Clearside Biomedical - Chapter 11 Plan Terms

Plan Terms

Overview

• The Debtor, Clearside Biomedical, Inc., proposes this Combined Disclosure Statement and Plan pursuant to sections 1125 and 1129 of the Bankruptcy Code for, among other things, the reorganization of the Debtor pursuant to the Restructuring Transactions with the Plan Sponsor, of which the Debtor is the proponent within the meaning of section 1129 of the Bankruptcy Code.
  • The Plan Sponsor is Steel Partners, Ltd., a Delaware corporation, or one of its affiliates.
• In addition to a plan sponsor bid submitted by Charlestown Capital Advisors, LLC (the “Charlestown Plan Sponsor Bid”), the Debtor received a plan sponsor proposal from Steel Partners (the “Steel Partners Plan Sponsor Bid”) for a chapter 11 plan of reorganization structured to:
  • Successfully reorganize the Debtor into the Reorganized Debtor;
  • Maximize value for all Holders;
  • Allow the Reorganized Debtor to exploit the Retained Assets and realize the economic benefits therefrom, including through an assumption and assignment of the Royalty Agreement under the Plan;
  • Ensure the Reorganized Debtor has access to funds, through the Credit Facility, needed to satisfy the Reorganized Debtor’s working capital and general corporate needs;
  • Preserve the Debtor’s Tax Attributes; and
  • Enable the Reorganized Debtor to seek future funding from, among others, the Plan Sponsor.
• After reviewing the revised bid from the Stalking Horse Bidder and the plan sponsor proposals submitted by Charlestown and Steel Partners, the Debtor determined, in the exercise of its business judgment, that (i) Charlestown’s Plan Sponsor Bid, which included assets that overlapped with the Remaining Assets and excluded the Clearside Royalty Equity, would not be actionable; and (ii) Steel Partners’ Plan Sponsor Bid, which would allow for the value-maximizing transaction contemplated by the Health Ocean Bid with less execution risk, would provide superior consideration to the estate and a greater recovery to stakeholders.
• The terms of the Plan Sponsor Term Sheet are incorporated into this Combined Disclosure Statement and Plan, where applicable, and proceeded as follows:
  • On April 17, 2026, following extensive good faith and arm's-length negotiations, the Debtor and Steel Partners entered into the Plan Sponsor Term Sheet (defined in the Plan as a binding term sheet dated April 20, 2026, attached to the Plan Sponsor Order as Exhibit 1).
  • On April 29, 2026, the Debtor filed a motion (the “Plan Sponsor Motion”) seeking approval of the Plan Sponsor Term Sheet [Docket No. 347].
  • On May 15, 2026, the Bankruptcy Court entered an order [Docket No. 364] granting the relief requested in the Plan Sponsor Motion (the “Plan Sponsor Order”).

New Common Equity Purchase

• On the Effective Date, Steel Partners will purchase newly issued Class B Common Stock of the Reorganized Debtor for an aggregate purchase price of up to $2,200,000, subject to the Class B Adjustment, but in no event less than $1,000,000.
  • Steel Partners will purchase 2,200,000 shares of Class B Common Stock for $1,650,000 ($0.75 per share), subject to the Class B Adjustment.
  • The aggregate purchase price (the “Adjusted Class B Purchase Price”) shall be automatically adjusted based on the average of the previous 20-day closing price per share of the Debtor’s Existing Common Stock as quoted on the OTC market on the trading day immediately preceding the Effective Date (the “OTC Closing Price”).
  • The Adjusted Class B Purchase Price shall equal the product of (a) 2,200,000 and (b) 2.5 times the OTC Closing Price, provided that it shall in no event be greater than $2,200,000 or less than $1,000,000 (the “Class B Adjustment”); the per share purchase price shall be the Adjusted Class B Purchase Price divided by 2,200,000.
• Except for the difference in voting rights and the Class A Cash Distribution, the Class B Common Stock will have the same rights and preferences as the existing Class A Common Stock and will share ratably in dividends and distributions, including upon liquidation, such that holders of Class B Common Stock are expected to hold approximately 30% of the aggregate economic interest in the Reorganized Debtor (on an as-converted, fully diluted basis).
• The Class B Common Stock will be entitled to such number of votes per share as is necessary so that, in the aggregate, the outstanding Class B Common Stock will represent 80% of the total voting power of the Debtor’s outstanding share capital (on an as-converted, fully diluted basis).
• Use of proceeds:
  • On the Effective Date, the Debtor shall fund the Claims Reserve in the amount of $1,000,000 from the proceeds of the New Common Equity Purchase for payment of any Bankruptcy Expenses that remain unpaid as of the Effective Date.
  • Any amounts remaining in the Claims Reserve following payment of Bankruptcy Expenses shall be distributed to holders of Class A Common Stock no later than two months following the Effective Date (the “Class A Cash Distribution”).
  • The remaining proceeds from the New Common Equity Purchase, if any, will remain in the Reorganized Debtor for general corporate purposes.

