Orthogonal Incorporated

Principal Terms of a Convertible Debt Term Sheet

Amount of Financing: $X John Smith

Proceeds to be used for the purposes of achieving agreed upon milestones

and general corporate purposes.

Expected Closing: On or before September 15, 2009

Types of Investment: Convertible Debt represented by promissory notes (the “Notes”); a vote of
the majority of principal amount of Notes will control decisions requiring a
consent, request or vote of Note holders;

Interest: 7.0 % compounded monthly (A/360).

Maturity: Two years following the issuance of the Notes, provided however, Note
holders, by vote, may extend the Maturity Date to a date no later than 36
months after the issuance of the Note without the Company’s consent.

Payment of Principal Principal and accrued interest is due and payable in a single installment at
and Interest: Maturity.

Prepayment: None, without the consent of the Company and the Note holders.

Optional Conversion: Optional conversion for principal amount and accrued interest:

i) In a next round of equity financing (the “Next Equity Round”), at or

greater than $500,000, each Note Holder may elect to convert its Notes, into
the same class or series of shares that are issued in the Next Equity Round
and the number of shares of stock to be issued will be determined by
dividing the aggregate principal amount and accrued interest on the Notes
by the “Conversion Price”. The “Conversion Price” will be at a 10%
discount to the price per share paid by investors in the Next Equity Round
Financing if the financing occurs within 6 months after issuance of the
Notes. The discount will then increase by 5% every three (3) months until
sooner of the Next Equity Round, or the discount reaches 30%.

ii) If neither the Next Equity Round nor a change in control or IPO has
occurred prior to the Maturity Date, then upon maturity the Note
holdersshall each have the option to convert to participating preferred stock
(with 1X liquidation preference and weighted average anti-dilution
protection) based on a $1.5 million pre-money valuation, on a fully diluted
basis.

iii) If prior to the Maturity Date (as may be extended) and prior to
conversion pursuant to section (i) above (a) the Company has signed a
 letter of intent or definitive agreement contemplating a change of control of
the Company or (b) the Company has filed a registration statement with the
Securities and Exchange Commission contemplating an IPO to be
underwritten by a nationally recognized investment bank, then the Note
holders shall each have the option to convert immediately prior to such
change of control or IPO to participating preferred stock (with 1X
liquidation preference) in either event equal to equity in the Company, on a
fully diluted basis; provided, however, that if such change of control or IPO
has not occurred prior to six months after the Maturity Date and is not then
pending, then the Note holders shall have the option to convert their Notes
to convertible participating preferred stock (with 1X liquidation preference
and weighted average anti-dilution protection) based on a $1.5 million pre-
money valuation equity in the Company, on a fully diluted basis.

Reporting The Company shall deliver to the Note holders annual performance reports
Requirements: (as agreed to by the Note holders) and annual unaudited financial
information for a period of 3 years from repayment or liquidation. In
addition, the Company will deliver, upon prior request of the Note holders:

(i) annual audited financial statements within one hundred and twenty
(120) days after each fiscal year end,

(ii) quarterly compiled statements within 45 days after each quarterly ended
period,

(iv) an annual budget no later than thirty (30) days before the beginning of
each fiscal year as approved by the Board of Directors. All of the financial
reports will be provided in a form and format acceptable to the investors.

Indemnification and The Company will indemnify the Investors for any claims brought against
Governing law: the Investors by any third party (including any other shareholder of the
Company) as a result of this financing.

The investment documents shall be governed by NY law.

Board Representation: The Board of Directors shall consist of three members. Two member of the
Board shall be selected from among Company officers. The third member
shall be selected by the Company from among non-employee investors and
research sponsors.

Expiration and Counsel These terms will expire 90 days after the first investment; Company to pay
Fees: fees and expenses of transaction counsel for the Note holders in an amount
not to exceed $3,000.

COMPANY: INVESTORS:
Orthogonal, Inc.

By:______________________________ By:____________________________
Title:
Title: