Enom 2010 Annual Report Download - page 136

Table of Contents
Demand Media, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
(In thousands, except per share amounts)
15. Convertible Preferred Stock
The Company is authorized to issue 700,000 shares of stock comprised of 500,000 shares of common stock and 200,000 shares of preferred stock. The
preferred stock may be issued in distinct series, of which there were four authorized as of December 31, 2010: Convertible Series A preferred stock
("Convertible Series A Preferred Stock"), 85,000 shares authorized; Convertible Series B preferred stock ("Convertible Series B Preferred Stock"), 15,000
shares authorized; Convertible Series C preferred stock ("Convertible Series C Preferred Stock"), 27,000 shares authorized; and Convertible Series D
preferred stock ("Convertible Series D Preferred Stock"), 26,150 shares authorized.
Convertible preferred stock activity during the periods indicated is as follows:
Convertible
Series A
preferred stock
Convertible
Series B
preferred stock
Convertible
Series C
preferred stock
Convertible
Series D
preferred stock Total
preferred
stock
Shares Amount Shares Amount Shares Amount Shares Amount
Balance at
December 31,
2007 65,333 $122,168 9,464 $17,000 26,047 $100,098 16,667 $ 99,696 $ 338,962
Issuance of
Convertible
Series D
preferred stock — — — — — — 5,833 35,000 35,000
Stock issuance
costs — — — — — — — (208) (208)
Balance at
December 31,
2008, 2009 and
2010 65,333 $122,168 9,464 $17,000 26,047 $100,098 22,500 $134,488 $ 373,754
In January 2011, all shares of preferred stock were converted into 61,672 shares of common stock in connection with the Company initial public offering
as described in Note 21—Subsequent Events.
The following is a summary of the rights and preferences of the classes of preferred stock as of December 31, 2010:
Dividends—The Convertible Series A Preferred Stock, Convertible Series C Preferred Stock and Convertible Series D Preferred Stock were entitled to
receive dividends on a pari passu basis, and out of any assets legally available when and if declared by the board of directors. The Convertible Series B
Preferred Stock was entitled to receive dividends when and if declared by the board of directors after all accrued and unpaid dividends have been paid on the
outstanding Convertible Series A Preferred Stock, Convertible Series C Preferred Stock and Convertible Series D Preferred Stock and prior to and in
preference to the declaration of dividends on the Company's common stock. The preferred stock dividends accrued cumulatively, whether or not declared at
the rate of: 6% per annum in the case of the Convertible Series A and Convertible Series C Preferred Stock; 3% per annum in the case of the Convertible
Series B Preferred Stock; and 9% per annum in the case of the Convertible Series D Preferred Stock and are compounded quarterly on the last day of March,
June, September and December for each year until paid. For the years ended December 31, 2008, 2009 and 2010, the preferred stock accrued cumulative
dividends of $28,209, $30,848 and $33,251, respectively.
Liquidation preference—In the event of a liquidation (as defined), which included a sale of the Company, the Convertible Series D Preferred Stock was
entitled to receive the Series D Liquidation Preference (as defined), which was equal to the original price per share of Convertible Series D Preferred Stock
($6.00 per share), prior to and in preference to the Series A, Series B and Series C Liquidation Preferences (as defined). After payment of the Series D
Liquidation Preference, the
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