TERM SHEET FOR SERIES A PREFERRED STOCK FINANCING OF ___________, INC.

__________ __, 2010 This Term Sheet summarizes the principal terms of the Series A Preferred Stock Financing of ________________, Inc., a Delaware corporation (the Company). Offering Terms Parties Type of Security Amount Raised: Investor(s)/Fund: ___________, Inc. a Delaware corporation (the Company) and ______________ LP (VCFund). Series A Preferred Shares of $____ par value each of the Company (the Preferred Shares). Between $8,000,000 to $12,000,000 (the "Investment") The Investment shall be allocated as follows:

(i) (ii)

VCFund in the amount of $3,300,000 to $5,000,000, in consideration for Series A Preferred Shares; and One or two additional reputable venture capital funds, as shall be mutually agreed between the Company and VCFund (the (each, an "Additional VC") in the amount of $3,300,000 to $5,000,000 each, in consideration for Series A Preferred Shares; and In the event that VCFund and the Additional VC's invest less than $10,000,000, such other private investors as mutually agreed upon by VCFund and the Company (the "Other Investors") in the amount of up to $2,000,000.

(iii)

(Each an "Investor", and collectively the "Investors"). In any event, VCFund and each of the Additional VC's shall invest the same amount. The Investment shall be paid in two tranches; 50% of the Investment shall be delivered at the Closing, and the remaining 50% shall be delivered 12 months thereafter. All of the Preferred Shares shall be issued to the Investors at the Closing. Bridge Loan: Within seven (7) business days of the signing of this term sheet, VCFund shall advance to the Company an aggregate amount of $200,000 on account of the Investment amount to be invested at the Closing; Upon execution of this Term Sheet by an Additional VC, such Additional VC shall also advance the Company an aggregate amount of $200,000 on the same terms as VCFund (collectively, the "Loan").

At the Closing, the Loan shall be converted into shares of Series A Preferred, in accordance with the provisions of the Promissory Note attached hereto, as Exhibit A (the "Note"), as if it had been invested at the Closing. The Loan shall be governed by the provisions of the Note. The Advance shall be used by the Company in accordance with an initial budget approved of by the Company and VCFund. Founders: Capitalization: Price Per Share: Pre-Money Valuation: ______________ (each a "Founder" and collectively, the "Founders"). The Companys capitalization table is attached hereto as Exhibit B. $[____] per share (based on the capitalization of the Company attached hereto as Exhibit B) (the Original Purchase Price). US$ __,000,000 (______ Million US dollars) on a fully diluted basis, including all outstanding shares and all other warrants, options, convertible bridge loans, and such other convertible rights, if any, outstanding immediately prior to the Closing. The Company will, prior to the Closing, increase the number of shares reserved under the Companys ESOP such that immediately following the Closing the increased and unallocated option plan will represent __% of the Companys fully diluted and as converted share capital. The Company and its subsidiaries shall use the funds received from the Investors to continue the development of the Company's technology, know-how, sales and marketing programs and provide general working capital, as shall be detailed in a work plan, which shall be attached to the final agreements to be signed between the Company and the Investors.

Use of Proceeds

CHARTER Dividends: The Series A Preferred will carry an annual 8% cumulative dividend compounded annually, payable upon a liquidation or redemption. For any other dividends or distributions, participation with Common Stock on an as-converted basis. In the event of any liquidation, dissolution or winding up of the Company, the proceeds shall be paid as follows: First pay one time the Original Purchase Price, plus 8% of the Original Purchase Price per annum, plus accrued dividends plus declared and unpaid dividends, on each share of Series A Preferred. Thereafter, the Series A Preferred participates with the Common Stock on an as-converted basis until the holders of Series A Preferred receive an aggregate of three (3) times the Original Purchase Price. Anything to the contrary notwithstanding, in any event the holders of the Series A Preferred shall be entitled to receive for each Series A Preferred held by such holder an amount per share equal to the greater of (i) 3 times

