Tracking Your Stock: Cap Table Basics Pre-IPO and

Transfer Agent Details Post-IPO

Miranda Garcia, CEP; formerly of Zynga Inc.

Roberta Jones, CEP; Corporate Focus

Josh McGinn, CEP; American Stock Transfer & Trust

July 25, 2012

Disclaimer

The following discussion and examples do not necessarily represent the official views of American Stock Transfer & Trust, Corporate Focus, or Zynga with respect to any of the issues addressed. Moreover, this presentation and the views expressed by the individual presenters should not be relied on as legal, accounting, auditing, or tax advice. The outcome of any individual situation depends on the specific facts and circumstances in which the issue arises and on the interpretation of the relevant literature in effect at the time.

Anyone viewing this presentation should not act upon this information without seeking professional counsel and/or input from their advisors.

Agenda

Speaker Intros

Tracking a Private Company Capitalization Table

Selecting a Transfer Agent

Common Issues

Checklist

3

A Sample Capitalization Table

4

The Stock Ledger

• Accurate list of all equity outstanding

• Scanned documents

• Plan Reserve Information

• Historical information on splits, transfers, ASC 718 audits, cost basis

• Vesting for founders' and restricted stock

• Current contact info for all stakeholders

• Correct SSN and Tax ID Numbers

• Correct and identifying information for trusts and other entity stakeholders

5

Get Organized Now

1.Work with your law firm

2.Research and find missing documents

3.Scan copies of your documents and store them for ready reference

4.Validate and reconcile your ledger against your documents

5.Contact stakeholders to update their information

6.Document and review the process

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Reconciliation Items

1.Confirm Ownership Type Authorizations and Reserves

2.Cross-reference Board resolutions for option grants and stock certificates

3.Review and verify transaction data

4.Backfill any information you are missing

5.Review your Option Plan Information

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Selecting a Transfer Agent

• Types of services offered• Large v. Small• Full Service/Full Integration v. Basic Service• Regional v. Centralized• Use of Technology (use of web/phone/e-mail/paper) • Assigned Rep v. Call-in-Center• What’s included; get an OOPs schedule • Review Shareholder Fee Schedule

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Selecting a Transfer Agent (cont.)

• Timing of selection• Start your due diligence well before your S-1

• Recommendations, Referrals, Surveys, Consultants• Review the Legal Agreement

• Negligence standard, termination fees and terms, COLA, etc.

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Reports and Documents for TA

• Articles of Incorporation & By-Laws• Appointment of Transfer Agent• Opinions• Certificate of Authorities: General & Options• Tax Certifications - Form W-9 & Form 2678• Stock Certificate/Book-Entry/DRS• Treasurer’s Certificate• Legal and Pricing Agreements• Certified Shareholder Ledger• Selling Stockholder Documentation

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Common Issues

• Quality of Records (i.e. Trusts & Joint accts)• Early Exercises/RSAs with future vesting• Lost stock certificates

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Common Issues (cont.)

• Cost Basis Reporting and Tracking • Required for equity purchases/transfers after 1/1/11• Collect, maintain, adjust, convey cost basis

• Agent must solicit missing cost basis with 15 days

• Determine ‘covered’ v. ‘non-covered’ items• Must now calculate LT/ST Gain/Loss on covered items

• Must also exclude any Wash Sale and reallocate cost

• Payor subject to $200 fine/1099B ($3 Million max)• IRC § 6045B

• Issuer to announce corporate actions basis adjustments

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Cost Basis Reporting

Considerations:– Check with your Agents as to how to best communicate Cost

Basis information. Sample Cost Basis Types*:

* This sample is not complete; please check with your agent representative for additional information.

Action (Covered) Code Action (Non-Covered) Code

Stock Option (Qualified) EISO Deferred Compensation DEFC

Stock Option (Non-Qualified) EOSX Stock Swap (no cash exch) EOSS

Incentive Stock Option ISO Stock Ownership Plan ESOP

ESPP (Qualified) ESPP Restricted Stock Award RSA

ESPP (Non-Qualified) ESPN Restricted Stock Unit RSU

Dividend Reinvestment DRPP Stock Appreciation Right SAR

Issuance ISS Restricted Performance Unit RPU

Initial Public Offering IPOA Shares acquired prior 2011 ISSN

Conversions and Splits at IPO

1.Determine conversion ratio

2.Determine if you are going to round up or round down

3.Determine how to handle fractional shares

4.Send the TA the aggregate information along with the ratios used in the process

5.Don’t forget to adjust your option data base for exchanges!

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DRS Book-Entry

1.Direct Registration SystemA NASDAQ & NYSE listing requirement

2.Benefits of Book-entryNo lost certificatesCan post full and fractional shares

3.Facilitates Restricted Stock handling and reduces fees4.Can provide significant cost savings

Adopt “certificate-less” issue and avoid printing certsSubstitute to DWAC deliveriesFacilitates splits, exchanges (including IPO distribution)

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Foresight, Inc. (the “Company”)commenced its Initial Public Offeringon February 14, 2011 and its shares ofCommon Stock are now trading on theNASDAQ under the ticker symbol ofFORE. Because of the Initial PublicOffering, the previous certificatesyou hold are now invalid and shouldnot be presented for transfer. Youhave been issued new shares torepresent your ownership in theCompany and these shares are beingmaintained for you in an electronic,book-entry account under the DirectRegistration System.

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Please note that your Class B

Common shares must be

converted to Class A Common

shares before they become

eligible to be traded on the open

market. This conversion can be

made at any time. In order to

convert your shares to Class A

Common Stock, please log into

your account as explained below

and access the General Account

Information Page to facilitate this

process.

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Lock-Up Period

Agreement with Underwriters to prevent salesUsually 180 days

Restriction placed upon sharesNeed to coordinate with Counsel at expiration

Issues Blanket Opinion to remove legends usually along with Rule 144(b)(1) exemption

Caution with Affiliates, tax legends & unvested

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Stock Option Plan Reserves

Establish Plan Reserves with Transfer Agent

Review and Formulate Issuance Processes

Forms, authorities, mediums, tracking

Don’t forget Capitalization Adjustments

Forfeited options to new plan(s)

Fungible Pool/Full Value Awards adjustments

Don’t forget possible Evergreen Provisions*

*ISOs and Qualified ESPPs may not qualify for Evergreen Plans

Adopt practice of conducting Quarterly or Monthly Reserve Reconciliations

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Common Gotchas

Floating TransactionsPending option exercises. Transfers.SecondMarket, SharesPost, etc.

Foreign Stockholders Budget ResponsibilitiesLost CertificatesDemand Exchange of Old CertificatesIssuance of Stock Certificates (with restrictions)Data Privacy

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Check List

Network, Network, Network…….

Reconcile Cap Table

Scrub Shareholder Data

Solicit Proposals for Transfer Agent/Option

Admin

Order Stock Certificates or go Certificate-less

Demand Exchange for Old Certificates?

Formulate Communication Plan

Review Action Plan with Partners

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Contact Information

Joshua P. McGinn, CEP

SVP, Western Region Relationship Management

American Stock Transfer & Trust LLC

One Embarcadero Center, Suite 503

San Francisco, CA 94111

Bus: 415.835.1313

jmcginn@amstock.com

www.amstock.com

Roberta Jones, CEP

Software Support Engineer

Corporate Focus144 Gould Street, Suite 202

Needham, MA 02494

Bus: 781-343-1213

rjones@corporate focus.com

www.corporatefocus.com

Miranda Garcia, CEP

former Director, Stock Administration

Zynga Inc.

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