Sample Term Sheet is Below:

SAMPLETERMSHEET–

FORDISCUSSIONPURPOSES ONLY

XYZ,INC.

SALEOFSERIESACONVERTIBLEPREFERREDSTOCKTERMSHEET

Confidential

This term sheet summarizestheprincipal termswithrespecttoapotential privateplacement ofequitysecuritiesofXYZ,Inc.(the“Company”)byagroupofinvestors(the“InvestorCo”).Thistermsheetisintendedsolelyasabasisforfurtherdiscussionandisnotintendedto beanddoesnotconstitutealegallybindingobligationexceptasprovidedunder“Confidentiality”below. Nootherlegallybindingobligationswillbecreated,implied,orinferreduntiladocumentinfinalformentitled“StockPurchaseAgreement,”isexecutedanddeliveredby allparties.Withoutlimitingthegeneralityoftheforegoing,itisthepartiesintentthat,untilthatevent,noagreementshallexistamong them and there shall be no obligations whatsoever basedon such things as parolevidence,extendednegotiations, “handshakes,” oral understandings, or coursesof conduct (including reliance and changes ofposition),except as provided under “Confidentiality”below.TheCompanyandtheInvestorsarediscussinga privateplacementofsharesof SeriesAConvertiblePreferredStockon thefollowingterms:

Issuer:                                                    XYZ,Inc.(the"Company")

Investors/Amountof Investment: InvestorCo,oroneormoredesigneesofInvestorCo,andcertainotherinvestorstobedeterminedforanamountupto$                                                                                    millionwithaninitialclosingof

$______. TheCompany andInvestorCoshallhavetherighttoapproveallmembers of the investment syndicate and such approval shallnotbe unreasonablywithheld.

TypeofSecurity:                                   Shares of the Company’s Series AConvertible Preferred Stock (“Series APreferredStock”), convertible intoshares oftheCompany’s CommonStock“Common”).Uponconversion,butpriortoapublicsale,theCommonintowhichtheSeriesA PreferredStockhasbeenconvertedwillbereferredtoasConversionShares.”(Assumenoexistingpreferred.)

Numberof Shares:                               Upto_____sharesof SeriesAPreferredStock

Founders:                                              ________and(“Founders”)

PricePerShare:                                      $          pershare(“OriginalPurchasePrice”).

Capitalizationof theCompany:

Rights,Preferences,Privileges:            (1)DividendProvisions: TheholdersoftheSeriesAPreferredStockwillbeentitled to receive dividends at an annual rate of 8% of the thenOriginalPurchasePricewheneverfundsarelegallyavailableandwhenandasdeclaredbytheBoard. NodividendshallbepaidontheCommonatarategreaterthantherateatwhich dividends arepaidonSeries APreferredStock (based onthenumber of shares of Common into which theSeries A Preferred Stock is convertible on the date the dividend isdeclared). Dividends on Series APreferred Stock will be in preferenceto dividends paid on the Common.Dividendson the SeriesAPreferredwillbe cumulative.

(2) LiquidationPreference:       In the event of any liquidation, dissolutionor windingupoftheCompany, theholdersofSeriesAPreferred Stockwillbeentitledtobepaidasfollows: First,theholdersoftheSeriesAPreferredStockshallbeentitledtoreceive inpreferencetotheholdersofCommonanamount(“Liquidation Preference”) equal to the OriginalPurchase Price plusanydividendsdeclaredontheSeriesAPreferredbutnotpaid.Second,theholdersofSeriesAPreferredStockandtheholdersofCommonwillbe entitledtoreceiveprorata,onaparipassubasiswiththeSeriesAPreferredStockbeingdeemedto have been converted to Commonimmediately prior to such liquidation, theremaining amounts or assetstoholders of capital stock of theCompany,providedthattheholdersoftheSeriesAPreferredStockshallnotbeentitledto receivepursuanttothissentenceanamountinexcessofthreetimestheOriginalPurchasePrice.TheeffectuationbytheCompanyorthird-partyacquirorsofatransactionor seriesoftransactionsinwhichmorethan50%ofthevotingpoweroftheCompanyisdisposedoftoasinglepersonorgroupofaffiliatedpersonsor theconsolidationormergeroftheCompanywithorintoanyothercorporation orcorporationsorthesaleofallorsubstantiallyallofitsassetsshallbedeemedtobealiquidation, dissolution orwindingupforpurposesoftheliquidationpreference.