Liquidation Preference:

the Series A Preferred original issue price, (ii) such amount per share as would have been payable had all Series A Preferred have been converted into Common Stock immediately prior to such distribution event. A merger or consolidation (other than one in which stockholders of the Company own a majority by voting power of the outstanding shares of the surviving or acquiring corporation) and a sale, lease, transfer or other disposition of all or substantially all of the assets of the Company will be treated as a liquidation event (a Deemed Liquidation Event), thereby triggering payment of the liquidation preferences described above. Voting Rights: The Series A Preferred Stock shall vote together with the Common Stock on an as-converted basis, and not as a separate class, except (i) the Series A Preferred as a class shall be entitled to up to 3 (thee) members of the Board of Directors of the Company (the "Board") (the Series A Directors), whereas one shall be elected by VCFund, another one shall be elected by one Additional VC and the third member elected by the other Additional VC , (ii) as provided under Protective Provisions below; or (iii) as required by law. The Companys Certificate of Incorporation will provide that the number of authorized shares of Common Stock may be increased or decreased with the approval of a majority of the Preferred and Common Stock, voting together as a single class, and without a separate class vote by the Common Stock. Protective Provisions: The Company will not, without the written consent of the holders of at least [51]% of the Companys Series A Preferred, either directly or by amendment, merger, consolidation, or otherwise: (i) liquidate, dissolve or wind-up the affairs of the Company, or effect any Deemed Liquidation Event; amend, alter, or repeal any provision of the Certificate of Incorporation or Bylaws of the Company; create or authorize the creation of or issue any other security convertible into or exercisable for any equity security, having rights, preferences or privileges senior to or on parity with the Series A Preferred, or increase the authorized number of Preferred Shares; purchase or redeem or pay any dividend on any capital stock prior to the Series A Preferred, other than as approved by the Board, including the approval of at least 2 (two) Series A Directors; create or authorize the creation of any debt security unless such debt security has received the prior approval of the Board, including the approval of at least 2 (two) Series A

(ii) (iii)

(iv)

(v)

Directors; and (vi) Optional Conversion: increase or decrease the size of the Board.

The Series A Preferred initially converts 1:1 to Common Stock at any time at option of holder, subject to adjustments for stock dividends, splits, combinations and similar events and as described below under the Antidilution Provisions. In the event that the Company issues additional securities at a purchase price less than the current Series A Preferred conversion price, such conversion price shall be adjusted in accordance with a "broad based" weighted average formula. The following issuances shall not trigger anti-dilution adjustment: (i) securities issuable upon conversion of any of the Series A Preferred, or as a dividend or distribution on the Series A Preferred; securities issued upon the conversion of any debenture, warrant, option, or other convertible security; Common Stock issuable upon a stock split, stock dividend, or any subdivision of shares of Common Stock; and shares of Common Stock (or options to purchase such shares of Common Stock) issued or issuable to employees or directors of, or consultants to, the Company pursuant to any plan approved by the Companys Board including the Series A Directors; shares of Common Stock issued or issuable to banks, equipment lessors pursuant to a debt financing, equipment leasing or real property leasing transaction approved by the Board, including the Series A Directors, not exceed, in the aggregate, 5% of the Company's issued and outstanding share capital.

Anti-dilution Provisions:

(ii)

(iii) (iv)

(v)

Mandatory Conversion:

Each share of Series A Preferred will automatically be converted into Common Stock at the then applicable conversion rate in the event of the closing of a firm commitment underwritten public offering with proceeds to the Company of not less than $US50,000,000 (Fifty Million US Dollars) (a QPO), or (ii) upon the written consent of the holders of [51]% of the Series A Preferred.

STOCK PURCHASE AGREEMENT Representations and Warranties: Standard representations and warranties by the Company and the Founders.

