Lockhart&Stark, a VC firm, has invested $ $3$ million for $30\%$ of the company, Banana. Palm, a leader in the same industry with Banana, is considering to acquire Banana. Answer the questions in the following situations.

a$)$ Would the deal be structured as all$-$common? Why?

b$)$ If the deal is structured as redeemable preferred $($with face value $$2\mathrm{.}5$ million$)$ and common stocks, and Palm offers Banana $$4\mathrm{.}5$ million. What are the net proceeds to Lockhart&Stark and Banana.

c$)$ The deal is structured as participating convertible preferred with $2$X liquidation preference, and Palm offers Banana $$12$ million. What are the net proceeds to Lockhart&Stark and Banana.

d$)$ The participating convertible preferred in c$)$ is combined with a term that the $2$X liquidation preference is only valid when the exit value is less than $ $16$ million. Calculate the range for the exit value where Lockhart&Stark may have a distorted incentive $($prefer a lower exit value$).$

e$)$ What is your suggestion to remedy the distorted incentive for Lockhart&Stark in d$)?$