Green Dot 2013 Annual Report Download - page 80

GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
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Note 9—Stockholders’ Equity (continued)
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.
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, 2013 or 2012.
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 $1.0 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.
Comprehensive Income
The tax impact on unrealized losses and gains on investment securities available-for-sale for the years ended
December 31, 2013 and December 31, 2012 was approximately $(104,000) and $46,000, respectively.
Note 10—Employee Stock-Based Compensation
Employee Stock-Based Compensation
In January 2001, we adopted the 2001 Stock Plan. The 2001 Stock Plan provided for the granting of incentive
stock options, nonqualified stock options and other stock awards. Options granted under the 2001 Stock Plan generally
vest over four years and expire five years or ten years from the date of grant. This stock plan is no longer in effect with
the automatic conversion of all Class B Common Stock to Class A Common Stock in August 2013 as noted within Note
9—Stockholders’ Equity.
In June 2010, our board of directors adopted, and in July 2010 our stockholders approved, the 2010 Equity Incentive
Plan, which replaced our 2001 Stock Plan, and the 2010 Employee Stock Purchase Plan. The 2010 Equity Incentive
Plan authorizes the award of stock options, restricted stock awards, stock appreciation rights, restricted stock units,
performance shares and stock bonuses. Options granted under the 2010 Equity Incentive Plan generally vest over
four years and expire five years or ten years from the date of grant. The 2010 Employee Stock Purchase Plan enables
eligible employees to purchase shares of our Class A common stock periodically at a discount. Our 2010 Employee
Stock Purchase Plan is intended to qualify as an employee stock purchase plan under Section 423 of the Internal
Revenue Code.