NetSpend 2010 Annual Report Download - page 91

Table of Contents
NetSpend Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 2008, 2009 and 2010
NOTE 11: STOCKHOLDERS' EQUITY
Common and Preferred Stock
Prior to the initial public offering in 2010, the Company's certificate of incorporation authorized the Company to issue 150,000,000 shares
of class A common stock, par value $0.001 per share, 15,000,000 shares of class B common stock, par value $0.001 per share and 10,000,000
shares of preferred stock, par value $0.001 per share. Each share of class B common stock was convertible into one share of class A common
stock as set forth in the Company's certificate of incorporation.
On October 22, 2010, the Company completed an initial public offering of 18,536,043 shares of common stock at an initial public offering
of $11.00 per share, of which 2,272,727 shares were sold by the Company and 16,263,316 shares were sold by existing stockholders. The
Company generated net proceeds of approximately $20.9 million after deducting underwriting discounts and commissions and $2.4 million in
total expenses incurred in connection with the offering. Effective with the completion of the initial public offering, certain selling stockholders
exercised warrants to purchase 696,270 shares of class A common stock with a weighted-average exercise price of $1.69 per share and vested
options to purchase 890,594 shares of class A common stock with a weighted-average exercise price of $2.96 per share in order to sell the
underlying shares of class A common stock in the offering. In addition, certain employees exercised fully vested options to purchase 890,594
shares of the Company's common stock. The option exercise was transacted through the transfer agent associated with the initial public
offering, with 651,085 net shares issued to the employees. The issued shares were sold by the employees in connection with the closing of the
initial public offering.
Upon the completion of the initial public offering in 2010, the Company's certificate of incorporation was amended and restated to reflect
the reclassification of the Company's class A common stock into common stock and to increase the total number of authorized shares of
common stock from 150,000,000 to 225,000,000 and to provide that all shares of the Company's class B common stock would automatically
convert into shares of common stock on a one-for-one basis upon certain events. Immediately following completion of the Company's initial
public offering in October 2010, Skylight Holdings I, LLC transferred all of the shares of the Company's class B common stock held by
Skylight Holdings to its members. As a result of the transfer, Skylight Holdings I, LLC, JLL Partners Fund IV, L.P., JLL Partners Fund V, L.P.
and their affiliates ceased to own or control 25% or more of the Company's voting securities and, pursuant to the terms of the Company's
amended and restated certificate of incorporation, all shares of the Company's class B common stock automatically converted into shares of
common stock on a one-for-one basis.
As of December 31, 2009 and 2010, there were no shares of preferred stock issued or outstanding.
Acquisition-related Stock Transactions
As part of the purchase consideration related to the Company's acquisition of Skylight in 2008, the Company issued 16,906,100 shares of
common stock (formerly "class A common stock") and 10,043,137 shares of class B common stock at the then-current fair market value of
$3.47 per share. Also in connection with the acquisition, all previously outstanding shares of class B common stock, totaling 6,110,000 shares,
were automatically converted into shares of common stock, and the Company's board of directors declared a cash dividend immediately prior
to the acquisition, totaling $30.0 million. The
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