Terms for Investment in Acme, Inc. (AI)

Terms for Investment in Acme, Inc. (AI) Series A Preferred Stock April 4, 2001 Investors

Investment funds managed by Eve’s Capital Management, Inc. ("Eve’s") and Mellon Ventures (“Mellon”) and other investors acceptable to them.

Amount of Investment

Minimum of $7,000,000 with a maximum of $10,000,000. Eve’s and Mellon will purchase 4,861,112 shares at a per-share price of $1.44, Series A Convertible Preferred Stock, (the "Series A Preferred"). Other investors acceptable to Eve’s and Mellon may also purchase stock in the transaction.

Each share of Series A preferred purchased at this time will be accompanied by a warrant to purchase 1 share of common stock with a strike price of $.01/share. This warrant will be net issuance and have a term of 7 years.

The Series A Preferred rights are described under Preferred Stock Rights and Preferences.

Capitalization After the Financing

See attached spreadsheet to show the capitalization of the company post deal.

Preferred Stock Rights and Preferences

Dividends - Series A Preferred shall be entitled to Dividends at the rate of eight percent annually. The Dividend shall have priority over Common Stock. The dividend shall not have a current pay effect but shall be payable only upon liquidation, as described in this Term Sheet. The issuance of the Dividend may be delayed or waived, in whole or in Part, with the consent of a majority of the Series A Preferred Stockholders.

Liquidation - If AI is wound up or liquidated, the Series A Preferred Stockholders shall receive in preference to the Common Stockholders $1.44 per share plus any accrued but unpaid Dividends. A sale of a majority of AI's assets, consolidation, merger or acquisition at a share price of less than $1.44 per share plus eight percent annually shall be considered a Liquidation under this provision. The Preferred Stockholders shall not, after receiving thAIr liquidation preference, participate in any distribution of proceeds to the Common Stockholders. A consolidation, merger or acquisition where AI is either the surviving corporation or has a majority of the combined stock shall not be considered liquidation.

Anti-dilution - The Series A Preferred stock rights will be adjusted to full ratchet dilution protection on all Series A Preferred issued (including all outstanding securities) in the event of a financing at a per-share price, adjusted for splits and the like, of less than the original Series A Preferred price. The anti-dilution formula shall have the customary carve outs for

1 Eve’s Capital Management, Inc.

PI/59876v3 employee, consultant, and director stock options and restricted stock grants, mergers, stock for stock acquisitions, and shares issued in connection with an Initial Public Offering (IPO) as well as securities issued to lender, bankers, and equipment financiers.

Voting - On all matters submitted to a vote of the Common Stockholders, the Series A Preferred Stockholders shall be entitled to vote on an as-converted basis.

Protective Provisions - The consent of at least 67 percent of the Series A Preferred Stockholders shall be necessary to authorize the following actions:

1. The merger, consolidation, or sale of AI or substantial assets.

2. The alteration of the rights, preferences, or privileges of the Series A Preferred.

3. The creation of a new class of equity or debt having parity with or preferences over the Series A Preferred.

4. An increase in the authorized number of shares of Series A Preferred or Common Stock.

Information Rights – Eve’s and Mellon, for as long as they or the investment funds that they manage, hold at least 250,000 shares of AI's equity on an as if converted basis shall recAIve the following information:

5. Business Plan - Prior to the beginning of each fiscal year, AI shall complete, and have approved by the Board, an annual business plan that includes financial statements on a monthly basis and operating goals for each functional unit.

6. Regular Unaudited Results - AI shall provide at each board meeting unaudited financial statements or a CEO letter summarizing relevant company developments.

7. Quarterly Unaudited Financial Statements – AI shall provide unaudited quarterly financial statements within a reasonable period of time following the end of each fiscal quarter.

8. Monthly financial and operating statements compared against the budget with management commentary.

9. Monthly sales pipeline update of including current recurring customers and prospects in negotiation.

10. Other Management Information - AI shall provide other materials customarily made available to Directors.

All Stockholders shall recAIve annual audited financial statements.

AI may, with the approval of the Board, restrict the dissemination of any information other than financial statements, which in its reasonable judgment, is proprietary or confidential.

Qualified Small Business Stock - AI shall make reasonable efforts to insure that the Series A Preferred constitutes qualified small business stock within the meaning of Section 1202(c) of the Internal Revenue Code and shall make all filings required under Section 1202(d)(1)(c) of the Internal Revenue Code and related Treasury regulations.

PI/59876v3 Conversion - The Series A Stockholders shall have the right to convert, at the then applicable conversion rate, Series A Preferred into shares of Common Stock at any time. Each share of Series A Preferred shall initially be convertible into one share of Common Stock.

Automatic Conversion - The Series A Preferred will automatically convert, at the then applicable conversion price, into Common Stock, in the event of a public offering with minimum gross proceeds of $15,000,000 of AI's shares at a per share price of at least five times the Series A price.

Registration - The Preferred Stock shall have the following demand and piggyback rights:

Demand Registrations - If, at any time (but not within six months of the effective date of a registration or two years of closing), a majority of the Series A Preferred Stockholders request that AI file a registration statement for an offering of at least $10,000,000, AI shall use its best efforts to cause such shares to be registered. AI shall not be obligated to cause more than two demand registrations and shall be entitled to reduce the number of shares to be registered based on the advice of its underwriters.

