Example of term sheet of FUND

DRAFT OF Feb. 1, 2007

SUMMARY OF PRINCIPAL TERMS

KHAN FUND I, L.P.

A CAYMAN ISLANDS EXEMPTED LIMITED PARTNERSHIP^[1]

_______________, 2006

Fund:	KHANFund I, L.P., a Cayman Islands exempted limited partnership (the "Fund").
Purpose:	Venture capital investing, primarily through acquiring, holding and disposing of equity securities issued by private companies with a focus on companies primarily engaged in M&A. The Fund also will invest idle cash in high-quality securities on a short-term basis and engage in other activities customary to venture capital investment funds.
General Partner:	KHAN Management I, L.P., a Cayman Islands exempted limited partnership (the "General Partner").  The members of the General Partner primarily responsible for the Fund's investment activities initially will include KHAN and Ryu (the "Senior Members").
Limited Partners:	Institutions, corporations and private individuals (or their estate planning vehicles) that are "accredited investors" within the meaning of the United States Securities Act of 1933 or qualified non-U.S. persons (the "Limited Partners").
Fund Size:	The target size of the Fund is [$20] million.  The General Partner may hold an initial closing of the Fund (the "Initial Closing") and accept "Capital Commitments" from Partners at any time. The Fund may admit additional Limited Partners or accept increased Capital Commitments from existing Limited Partners at one or more additional closings held within twelve months after the Initial Closing.  The fact that certain Capital Commitments may be attributable to closings held after the Initial Closing generally will be disregarded for purposes of allocating Fund profits and losses (i.e., all Capital Commitments will be treated as if made at the Initial Closing).
Minimum Capital Commitment Per Limited Partner:	$[500,000] per investor, subject to waiver in the General Partner's sole discretion.
General Partner's Capital Commitment:	At least one percent of the aggregate Capital Commitments of the Partners.  A portion of the General Partner's capital may be invested through a special purpose fund that operates on a side-by-side basis with the Fund.
Timing of Capital Contributions:	In general, the Partners will make capital contributions in respect of their Capital Commitments on an "as needed" basis. Capital contributions will be due, upon not less than 10 days prior notice, at such times and in such amounts as will be specified in capital calls issued by the General Partner. [[10] percent of each Limited Partner's Capital Commitment will be due and payable at the Initial Closing.] A Limited Partner that is admitted to the Fund, or increases its Capital Commitment, after the Initial Closing will be required to immediately contribute that portion of its entire Capital Commitment that it would have been required to contribute if such entire Capital Commitment had been made at the Initial Closing.  In addition, each such Limited Partner will be required to pay to the Fund a late admission charge equal to market rate interest on the amount contributed (calculated from the date(s) that the component portions of such amount would have been contributed if the Limited Partner's entire Capital Commitment had been made at the Initial Closing). Following the end of the fifth full Fiscal Year of the Fund, the General Partner will not be permitted to issue capital calls for the purpose of enabling the Fund to make investments in new portfolio companies.  Throughout the term of the Fund, however, capital calls may be issued for the purpose of enabling the Fund to: (x) make follow-on investments in existing portfolio companies; or (y) pay Fund expenses.
Initial Closing Date:	The Initial Closing is expected to occur during the [first] quarter of [200x].
Term:	The term of the Fund will be 10 years.  The General Partner may extend the Fund's term for up to two periods of one year each.
Management:	The General Partner will have the exclusive right and power to manage and operate the Fund. The Limited Partners will have no right to participate in the management of the Fund, to act for the Fund, or to vote on Fund matters except as specifically provided under applicable law or in the Partnership Agreement.
Management Company:	The General Partner may delegate certain of its management or administrative responsibilities to an affiliated "Management Company" and may assign to the Management Company the right to receive all or any portion of the Management Fee (defined below); provided, however, that the General Partner will not delegate to the Management Company the authority to select investment opportunities or to make investment or investment-related decisions on behalf of the Fund.
Advisory Committee:	The Fund will have an "Advisory Committee" of at least three members appointed by the General Partner.  All of the Advisory Committee members will be Limited Partners or their designated representatives. The Advisory Committee will have the authority to approve or disapprove certain transactions as described in the Partnership Agreement, but generally will have no other power to participate in the Fund's management.
Co-Investments:	The General Partner may offer to affiliated persons, including other funds managed by members of the General Partner, up to 35 percent of any investment opportunity in which the Fund participates.