Credit Facility

• Steel Partners shall provide the Reorganized Debtor with a senior secured revolving Credit Facility on the following binding terms:
  • Commitment Amount: $3,000,000
  • Facility Type: Senior secured revolving line of credit
  • Borrower: Reorganized Debtor
  • Interest Rate: SOFR + 7.00% per annum
  • Maturity: Two years from the Effective Date
  • Purpose: Working capital and general corporate purposes
  • Security: First-priority lien on all assets of the Reorganized Debtor
  • Prepayment: Voluntary prepayment permitted without penalty
  • Commitment Fee: None
  • Availability: Drawable on and after the Effective Date

Sale Transactions

• Excess Royalties:
  • On June 12, 2026, the Court entered the Excess Royalties Sale Order, authorizing the Debtor to enter into the Excess Royalties APA and approving the Excess Royalties Sale Transaction with HCR.
  • HCR agreed to, among other things, pay $6,000,000 in cash consideration in exchange for the Excess Royalties. (Aura Biosciences, Inc. had been designated the Successful Bidder for the Excess Royalties but declined to proceed, after which the Debtor designated HCR—the Backup Bidder—as the Successful Bidder on June 5, 2026.) The Debtor also retained Aura's good faith deposit in accordance with the Bidding Procedures.
• Remaining Assets:
  • Following the Excess Royalties Auction, the Debtor solicited revised bids for its remaining Assets, including the Clearside Royalty Equity, CLS-AX, and any other remaining Assets.
  • The Stalking Horse Bidder submitted a revised bid (the “Health Ocean Bid”) that—unlike its Stalking Horse Bid contemplating a sale of substantially all of the Debtor’s assets—included the Clearside Royalty Equity, CLS-AX, and certain molecules (the “Remaining Assets”), and excluded certain other Assets (the “Retained Assets”) critical to the Plan Sponsor’s proposed reorganization, which Retained Assets will be retained by the Reorganized Debtor.
  • On June 9, 2026, the Court entered the Remaining Assets Sale Order, authorizing the Debtor to enter into the Remaining Assets APA and approving the Remaining Assets Sale Transaction with Health Ocean, pursuant to which Health Ocean agreed to, among other things, pay $4,000,000 in cash consideration in exchange for the Remaining Assets.
• The Debtor expects that both the Excess Royalties Sale Transaction and the Remaining Assets Sale Transaction will close no later than, or contemporaneously with, the Effective Date.
• Proceeds from the sale of the Debtor’s Assets, including the Excess Royalties, the Remaining Assets, the Revenue Generating IP Assets, and the Class A Cash Distribution Amount (the “Sale Proceeds”) shall be used to fund the costs and expenses of the Debtor’s Chapter 11 Case, including payment of any administrative, priority, or unsecured claims (collectively, “Bankruptcy Expenses”), subject to the HCR Settlement Agreement; after the satisfaction of all Bankruptcy Expenses, remaining Sale Proceeds, if any, shall be retained by the Reorganized Debtor.

Royalty Agreement

• In connection with the sale of the Revenue Generating IP Assets, such sale shall include a perpetual royalty agreement (the “Royalty Agreement”) wherein the IP Buyer and its successors and assigns shall be obligated to pay the Reorganized Debtor a 2.5% royalty fee in respect of any income generated out of or related to the Revenue Generating IP Assets, subject to an annual cap of $250,000 and an aggregate cap of $2.0 million.

Asset Retention

• The Reorganized Debtor shall (i) own and retain all non-revenue generating intellectual property currently owned by the Debtor and the rights under the Royalty Agreement, free and clear of all Liabilities, liens, Claims, and encumbrances outstanding as of Confirmation, and (ii) have no liability for any amounts owing prior to the Effective Date, including for any known or unknown Claims or Liabilities of the Debtor existing as of the Effective Date.
• Any Assets that are property of the Debtor’s Estate on the Effective Date, including the Retained Assets and any Causes of Action, shall revest in the Reorganized Debtor on the Effective Date.

Treatment of Existing Equity

• Pursuant to this Combined Disclosure Statement and Plan, all Existing Equity Interests in the Debtor, including common stock, warrants and options, shall be cancelled, and on the Effective Date all Existing Common Stock shall be simultaneously canceled, released, and extinguished.
• Holders of Existing Common Stock shall receive approximately 70% (on a fully diluted basis) of the Reorganized Debtor common stock, as Class A Common Stock, and shall be entitled to the Class A Cash Distribution with respect to any amounts remaining from the Claims Reserve following payment of all Bankruptcy Expenses.
  • The recovery for Existing Common Stock is subject to (i) appropriate transfer restrictions to preserve the Debtor’s tax attributes, and (ii) acceptable diligence related to Section 382 limitations.
  • The Holders of Class A Common Stock are expected to control 20% of the voting rights in the Reorganized Debtor, on a fully diluted basis, regardless of whether the Reverse Stock Split is effectuated.
• On the Effective Date, all Contingent Equity Interests shall be canceled, released, and extinguished, and shall not receive a Distribution under this Combined Disclosure Statement and Plan.

Reverse Stock Split

• In connection with the issuance of the Class A Common Stock and the cancellation of the Existing Common Stock, the Existing Common Stock may be subject to a reverse stock split, as determined by Steel Partners in its sole discretion, whereby up to 1,000 shares of Existing Common Stock will be consolidated into 1 share (the “Reverse Stock Split”); this reduction shall be reflected in the rate of new Class A Common Stock distributed to holders, in a single distribution and without the need for holders to take any action.
• On June 15, 2026, as part of the Notice of Filing of Plan Supplement [Docket No. 412], the Debtor filed the Notice Regarding Reverse Stock Split Authorization, indicating that the Plan Sponsor elected not to authorize the Reverse Stock Split and reserved, subject to the terms and conditions of the Combined Plan and Disclosure Statement, all rights with respect thereto.

Corporate Governance

• On the Effective Date, in accordance with the terms of the Plan Sponsor Term Sheet, the New Board shall be appointed and the Reorganized Debtor shall adopt the New Corporate Governance Documents.
• The Board shall establish an Audit Committee consisting of independent directors only.
  • The independent directors shall (i) meet the independence requirements under applicable law, and (ii) be acceptable to both Steel Partners and the Strategic Committee (such acceptance not to be unreasonably withheld).
• The Reorganized Debtor’s certificate of incorporation and bylaws shall be amended and restated on the Effective Date to reflect the recapitalization, the potential redomestication, and the potential reformation of the Reorganized Debtor, and shall include:
  • Board composition and nomination rights as set forth in or contemplated by the Plan Sponsor Term Sheet;
  • Transfer restrictions designed to preserve tax attributes and avoid Section 382 ownership changes; and
  • Appropriate procedural processes for a company of this size (allowing for written consents, etc.), all acceptable to Steel Partners.

Post-Emergence Structure

• Following the Effective Date, the Reorganized Debtor shall:
  • Deregister as an SEC reporting company under the Securities Exchange Act of 1934;
  • Terminate its obligations to file periodic reports under Sections 13 and 15(d) of the Exchange Act;
  • Continue trading on the OTC Pink Sheets or similar quotation system; and
  • Provide quarterly unaudited financial information to equity holders.
• The Reorganized Debtor (i) shall emerge from the Chapter 11 Case as a private company on the Effective Date, with the New Equity Interests not listed on a public stock exchange; (ii) shall not be voluntarily subjected to any reporting requirements promulgated by the SEC; and (iii) shall not be required to list the New Equity Interests on a recognized U.S. stock exchange.

