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San Francisco, June, 2010
Date Certain M&A of Teranode Corporation - its Assets and Intellectual Property

Sale of Teranode Corporation

Gerbsman Partners has been retained by Teranode Corporation to solicit interest for the acquisition of all, or substantially all, of Teranode's assets, including its Intellectual Property ("IP"), in whole or in part (collectively, the "Teranode Assets"). The sale is being conducted with cooperation of Teranode. Teranode and its employees will be available to assist the purchasers with due diligence and assist with a prompt and efficient transition.

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 Teranode's Assets has been supplied by Teranode Corporation. 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 Teranode Corporation's or Gerbsman Partners' negligence or otherwise. Any sale of the Teranode CorporationÕs 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 or behalf of Teranode Corporation and Gerbsman Partners. Without limiting the generality of the foregoing, Teranode Corporation and Gerbsman Partners and their respective staff, agents, and attorneys, hereby expressly disclaim any and all implied warranties concerning the condition of the Teranode Corporation 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.

Background

Teranode Corporation ("Teranode" or the "Company") is an innovative provider of business intelligence and lab automation solutions for the Life Science markets. Founded in 2002, the Company evolved from a team of scientists and professors from the University of Washington. Teranode has produced two award winning software platforms, Fuel and XDA. The Teranode proprietary technology can also be applied to any R&D business intelligence market, including agribusiness, healthcare research, legal research, market research, etc.

Teranode is a privately held, venture capital backed company. Over $12 million has been invested to date from Ignition Partners, Trident Capital, Black-River Asset Management and WRF Capital.

Teranode presently employs 10 full-time employees and its product development is based in Seattle, WA with field consultants in the Boston, MA area.

Teranode's Fuel platform supports next-generation, distributed business intelligence optimized for life sciences R&D pipeline management.

Teranode's XDA platform has automated chemistry and biology labs at some of the world's largest research companies and institutes.

Teranode CorporationÕs assets are attractive for a number of reasons:

  • Teranode has over $12M invested in product and business development, from major venture investors Ignition Partners, Trident Capital, Black-River Asset Management, and WRF Capital.

  • Teranode revenue Year Revenue 2007 $1.7M 2008 $1.8M 2009 $1.9M 2010 (est) $2.3M

  • 20-year, transferrable technology copyright agreement with University of Washington, from 2003-2023

  • US patent 7,010,760 awarded in 2006: Batch-based method and tool for graphical manipulation of workflows; Trademarks for XDA, Fuel, Teranode.

  • Teranode XDA includes a blue-chip customer base of leading pharmaceutical, biotechnology, research, and academic organizations, including Pfizer, GSK, AstraZeneca, MIT, St. Jude, Fred Hutchinson CRC, Calibrant, Tethys, Nastech, Novartis, CSBI

  • Teranode's new Fuel platform has a growing customer base as opportunities are mined within the pharmaceutical and biotechnology industry in partnership with Oracle, Spotfire and Microsoft, along with a pipeline of additional opportunities :
    • Target Validation - Monsanto, Genstruct

    • Biologics Development - Boehringer Ingelhiem, Biogen-Idec

    • Small Molecule Development - Boehringer Ingelhiem, Novartis

    • Pipeline Decision Support - Monsanto, Pfizer

    • Clinical Trials Management - BMS

    • Event Reporting & Surveillance- Pfizer

  • Together Fuel and XDA provide a complete R&D automation and business intelligence platform, optimized for easy customer installation onsite, or hosted as a SaaS offering by a major vendor seeking to expand and accelerate its solutions and solutions-building capabilities in the life sciences and related R&D markets

  • The Company is a leading innovator in the emerging semantic technology field: - "Teranode is at the forefront of bringing semantics-based business intelligence solutions to R&D organizations." - VP, Biotherapeutics Division, Large Multinational Pharmaceutical

Teranode Software and Intellectual Property Assets

Teranode has developed a portfolio of assets critical to Product and Process Development, including:

  • Patents
  • Platform and Application Software Products
  • Product and solution designs and prototypes
  • Software and control algorithms
  • Automated software configuration & testing process & framework
  • A closed loop development, documentation, QA process management system for global software development
  • Intellectual capital and expertise
  • Trademarks
  • Domain names

