TERM SHEET Private Equity Acquisition of Company

1 2007 Arch Capital Advisors. All Rights SHEETP rivate Equity Acquisition of CompanyThis term SHEET (the Term SHEET ) is intended to describe the general terms and conditions ofa proposed Acquisition of XYZ Company , a Company organized under the laws of[_____] ( XYZ ), and certain of its affiliates by ABC, a [_____]organized under the laws of [_____] ( ABC ) and is subject to the negotiation andexecution of a definitive purchase and sale agreement, a definitive escrow agreement andanyother agreement that may be necessary to effect the transaction (together, the TransactionDocuments ). Except for sections below entitled Confidentiality , Dispute Resolution , Exclusivity , Expenses and Governing Law , which are intended to be, and are, bindingagreements between the parties, this Term SHEET is not a binding agreement on ABC or theExisting Shareholders (as defined below) to proceed with the transaction and will not imposeany obligation or liability on any such party if the transactions contemplated herein are notconsummated.

2 Any such agreement will be made only if and when definitive TransactionDocuments containing such agreements are agreed to and :ABC and Mr. [_____], Mr. [_____] and Mr.[_____], as the individual shareholders of XYZ(together, the Existing Shareholders with a currentshareholding of [__]%, [__]% and [__]% respectively in XYZ,and together with ABC, the Parties ). The obligations of theExisting Shareholders herein and in the Transaction Documentswill be joint and :ABC will purchase (the Transaction ) (i) 100% of the fully-diluted capital stock of XYZ, XYZ1 and XYZ2 and any otherentity (together, the XYZ Group Companies ) engaged in thebusiness of the XYZ Group Companies or necessary to continuethe XYZ Group Companies business in accordance with thebusiness plan presented by the Existing Shareholders to ABC on[_____] (the Business Plan ) and (ii)

3 All other assetsowned by the Existing Shareholders that are used in, related toor necessary for the business that is conducted by the XYZG roup Companies, including associated trademarks, tradenames, brand names (such as XYZ , XYZ2 , XXX , YYY , ZZZ and any other products sold by the XYZ GroupCompanies), goodwill, customer lists, contracts, warranties,leases, rights, arrangements and other Price:Subject to ABC s obtaining at closing (the Closing ) debtfinancing of at least the equivalent of $[__] on terms 2007 Arch Capital Advisors. All Rights ABC in its sole discretion (the Acquisition Financing ), thepurchase price (the purchase Price ) to be paid by ABC to theExisting Shareholders (pro rata based on each suchShareholder s interest in the XYZ Group Companies as of theClosing Date) will equal $[___], of which:(i)$[___] will be paid on the Closing Date, subject to areduction for increased salary expenses in an amount tobe agreed by the Parties.

4 The Parties will negotiate theamount of the reduction once ABC has completed itsdue diligence of the XYZ Group Companies. TheParties acknowledge that the initial estimate of theamount of the reduction is $[___], calculated asfollows: the increased expenses of XYZ if its currentsalary mechanisms were not used during [____](initially estimated at $_____)multiplied byapurchase multiple of [___]; and(ii)$[___] will be held in escrow as described in the sectionentitled escrow Parties agree that they will structure the payments of thePurchase Price ina tax efficient manner and that any suchstructure will be subject to the mutual agreement of the , although the Parties currently intend to structure theTransaction as the purchase of the stock of the XYZ GroupCompanies, the Partiesmay consider structuring the Transactionin a different manner, including a purchase of all of the assets ofthe XYZ Group Companies, subject to tax, legal and.

5 $[___] of the purchase Price will be placed in a bank account inthe names of the Existing Shareholders and an independentescrow agent (satisfactory to both Parties) will release funds insuch bank account, including any interest earned thereon, to theExisting Shareholders as follows:(i)An amount to be agreed uponby the Parties prior to theexecution of the Transaction Documents (althoughinitially agreed to be $[___], pending due diligence byABC), which amount will be released [___] monthsafter the Closing Date if there are no claims arising outof the Transaction as of such date (including claims forbreach of the representations and warranties describedin the section on claims below).