Management Fee:	The Fund will pay to the General Partner an annual "Management Fee" equal to [2.5] percent of the aggregate Capital Commitments of the Partners.  [Commencing with the first complete Fiscal Year following the fifth anniversary of the Initial Closing, the annual Management Fee rate will be reduced by 0.25 percentage points each year (but will not in any event be reduced to less than 1.5 percent).][Should there be a management fee stepdown?] [In the event that the General Partner (or any member thereof) receives Fees Subject to Offset, future Management Fees payable by the Fund to the General Partner will be reduced by an aggregate amount equal to 100 percent of such Fees Subject to Offset (the "Management Fee Offset").  For this purpose, "Fees Subject to Offset" means commitment, break-up, directors, officers, advisory and management fees paid by a portfolio company that would not, if earned directly by the Fund, cause the Fund to cease to qualify as an "investment partnership" within the meaning of Section 731(c)(3)(C) of the United States Internal Revenue Code (the "Code").] [At the election of the General Partner, all or a portion of the Management Fee may be replaced by a special allocation and distribution of Fund profits to the General Partner.  Pursuant to such election, the General Partner may be required to return distributions received in lieu of Management Fees if the Fund fails to generate sufficient items of profit.]  [In addition, the General Partner may elect to offset against its capital contribution obligations a portion of the Management Fee to which it is otherwise entitled, provided that at least $500,000 of the General Partner's Capital Commitment shall not be subject to such an offset.]
Capital Accounts:	The Fund will maintain a "Capital Account" for each Partner, the balance of which will be: Increased by: (i) such Partner's capital contributions and (ii) such Partner's allocated share of Fund profits, both realized and unrealized; and Decreased by: (i) the fair market value of all distributions (whether in cash or in kind) made by the Fund to such Partner and (ii) such Partner's allocated share of Fund losses, both realized and unrealized. Any withholding tax paid by the Fund to a governmental entity in respect of an allocation or distribution made by the Fund to a Partner generally will be treated as a distribution and subtracted from such Partner's Capital Account balance.
Allocations of Profit and Loss:	Items of profit and loss attributable to the short-term investment of idle cash will be allocated among the Partners in proportion to their respective Capital Commitments. All other items of profit will be allocated among the Partners as follows: 1.         First, 100 percent to all the Partners in proportion to their respective Capital Commitments until each Limited Partner has, over the term of the Fund, been allocated net profit representing an 8 percent annual  return on its contributed capital (the "Preferred Return"); 2.         Next, 100 percent to the General Partner until, over the term of the Fund, net profits have been allocated: (x) 80 percent to all the Partners in proportion to their respective Capital Commitments; and (y) 20 percent to the General Partner as "Carried Interest"; 3.         Next, (x) 80 percent to all the Partners in proportion to their respective Capital Commitments; and (y)     20 percent to the General Partner as Carried Interest, until each Limited Partner has, over the term of the Fund, been allocated net profit representing a 25 percent annual rate of return on its contributed capital (the "Hurdle Return"); 4.         Next, 100 percent to the General Partner until, over the term of the Fund, net profits have been allocated: (x) [75] percent to all the Partners in proportion to their respective Capital Commitments; and (y) [25] percent to the General Partner as Carried Interest; and 5.         Next, (x) [75] percent to all the Partners in proportion to their respective Capital Commitments; and (y)     [25] percent to the General Partner as Carried Interest. All other items of loss will be allocated as follows: 1.          First, to offset, in reverse order of priority, previous allocations of profit; and 2.          Next, 100 percent to all the Partners in proportion to their respective Capital Commitments.
Tax Distributions:	Within 90 days after the close of each Fiscal Year, the Fund will make a cash "Tax Distribution" to each Partner equal to the "Tax Percentage" of the net taxable income and gain allocated to such Partner in respect of such Fiscal Year (as shown on the Fund's United States Federal income tax return, except to the extent provided below).  The Tax Percentage with respect to net long-term capital gain will be the highest blended United States Federal and state income tax rate applicable to such type of capital gain.  The Tax Percentage with respect to all other types of income and gain generally will be the highest blended United States Federal and state income tax rate applicable to ordinary income.  The net taxable income and gain allocated to a Partner will be calculated as if no deduction were permitted in respect of any item (e.g., an item of Management Fee) whose deductibility is potentially subject to limitation under Section 67 of the Code. At the election of the General Partner, there will be no Tax Distribution in respect of a Fiscal Year if the total net taxable income and gain of the Fund for such Fiscal Year is less than or equal to $500,000. If, for any year, the Fund is not required to file a United States Federal income tax return, the amounts that would have been shown on such a return (if required) will be determined by the General Partner in good faith.
