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TERM SHEET: BLOOD, SWEAT AND TEARS June 6, 2007

TERM SHEET: BLOOD, SWEAT AND TEARS June 6, 2007. Henry Wong Diamond Tech Ventures Sara Rauchwerger BG Strategy Samba Murthy, Director Xambala Fred Greguras Fenwick & West LLP. 1727808.1. SERIES A FINANCINGS KEY TERMS. Pre-money valuation – item 1, page 1

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TERM SHEET: BLOOD, SWEAT AND TEARS June 6, 2007

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  1. TERM SHEET: BLOOD,SWEAT AND TEARSJune 6, 2007 Henry WongDiamond Tech Ventures Sara RauchwergerBG Strategy Samba Murthy, DirectorXambala Fred GregurasFenwick & West LLP 1727808.1

  2. SERIES A FINANCINGS KEY TERMS • Pre-money valuation – item 1, page 1 • Size of option pool – item 5, page 1 • Founders vesting schedules – item 13, page 6 • Board size and composition – item 12, page 6 • Liquidation preference – item 7(2), page 2 • No shop period – item 16, page 7 • Drag-along rights – item 17, page 7

  3. IMPACT OF OPTION POOL SIZEEXAMPLE (I) • Fully-diluted means (1) outstanding stock, plus (2) outstanding options, plus (3) option reserve, plus (4) any other outstanding equity • Pre-money valuation includes fully-diluted stock not just issued shares Pre-money of $6M Investment of $4M Shares% Founders (CS) 4M 40%Stock Option Pool (CS) 2M 20%Series A Investors 4M 40% Price per share = $6M/6M shares or $1 per share

  4. IMPACT OF OPTION POOL SIZEEXAMPLE (II) Pre-money of $6M Investment of $4M Shares% Founders (CS) 4M 34.3%Stock Option Pool (CS) 3M 25.7% Series A Investors 4,667,445 40.0% Price per share = $6M/7M shares or $0.857 per share Series A shares purchased is $4M/$0.857 = 4,667,445

  5. LIQUIDATION PREFERENCE EXAMPLE (I) • Startup, Inc. is acquired for $40M • Series A LP is for $4M, participating, no cap Series A owns 50% and common stock owns 50% of the outstanding shares

  6. LIQUIDATION PREFERENCE EXAMPLE (II) • Startup, Inc. is acquired for $40M • Series A LP is for $4M, participating, 3X cap • Series A owns 50% and common stock owns 50% of the outstanding shares

  7. DRAG-ALONG RIGHTS • Drag-along Rights – Item 17, page 7 • Purpose is to provide investors with control over having liquidity through an M&A • Requires certain common stock holders to vote in favor of an acquisition • Board and preferred stock approve the transaction • Acquiror not affiliated with any major investor • Base valuation for the acquisition

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