Buzz Article:
Latest Deal Terms for Zynga Game Network, Inc.

by Justin Byers, Business Intelligence Analyst, 6/17/2010

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More money for Zynga Game Network, Inc. is what we are hearing. Various media outlets have recently reported additional funding for Zynga this week. We have been following their funding for Zynga, and lately the paper trail has become very interesting when it comes to tracking the funds and the new securities being authorized. This week we are going to recap the data that we have for Zynga Game Network, Inc., including their recent filings so far this year in April, May, and June.

Zynga Game Network, Inc. (Formerly Presidio Media, Inc.) is headquartered in San Francisco, California. The company develops online games designed for play on social networking sites such as Bebo, Facebook, and Meebo.

The company has raised more than $350 MM from investors that include Union Square Ventures, Kleiner Perkins Caufield and Byers, Institutional Venture Partners, Avalon Ventures, Andreessen Horowitz, and Digital Sky Technologies (DST). This total amount also includes the recently reported round of $147 MM from SoftBank Corp. Prior to the reported DST investment of $180 MM at the end of 2009, the filing data was fairly typical to follow. Shortly after the DST investment was announced, things seemed to become a little less clear as far as the filings are concerned. Below we have provided a timeline with filing data and links to copies of recent Amended and Restated Certificates of Incorporation filed in April, May, and June 2010.

As one can see from the data below, there have been multiple forward stock splits over a rather short period of time, an authorization of shares of a "Series Z Preferred Stock" (that has an issued price of $.01 and very low liquidation preference), and also a significant increase in the number of authorized shares of "Series B-2 Preferred Stock" (from approx $25 MM to $315 MM). Did DST and/or SoftBank Corp receive shares of "Series B-2 Preferred Stock"? Who has received shares of the "Series Z Preferred Stock"? Were any of these shares used in prior acquisitions of XPD Media, Inc. and/or Challenge Games?

You can view copies of Restated and Amended Certificates of Incorporation filed April 2010, May 2010, and June 2010.

• On November 15, 2007 a Restated Certificate of Incorporation was filed authorizing:

  • 23,717,658 shares of "Class A Common Stock"

  • 1,282,342 shares of "Class B Common Stock"

  • 6,001,112 shares of "Series A Preferred Stock"

• On January 14, 2008 there was a Form D filing showing the sale of $5,589,003.84 worth of "Series A Preferred Stock" and the "Class A Common Stock" issuable upon conversion of such Preferred Stock"

• The Deal Terms for the Series A Preferred Stock were:

Filing Date	01/15/2007
Liquidation Preference for the Current Round	N/A
Round of Financing	Series A Preferred
Round Direction	N/A
Multiple of the Liquidation Preference: 1x; 2x; 3x; > 3x.	1x
Type of Preferred Stock	Conventional Convertible
Anti-Dilution Protection	Weighted Average
Redemption at Investor's Option	No
Pay-to-Play Provisions	No
Cumulative Dividends	No
Dividend Rate	8%
Price Per Share	$.903
Total Amount Raised in Current Round	$5.589 MM

• On January 08, 2008, a Certificate of Amendment of Restated Certificate of Incorporation was filed authorizing an increase in the number of authorized shares of "Series A Preferred Stock" to 6,217,059

• On February 11, 2008 a Restated Certificate of Incorporation was filed authorizing:

  • An increase in the number of authorized shares of "Class A Common Stock" to 28,000,000

  • An adjustment to the number of authorized shares of "Series A Preferred Stock" to 6,212,515

  • 3,012,957 shares of "Series A-1 Preferred Stock"

• On July 7, 2008 there was a Form D filing showing the sale of $5,025,914 worth of "Series A-1 Preferred Stock and Common Stock issuable upon conversion of such Preferred Stock"

• The Deal Terms for the "Series A-1 Preferred stock" were:

Filing Date	02/11/2008
Liquidation Preference for the Current Round	Pari Passu
Round of Financing	Series A-1 Preferred*
Round Direction	UP
Multiple of the Liquidation Preference: 1x; 2x; 3x; > 3x.	1x
Type of Preferred Stock	Conventional Convertible
Anti-Dilution Protection	Weighted Average
Redemption at Investor's Option	No
Pay-to-Play Provisions	No
Cumulative Dividends	No
Dividend Rate	8%
Price Per Share	$2
Total Amount Raised in Current Round	$5.025 MM

*Noted as Series B in the VC Experts Valuation and Deal Terms Database, due to there is a prior Series A Preferred authorized

• On July 17, 2008 a Restated Certificate of Incorporation was filed authorizing:

  • An increase in the number of authorized shares of "Class A Common Stock" to 35,000,000

  • An adjustment to the number of authorized shares of "Series A-1 Preferred Stock" to 2,512,957

  • 3,711,956 authorized shares of "Series B Preferred Stock"

• On August, 01, 2008, there was a filing to the California Department of Corporations for Zynga Game Network, Inc. with the date of first sale as 07/18/2008 for a total offering of $25,000,023.68 of Preferred Stock and Common Stock

• The Deal Terms for the "Series B Preferred stock" were:

Filing Date	07/17/2008
Liquidation Preference for the Current Round	Senior
Round of Financing	Series B Preferred*
Round Direction	UP
Multiple of the Liquidation Preference: 1x; 2x; 3x; > 3x.	1x
Type of Preferred Stock	Conventional Convertible
Anti-Dilution Protection	Weighted Average
Redemption at Investor's Option	No
Pay-to-Play Provisions	No
Cumulative Dividends	No
Dividend Rate	8%
Price Per Share	$6.735
Total Amount Raised in Current Round	$25 MM

*Noted as Series C in the VC Experts Valuation and Deal Terms Database, due to there are prior Series A & Series A-1 Preferred authorized