Discretionary Operating Distributions:	The Fund will make additional operating distributions, in cash or in kind, at such times and in such amounts as shall be determined by the General Partner in its sole discretion. Such distributions will be made as follows: 1.         First, 100 percent to all the Partners in proportion to their respective Capital Commitments until each Limited Partner has received aggregate distributions over the term of the Fund in an amount at least equal to the sum of: (a) its contributed capital; and (b) its Preferred Return; 2.         Next, 100 percent to the General Partner until the General Partner's 80/20 Catch-Up Amount is not less than zero; 3.         Next, 100 percent to the Partners in proportion to their respective Capital Commitments until the earlier of: (a) each Limited Partner's 80/20 Catch-Up Amount is not less than zero; or (b) each Limited Partner has received aggregate distributions over the term of the Fund in an amount at least equal to the sum of: (x) its contributed capital; and (y) its Hurdle Return; 4.         Next, (a) 80 percent to all the Partners in proportion to their respective Capital Commitments; and (b)     20 percent to the General Partner, until each Limited Partner has received aggregate distributions over the term of the Fund in an amount at least equal to the sum of: (a) its contributed capital; and (b) its Hurdle Return; 5.         Next, 100 percent to the General Partner until the General Partner's [75/25] Catch-Up Amount is not less than zero; 6.         Next, 100 percent to the Limited Partners in proportion to their respective Capital Commitments until each Limited Partner's [75/25] Catch-Up Amount is not less than zero; and 7.         Thereafter, (a) [75] percent to all the Partners in proportion to their respective Capital Commitments; and (b)     [25] percent to the General Partner. As used above, the "80/20 Catch-Up Amount" means, with respect to a Partner, the excess of: A.        The aggregate distributions over the term of the Fund that would have been made to such Partner if all distributions had been made:              1.          First, 100 percent to all the Partners in proportion to their respective Capital Commitments until each Limited Partner had received aggregate distributions over the term of the Fund in an amount at least equal to its contributed capital; and              2.          Thereafter, (x) 80 percent to all the Partners in proportion to their respective Capital Commitments; and (y)     20 percent to the General Partner; over B.         The aggregate distributions over the term of the Fund that were actually made to such Partner. As used above, the "75/25 Catch-Up Amount" means, with respect to a Partner, the excess of: A.        The aggregate distributions over the term of the Fund that would have been made to such Partner if all distributions had been made:              1.          First, 100 percent to all the Partners in proportion to their respective Capital Commitments until each Limited Partner had received aggregate distributions over the term of the Fund in an amount at least equal to its contributed capital; and              2.          Thereafter, (x) 75 percent to all the Partners in proportion to their respective Capital Commitments; and (y)     25 percent to the General Partner; over B.         The aggregate distributions over the term of the Fund that were actually made to such Partner.
Liquidating Distributions:	Distributions associated with the dissolution and liquidation of the Fund will be made in proportion to the Partners' respective positive Capital Account balances.
Special Distribution Rules:	Notwithstanding any distribution provision of the Partnership Agreement to the contrary: (i) the General Partner may elect to take less than the full amount of any distribution to which it is entitled; and (ii) in general, no distribution will be made that would cause any Partner's Capital Account balance to be reduced below zero or render the Fund insolvent. If a Limited Partner notifies the General Partner that the receipt by such Limited Partner of a portfolio security would violate any law, regulation or governmental order applicable to such Limited Partner or subject such Limited Partner to a foundation excise tax under Section 4943 of the Code, the General Partner will use its reasonable efforts to either (i) vary the method of distribution or (ii) sell such security on behalf of the affected Limited Partner in a manner that would avoid such violation or tax. Upon request, the General Partner will arrange for all securities distributed in respect of a Limited Partner to be sold on such Limited Partner's behalf.
Claw-Back:	In connection with the dissolution and liquidation of the Fund, the General Partner will return carried interest distributions (other than actual or deemed Tax Distributions) to the extent that such distributions exceed the carried interest distributions that the General Partner would have received if all allocations and distributions had occurred immediately prior to the Fund's dissolution (but taking into account the actual timing of allocations and distributions for purposes of determining the Preferred Return and the Hurdle Return).