6 2007 Arch Capital Advisors. All Rights (ii)An amount to be agreed upon by the Parties prior to theexecution of the Transaction Documents (althoughinitially agreed tobe $[___], pending due diligence byABC), which amount will be released [___] monthsafter the Closing Date if there are no claims arising outof the Transaction as of such date (including claims forbreach of the representations and warranties describedin the section entitled Limitation on Claims below).(iii)$[___] less the EBITDA shortfall amount (as definedbelow, the ESA ) released on the date which is [__]days following the receipt by ABC of complete andaccurate financial statements of the XYZ GroupEntities for the fiscal year ended [_____], inaccordance with GAAP standards in a form satisfactoryto ABC, as audited by, and with a clean opinion from,an internationally recognized accounting firm(satisfactory to both Parties) (the AuditedFinancials ).

7 The ESA will represent a reduction in purchase Price ifthe XYZ Group Companies fail to achieve an EBITDAof $[___] (less any such reduction for increased salaryexpenses as described under 3(i) above) for the yearending [_____],as indicated in the auditedfinancials described above. The ESA will be equal to:(x) the difference between $[___] (less any suchreduction for increased salary expenses as describedunder 3(i) above) and the XYZ Group Companies [____] EBITDA (less any such reduction for increasedsalary expenses as described under 3(i) above)multiplied by(y) [____].For the avoidance of doubt, (i) if there is no ESA, themaximum amount which will be released under thisclause will be $[__], plus any interest earned thereon;and (ii) if the ESA exceeds $[__], the ExistingShareholders will not be liable to ABC for anyadditional amounts.

8 (iv)A amount to be agreed upon by the Parties prior to theexecution of the Transaction Documents (althoughinitially agreed to beapproximately $[___], pendingdue diligence by ABC and subject to any difference inWorking Capital upon receipt of the AuditedFinancials), which amount will represent the 2007 Arch Capital Advisors. All Rights Capital in the XYZ Group Companies accounts on the Closing used herein, ExcessWorking Capital means the amount of working capitalin excess of that required by the XYZ GroupCompanies to conduct their business in the mannercontemplated by the Business Plan as determined by theParties prior to the executionof the TransactionDocuments.

9 Any such Excess Working Capital shall bereleased to the Shareholders on the date which is [___]days following the receipt by ABC of the :The Existing Shareholders will agree not to, directly orindirectly, enter into, encourage, assist, work, consult or ownany interest in a competing business involving the[_____] in [_____] for aperiod of [__] years following the Closing Date without thewritten consent ofABC. The Existing Shareholders will alsoagree not to solicit any employee, customer or vendor of theXYZ Group Companies for such [__]-year Diligence:The Existing Shareholders will give, and will cause the XYZG roup Companies to give, ABCand ABC s accountants,attorneys, partners, consultants, financing sources and all otherrepresentatives and agents of ABC full access to the XYZ GroupCompanies management, consultants, accountants, advisors andall other representatives, and to all properties, operating andfinancial data, records, agreements and other informationrelating to the Transaction, to the extent reasonably requested byABC.

10 The Existing Shareholders will use their best efforts tokeep ABC informed of any material changes thathave occurredor may occur affecting the business, results of operations,condition (financial or otherwise) or prospects of the XYZG roup :The Parties agree to extend the Confidentiality Agreement dated[_____] to [_____]. :During the period from the date of this Term SHEET to the earlierof the Closing Date and [_____], the ExistingShareholders will not, and will cause the XYZ GroupCompanies not to, directly or indirectly, otherthan in theordinary course of business, or as contemplated by this TermSheet, (i) solicit, initiate or encourage any inquiries, discussionsor proposals from any other person or entity relating to apossible Acquisition of any part of the business or ofthe capitalstock, securities or assets of any of the XYZ Group Companies, 2007 Arch Capital Advisors.