(3)Conversion: AholderofSeriesAPreferredwillhavetherighttoconvertSeriesAPreferredStock,attheoptionoftheholder,atanytime,intosharesofCommon.ThetotalnumberofsharesofCommonintowhichSeriesAPreferredmay be converted initially will be determined bydividing the LiquidationPreferenceby the conversion price. The initialconversionpricewillbetheOriginalPurchasePrice. Theconversionpricewillbesubjecttoadjustmenttoreflect stock dividends, stock splits andsimilar events and as provided in paragraph(4)below. TheSeriesAStockwillbeautomatically convertedintoCommon, at the thenapplicable conversion price, in the event of (a)anunderwrittenpublicofferingofsharesofCommonatapublicofferingpricepersharethatwouldvaluetheCompanyatnotlessthan$3.00pershare(subjectto adjustment) inanofferingofnotlessthan$10,000,000or(b)thevoteoftheholdersoftwo-thirdsofthe outstandingSeriesA PreferredStock.

(4)AntidilutionProvisions:The conversionpriceof theSeriesAPreferredStockwillbesubject toadjustment (a) for stockdividends, stocksplits,orsimilarevents,and(b)onaweightedaveragebasistopreventdilutionintheeventthattheCompanyissuesadditionalsharesatapurchasepricelessthantheOriginalPurchasePrice,asadjustedhereunder. Noadjustmenttotheconversionpricewilloccurforanyissuanceofadditionalsharesatapurchasepriceinexcessof theOriginalPurchasePrice,asadjustedhereunder.Conversionpriceswillnotbeadjusted because of (a) conversionof Series APreferred Stock, or (b)theissuance andsaleof,orthegrantofoptionstopurchase,10%sharesofCommonpursuant tothe Company'semployee stock purchase or option plans(the“ReservedEmployeeShares”).

(5)VotingRights:ExceptasprovidedbylawandwithrespecttoelectionofDirectors,aholderofSeriesAPreferredStockwillhavetherighttothatnumberofvotesequaltothenumberofsharesofCommonissuableuponconversionofitsSeriesAPreferredStockatthetimethesharesarevoted.ElectionofDirectorswillbe as describedunder“BoardRepresentation”below.

(6)ProtectiveProvisions:WithoutthewrittenconsentofatleastoneSeriesA Preferred Director,whichconsentwillnotbeunreasonablywithheld, conditionedordelayed,theCompanywillnotagreetoandthe Boardwillnotauthorizeanyofthefollowingmatters:(1)approvaloftheCompany’sannualcapitalexpenditurebudget; (2) approval of the Company’s annualperformance budget;(3)incurrenceofanyindebtednessinexcessof$_____;(4)incurrenceofanylienuponanyofitspropertyorrevenuesinexcessof$_____;(5)transactionswithaffiliatesoftheCompany,providedthatanaffiliateshallnotincludeasubsidiaryoftheCompany,whetherornotwholly-owned;(6)appointmentordismissalofthe Company’s ChiefExecutive Officer and any other member ofseniormanagement;(7)approvaloftheChiefExecutiveOfficer’sandeachothermemberofseniormanagement’srespectiveemploymentarrangements;or (8)creationof a subsidiaryotherthana wholly-ownedsubsidiary.

