So in this session, we will do some exercise regarding term sheets. The first practice is related to vesting. So, as a founder, you have to be around for four years to own all of your stocks or options as I told you before. Typical condition is a one-year vesting cliff and monthly vesting thereafter for the full three years. So let's consider the case of founders, X & Y, in ABC Company. X has 2 million shares and Y has 1 million shares, but Y left the company after 18 months. How many shares does Y have? So again, the vesting condition is a one-year vesting cliff, and monthly vesting thereafter full for three years. So one year vesting cliff means Y vested 25 percent of his shares after 12 months and Y was with the company for six more months. So, this monthly vesting will be applied like this, so the other 75 percent remaining, Y will get 6 over 36. Okay? So this 36 is the remaining three years, but Y stayed there only for six month. So this is a 12.5 percent. So Y's total shares is 33.3 percent, but Y keeps only 37.5 percent of these share. So that's 12.5 percent or since the original number of shares for Y was 1 million shares, Y will keep 125,000 shares. So this vesting prohibits the founders who depart early own large chunk of shares. Okay, in practice two, we will practice the liquidation preference. So, venture capital invested $1 million and got 30 percent share. The terms for liquidation preference is 1x preference and participation with a cap of 3x. So, this cap of 3x means the maximum amount you can get from participation is three times the original amount of money, $1 million. So 3x is $3 million. So how much will the VC recover if the company is sold at $1 million, $ 2 million, $ 10 million and $ 15 million? So let's consider these cases. So, if the company sold at $1 million, shown here in blue, with the liquidation preference of 1x, the whole $1 million will go to the investor. So nothing for the founder. What if the company is sold at $2 million? Then liquidation preference, the investor will first get $1 million and with participation of 30 percent, the investor will still get 300,000 more. So in total, the investor will get $1.3 million, and the founders will get the remaining. $ 0.7 million. If the company is sold at $10 million, the investor will get $1 million, from liquidation preference of 1x, and 30 percent of the remaining $9 million. And this participation portion is $2.7 million, which is still less than the 3x cap. So that in total, the investor will get $3.7 million. If the company is sold at $50 million, 1x liquidation preference will give $1 million and 30 percent of $40 million so it would be $4.2 million, but this is larger than the participation cap of 3x. So, the investor would get a total of $4 million, but the better way. That is conversion from the beginning. So, if you convert these preference shares to common shares, then you will get 30 percent of $50 million, that is $4.5 million. So, with the conversion term can be converted to common shares anytime.