Conditions to Closing:

Standard conditions to Closing, which shall include, among other things, the investment in the Company of at least $US 8,000,000 (Eight Million US Dollars) by VCFund and an Additional VC, satisfactory completion of financial and legal due diligence, qualification of the shares under applicable Blue Sky laws, the filing of a Certificate of Incorporation establishing the rights and preferences of the Series A Preferred, and an opinion of counsel to the Company. VCFund counsel to draft closing documents. The Company shall pay all legal and administrative costs of the financing at Closing, including reasonable fees and expenses of VCFund's counsel.

Counsel and Expenses:

INVESTOR RIGHTS AGREEMENT Registration Rights: Registrable Securities: All shares of Common Stock issuable upon conversion of the Series A Preferred and any other Common Stock held by the Investors will be deemed Registrable Securities. Upon earliest of (i) 7 (seven) years after the Closing; or (ii) 6 (six) months following an initial public offering (IPO), persons holding 50% of the Registrable Securities may request 2 (two) registrations by the Company of their shares. The aggregate offering price for such registration may not be less than $US 4,000,000 (Four Million US Dollars). A registration will count for this purpose only if (i) all Registrable Securities requested to be registered are registered; and (ii) it is closed, or withdrawn at the request of the Investors (other than as a result of a material adverse change to the Company). Registration on Form S-3: The holders of 50% of the Registrable Securities will have the right to require the Company to register on Form S-3, if available for use by the Company, Registrable Securities for an aggregate offering price of at least $US 1,000,000 (One Million US Dollars). There will be no limit on the aggregate number of such Form S-3 registrations. The holders of Registrable Securities will be entitled to piggyback registration rights on all registration statements of the Company, subject to the right; however, of the Company and its underwriters to reduce the number of shares proposed to be registered to a minimum of 30% on a pro rata basis and to complete reduction on an IPO at the underwriters discretion. In all events, the shares to be registered by holders of Registrable Securities will be reduced only after all other stockholders shares are reduced. The registration expenses (exclusive of stock transfer taxes, underwriting discounts and commissions) will be borne by the Company. The Company will also pay the reasonable fees and expenses of one special

Demand Registration:

Piggyback Registration:

Expenses:

counsel to represent all the participating stockholders. Lock-up: The Investors shall agree in connection with the IPO, if requested by the managing underwriter, not to sell or transfer any shares of Common Stock of the Company, (excluding shares acquired in or following the IPO) for a period of up to 180 days following the IPO (provided all directors and officers of the Company and 1% stockholders agree to the same lock-up). Such lock-up agreement shall provide that any discretionary waiver or termination of the restrictions of such agreements by the Company or representatives of the underwriters shall apply to the Investors, pro rata, based on the number of shares held. Termination: Earlier of 7 (seven) years after IPO, upon a Deemed Liquidation Event, or when all shares of an Investor are eligible to be sold without restriction under Rule 144(k) within any 90-day period. No future registration rights may be granted without consent of the holders of 51% of the Registrable Securities unless subordinate to the Investors rights. Management and Information Rights: A Management Rights letter from the Company, in a form reasonably acceptable to VCFund and the Additional VC, will be delivered prior to Closing to VCFund and the Additional VC. Any Investor, who holds at least 5% of the Company's share capital on a fully diluted basis (the "Qualified Investor"), will be granted access to Company facilities and personnel during normal business hours and with reasonable advance notification. [In the event that 3 VC's and no other investors will invest in the Company in this financing -a Qualified Investor shall mean any Investor]. The Company will deliver to such Qualified Investor: (i) annual and quarterly financial statements, monthly reports, and other information as determined by the Board; and (ii) 30 days prior to the end of each fiscal year, a comprehensive operating budget forecasting the Companys revenues, expenses, and cash position on a month-to-month basis for the upcoming fiscal year; Right to Participate Pro Rata in Future Rounds: All Qualified Investors shall have a pro rata right, based on their percentage equity ownership in the Company (assuming the conversion of all outstanding Preferred Stock into Common Stock and the exercise of all options outstanding under the Companys stock plans), to participate in subsequent issuances of equity securities of the Company (excluding those issuances listed at the end of the Anti-dilution Provisions section of this Term Sheet and issuances in connection with acquisitions by the Company). In addition, should any Qualified Investor choose not to purchase its full pro rata share, the remaining Qualified Investors shall have the right to purchase the remaining pro rata shares.