Preservation of Tax Attributes

• All equity securities of the Reorganized Debtor shall be subject to transfer restrictions designed to preserve the Debtor’s tax attributes, including NOLs. Such restrictions shall include:
  • A prohibition on transfers that would result in a Section 382 ownership change;
  • A requirement for pre-approval by the Board for any transfer exceeding 4.90% of outstanding shares;
  • Legend restrictions on stock certificates;
  • Automatic voiding of prohibited transfers; and
  • Annual Section 382 monitoring and testing.
• This Combined Disclosure Statement and Plan and all post-emergence governance documents shall include provisions specifically designed to preserve the Debtor’s NOLs and other tax attributes, including authorization for the Board to impose additional restrictions if necessary to prevent an ownership change, including a tax benefits preservation plan, and providing that if any corporate subsidiary ceases to be a member of the Debtor’s affiliated group (within the meaning of Section 1504(a) of the IRC), all tax attributes of such subsidiary shall, to the fullest extent permitted by law, be retained by the Debtor.
• “Tax Attributes” means any and all federal and state net operating loss carryforwards, tax credits, tax basis, and other favorable tax attributes of the Debtor, including the NOL carryforwards, to be preserved through the Plan in accordance with the Plan Sponsor Term Sheet.

Conditions to Steel Partners’ Obligations

• Steel Partners’ obligations to consummate the transactions contemplated under the Plan Sponsor Term Sheet are subject to the satisfaction or waiver of the following conditions:
  • Definitive Documentation: Execution of all definitive agreements in form and substance acceptable to Steel Partners.
  • Bankruptcy Court Approval: Entry of a final, non-appealable order approving the Plan Sponsor Term Sheet.
  • Plan Confirmation: Entry of the Confirmation Order confirming the Plan, including the transactions contemplated therein, in form and substance consistent with the Plan Sponsor Term Sheet.
  • No Material Adverse Change: Absence of any Material Adverse Change since the date of the Plan Sponsor Term Sheet.
  • Representations and Warranties: Accuracy of all representations and warranties set forth in the Plan Sponsor Term Sheet.
  • Subsidiary Sale: Completion of the Clearside Royalty Equity sale or the Debtor’s entry into binding definitive documentation therefor.
  • No Litigation: Absence of any litigation, proceeding, or investigation seeking to enjoin, prohibit, or materially alter the transactions.
  • Tax Attributes: The tax attributes remain consistent with those disclosed to Steel Partners, including the Debtor having the Federal NOLs disclosed, and no owner shift, as defined in Section 382(g)(2) of the Internal Revenue Code, has occurred since the effective time of the NOL Order and prior to the Effective Date (other than that occurring due to Steel Partners’ investment).
  • Debtor Liabilities: All liabilities of the Debtor have been waived or paid and there will be no liabilities of the Debtor after Confirmation, other than those previously disclosed to Steel Partners and any liabilities for which a reserve is to be established under the Plan or as otherwise agreed.
  • Enforcement of NOL Order: Enforcement of the NOL Order pursuant to the Plan's NOL-enforcement provisions.

Termination Events

• The Plan Sponsor Term Sheet may be terminated:
  • By mutual written consent of Steel Partners and the Debtor;
  • By Steel Partners if: (a) a Material Adverse Change occurs; (b) the conditions set forth in the Plan Sponsor Term Sheet are incapable of being satisfied; (c) the parties are unable to agree on definitive documents within 30 days following Bankruptcy Court approval of the Plan Sponsor Term Sheet; (d) the Debtor provides notice that it will not accept the terms set forth in the Plan Sponsor Term Sheet; or (e) the Effective Date does not occur within 90 days from the date of the Plan Sponsor Term Sheet; and
  • By the Debtor if it determines in good faith that continued performance under the Plan Sponsor Term Sheet would be inconsistent with the exercise of its fiduciary duties under applicable law.

