTS. THIS INFORMATION SHOULD NOT BE RELIED UPON TO MAKE FUTURE PERFORMANCE PROJECTIONS OF ANY KIND.

Summary

· Strong Historical Growth

· Attractive Industry – Fastest growing segment of the online advertising market, well-positioned to capitalize on major shifts in marketing strategies and media budgets

· Best in Class Technology – AMP platform provides a turn key lead generation and transactional marketing solution, which can also be extended to power call center operations

· Proprietary Data Base of over 20 million fully profiled consumers with over 2 billion data points

· Diversified Client Base with Low Concentration

· Excellent Relationships with Media Publishers and Advertisers – long-standing relationships with key players such as Value Click, Advertising.com, Q Interactive and other leading companies

· Opportunity for Future Growth and Margin Improvement – company has made moves to reduce fixed costs and improve marginal profitability making the company poised to scale.

The reasons why the ARG’s assets are attractive are:

ARG has historically experienced strong growth and has been among the leaders in the lead generation space. However, recent working capital constraints and an overly leveraged balance sheet have created the opportunity for all or a portion of ARG’s assets to be sold. The acquisition of these assets can enable the purchaser to realize significant short and long term value from the ARG assets as ARG maintains the ability to quickly scale within the context of sufficient working capital and a stronger balance sheet.

Robust Growth: Since inception, the Company has grown very impressively, with revenues increasing from $1 million to $32 million between 2004 and 2008.

Market Position: The Company is one of the five major players in the online lead generation space in terms of market size and presence. While ARG is the youngest of the five, it has the critical mass, superior technology and operational expertise to be highly successful in the marketplace, which is not true of its smaller competitors.

Proprietary Technology Platform That Can Be Bolted On or Run On a Standalone Basis: The Company’s proprietary technology platform (AMP) provides superior functionality relative to competitive solutions. The platform’s robustness handles extreme traffic loads, offer volatility, and “tech stress” created by many high-volume clients with many different consumer registration profiles simultaneously. Employing sophisticated advertising targeting and dynamic registration path optimization, the AMP possesses integrated additional functionality and analytical tools that support e-commerce, market research and affiliate marketing activities. Furthermore, the platform is capable of accommodating new non-Web communication devices (such as cell phone messaging) as consumer penetration and acceptance of added mobile functionality increases.

Extensive and Diversified Creative Library: To date ARG has developed thousands of websites and customer acquisition creative assets. AMP’s flexible architecture allows for rapid implementation or augmentation of brand and creative design allowing ARG’s creative inventory to be rapidly transplanted to complement existing or newly developed brands or lead generation properties and initiatives.

Diversified Client Base: The Company has over 400 clients engaged in a wide variety of consumer-oriented industries. This allows the Company to maximize the revenue and profitability of the leads it generates by delivering them to the most appropriate client based on expected yield as determined by AMP. In addition, by establishing a diverse customer base, the Company can avoid fluctuation in its revenues caused by adverse changes effecting any particular client industry category.

Agency Approvals: The Company is in compliance with the Interactive Advertising Bureau’s (IAB) newly established standards, which defines online lead generation best practices for US-based advertisers and publishers. The Company is a member of the IAB and sits on its lead generation committee, and it is also a member of the Online Lead Generation Association (OLGA) and the Direct Marketing Association (DMA).

Strong Regulatory Positioning: The Company invested hundreds of thousands of dollars in 2007 to completely overhaul its privacy policies and consumer disclosures to be ahead of the regulatory curve. Since the lead generation space continues to attract regulatory scrutiny, the Company is well-positioned to be operationally unaffected and to benefit, from a competitive standpoint, if any new regulations are initiated with respect to the lead generation business.

Hercules is seeking a buyer of the ARG’s Assets, in whole or in part. Interested parties may bid on all or any part of ARG’s core technology, creative library and customer contracts, enabling the purchaser to leverage ARG’s core technology, creative library, client and vendor relationships and to obtain new sales, enhance revenue streams or accentuate or augment lead generation and performance marketing business unit.

The Bidding Process for interested buyers:

Interested and qualified parties will be expected to sign a nondisclosure agreement (attached hereto as Exhibit A) to have access to key members of the management and intellectual capital teams and the due diligence “war room” 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 is bound by the bidding procedures described herein; (ii) that it has an opportunity to inspect and examine the ARG Assets and to review all pertinent documents and information with respect thereto; (iii) that it is not relying upon any written or oral statements, representations, or warranties of Hercules, Gerbsman Partners, or ARG, or their respective staff, agents, or attorneys; and (iv) all such documents and reports have been provided solely for the convenience of the interested party, and Hercules, ARG, and Gerbsman Partners (and their respective, staff, agents, or attorneys) do not make any representations as to the accuracy or completeness of the same.