Matters Requiring Investor Director Approval:

The Company shall not, without Board approval, which approval must include the affirmative vote of at least 2 (two) of the Series A Director(s): (i) make any loan or advance to, or own any stock or other securities of, any subsidiary or other corporation, partnership, or other entity unless it is wholly owned by the Company; make any loan or advance to any person, including, any employee or director, except advances and similar expenditures in the ordinary course of business or under the terms of a employee stock or option plan approved by the Board; guarantee, any indebtedness except for trade accounts of the Company or any subsidiary arising in the ordinary course of business; incur any aggregate indebtedness in excess of $500,000 that is not already included in a Board-approved budget, other than trade credit incurred in the ordinary course of business; enter into or be a party to any transaction with any director, officer or employee of the Company or any associate (as defined in Rule 12b-2 promulgated under the Exchange Act) of any such person or transactions made in the ordinary course of business and pursuant to reasonable requirements of the Companys business and upon fair and reasonable terms that are approved by a majority of the Board; hire, fire, or change the compensation of the executive officers, including approving any option plans; change the principal business of the Company, enter new lines of business, or exit the current line of business; or sell, transfer, license, pledge or encumber technology or intellectual property, other than licenses granted in the ordinary course of business.

(ii)

(iii)

(iv)

(v)

(vi) (vii)
(viii)

Non-Competition and NonSolicitation and Agreements: Non-Disclosure and Developments Agreement:

Each Founder and key employee will enter into a 2 (two) year noncompetition and non-solicitation agreement in a form reasonably acceptable to VCFund and the Additional VC. Each Founder, employee and consultant with access to Company confidential information/trade secrets will enter into a non-disclosure and proprietary rights assignment agreement in a form reasonably acceptable to VCFund. Each Board Committee shall include the Series A Directors.

Board Matters:

The Board of Directors shall meet at least quarterly, unless otherwise agreed by a vote of the majority of Directors. The Company will bind D&O insurance with a carrier and in an amount satisfactory to the Board of Directors. In the event the Company merges with another entity and is not the surviving corporation, or transfers all of its assets, proper provisions shall be made so that successors of the Company assume Companys obligations with respect to indemnification of Directors. Employee Stock Options: All employee options to vest as follows: 25% after one year, with remaining vesting monthly over next 36 months. Other vesting schedule or acceleration provisions shall require board approval. Company to acquire life insurance on each Founder in an amount of $1,000,000. Proceeds payable to the Company. All rights under the Investor Rights Agreement, other than registration rights, shall terminate upon the earlier of an IPO, a Deemed Liquidation Event.

Key Person Insurance: Termination:

RIGHT OF FIRST REFUSAL/CO-SALE AGREEMENT AND VOTING AGREEMENT Right of first Refusal/ Right of Co-Sale: Company first and Qualified Investors second (to the extent assigned by the Board) have a right of first refusal with respect to any shares of capital stock of the Company proposed to be sold by Founders, with a right of oversubscription for Qualified Investors of shares unsubscribed by the other Qualified Investors. Before any such person may sell Common Stock, he will give the Qualified Investors an opportunity to participate in such sale on a basis proportionate to the amount of securities held by the seller and those held by the participating Qualified Investors. At the initial Closing, the Companys Board of Directors shall consist of up to five members. The Board shall be comprised of :

Board of Directors:

(i) (ii)

2 (two) directors to be designated by the Founders; Up to 3 (three) directors elected by the Preferred Shares, whereas one director shall be designated by VCFund, one director shall be designated by an Additional VC and one director shall be designated by the other Additional VC ; and 1 (one) director elected by the VCFund and the Additional VC and acceptable to the Founders' designated directors, who shall be an industry expert.

(iii)

All directors will be reimbursed for their reasonably documented out of pocket expenses associated with attending Board meetings and related

Company business. The Company will sign an indemnity agreement with the Series A Directors to the maximum extent permitted by law. Drag Along: Holders of Preferred Stock and the Founders shall be required to enter into an agreement with the Investors that provides that such stockholders will vote their shares in favor of a Deemed Liquidation Event or transaction in which 50% or more of the voting power of the Company is transferred, approved by the Board and the holders of a majority of the outstanding shares of Preferred Stock, on an as-converted basis. The Founders shall not be entitled to sell any of their shares in the Company (subject to drag-along). Notwithstanding the above, after the lapse of 36 (thirty six) months from the Closing, a Founder shall be entitled (after full compliance with the rights of first refusal and co-sale) to sell up to 10% of his holdings in any 12 (twelve) month period and on an aggregate basis, no more than 30% of his shares in the Company until the IPO. These restrictions shall apply to all shares held by the Founders now or hereafter acquired by the Founders. All rights under the Right of First Refusal/Co-Sale, and Voting Agreements shall terminate upon an IPO, or a Deemed Liquidation Event.

Restrictions on Sales (No Sale):

Termination: OTHER MATTERS Founders Stock:

Each of the Founders shall be subject to vesting or repurchase arrangements such that their entire holdings shall be subject to vested or repurchase as of Closing; so long as each of the Founders is employed by the Company and did not resign from his position at the Company, or was terminated by the Company for any reason, 25% of his holdings shall vest within 12 months following the Closing and 1/16 of his holdings shall vest on a quarterly basis thereafter for a period of additional 3 years. The Company agrees to work in good faith expeditiously towards a closing. The Company and the Founders agree that they will not, for a period of 90 (ninety) days from the date these terms are accepted, take any action to solicit, initiate, encourage or assist the submission of any proposal, negotiation or offer from any person or entity other than with respect to any Investor which VCFund has provided its prior written approval to, relating to the sale or issuance, of any of the capital stock of the Company or the acquisition, sale, lease, license or other disposition of the Company or any material part of the stock or assets of the Company. This no shop provision will be automatically extended unless terminated by either party in writing with seven (7) days advance notice. The Company will not disclose the terms of this Term Sheet to any person other than officers, members of the Board and the Companys accountants and attorneys, without the prior written consent of VCFund.

No Shop/Confidentiality:

Employment Agreements:

Prior to the Closing and as a condition thereof, the Founders shall enter into employment agreements with the Company (including noncompetition, intellectual property assignment and confidentiality

provisions), on a full time basis, in a form satisfactory to VCFund and the Additional VC. Finders Fee: The Company shall indemnify the Investors for any brokers or finders fees for which it is responsible.

The No Shop/Confidentiality of this Term Sheet shall be binding obligations of the Company whether or not the financing is consummated. No other legally binding obligations will be created until definitive agreements are executed and delivered by all parties. This Term Sheet is not a commitment to invest, and is conditioned on the completion of due diligence, legal review and documentation that is satisfactory to the Investors.

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IN WITNESS WHEROF, THE UNDERSIGNED HAVE HEREUNTO SET THEIR HANDS THIS DAY ___ OF ___________, 2010.
COMPANY

____________, INC.

BY: _____________________ TITLE:___________________

INVESTORS

VCFUND L.P

BY: _____________________ TITLE:___________________ DATE:_____________________

FOUNDERS

ADDITIONAL VC CONFIRMATION: I HEREBY AGREE TO THE TERMS PROVIDED UNDER THIS TERM SHEET. _______________ [ADDITIONAL VC] DATE: ______, 2010

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