At any time after AI becomes eligible to file a registration statement on Form S-3 (or any successor form relating to secondary offerings), Series A Preferred Stockholders may request AI to effect the registration on Form S-3 (or any successor form) of shares owned by Series A Preferred Stockholders having an aggregate net offering price of at least $5,000,000 (based upon the then current market price or fair value). AI will not be required to affect more than one such registration in any twelve-month period.

Piggyback Registrations - The Series A Preferred Stockholders shall be entitled to unlimited "piggyback" registration rights. AI shall be entitled to limit the number of shares to be registered based on the advice of its underwriters, including exclusion of piggyback registration rights from an Initial Public Offering.

Registration Expenses - The registration expenses, excluding underwriting discounts and commissions, but including a single counsel representing the selling Series A Preferred Stockholders of the two demand registrations, S-3 and all piggyback registrations shall be borne by AI.

Customary Provisions - Customary provisions, including cross-indemnification, push back, underwriting arrangements and the like, shall be included in the Stock Purchase Agreement.

Stock Option Plan The Company's Stock Option Plan shall be in a form satisfactory to Investors. 9,117,720 shares in total shall be allocated toward an Employee Stock to attract new employees and provide equity grants to consultants as required. On a fully diluted basis, the Stock Option Plan, covering new employees, will account for 15.1% of AI's equity at closing assuming the full issuance of the Series A Preferred and related warrants. These shares include all options currently granted including those granted to Tom Gill.

PI/59876v3 Board of Directors

Composition - Upon the closing, the Board shall be composed of five Directors, as follows: Director Nominated By Affiliation

Fred Common Company John Series A Mellon Jack. Eve Series A Eve’s Capital TBD Management Industry Expert TBD Management and BOD TBD All Directors shall be re-elected annually.

Committees – The Board shall create a Compensation Committee consisting of the representative of Eve’s, who shall be Chairman, and one other Board member selected by the Board, who shall initially bJohn. The consent of both members of the Compensation Committee shall be required for any option grants. In addition, the Board may create Committees to conduct such business as may properly come before them. A Director representing Eve’s Capital Management shall have the right, but not the obligation, to be elected to any other Committee constituted by the Board.

Expense - AI shall remburse Directors for reasonable out-of-pocket expenses incurred while attending Board meetings, Committee meetings or on Company-approved business.

Related Agreements

Non-disclosure and Proprietary Rights - All current and future employees shall enter into non- disclosure agreements and proprietary rights agreements that are in a form satisfactory to the Investors.

Co-sale Agreement - Management and all Common and Preferred Stockholders who own more than 5% of AI's equity on a fully-diluted basis following the closing of the Series A financing will be subject to a co-sale agreement with customary provisions as part of the Stock Purchase Agreement.

Right of First Refusal - Series A Preferred Stockholders shall have the right, but not the obligation, to participate in subsequent rounds of financing for an amount that will maintain thAIr percentage interest in the Company. Failure to exercise this right will not preclude any Series A Preferred Stockholder from participating in future rounds. Such equity shall not include shares issued as part of an approved Stock Option Plan, shares issued as part of an acquisition of another company approved by the Board, or shares offered in an approved and underwritten public offering.

AI first and the Investors second shall have the right to purchase all equity or rights to purchase equity offered by a Stockholder to a third party.

Stock Purchase Agreement

The purchase of Securities shall be made upon completion of an executed Stock Purchase Agreement which shall contain representations and warranties made by AI as to its assets, liabilities, corporate authority, litigation and similar matters as are customarily given by a seller of securities to a purchaser.

PI/59876v3 Preconditions to Investment

Completion of Diligence - The Investors shall complete thAIr legal due diligence to the satisfaction of Eve’s and Mellon. Such diligence includes, but is not be limited to, the items listed in this section.

Corporate and Stockholder Agreements - The Company's Articles of Incorporation, Shareholder's Agreements, Intellectual Property Agreements, Executive Employment Agreements and the like shall be in a form satisfactory to the Investors.

Key Manager Insurance - AI shall carry Key Manager Insurance with a value of $5,000,000, payable to AI, on Fred. The Company shall have such policy in place within 45 days of closing. Expenses AI Inc. shall bear its own legal and other expenses with respect to the transaction. If the transaction is consummated, AI will pay the investor's reasonable auditing, legal, background check and closing expenses, which shall not exceed $20,000 without AI's approval.

Closing

The closing is expected to occur 21 days after Company signature of this Term Sheet.

Expiration

This Term Sheet expires if not signed by AI on or before April 9, 2001.

This Term Sheet is only a statement of intention to effect the proposed transaction in accordance with the terms and conditions outlined herAIn. This Term Sheet does not constitute a binding agreement to sell or purchase securities in any form until a mutually satisfactory Stock Purchase Agreement is executed by AI, the Investors, and other related parties.

Date: Acme, Inc.

Title:

Date: Eve’s Capital Management, Inc.

General Partner

Date: Mellon Ventures, Inc.

Principal

PI/59876v3 6 Eve’s Capital Management, Inc.

PI/59876v3