Green Dot 2011 Annual Report Download - page 83

GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 13—Stockholders' Equity (continued)
73
will receive Class A common stock, or rights to acquire Class A common stock, as the case may be, and the holders
of Class B common stock will receive Class B common stock, or rights to acquire Class B common stock, as the case
may be. However, in general and subject to certain limited exceptions, without approval of each class of our common
stock, we may not pay any dividends or make other distributions with respect to any class of common stock unless at
the same time we make a ratable dividend or distribution with respect to each outstanding share of common stock,
regardless of class.
Liquidation
Upon our liquidation, dissolution or winding-up, the assets legally available for distribution to our stockholders
would be distributable ratably among the holders of our Class A and Class B common stock and any participating
preferred stock outstanding at that time after payment of liquidation preferences, if any, on any outstanding shares of
our preferred stock and payment of other claims of creditors.
Preemptive or Similar Rights
Neither our Class A nor our Class B common stock is entitled to preemptive rights, and neither is subject to
redemption.
Conversion
Our Class A common stock is not convertible into any other shares of our capital stock. Each share of our Class
B common stock is convertible at any time at the option of the holder into one share of our Class A common stock. In
addition, each share of our Class B common stock will convert automatically into one share of our Class A common
stock upon any transfer, whether or not for value, except for estate planning, intercompany and other similar transfers
or upon the date that the total number of shares of our Class B common stock outstanding represents less than 10%
of the total number of shares of our Class A and Class B common stock outstanding. Once transferred and converted
into Class A common stock, the Class B common stock may not be reissued. No class of our common stock may be
subdivided or combined unless the other class of our common stock concurrently is subdivided or combined in the
same proportion and in the same manner.
Non-Employee Stock-Based Payments
Shares Subject to Repurchase
In May 2010, we amended our commercial agreement with Walmart, our largest retail distributor, and GE Money
Bank. The amendment modifies the terms of our agreement related to our co-branded GPR MoneyCard, which
significantly increased the sales commission rates we pay to Walmart for our products sold in their stores. The new
agreement commenced on May 1, 2010 with a five-year term. As an incentive to amend our prepaid card program
agreement, we issued Walmart 2,208,552 shares of our Class A common stock. These shares are subject to our right
to repurchase them at $0.01 per share upon termination of our agreement with Walmart other than a termination arising
out of our knowing, intentional and material breach of the agreement. Our right to repurchase the shares 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 agreement, if we experience a “change of control,” as defined in the stock issuance
agreement, or under certain other limited circumstances, which we currently believe are remote. As of December 31,
2011, 1,472,352 shares of Class A common stock issued to Walmart were subject to our repurchase right.
Warrant
On March 3, 2009, we entered into a sales and marketing agreement with a third party that contained a contingent
warrant feature. The warrant provides the third party with an option to purchase 3,426,765 shares of our common
stock at a per share price of $23.70 if certain sales volume or revenue targets are achieved. A further 856,691 shares
become eligible for purchase under the warrant should either of these targets be achieved and additional specified
marketing and promotional activities take place.
The shares become eligible for purchase under the warrant at any time the targets are achieved prior to the earlier
of March 3, 2014 or the termination of the sales and marketing agreement. Once eligible for purchase, the purchase
option expires on the earliest of: (1) the date at which the sales and marketing agreement with the third party is
terminated; (2) the date of a change of control transaction of our company; or (3) March 3, 2017.