Green Dot 2010 Annual Report Download - page 13

• in the event of specified changes in control of GE Money Bank or us that are not otherwise permitted
by the agreement; or
• our failure to meet agreed-upon service levels.
In connection with our entry into this commercial agreement, we issued to Walmart 2,208,552 shares
of our Class A common stock. These shares also are subject to our right to repurchase them at $0.01 per
share upon termination of our commercial agreement with Walmart and GE Money Bank, other than a
termination arising out of our knowing, intentional and material breach of the agreement. Our right to
repurchase lapses with respect to 36,810 shares per month over the 60-month term of the agreement. The
repurchase right will expire as to all shares of Class A common stock that remain subject to the repurchase
right if we experience a “prohibited change of control,” as defined in the commercial agreement, if we
experience a “change of control,” as defined in the stock issuance agreement, or under certain other
limited circumstances, such as a termination of our commercial agreement with Walmart and GE Money
Bank for the reason described in the fourth bullet of the preceding paragraph. However, should it become
reasonably possible that such termination right could be exercised, we would take all steps within our
power to address the concerns of the Federal Reserve Board or its staff to avoid a termination under our
commercial agreement with Walmart and GE Money Bank. Prior to the earliest to occur of (i) December 24,
2012, (ii) the termination of our commercial agreement under certain limited circumstances and (iii) an
event that would cause our repurchase right to lapse in full prior to May 2015, Walmart is required to pay us
$25.00 per share for each share it sells in excess of 309,839 shares in any consecutive six-month period
following January 18, 2011. We have also granted Walmart registration rights for all of its shares of our
Class A common stock that are no longer subject to our repurchase right.
Network Acceptance Members. A large number of institutions accept funds through our reload
network, using our MoneyPak product. We provide reload services to over 100 third-party prepaid card
programs, including programs offered by H&R Block, AccountNow and Rushcard. MasterCard’s RePower
Reload Network also uses the Green Dot Network to facilitate cash reloads for its own member programs.
Furthermore, in February 2009, we entered into a five-year agreement with PayPal that enables PayPal
customers to use a MoneyPak to fund a new or existing PayPal account. As a result of this agreement,
consumers without a bank account or credit card are able to fund PayPal accounts.
Other Channels. An increasing portion of our card sales is generated from our online distribution
channel and other non-retail channels. We offer Green Dot-branded cards through our website,
www.greendot.com. We promote this distribution channel through television and online advertising.
Customers who activate their cards through this channel typically receive an unfunded card in the mail
and then can reload the card either through a cash reload or a payroll direct deposit transaction. In October
2009, we entered into a joint marketing and referral agreement with Intuit. Under this agreement, Intuit
customers can elect to receive their tax refunds via a co-branded card program. We will manage this
program for Intuit through the 2011 tax season. The initial term of our agreement with Intuit expires in
October 2011, and we do not currently expect that this agreement will be renewed.
Our Products and Services
Our principal products and services consist of Green Dot-branded GPR cards, co-branded GPR
cards, and MoneyPak and point-of-sale, or POS, swipe reload transactions facilitated by the Green Dot
Network. We also service general purpose gift cards, which have historically represented only a small
percentage of our operating revenues. GPR cards are designed for general spending purposes and can be
used anywhere their applicable payment network, such as Visa or MasterCard, is accepted. Unlike gift
cards, GPR cards are reloadable for ongoing, long-term use and require the completion of various
identification, verification and other USA PATRIOT Act-compliant processes before a cardholder rela-
tionship can be established. The GPR cards we offer are issued primarily by Columbus Bank and
Trust Company, a division of Synovus Bank, and, in the case of certain of our co-branded cards discussed
below, GE Money Bank. Card balances are FDIC-insured and have either Visa or MasterCard zero liability
card protection.
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