Following an initial round of due diligence, interested parties will be invited to participate with a sealed bid, for the acquisition of ARG’s Assets. Sealed bids must be submitted so that it is actually received by Gerbsman Partners no later than July 23, 2009 at 3:00 p.m. (Eastern Time) (the “Bid Deadline”) at ARG’s office, located at 104 W 27th St, 2nd Floor, New York, NY 10011. Please email all bids to steve@gerbsmanpartners.com and sharvey@herculestech.com

Bids should identify those assets being tendered for in a specific and identifiable way.

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. All bids must be accompanied by a refundable deposit check in the amount of $200,000 (payable to Hercules Technology Growth Capital, Inc.). The winning bidder will be notified within 48 hours of the Bid Deadline. Non-successful bidders will have their deposit returned to them. Hercules reserves the right to, in its sole discretion, accept or reject any bid, or withdraw any or all assets from sale.

Hercules will require the successful bidder to close within a 7-day period. Any or all of the assets of ARG will be sold on an “as is,” “where is” basis, with no representation or warranties whatsoever.

All sales, transfer, and recording taxes, stamp taxes, or similar taxes, if any, relating to the sale of the ARG Assets shall be the sole responsibility of the successful bidder and shall be paid to Hercules at the closing of each transaction.

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

Steven R. Gerbsman
Gerbsman Partners
415 456 –0628
steve@gerbsmanpartners.com

[1] All information provided herein relating to the operations of ARG’s business and the market positions relates to periods on or prior to March 31, 2009. Interested parties should satisfy themselves through independent investigations as they or their legal and financial advisors see fit.

[2] The biographical information concerning the current management of ARG is included for information purposes only. Although this sale is being conducted with ARG’s cooperation, this sale is strictly an asset sale offered by Hercules as ARG’s senior lender pursuant to Article 9 of the Uniform Commercial Code. HERCULES HAS NO ARRANGEMENT PURSUANT TO WHICH BUYER OF THE ARG ASSETS COULD BE ASSURED OF THE FUTURE SERVICES OF ANY ARG OFFICERS OR EMPLOYEES.

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Gerbsman Partners www.gerbsmanpartners.com has been retained by Pegasus Biologics, Inc. www.pegasusbio.com to solicit interest for the acquisition of all, or substantially all, Pegasus Biologics Inc.’s (“Pegasus”) assets.

Pegasus Biologics, headquartered in Irvine, California, is an emerging growth regenerative medicine company focused on the manufacturing and commercialization of advanced bio-surgical solutions for soft tissue repair and regeneration.

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 Pegasus Biologics’ Assets has been supplied by Pegasus. 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, agents, and attorneys, (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 Pegasus’ or Gerbsman Partners’ negligence or otherwise.

Any sale of the Pegasus Biologics’ 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 Pegasus Biologics and Gerbsman Partners. Without limiting the generality of the foregoing, Pegasus and Gerbsman Partners and their respective staff, agents, and attorneys,  hereby expressly disclaim any and all implied warranties concerning the condition of the Pegasus Biologics’ 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.

Pegasus believes its assets are attractive for a number of reasons

·       Privately-held regenerative medicine, medical device company – capitalized in Jan 2005.

·       $31.8MM raised through Three Arch Partners, Onset Ventures, Frazier Healthcare Partners, Affinity Capital and others.

·       Has developed and is commercializing a revolutionary bioscaffold comprised of highly organized collagen, sourced from equine pericardium that encourages the healing process by addressing the demands of a challenging biological environment.

·       Core product technology is based on a proprietary processing and sterilization method resulting in a sterile, structurally sound, biologically conductive scaffold that complements soft tissue repair and adds strength to the repair over time. .

·       Known as “flexible crosslinking”, the technology maintains the native collagen architecture, which supports cellular ingrowth and resists enzymatic degradation – ideal for both soft tissue reinforcement as well as chronic wounds.

·       Has obtained exclusive worldwide licenses for the processing and sterilization of biological tissue for use in orthopedic, oral/dental, spinal and neurological, abdominal and thoracic, breast and wound applications.

·       Technology has 6 issued US patents, 5 pending US patent applications and associated International filings.

·       A revenue model consistent with other medical devices that are invoiced at the time of application (surgery).  Current ASP holding at $2200 with attractive gross margins
·       To date, over 10,000 patients have been treated with Pegasus’ products in various orthopaedic and chronic, complex wound applications

·       Received four FDA 510(k) approvals:  For Unite® Biomatrix as a collagen wound dressing (Sept. 26, 2007), for Orthadapt® as a surgical mesh for the repair, reinforcement and augmentation of soft tissues repaired by sutures or suture anchors during tendon repair surgery (Aug 5, 2005 and May 4, 2007), for Duradapt ® as a dural substitute under an IDE, and for Orthadapt® PR (Peek Reinforced), also for the repair, reinforcement and augmentation of soft tissues repaired by sutures or suture anchors during tendon repair surgery (May 5, 2009).

·       Received 1 FDA Investigational Device Exemption (IDE) to evaluate the safety and procedural success of a product called Duradapt® (a version of Orthadapt) for the repair/replacement of cranial dura mater.

·       Inventory of 4000 units valued at $667K based on cost of goods.

