NetSpend 2011 Annual Report Download - page 31

Table of Contents
Concurrently with the creation of the Series A Preferred Stock we entered into a Share Exchange Agreement (the "Exchange Agreement"),
with JLL Partners Fund IV, L.P., a Delaware limited partnership ("JLL Fund IV"), and JLL Partners Fund V, L.P., a Delaware limited
partnership ("JLL Fund V" and , collectively with JLL Fund IV, the "JLL Funds").
Pursuant to the Exchange Agreement, JLL Fund IV (1,999,950 shares) and JLL Fund V (5,000,050 shares) exchanged (the "Exchange")
an aggregate of 7,000,000 shares of the Common Stock held by them for an aggregate of 700,000 shares of Series A Preferred Stock in a
transaction exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 3(a)(9) thereof. No
commissions or other remuneration was or will be paid or given, directly or indirectly, to the JLL Funds or any other person in connection with
the Exchange. The shares of Series A Preferred Stock issued to the JLL Funds will be automatically re-
converted into shares of Common Stock
(at the rate of ten shares of Common Stock for each share of Series A Preferred Stock) if they are sold or otherwise transferred to a person who
is not affiliated with the JLL Funds.
We created the Series A Preferred Stock and entered into the Exchange Agreement because the JLL Funds and their affiliates were close
to owning 25% of our outstanding Common Stock as a result of the repurchases conducted by us pursuant to our stock repurchase plan. Under
the statutes pursuant to which we are licensed as a money transmitter, having a stockholder acquire in excess of 25% of our outstanding voting
shares can result in various filing and notification requirements. Following the consummation of this transaction, the JLL Funds and their
affiliates owned less than 20% of our outstanding voting securities.
For the twelve months ended December 31, 2010, we issued and sold 1,000,215 shares of common stock to certain of our employees and
consultants upon the exercise of options to purchase common stock granted pursuant to our Amended and Restated NetSpend Holdings, Inc.
2004 Equity Incentive Plan (the "2004 Plan") at exercise prices ranging from $0.25 per share to $3.53 per share. The issuance of such shares
was exempt from the registration requirements of the Securities Act of 1933 in reliance on Section 4(2) thereof, and the rules and regulations
promulgated thereunder, or Rule 701 promulgated under Section 3(b) of the Securities Act, as transactions by an issuer not involving a public
offering or transactions pursuant to compensatory benefit plans and contracts relating to compensation as provided under such Rule 701.
For the twelve months ended December 31, 2010, we granted options to purchase an aggregate of 3,244,574 shares of common stock to
certain of our employees and consultants pursuant to the 2004 Plan at a weighted average exercise price of $5.22 per share. The issuance of
such options was exempt from the registration requirements of the Securities Act of 1933 in reliance on Section 4(2) thereof, and the rules and
regulations promulgated thereunder, or Rule 701 promulgated under Section 3(b) of the Securities Act, as transactions by an issuer not
involving a public offering or transactions pursuant to compensatory benefit plans and contracts relating to compensation as provided under
such Rule 701.
For the twelve months ended December 31, 2010, we granted an aggregate of 674,043 shares of restricted common stock to certain of our
employees pursuant to the 2004 Plan. The issuance of such shares was exempt from the registration requirements of the Securities Act of 1933
in reliance on Section 4(2) thereof, and the rules and regulations promulgated thereunder, or Rule 701 promulgated under Section 3(b) of the
Securities Act, as transactions by an issuer not involving a public offering or transactions pursuant to compensatory benefit plans and contracts
relating to compensation as provided under such Rule 701.
Description of Equity Compensation Plans
The description of our equity compensation plans required by Item 201(d) of Regulation S-K is incorporated herein by reference to
"Part III—Item 12— Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters " of this Annual
Report on Form 10-K.
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