A summary of the Fuel and XDA product technology development to date is as follows

  • >1500 business requirements and automated test cases
  • >1 Million lines of Java, C#, Javascript, and PL/SQL code, SOA Architecture
  • >75 person-years of development (currently 5 person team)
  • 3 full releases of XDA, 3 full releases of Fuel Platform and Applications Modules
  • 5 Complete XDA Application Modules (XDA Protocol Modeler, Protocol Player, Biological Modeler, TMS Server, SDK)
  • 7 Complete Fuel Application Modules (Ontology Browser, Document Autotagger, Dataset Definition tool, View Definition tool, Fuel Application Server, Fuel Sharepoint Template Library, Fuel SDK)
  • 4 XDA and 2 Fuel Application Suites Configured Š XDA Chemistry Synthesis, Chemistry Purification, High-Content Screening, RNAi Automation; Fuel Antibody Biologics Research, Genetics Trait Analysis
  • > 50 Integrations (including MS Sharepoint, Oracle 10 and 11G, MS SQLServer, Spotfire tools and analytic wofklow server, various laboratory instrument and robotic platforms, chemistry structure visualization, chemistry and biologics registries, ontologies including NCI, GO, MeSH, SNOMED; pathway model formats including SBML, KEGG, MATLAB; etc.)
  • Thousands of tasks completed in the development project plans
  • Completely traceable documented development methodology

Patent

United States Patent 7,010,760 - Arnstein , et al. March 7, 2006 Batch-based method and tool for graphical manipulation of workflows: An autofill algorithm provides tools for defining and automatically executing batch based procedures in an adaptive hierarchical workflow environment, and may be suitable for a large variety of applications including laboratory procedure planning, execution, documentation, as wells ad driving robotic apparatus.

The Bidding Process for Interested Buyers

The Bidding Process for interested buyers Interested and qualified parties will be required 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 Teranode Corporation's 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 Teranode Corporations Assets. A sealed bid must be submitted so that it is actually received by Gerbsman Partners no later than Wednesday June 23, 2010 at 3 p.m. Pacific Daylight Time (the "Bid Deadline") at Teranode Corporations office, located at 411 First Avenue S, Suite 700, Seattle WA 98104 . Please also send an email to steve@gerbsmanpartner.com with your bid.

Bids should identify those assets being tendered for in a specific and identifiable way. The attached fixed asset list may not be complete and Bidders interested in any fixed assets must submit a separate bid for such assets, be specific as to the assets and any sale of the fixed assets or Intellectual Property of Teranode Corporation.

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 Teranode Corporation). The deposit should be wired to Teranodes attorneys Murray & Murray, A Professional Corporation. The winning bidder will be notified within 3 business days of the Bid Deadline. The deposit will be held in trust by Companys counsel. Unsuccessful bidders will have their deposit returned to them within three business days of notification that they are an unsuccessful bidder . Teranode Corporation reserves the right to, in its sole discretion, accept or reject any bid, or withdraw any or all assets from sale. Interested parties should understand that it is expected that the highest and best bid submitted will be chosen as the winning bidder and bidders may not have the opportunity to improve their bids after submission.

Teranode Corporation will require the successful bidder to close within a 7 day period. Any or all of the assets of Teranode Corporation 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 Teranode Corporations Assets shall be the sole responsibility of the successful bidder and shall be paid to Teranode Corporation at the closing of each transaction.

For additional information, please see below:

About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property. Since 2001, Gerbsman Partners has been involved in maximizing value for 60 Technology, Life Science and Medical Device companies and their Intellectual Property,, through its proprietary "Date Certain M&A Process" and has restructured/terminated over $790 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception, Gerbsman Partners has been involved in over $2.3 billion of financings, restructurings and M&A transactions.

Gerbsman Partners has offices and strategic alliances in Boston, New York, Washington, DC, Alexandria, VA, San Francisco, Europe and Israel.

For additional information please visit www.gerbsmanpartners.com or
Gerbsman Partners blog.

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