Revenue Summary–

Pegasus has been generating revenue since mid 2006 with both Orthadapt and Unite products.  Total revenue summary is as follows:
·     2006 – $2,958,113
·     2007 – $7,323,429
·     2008 – $9,147,515
·     Q1, 2009 – $2,479,987
Pegasus Key Accounts –
·     UCSD Medical Center – San Diego, CA
·     Alexian Brothers Hospital – Arlington Heights, IL
·     Wellstar Cobb Hospital – Marietta, GA
·     Westchester General Hospital – Miami, FL
·     Memorial Hospital of Rhode Island – Pawtucket, RI

Pegasus Biologics Company Profile

Founded in June, 2004, Pegasus is a California based, revenue stage medical device company.  Over the last 4 years, the company has raised $32MM in equity and debt from leading capital venture firms such as Onset Ventures, Frazier Healthcare Partners, Three Arch Partners and Affinity Capital.

Pegasus is becoming recognized as a global leader in bio-surgical solutions for soft tissue repair.  With thousands of successful clinical outcomes, current applications range from the repair, reinforcement and reconstruction of tendons to limb preservation and advanced wound management.

Impact of Technology on the Market
With the growing demand for advanced biologics, Pegasus is well positioned for the future.  An estimated 850,000 orthopedic soft tissue repairs and over 365,000 chronic complex wounds performed annually worldwide support this theory, and the high failure rates of tendon repair reported in the literature indicate an unmet clinical need.  The OrthADAPT® Bioimplant and Unite® Biomatrix collagen-based products are both FDA cleared and CE Marked.

Pegasus Biologics has obtained exclusive worldwide licenses for the revolutionary bio-platform technology developed for the processing and sterilization of biological tissue for use in orthopedic, oral/dental, spinal and neurological, abdominal and thoracic, breast and wound applications.

Pegasus Biologics’ Assets
Pegasus Biologics has developed a portfolio of assets critical to the repair and reinforcement of soft tissues and the treatment of chronic, complex wounds. These assets fall into a variety of categories, including:
·       Patents
·       Product
·       Product designs and prototype
·       Software and control algorithms
·       Manufacturing equipment and fixtures
·       One (1) prospective, multi-center, clinical trial under an FDA investigational device exemption. (Dura)
·       Three (3)  prospective, multi-center clinical studies for marketing purposes (Achilles tendon, arthroscopic rotator cuff, wound)
·       One (1) retrospective study for marketing purposes (open rotator cuff)
·       Current FDA regulatory clearances and CE marks
·       Data from human clinical trials/studies
·       Intellectual capital and expertise
·       Trademarks
·       Domain names

The assets of Pegasus Biologics will be sold in whole or in part (collectively, the “Pegasus Assets”).  The sale of these assets is being conducted with the cooperation of Pegasus. Pegasus and its employees may be available to assist purchasers with due diligence.  Notwithstanding the foregoing, Pegasus Biologics should not be contacted directly without the prior consent of Gerbsman Partners.

The Bidding Process for Interested Buyers
Interested and qualified parties will be expected to sign a nondisclosure agreement (attached hereto as Exhibit A) to have access to key members of the management and intellectual capital teams and the due diligence “war room” 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 is bound by the bidding procedures described herein; (ii) that it has an opportunity to inspect and examine the Pegasus Biologics’ Assets and to review all pertinent documents and information with respect thereto; (iii) 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 (iv) 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.

Following an initial round of due diligence, interested parties will be invited to participate with a sealed bid, for the acquisition of the Pegasus Biologics’ Assets. Sealed bids must be submitted so that the bid is actually received by Gerbsman Partners no later than Friday, June 26, 2009 at 3:00 p.m. Pacific Standard Time (the “Bid Deadline”) at Pegasus’ office, located at 6 Jenner Dr, Suite 150 Irvine, CA. 92618.  Please also email steve@gerbsmanpartners.com with any bid.

Bids should identify those assets being tendered for in a specific and identifiable way. The attached Pegasus fixed asset list may not be complete and Bidders interested in the Pegasus Biologics Equipment must submit a separate bid for such assets. Be specific as to the assets desired.

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. All bids must be accompanied by a refundable deposit check in the amount of $200,000 (payable to Pegasus Biologics, Inc.). The winning bidder will be notified within 3 business days after the Bid Deadline. Non-successful bidders will have their deposit returned to them. Pegasus Biologics reserves the right to, in its sole discretion, accept or reject any bid, or withdraw any or all assets from sale.

Pegasus will require the successful bidder to close within 7 business days.  Any or all of the assets of Pegasus will be sold on an “as is, where is” basis, with no representation or warranties whatsoever.

All sales, transfer, and recording taxes, stamp taxes, or similar taxes, if any, relating to the sale of the Pegasus Biologics Assets shall be the sole responsibility of the successful bidder and shall be paid to Pegasus at the closing of each transaction.

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

Steven R. Gerbsman
steve@gerbsmanpartners.com

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