Expenses:	The General Partner will pay all of its own normal operating expenses (including employee salaries, rent, communications, travel and other expenses incurred in investigating or evaluating investment opportunities). The Fund will pay all other expenses including, without limitation: (i) organization and syndication costs (up to a maximum of [$500,000]); (ii) legal, accounting, audit, custodial, consulting and other professional fees; (iii) banking, brokerage, broken-deal, registration, qualification, finders, depositary and similar fees or commissions; (iv) transfer, capital and other taxes, duties and costs incurred in acquiring, holding, selling or otherwise disposing of Fund assets; and (v) costs of financial statements and other reports.
Borrowing:	Except with regard to amounts borrowed for less than 180 days to satisfy short-term working capital needs of the Fund, the General Partner will not cause the Fund to borrow money. The principal amount of the Fund's indebtedness for borrowed money will not at any time exceed 10 percent of the total Capital Commitments of the Partners.
Outside Activities:	The members of the General Partner will devote to the Fund such time and effort as is reasonably necessary to diligently manage the Fund's business and affairs.
Reports:	Limited Partners will receive: (i) quarterly reports briefly summarizing the business activities and financial status of the Fund; (ii) annual [audited] financial statements; and (iii) information reasonably necessary for the preparation of income tax returns.  Limited Partners also will receive a valuation report each time the value of one or more Fund assets is determined under the Partnership Agreement. [Should the annual financial statements be audited? It may not make economic sense if the Fund is very small and the Limited Partners are close to the fund managers. Arms' length investors may ask for audited financials.]  Under rules set forth in the Partnership Agreement, the General Partner may edit such reports to protect the confidentiality of highly sensitive information.
Valuation:	The General Partner will value the Fund's assets quarterly and as of the date of dissolution of the Fund.  The General Partner will also value any security being distributed in kind as of its date of distribution, or being returned to the Fund as of the date of receipt by the Fund.  The General Partner's valuation will be conclusive and binding on all Limited Partners; provided, however, that if Limited Partners representing at least two-thirds of the Capital Commitments made by all Limited Partners (a "Two-Thirds-Interest of the Limited Partners") objects to a valuation, the General Partner will attempt to determine an alternative value for the asset in question.  If the General Partner fails to propose an alternative value that eliminates continued objection by a Two-Thirds-Interest of the Limited Partners, the value will be determined through a binding third-party appraisal procedure.
Transfers of Fund Interests:	A Limited Partner's interest in the Fund generally may be transferred only with the consent of the General Partner. Transferees will be bound by all applicable provisions of the Partnership Agreement including, without limitation, provisions governing the transfer of Fund interests.  No transfer may be made that would: (i) subject interests in the Fund to registration under the United States Securities Act of 1933 or the securities laws of any state or foreign country; (ii) subject the Fund to registration as an investment company or regulation as a business development company under the United States Investment Company Act of 1940; (iii) require registration of the General Partner as an investment adviser under the United States Investment Advisers Act of 1940; (iv) cause the Fund to be deemed terminated under the Code; (v) cause the Fund to be classified as a publicly traded partnership under the Code; or (vi) subject the Fund or the General Partner to any other additional regulatory requirements.  Transferees will be admitted as substitute Limited Partners only with the consent of the General Partner, which consent may be withheld in the General Partner's sole discretion. The General Partner will not be permitted to transfer its interest in the Fund without the consent of a Two-Thirds-Interest of the Limited Partners.
Withdrawals:	Limited Partners will be permitted to withdraw from the Fund only with the General Partner's consent.  The General Partner may deem a Limited Partner to have withdrawn in the event such Limited Partner fails to make timely capital contributions. The General Partner may also deem a Limited Partner to have withdrawn in whole or in part if the General Partner determines in its reasonable discretion that continued undiminished participation of the Limited Partner in the Fund would (i) constitute or give rise to a violation of applicable law or (ii) otherwise subject the Fund or the General Partner to material onerous legal, tax or other regulatory requirements that cannot reasonably be avoided. Upon withdrawal of a Limited Partner, the General Partner, in its sole discretion, may liquidate the withdrawing Limited Partner's Fund interest by: (i) causing the Fund to distribute to the withdrawing Limited Partner, in cash or in kind, a redemption amount equal to the withdrawing Limited Partner's Capital Account balance (amounts payable in kind generally will be paid ratably in proportion to the value of each security held by the Fund and may be paid by designating restricted securities to be distributed on a delayed basis); or (ii) selling the withdrawing Limited Partner's Fund interest and remitting the proceeds to such withdrawing Limited Partner.
