Again, for this question, assume that: (a) a large Delaware corporation, Big Public Co., is going to buy all of DIY Chef's assets for $28,000,000; (b) immediately after the sale, no shares of DIY Chef's common stock will be subject to any vesting; (c) immediately after the sale, DIY Chef has no debts or other liabilities; and, (d) DIY Chef is going to distribute all of the sale proceeds to its stockholders. Also, for purposes of this question only, assume that CMUV had acquired NON-participating preferred stock (i.e., instead of the full participating preferred stock). Assume further that the NON-participating preferred stock has a ONE times liquidation preference right (i.e., LP = 1X). Should CMUV convert its preferred stock to common stock after learning about the terms of the sale (HINT: 50% of $28,000,000 is $14,000,000)? No - because converting to common stock would cause CMUV to lose its special rights No - because converting to common stock would cause CMUV to receive LESS cash (than it would receive if it does NOT convert) Yes - because converting to common stock would cause CMUV to receive MORE cash (than it would receive if it does NOT convert) It does not matter. CMUV will receive exactly the same amount of cash regardless of whether it converts the preferred stock to common stock

DIY Chef (Post Series A Capitalization Table) Shares % Common Stock: Founders: Sierra & Derrick 4,000,000 40% Reserved for Stock Option Plan 2,000,000 20% Series A Preferred Stock: CMU Ventures II, LP 4,000,000 40% Total Capital Stock 10,000,000 100% Use the above capitalization table for DIY Chef and assume that: Founders (Sierra & Darrick) purchased their shares of common stock for $0.001 per share (for a total of $4,000). A venture capital fund managed by Carson and Shanell of CMU Ventures ("CMUV") recently paid $2.00 for each share of its Series A preferred stock (for a total of $8,000,000). Immediately after the Series A financing, CMUV has the right to convert each share of its Series A preferred stock into one share of common stock. The Series A preferred stock has full ratchet" price-based anti-dilution protection. The Series A preferred stock has a ONE times liquidation preference right (i.e., LP = 1X) AND the Series A preferred stock is full participating. The above capitalization table is accurate and complete (i.e., immediately after the Series A financing: (a) there are no other outstanding shares of stock or options to purchase stock; and (b) DIY Chef has not yet issued any shares reserved for its Stock Option Plan)