• On June 3, 2009 a Restated Certificate of Incorporation was filed authorizing

  • An increase in the number of authorized shares of "Class A Common Stock" to 41,000,000

• On July 1, 2009 a Fourth Amended and Restated Certificate of Incorporation was filed authorizing:

  • 1 to 2 stock split of each outstanding share of both classes of stock, resulting in:

    • 82,000,000 shares of Class A Common Stock

    • 2,564,684 shares of Class B Common Stock

    • 12,425,030 shares of Series A Preferred Stock

    • 5,025,914 shares of Series A-1 Preferred Stock

    • 7,423,912 shares of Series B Preferred Stock

• On October 1, 2009 a Fifth Amended and Restated Certificate of Incorporation was filed authorizing:

  • 1 to 2 stock split of each outstanding share of both classes of stock, resulting in:

    • 164,000,000 shares of Class A Common Stock

    • 5,129,368 shares of Class B Common Stock

    • 24,850,060 shares of Series A Preferred Stock

    • 10,051,828 shares of Series A-1 Preferred Stock

    • 14,847,824 shares of Series B Preferred Stock

• On November 3, 2009 a Sixth Amended and Restated Certificate of Incorporation was filed authorizing:

  • An adjustment to the number of authorized shares of "Class A Common Stock" to 163,200,000

  • 800,000 authorized shares of "Series B-1 Preferred Stock"

• On November 11, 2009 there was a Form D filing showing the sale of $15,187,440; noted on the filing "This filing covers the Series B-1 Preferred Stock and the underlying Common Stock issuable upon conversion thereof."

• The Deal Terms for the "Series B-1 Preferred Stock" were:

Filing Date	11/03/2009
Liquidation Preference for the Current Round	Pari Passu
Round of Financing	Series B-1 Preferred*
Round Direction	UP
Multiple of the Liquidation Preference: 1x; 2x; 3x; > 3x.	1x
Type of Preferred Stock	Conventional Convertible
Anti-Dilution Protection	Weighted Average
Redemption at Investor's Option	No
Pay-to-Play Provisions	No
Cumulative Dividends	No
Dividend Rate	8%
Price Per Share	$18.9843
Total Amount Raised in Current Round	$15.18 MM

*Noted as Series D in the VC Experts Valuation and Deal Terms Database, due to there is a prior Series A, Series A-1, and Series B authorized.

• On December 1, 2009 a Seventh Amended and Restated Certificate of Incorporation was filed authorizing:

  • 1 to 2 stock split of each outstanding share of both classes of stock, resulting in:

    • 326,400,000 shares of "Class A Common Stock"

    • 10,258,736 shares of "Class B Common Stock"

    • 49,700,120 shares of "Series A Preferred Stock"

    • 20,103,656 shares of "Series A-1 Preferred Stock"

    • 29,695,648 shares of "Series B Preferred Stock"

    • 1,600,000 shares of "Series B-1 Preferred Stock"

• Also in December 2009 it is reported that Digital Sky Technologies (DST) invested $180 MM into Zynga Game Network, Inc.

• On April 22, 2010 an Eighth Amended and Restated Certificate of Incorporation was filed authorizing:

  • An increase in the number of authorized shares of Class A Common Stock to 350,000,000

  • 1,942,500 authorized shares of "Series B-2 Preferred Stock"

  • 10,000,000 authorized shares of "Series Z Preferred Stock"

• The Deal Terms of the "Series B-2 Preferred Stock" and "Series Z Preferred Stock" were:

Filing Date	4/22/2010	4/22/2010
Liquidation Preference for the Current Round	Pari Passu	Junior to all other Preferred
Round of Financing	Series B-2 Preferred*	Series Z Preferred
Round Direction	UP	Down
Multiple of the Liquidation Preference: 1x; 2x; 3x; > 3x.	1x	1x
Type of Preferred Stock	Conventional Convertible	Conventional Convertible
Anti-Dilution Protection	Weighted Average	Weighted Average
Redemption at Investor's Option	No	No
Pay-to-Play Provisions	No	No
Cumulative Dividends	No	No
Dividend Rate	8%	8%
Price Per Share	$12.87293	$.01

*Noted as Series E in the VC Experts Valuation and Deal Terms Database, due to there is a prior Series A, Series A-1, Series B, and Series B-1 authorized.

• On May 11, 2010 a Ninth Amended and Restated Certificate of Incorporation was filed authorizing:

  • An increase in the number of authorized shares of "Class A Common Stock" to 372,557,500

  • An increase in the number of authorized shares of "Series B-2 Preferred Stock" to 24,500,000 (times the price per share gives a total of $315,386,785 worth of Series B-2 Preferred Shares)

• On May 28, 2010 there was a Form D filing showing the sale of $7,508,474 with the type of securities offered marked as "Equity" and the data of first sale as 05/14/2010

• On June 1, 2010 a Tenth Amended and Restated Certificate of Incorporation was filed

  • In Article V, 3.5 Deemed Liquidation Events - The first portion of the first sentence was omitted that had been used in prior filings. The portion that was omitted was "Unless otherwise approved by vote of the holders of a majority of the then-outstanding shares of Preferred Stock,"

  • In Article V, 5.9(b)(i)(C) - an additional definition for "Additional Shares of Common Stock" was added to read: (C) 3,884,120 shares of Class A Common Stock (and the warrant or other rights therefor) issuable upon the exercise of a warrant to purchase shares of Class A Common Stock issuable to a strategic Partner of the Corporation.

• On June 4, 2010 there was a Form D Filing showing the sale of $20,571,454 with the type of securities offered marked as "Equity" and the date of first sale as 05/24/2010

• On June 14, 2010 it was reported that SoftBank Corp made an investment of $147 MM in Zynga Game Network, Inc.

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