Green Dot 2011 Annual Report Download - page 84

GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 13—Stockholders' Equity (continued)
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The warrant is redeemable for cash by the holder if we fail to perform in accordance with the customary contractual
terms of the sales and marketing agreement. Should the third party fail to perform in accordance with the terms of the
sales and marketing agreement, we obtain an option to repurchase any shares previously issued under the warrant.
As the option to purchase shares under the warrant is contingent upon the achievement of certain sales volume
or revenue targets, there is a possibility that no shares will become eligible for purchase. Based on different possible
outcomes, we developed a range of fair values for the warrant, and we measured the warrant at its current lowest
aggregate fair value within that range. As none of the performance conditions have been met, the lowest aggregate
fair value is zero. Accordingly, we have not assigned any value to the warrant in our consolidated financial statements
as of December 31, 2011 or 2010.
Follow-on Offering
On December 13, 2010, we completed a follow-on offering of 4,269,051 shares of our Class A common stock at
an offering price of $61.00 per share, all of which were sold by existing stockholders. We did not receive any proceeds
from the sale of shares of our Class A common stock on the follow-on offering. Concurrent with the completion of the
follow-on offering, certain selling stockholders exercised vested options to purchase 936,301 shares of Class B common
stock with a weighted-average exercise price of $4.32 in order to sell the underlying shares of Class A common stock
in the follow-on offering. We received aggregate proceeds of $4.0 million from these exercises.
Registration Rights Agreement
We are a party to a registration rights agreement with certain of our investors, pursuant to which we have granted
those persons or entities the right to register shares of common stock held by them under the Securities Act of 1933,
as amended, or the Securities Act. Holders of these rights are entitled to demand that we register their shares of
common stock under the Securities Act so long as certain conditions are satisfied and require us to include their shares
of common stock in future registration statements that may be filed, either for our own account or for the account of
other security holders exercising registration rights. In addition, after an initial public offering, these holders have the
right to request that their shares of common stock be registered on a Form S-3 registration statement so long as certain
conditions are satisfied and the anticipated aggregate sales price of the registered shares as of the date of filing of
the Form S-3 registration statement is at least $1 million. The foregoing registration rights are subject to various
conditions and limitations, including the right of underwriters of an offering to limit the number of registrable securities
that may be included in an offering. The registration rights terminate as to any particular shares on the date on which
the holder sells such shares to the public in a registered offering or pursuant to Rule 144 under the Securities Act. We
are generally required to bear all of the expenses of these registrations, except underwriting commissions, selling
discounts and transfer taxes.
We are not obligated under the registration rights agreement to transfer consideration, whether in cash, equity
instruments, or adjustments to the terms of the financial instruments that are subject to the registration payment
arrangement, to the investors, if the registration statement is not declared effective within the specified time or if
effectiveness of the registration statement is not maintained.
Redeemable Convertible Preferred Stock
In October 2006, we entered into an agreement with a card issuing bank to provide a co-branded GPR card
program with a major retail distributor. We also entered into equity financing transactions with the bank and an affiliated
investment entity, under which we issued a warrant to purchase 500,000 shares of our common stock in October 2006
and 2,926,458 shares of Series D redeemable convertible preferred stock, or Series D, in December 2006. We received
cash consideration of $20.0 million from the equity financing transactions. The holder of Series D was entitled to receive
noncumulative dividends at a per annum rate of $0.547 per share and to participate in dividends on common stock
on an as-converted basis, subject to the declaration by our board of directors out of funds legally available. Series D
was redeemable for cash at the option of the holder on the seventh anniversary of its issuance. Series D was also
convertible into our common stock any time prior to redemption, at the option of the holder, based on a conversion
ratio. In the event of any liquidation, dissolution or winding up of our company, the holder of Series D was entitled to
receive an amount equal to $6.834 per share plus 20% per annum from the date of issuance.
The freestanding warrant we issued entitled the holder to purchase 500,000 shares of our common stock at a per
share price of $6.834 any time prior to the earliest of: a) the date of our initial public offering; b) the date of a change
in control of our company; or c) October 27, 2013. The warrant was not redeemable.