Written consent of the holders of fifty-one percent (51%) of the SeriesA PreferredStockwillberequiredfor:(1)authorization,creationand/orissuanceof aseniorclassorseriesofequitysecuritiesovertheSeriesAPreferredStockora parityclassorseriesofequitysecurities;(2)amendmentstotheCertificateofIncorporationorBy-Laws oftheCompany;(3)anincreaseordecreasein thesizeoftheBoardofDirectors;(4)paymentofdividends,orredemptionorrepurchaseofstockorstockoptions;(5)liquidationordissolutionoftheCompanyorthesale,leaseorotherdisposalofallorsubstantiallyalloftheCompany’sassets;and(6)anyreorganization,consolidationormergeroftheCompanywithanotherentity inwhich more than 50% of the voting power of the Companyis transferred.

Informationand

RegistrationRights:                              (1)InformationRights: SolongasanInvestorholdsSeriesAPreferredStock(orConversionShares),theCompanywilldelivertosuchInvestorannualauditedandquarterlyunauditedfinancialstatements. SolongastheInvestorholdsatleast 25% of the capital stock (in the form of Series APreferred Stock orConversionShares)heldonthedateoftheClosing,theCompanywilltimelyfurnish each Investor with annual budgetsafter such budgets havebeenapproved bythe Company'sBoardofDirectors.

(2) Demand Rights If, at any time after the earlier of the Company’s initial public offering and the datethreeyearsfromthepurchaseoftheSeriesAPreferredStock(butnotwithin180daysoftheeffectivedateofaregistration),investorsholdingatleast25%ofaggregatevotingpoweroftheSeriesAPreferredStockandConversionSharesrequestthattheCompanyfileaRegistrationStatementforatleast25%oftheCommonissuedorissuableuponconversionoftheSeries APreferredStock(oranylesserpercentageiftheaggregateofferingpricetothepublicwouldexceed$5,000,000),theCompanywilluseitsbesteffortstocausesuchsharestoberegistered.TheCompanywillnotbeobligatedtoeffectmorethantworegistrations(otherthanonFormS-3)underthesedemandregistrationright provisions.

(3) PiggybackRegistration: The Investors will be entitled to“piggyback”registration rights on registrations of the Company oron anydemandregistrations,subjecttotherightoftheCompanyanditsunderwriters,inviewof marketconditions,toreduceoreliminatethenumberofsharesoftheInvestorsproposedtoberegistered.

(5)RegistrationExpenses:Allregistrationexpenses(exclusiveofunderwritingdiscountsandcommissions andspecialcounselfeesofasellingshareholder)shallbebornebytheCompany.

(6)OtherRegistrationProvisions: Other provisionswillbecontainedintheInvestorRightsAgreementwithrespecttoregistrationrightsasarecustomary,including theagreement by the holders of the Series APreferred Stock (ifrequestedbytheunderwriter inconnection withtheinitialpublicofferingof securitiesoftheCompany)nottosellanyunregisteredCommontheyholdfora periodof180daysfollowingtheeffectivedateoftheRegistrationStatementofsuchoffering.

BoardRepresentation:                        TheauthorizednumberofdirectorsoftheCompanywillbefixedat                     .The BoardofDirectors(the“Board”)shallinclude:(i)atleasttwo(2)representativesdesignated by the Series APreferred Stock                                                          (eacha“Series APreferredDirector”);and(ii)three(3)representativesdesignatedbytheFounders(eachaFounder-Director). InvestorCoshallbeentitledtoelectoneoftheSeriesA PreferredDirectorsintheeventthatInvestorCo(oritsdesignees)purchasesat least $_____of theSeriesAPreferredStock.

UseofProceeds:                                    TheproceedsfromthesaleoftheSeriesAPreferredwillbeusedforworkingcapital.

EmploymentRelationships: TheCompanyhasorwillhavepriortotheclosingemploymentagreementswithpersonsmutuallyagreedtobytheCompanyandInvestors(the“ManagementTeam”).