Removal of the General Partner:	The General Partner may be removed only for "Cause" by the affirmative vote of 80 percent in interest of the Limited Partners. For this purpose, "Cause" will mean any act that both: (i) constitutes fraud, a felony relating to the General Partner's role as such or involving moral turpitude, gross negligence in the management of the Fund, or a willful breach of a fiduciary duty arising under the Partnership Agreement, and (ii) in the reasonable judgment of 80 percent in interest of the Limited Partners, clearly reflects an unfitness to serve in a management capacity with regard to the Fund.
Key Person Events:	If either (a) Chauncey Shey, or (b) both Dr. Peter Hua and Dr. Alan Song, have ceased to be, directly or indirectly, actively involved in the business and affairs of the Fund, a Majority-In-Interest of the Limited Partners may: (x) place the Fund in "Limited Operations Mode" pursuant to which the Fund's activities generally will be limited to managing its existing portfolio (and will not include investments in new portfolio companies); or (y) elect to dissolve the Fund.
Exculpation and Indemnification:	In the absence of Material Misconduct, an Indemnified Person: (i) will not be liable for any act or omission concerning the Fund; and (ii) will be indemnified from and against any loss, expense, damage or injury suffered or sustained by such Indemnified Person by reason of any actual or threatened claim, demand, action, suit or proceeding in which such Indemnified Person may be involved by reason of its actual or alleged management of, or involvement in, the affairs of the Fund (including, without limitation, an Indemnified Person's involvement as an officer or director of a portfolio company or an offeror of interests in the Fund). As used herein: (i) "Material Misconduct" means gross negligence, material breach of the Partnership Agreement, fraud, material breach of fiduciary duty to the Fund or any Partner in its capacity as such, commission of a felony involving moral turpitude, or violation of applicable securities laws (except that Material Misconduct will not include ordinary negligence, disclosure of information to a Limited Partner, or any action or omission based upon a good faith interpretation of the Partnership Agreement); and (ii) "Indemnified Person" means the General Partner, the Management Company, and the members of the Advisory Committee (as well as, in each case, certain persons related thereto).  "Indemnified Person" may also include any employee or agent of the Fund to the extent determined by the General Partner in its reasonable discretion.
Liability of Limited Partners:	Limited Partners will have no personal liability for the debts and obligations of the Fund, although each Limited Partner will be responsible for making timely contributions in respect of its Capital Commitment and for returning distributions as required under the Partnership Agreement or applicable law.
Failure to Make Capital Contributions:	Upon default in the payment of a Limited Partner's Capital Commitment, the General Partner may do any one or more of the following on behalf of the Fund: (i) sue to enforce the obligation of the defaulting Limited Partner to make capital contributions when due, and receive interest at the lesser of 18 percent or the highest rate permitted by law, plus out-of-pocket legal and collection costs (with such interest and costs to be treated as income of or reimbursement to the Fund, and not as a capital contribution of the defaulting Limited Partner); (ii) designate one or more persons to assume responsibility for the entire unpaid balance of the defaulting Limited Partner's Capital Commitment and to assume and succeed to all of the rights of the defaulting Limited Partner's interest attributable to that portion of the defaulting Limited Partner's Capital Commitment; (iii) cancel all or any portion of the defaulting Limited Partner's Capital Commitment; (iv) cause the defaulting Limited Partner's share of future allocations of profit (but not loss) to be reduced by up to 50 percent; (v) cause the defaulting Limited Partner's Capital Account balance to be reduced by up to 50 percent of the amount contained therein on the date of default; or (vi) deem the  defaulting Limited Partner to have withdrawn from the Fund. A Limited Partner that has been in default for more than 270 days may be required to forfeit its entire interest in the Fund (while remaining obligated in respect of its Capital Commitment).  Additional penalties will be set forth in the Partnership Agreement.
Fiscal Year:	Calendar year (except as otherwise required by law).
Legal Counsel:	Wilson Sonsini Goodrich & Rosati, Professional Corporation, will represent the General Partner and the Fund (but will not represent any Limited Partner in connection with the organization of the Fund or the preparation of the Partnership Agreement).
Amendment:	In general, the Partnership Agreement will be amended only with the consent of the General Partner and a Two-Thirds-Interest of the Limited Partners.  There will be no amendment that is adverse to a Limited Partner unless such amendment is consented to by such Limited Partner or by its terms applies to all Limited Partners.

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[1]             This Summary of Principal Terms is subject to the detailed provisions of the Limited Partnership Agreement of SBCVC Retail Fund I, L.P., a Cayman Islands Exempted Limited Partnership (the "Partnership Agreement"), and is qualified in its entirety by reference to such Agreement.  No legal obligation is created hereby.