Conditions to the Effective Date

• The Combined Disclosure Statement and Plan shall not become effective unless and until the following conditions have been satisfied or waived:
  • The Confirmation Order shall have been entered and shall have become a Final Order.
  • The Excess Royalties Sale Transaction and the Remaining Assets Sale Transaction shall have each been consummated.
  • The HCR Settlement Agreement conditions, including withdrawal of the HCR Claim, shall have been satisfied.
  • All actions and agreements, instruments, or other documents necessary to implement the terms of the Plan shall have been effected or executed and delivered.
  • All conditions and obligations set forth in the Plan Sponsor Term Sheet shall have been satisfied, including, but not limited to, (i) the Stock Purchase Agreement, the Royalty Agreement, and the Credit Facility Documents shall have been entered into by the Debtor, Steel Partners, and any other necessary party; and (ii) no Material Adverse Change shall have occurred and remain outstanding.
  • The Plan Administrator shall be duly appointed, qualified, and acting in that capacity.
  • The Professional Fee Reserve is funded pursuant to Article V.D.2 of the Plan.
• Except with respect to the conditions relating to consummation of the Sale Transactions and the HCR Settlement Agreement, which may not be modified or waived without the written consent of HCR, each of the conditions to the Effective Date may be waived, in whole or in part, by the Debtor without notice or an Order of the Bankruptcy Court.

HCR Settlement

• On March 11, 2026, following weeks of arm’s-length and good faith negotiations, the Debtor and HCR entered into the HCR Settlement Agreement resolving the Disputes between the Debtor and HCR, and the Debtor filed the HCR Settlement Motion.
• Pursuant to the HCR Settlement Agreement, the Debtor agreed, among other things, to:
  • Bifurcate the Auction for the sale of the Excess Royalties from the sale of the Debtor’s other Assets; and
  • From the proceeds of the sale of the Excess Royalties and the Clearside Royalty Equity, (i) fund Clearside Royalty with $1.5 million on account of the Royalty Holdback, and (ii) pay HCR up to $1.5 million for HCR’s professional fees and expenses on account of the Indemnity Claim.
• In exchange, HCR agreed to withdraw with prejudice the HCR Claim and to waive the right to assert the HCR Credit Bid and Change of Control under the HCR Transaction Documents.
• On March 23, 2026, the Bankruptcy Court entered an order [Docket No. 298] (the “HCR Settlement Order”) approving the HCR Settlement Agreement, which is appended thereto as Exhibit 1.

Arctic Vision Settlement

• After arm’s-length and good faith negotiations, Arctic Vision and the Debtor agreed to resolve the Arctic Vision Claim (the “Arctic Vision Settlement”) as follows:
  • Arctic Vision agreed to reduce the Arctic Vision Claim to $220,000, and the Debtor agreed not to object to the Arctic Vision Claim, as reduced;
  • The reduced Arctic Vision Claim shall be treated as a General Unsecured Claim in Class 3 and shall be paid by the Debtor (or the Plan Administrator) in full in cash as soon as practicable after the Effective Date, provided that in no event shall Arctic Vision receive less than $220,000; and
  • Such payment shall constitute full and final satisfaction of the Arctic Vision Claim, with Arctic Vision having no further claims, rights of payment, or remedies arising from or related to its obligation to withhold taxes from payments made pursuant to the Arctic Vision License Agreement.
• The entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of the Arctic Vision Settlement.

Officer Settlement

• The “Completion Payments” consist of a one-time cash payment of $861,840 to the Debtor’s Chief Executive Officer and $633,525 to the Debtor’s Chief Financial Officer, contemplated under their respective consulting agreements with the Debtor and payable if each (i) continues to provide services through consummation of a change in control or similar transaction, and (ii) has not received an offer of employment from any acquiror on substantially similar terms to their respective prior employment agreements.
• On the Effective Date, the Debtor shall pay (or cause to be paid) the Settlement Payments—$193,914 to the Chief Executive Officer and $142,543 to the Chief Financial Officer—to the Officer Parties in full and final satisfaction, settlement, release, and discharge of any and all Claims, causes of action, rights, or entitlements against the Debtor, including for the Completion Payments under their respective consulting agreements.
• This Combined Disclosure Statement and Plan constitutes the Officer Settlement Agreement, which shall be binding and enforceable without the need for any separate agreement. The Confirmation Order shall approve the Officer Settlement Agreement under Bankruptcy Rule 9019 and authorize the Settlement Payments on the Effective Date without the need for any further Order of the Bankruptcy Court.

