Free Series AA Termsheet - All States

[NAME OF ISSUER]

MEMORANDUM OF TERMS

This Memorandum of Terms represents only the current thinking of the
parties with respect to certain of the major issues relating to the
proposed private offering and does not constitute a legally binding
agreement. This Memorandum of Terms does not constitute an offer to sell
or a solicitation of an offer to buy securities in any state where the
offer or sale is not permitted.

THE OFFERING

Issuer: [__________], a Delaware corporation (the ``Company'')

Securities: Series AA Preferred Stock (the ``Preferred'')

Valuation of the Company: $[__________] pre-money

Amount of the offering: $[__________]

Number of shares: [__________] shares

Price per share: $[__________]

TERMS OF THE PREFERRED

Liquidation preference: In the event of a liquidation, dissolution or
winding up of the Company, the Preferred will have the right to receive
the original purchase price prior to any distribution to the common
stock. The remaining assets will be distributed pro rata to the holders
of common stock. A sale of all or substantially all of the Company's
assets or a merger or consolidation of the Company with any other
company will be treated as a liquidation of the Company.

Conversion: The Preferred may be converted at any time, at the option of
the holder, into shares of common stock. The conversion rate will
initially be 1:1, subject to customary adjustments.

Automatic conversion: Each share of Preferred will automatically convert
into common stock, at the then applicable conversion rate, upon (i) the
closing of a firmly underwritten public offering of common stock, or
(ii) the consent of the holders of at least a majority of the then
outstanding shares of Preferred.

General voting rights: Each share of Preferred will have the right to a
number of votes equal to the number of shares of common stock issuable
upon conversion of each such share of Preferred. The Preferred will vote
with the common stock on all matters except as specifically provided
herein or as otherwise required by law.

Protective provisions: So long as any of the Preferred is outstanding,
consent of the holders of at least 50% of the Preferred will be required
for any action that: (i) alters any provision of the certificate of
incorporation if it would adversely alter the rights, preferences,
privileges or powers of the Preferred; (ii) changes the authorized
number of shares of Preferred; or (iii) approves any merger, sale of
assets or other corporate reorganization or acquisition.

INVESTOR RIGHTS

Right to maintain

proportionate ownership: Each holder of at least [_________] shares
of Preferred will have a right to purchase its pro rata share of any
offering of new securities by the Company, subject to customary
exceptions. The pro rata share will be based on the ratio of (x) the
number of shares of Preferred held by such holder (on an as-converted
basis) to (y) the Company's fully-diluted capitalization (on an
as-converted and as-exercised basis). This right will terminate
immediately prior to the Company's initial public offering or five years
after the financing.

Information rights: As soon as practicable, the Company will deliver to
each holder of at least [______] shares of Preferred, (i) unaudited
annual financial statements and (ii) unaudited quarterly financial
statements. The information rights will terminate upon an initial public
offering.

Other Matters: Market stand-off. Holders of Preferred will agree not to
effect any transactions with respect to any of the Company's securities
within 180 days following the Company's initial public offering,
provided that all officers, directors and 1% stockholders of the Company
are similarly bound.

(Signature page follows)

This Memorandum of Terms may be executed in counterparts, which
together will constitute one document. Facsimile signatures shall have
the same legal effect as original signatures.

[INSERT COMPANY NAME] [INSERT NAME OF INVESTOR]



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This Memorandum of Terms and all of the Series AA financing documents on
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relationship. Internet subscribers and online readers should not rely
upon this information for any purpose without seeking legal advice from
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