Drag-AlongRights:                               In the event that oneormore holders ofthecapital stock oftheCompanyholdingmorethan75%ofthevotingpowerofthecapitalstockoftheCompany(withtheSeriesAPreferredStockvotingonanasconvertedtoCommonbasis)accept an offer to sell all of their stock toathirdparty,andsuch saleis conditioneduponthesaleofallremainingcapitalstockoftheCompanytosuchthirdparty, allofthe holders ofthe capitalstock ofthe Company shallberequiredtoselltheirstockinsuchtransaction,on thesameterms andconditions.

RightofFirstRefusal:                           IntheeventthattheCompany offersequitysecurities (other thanReservedEmployeeShares,oruponconversionofoutstandingSeriesAPreferredStock,oruponexerciseofoutstandingoptionsorwarrants,orinconnectionwithanacquisitionorinapublicoffering),eachInvestorshallhavearightoffirstrefusaltopurchaseaproratapercentageofsharesinthenewoffering,basedontheholder's percentageownershipinterestintheCompany.

Tag-AlongRights: IntheeventaFounderproposestosellsharesoftheCompany,eachInvestorwillbeentitledtoparticipateinsuchsalebysellingthesamepercentageofhisstockassuchFounderissellingofhisstock.

ConfidentialInformationand

InventionsAssignment

Agreement:                                           Each officer, director and key employee of the Company will enterinto a Confidential Information and Inventions Assignment Agreementin aformreasonablyacceptabletothe CompanyandtheInvestors.

TheStockPurchaseAgreement:         Thepurchaseof theSeriesAPreferred,ifconsummated,willbemadepursuanttoaStockPurchaseAgreement(withexhibits)draftedbycounseltotheCompanyandacceptabletotheInvestors.TheStockPurchaseAgreementwillcontain,amongotherthings,representationsandwarrantiesoftheCompany,covenantsofthe Company,andconditionstotheobligationsoftheInvestors.

Redemption:                                        If the Series A Preferred Stock hasnot been converted toCommonbeforeDecember31,2012 heholdersshallhavetheoptiontoforcetheCompanytoredeemtheSeriesAPreferredStockinthreeequalyearlyinstallmentsbeginningMarch1,2013, theredemptionamountshallbeequaltotheoriginalSeriesA Preferred Stockpurchaseprice,plusanyaccruedbutunpaiddividends.

VotingAgreement:                               TheFounderswillenterintoavotingagreementwiththeInvestorstoenforcetheir obligationshereunder.

Conditionsof Closing:                         Theclosingfor the purchaseofthe SeriesA Preferredwillbeconditionedupon: (1)CompletionofduediligencetothesatisfactionoftheInvestorsintheirsole

discretion.

(2) Execution by the Company of a Stock Purchase Agreement andrelatedagreementssatisfactorytothe Investorsintheirsolediscretion.

(3)Complianceby theCompanywithapplicablesecuritieslaws.

(4)OpinionofcounseltotheCompanyrenderedtotheInvestorsinformand substancesatisfactorytotheInvestors.

(5)Othermaterialconditions,tobediscussed.

(6) Suchotherconditionsasare customaryfor transactionsofthistype.(7)Executionbythe FoundersofaVotingAgreement.

Expenses:                                              The Company and the Investors will each bear their own legal andotherexpenseswithrespecttothetransaction(exceptthattheCompanywillpaythefeesandexpenses of(a)counsel totheInvestorsand(b)consultantstotheInvestors, subject to a maximum aggregate amount forboth (a) and (b)of

$______).TheInvestorsshallbeentitledreviewbytheirattorneysofmaterialagreements,attheInvestors'solecostandexpense,followingthetransaction;provided,however,thattheCompanyshallhavenoobligationtoprovidesuchinformation to Investors if the Company reasonablydetermines thattheinformationcontainsconfidentialinformationoftheCompany.

Finders:                                                  TheCompanyandtheInvestorseachwillindemnifytheotherforanyfinder’sfees for whichthatpartyisresponsible.