Groupon 2011 Annual Report Download - page 92

GROUPON, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
declared by the Board, participating equally with the holders of common stock and the holders of Series Preferred.
In January 2011, the Company authorized the sale and additional issuance of 15,827,796 shares of Series G Preferred for $496.0 million in gross
proceeds (or $492.5 million, net of issuance costs), and used $371.5 million of the proceeds from the sale to redeem shares of its outstanding common stock and
preferred stock held by certain shareholders and the remainder for working capital and general corporate purposes. Included in the additional stock issuance was
126,622 shares of Series G Preferred (or the equivalent of $4.0 million) the Company transferred to its underwriter in exchange for financial advisory services
provided.
Holders of Series G Preferred were entitled to the number of votes equal to the number of shares of voting common stock into which their shares of
Series G Preferred could be converted. In addition, the Series G Preferred holders were entitled, before any distribution or payment is made upon any Series B
Preferred, Series D Preferred, Series E Preferred, Series F Preferred or common stock, to be paid an amount per share equal to 100% of the Series G Preferred
original price, plus all declared but unpaid dividends on the Series G Preferred. If, upon the liquidating event, the assets of the Company were insufficient to fully
pay the amounts owed to Series G Preferred holders, all distributions would be made ratably in proportion to the full amounts to which Series G Preferred
holders would have otherwise been entitled. In the event that the Company was a party to an acquisition or asset transfer, each holder of Series G Preferred was
entitled to receive the amount of cash, securities, or other property to which such holder would be entitled to receive in a liquidation event.
Each share of Series G Preferred would automatically have been converted into shares of voting common stock upon the earliest of the following events
to occur: (i) holders of at least 50% of the outstanding shares of Series G Preferred consent to a conversion, or (ii) immediately upon the closing of an initial
public offering. The number of shares of voting common stock to which a Series G
Preferred stockholder wass entitled upon conversion is calculated by
multiplying the applicable conversion rate then in effect (currently 4.0) by the number of Series G Preferred shares to be converted. The conversion rate for the
Series G Preferred shares was subject to change in accordance with anti-
dilution provisions contained in the agreement with those holders. More specifically, the
conversion price was subject to adjustment to prevent dilution on a weighted1
average basis in the event that the Company issues additional shares of common
stock or securities convertible or exercisable for common stock at a purchase price less than the then effective conversion price. As of December 31, 2010,
56,980,072 shares of voting common stock would have been required to be issued assuming conversion of all of the issued and outstanding shares of Series G
Preferred.
Series Preferred
On October 31, 2011, each outstanding share of Series D preferred stock, Series E preferred stock and Series F preferred stock was converted into
twelve shares of Class A common stock and each outstanding share of our Series G preferred stock was converted into four shares of Class A common stock.
This resulted in the issuance of 290,909,740 shares of Class A common stock. In addition, each outstanding share of Series B preferred stock was converted into
twelve shares of Class B common stock. This resulted in the issuance of 2,399,976 shares of Class B common stock.
The Board has the authority, without approval by the stockholders, to issue up to a total of 50,000,000 shares of preferred stock in one or more series.
The Board may establish the number of shares to be included in each such series and may fix the designations, preferences, powers and other rights of the shares
of a series of preferred stock. The Board could authorize the issuance of preferred stock with voting or conversion rights that could dilute the voting power or
rights of the holders of the Class A common stock or Class B common stock.
As of December 31, 2011, there were no shares of Series Preferred stock outstanding.
Common Stock
The Board has authorized three classes of common stock: Class A common stock, Class B common stock and common stock. No shares of common
stock will be issued or outstanding until November 5, 2016 at which time all outstanding shares of Class A common stock and Class B common stock will
automatically convert into shares of common stock. In addition, the Board authorized shares of undesignated preferred stock, the rights, preferences and
privileges of which may be designated from time to time by the Board.
The total amount of our authorized common stock will consist of 4,020,000,000 shares, all with a par value of $0.0001 per share, of which
2,000,000,000 shares are designated as Class A common stock, 10,000,000 shares are designated as Class B common stock, 2,010,000,000 shares are designated
as common stock. On December 31, 2011, we had outstanding 641,745,225 shares of Class A common stock and 2,399,976 shares of Class B common stock.
Holders of our Class A common stock and Class B common stock have identical rights, except that holders of our Class
86