Ad Hoc Group Settlement

• Following arm’s-length, good faith negotiations, on May 13, 2026, the Debtor and the Ad Hoc Group entered into the Settlement Agreement by and Among the Debtor and the Ad Hoc Equity Group and Its Members (the “Ad Hoc Group Settlement”).
• On May 14, 2026, the Debtor filed a motion [Docket No. 354] (the “Ad Hoc Group Settlement 9019 Motion”) seeking Bankruptcy Court approval of the Ad Hoc Group Settlement pursuant to Bankruptcy Rule 9019.
• On June 1, 2026, the Court entered an order [Docket No. 378] approving the Ad Hoc Group Settlement.

Releases

• The “Released Parties” are (a) the Debtor and (b) the Related Parties of the Debtor.
• The “Releasing Parties” include:
  • All Holders of Existing Common Stock that vote to accept the Plan and do not opt out of the releases by checking the applicable box on the Ballot submitted on or before the Voting Deadline;
  • All Holders of Existing Common Stock entitled to vote who either abstain from voting or vote to reject the Plan and, in each case, opt into the third-party releases by checking the applicable box on the Ballot; and
  • With respect to each of the foregoing, their respective Related Parties.
• Releases by the Debtor: Effective as of the Effective Date, the Debtor, its Estate, and its current and former Affiliates, successors, and assigns, including the Plan Administrator, shall release the Released Parties from any and all claims and Causes of Action, whether known or unknown, relating to or arising out of the Debtor, the Chapter 11 Case, the Sale Transactions, the negotiation and consummation of the Plan, and related matters.
• Releases by Holders of Equity Interests: Effective as of the Effective Date, the Releasing Parties and their respective Related Parties shall release the Released Parties from such claims and Causes of Action on substantially the same terms.
• In each case, the releases shall not operate to waive or release any Claims or Causes of Action resulting from any act or omission judicially determined by a Final Order to have constituted actual fraud, willful misconduct, or gross negligence of the applicable Released Party.

Exculpation

• The “Exculpated Parties” are (a) the Debtor and (b) the Related Parties of the Debtor, in each case as to such Related Parties to the extent the Person or Entity is a fiduciary of the Estate (including as an officer or director of the Debtor).
• The Exculpated Parties shall not have or incur, and are exculpated from, any claim, Cause of Action, or liability whatsoever for any act or omission originating or occurring on or after the Petition Date through and including the Effective Date in connection with, relating to, or arising out of the Debtor, the Chapter 11 Case, the Sale Transactions, the negotiation and consummation of the Plan, and related matters; provided that the exculpation shall not waive or release any Claims or Causes of Action arising from an act or omission judicially determined by a Final Order to have constituted actual fraud, willful misconduct, or gross negligence.

Voting and Confirmation

• Holders of Existing Common Stock in Class 4 are Impaired and entitled to vote on the Combined Disclosure Statement and Plan (the “Voting Class”).
• The Record Date for determining which Holders of Existing Equity Interests in the Voting Class may vote is May 13, 2026.
• On May 15, 2026, the Bankruptcy Court entered the Conditional Approval and Procedures Order conditionally approving the adequacy of information in the Combined Disclosure Statement and Plan.
• The Voting Deadline is June 24, 2026, at 4:00 p.m., prevailing Eastern Time.
• The Confirmation Hearing has been scheduled for July 1, 2026, at 11:00 a.m., prevailing Eastern Time, at the Bankruptcy Court, 824 North Market Street, 3rd Floor, Courtroom 5, Wilmington, Delaware 19801, to consider (i) approval of the Combined Disclosure Statement and Plan as providing adequate information pursuant to section 1125 of the Bankruptcy Code and (ii) confirmation of the Combined Disclosure Statement and Plan pursuant to section 1129 of the Bankruptcy Code.