TERM SHEET FOR ONGRIDS WORKING CAPITAL FINANCING NOTES

Borrower

Entity formed to acquire OnGrid business assets (the Business) from

Andrew Black (Seller).

Term Sheet Definitions

Use of Proceeds

Seller Note: The note titled ONGRID BUSINESS

ACQUISITION SELLER NOTE
Acquisition Notes: The notes collectively titled ONGRIDS
ACQUISITION FINANCING NOTES
Working Capital Notes: The notes collectively titled
ONGRIDS WORKING CAPITAL FINANCING NOTES
To provide working capital for Borrower.
$50,000.

Principal Amount of Working

Capital Notes

8%.

Interest Rate
Payments

Interest: Payable quarterly in arrears to the holders of the Working

Capital Notes (the Working Capital Noteholders). However
Borrower may elect to add interest to Notes principal on any quarterly
payment date.
Principal: On Maturity Date.

Voluntary Prepayments

Once principal payments on Seller Note have exceeded $50,000,

Borrower may prepay all or portion of principal from time to time.
Partial prepayments shall be made on pro rata basis across the
outstanding Working Capital Notes.

Mandatory Prepayment Upon

Change in Control

After the Seller Note and Acquisition Notes have been repaid,
Borrower will repay the Working Capital Notes in full if there is a
change in control, including if a third party acquires the Business
either by (i) purchasing the Business assets from Borrower, or (ii)
acquiring majority of Borrowers outstanding equity.

Voluntary Conversion

If Borrower issues equity for cash consideration (an Equity

Financing), a Working Capital Noteholder may elect to convert the
principal outstanding and the interest accrued under the holders Note
into such equity at a per share price equal to eighty-five percent (85%)
of the price paid by the investors in such Equity Financing.

Maturity Date

7th anniversary of Closing.

Bonus Payment

If, as of the date the Working Capital Notes are paid, including
pursuant to a mandatory prepayment, principal payments on the Seller
Note have exceeded $100,000 and Borrowers aggregate revenues
have exceeded $2,400,000 (Borrowers 5-year aggregate revenue

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projection), Borrower shall pay the Working Capital Noteholders an

additional total of $10,000 within one (1) year of the final payment
date of the Working Capital Notes.
None; Working Capital Notes are unsecured.

Collateral
Subordination

Working Capital Notes are subordinated to the Seller Note and the
Acquisition Notes, on following terms:

So long as the Seller Note is Current (that is, if all payments

due thereunder have been paid), and/or so long as Seller has
not enforced his rights and remedies under the Seller Note,
Borrower may make, and the Noteholders may retain, interest
and principal payments on the Notes, including voluntary
prepayments;
If Seller enforces the pledge of Borrowers equity securing the
Seller Note and as a result takes control of Borrower, then the
principal outstanding under the Working Capital Notes shall
be adjusted to the lesser of (i) $25,000, or (ii) the Seller Note
principal payments to date, so long as such adjustment does
not result in an increase in the principal outstanding under the
Working Capital Notes; and
In a liquidation, winding up or bankruptcy of Borrower, the
Seller Note and the Acquisition Notes shall be paid in full
before any payment is made with respect to the Working
Capital Notes.

Restrictions

Michael Bishops total annual compensation not to exceed $90,000,

unless and until Borrowers twelve (12) month trailing revenues
exceed $500,000. Michael Bishops total annual compensation not to
exceed $110,000 under any circumstances.

Reporting

Borrower to provide Working Capital Noteholders with quarterly

financial statements.

Events of Default

Amendments/Waivers

Governing Law
Expenses

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Failure to pay principal and accrued interest on the Maturity

Date or a mandatory prepayment date
Breach of any covenant not cured within thirty (30) days

Amendment or waiver of Working Capital Notes terms require

consent of Working Capital Noteholders holding a majority of the
outstanding Working Capital Notes principal.
However, any amendment that would treat a Working Capital
Noteholder differently from the other Working Capital Noteholders
would require such Working Capital Noteholders consent.
California.
Each party is responsible for its own legal and other expenses in
connection with the closing of the financing.

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