AsfiledwiththeSecuritiesandExchangeCommissiononFebruary25,2021
RegistrationNo.333-
UNITEDSTATES
SECURITIESANDEXCHANGECOMMISSION
WASHINGTON,DC20549
FORMS-1
REGISTRATIONSTATEMENT
UNDER
THESECURITIESACTOF1933
CoinbaseGlobal,Inc.
(Exact name of registrant as specified in its charter)
Delaware 7389 46-4707224
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)
BrianArmstrong,ChiefExecutiveOfficer
CoinbaseGlobal,Inc.
AddressNotApplicable
(Address, including zip code, and telephone number, including
area code, of registrant’s principal executive offices)
TheCorporationTrustCompany
1209OrangeStreet
Wilmington,Delaware19801
(302)777-0200
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
MarkC.Stevens
MichaelA.Brown
RanD.Ben-Tzur
FaisalRashid
JenniferJ.Hitchcock
Fenwick&WestLLP
228SantaMonicaBlvd,Suite300
SantaMonica,California90401
(310)434-5400
PaulGrewal
JuanSuarez
DougSharp
CoinbaseGlobal,Inc.
AddressNotApplicable
SatoshiNakamoto
1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa
Approximatedateofcommencementofproposedsaletothepublic:
Assoonaspracticableafterthisregistrationstatementbecomeseffective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, or Securities Act, check the following box:
☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration
statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration
statement for the same offering. ☐
In May 2020, we became a remote-first company. Accordingly, we do not maintain a headquarters.
1
1
1
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large
accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934, as amended.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to
Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
TitleofEachClassofSecuritiestobeRegistered AmounttobeRegistered
ProposedMaximum
OfferingPricePerShare
ProposedMaximumAggregate
OfferingPrice AmountofRegistrationFee
Class A common stock, $0.00001 par value per share Not applicable $1,000,000,000 $109,100
(1) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(a) of the Securities Act. Given that there is no proposed maximum offering price per share of Class A common stock, the
registrant calculates the proposed maximum aggregate offering price, by analogy to Rule 457(f)(2), based on the book value of the Class A common stock the registrant registers, which will be calculated from its
audited balance sheet as of December 31, 2020. Given that the registrant’s shares of Class A common stock are not traded on an exchange or over-the-counter, the registrant did not use the market prices of its
ordinary shares in accordance with Rule 457(c).
Theregistrantherebyamendsthisregistrationstatementonsuchdateordatesasmaybenecessarytodelayitseffectivedateuntiltheregistrantshallfileafurtheramendmentwhichspecifically
statesthatthisregistrationstatementshallthereafterbecomeeffectiveinaccordancewithSection8(a)oftheSecuritiesActoruntiltheregistrationstatementshallbecomeeffectiveonsuchdateas
theSecuritiesandExchangeCommission,actingpursuanttosaidSection8(a),maydetermine.
(1)
Theinformationinthisprospectusisnotcompleteandmaybechanged.ThesecuritiesmaynotbesolduntiltheregistrationstatementfiledwiththeSecuritiesand
ExchangeCommissioniseffective.Thisprospectusisnotanoffertosellthesesecuritiesanditisnotsolicitinganoffertobuythesesecuritiesinanyjurisdictionwhere
theofferorsaleisnotpermitted.
SubjecttoCompletion,dated,2021.
SharesofClassACommonStock
This prospectus relates to the registration of the resale of up to shares of our Class A common stock by the stockholders identified in this prospectus, or the registered
stockholders. Prior to the listing of our Class A common stock on the Nasdaq Global Select Market there has been no public market for our Class A common stock. Unlike an initial
public offering, the resale by the registered stockholders is not being underwritten by any investment bank. The registered stockholders may elect to sell their shares of Class A
common stock covered by this prospectus, as and to the extent they may determine. Such sales, if any, will be made through brokerage transactions on the Nasdaq Global Select
Market at prevailing market prices. For more information, see the section titled “Plan of Distribution.” If the registered stockholders choose to sell their shares of Class A common
stock, we will not receive any proceeds from the sale of such shares.
We have two classes of common stock, Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are
identical, except with respect to voting and conversion rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to twenty
votes and is convertible at any time into one share of Class A common stock. The holders of our outstanding Class B common stock hold approximately % of the voting
power of our outstanding capital stock, with our directors, executive officers, and 5% stockholders, and their respective affiliates, holding approximately % of the voting
power of our outstanding capital stock. Prior to any sales of shares of Class A common stock, a registered stockholder who holds Class B common stock must convert their shares of
Class B common stock into shares of Class A common stock.
No public market for our Class A common stock currently exists. However, our shares of Class A common stock and Class B common stock (on an as-converted basis) have a
history of trading in private transactions. Based on information available to us, the low and high sales price per share of Class A common stock and Class B common stock (on an as-
converted basis) for such private transactions during the period from January 1, 2021 through , 2021 was $ and $ , respectively. For more
information, see the section titled “Sale Price History of our Capital Stock.” Our recent trading prices in private transactions may have little or no relation to the opening public price or
the subsequent trading price of our shares of Class A common stock on the Nasdaq Global Select Market. Further, the listing of our Class A common stock on the Nasdaq Global
Select Market without underwriters is a novel method for commencing public trading in shares of our Class A common stock, and consequently, the trading volume and price of shares
of our Class A common stock may be more volatile than if shares of our Class A common stock were initially listed in connection with an underwritten initial public offering.
On the day that our shares of Class A common stock are initially listed on the Nasdaq Global Select Market, the Nasdaq Stock Market LLC, or Nasdaq, will begin accepting, but
not executing, pre-opening
buy and sell orders and will begin to continuously generate the indicative Current Reference Price (as defined below) on the basis of such accepted orders. During a 10-minute
“Display Only” period, market participants may enter quotes and orders in Class A common stock in Nasdaq’s systems and such information is disseminated, along with other
indicative imbalance information, to Goldman Sachs & Co. LLC, or Goldman Sachs, and other market participants (including the other financial advisors) by Nasdaq on its NOII and
BookViewer tools. Following the “Display Only” period, a “Pre-Launch” period begins, during which Goldman Sachs, in its capacity as our designated financial advisor to perform the
functions under Nasdaq Rule 4120(c)(8), must notify Nasdaq that our shares are “ready to trade.” Once Goldman Sachs has notified Nasdaq that our shares of Class A common stock
are ready to trade, Nasdaq will calculate the Current Reference Price (as defined below) for our shares of Class A common stock, in accordance with the Nasdaq’s rules. If Goldman
Sachs then approves proceeding at the Current Reference Price, Nasdaq will conduct price validation checks in accordance with Nasdaq rules. As part of conducting its price
validation checks, Nasdaq may consult with Goldman Sachs and other market participants (including the other financial advisors). Upon completion of such price validation checks,
the applicable orders that have been entered will then be executed at such price and regular trading of our shares of Class A common stock on the Nasdaq Global Select Market will
commence. Under the Nasdaq rules, the “Current Reference Price” means: (i) the single price at which the maximum number of orders to buy or sell our shares of Class A common
stock can be matched; (ii) if more than one price exists under clause (i), then the price that minimizes the number of our shares of Class A common stock for which orders cannot be
matched; (iii) if more than one price exists under clause (ii), then the entered price (i.e. the specified price entered in an order by a customer to buy or sell) at which our shares of
Class A common stock will remain unmatched (i.e. will not be bought or sold); and (iv) if more than one price exists under clause (iii), a price determined by Nasdaq after consultation
with Goldman Sachs, J.P. Morgan Securities LLC, or J.P. Morgan, Allen & Company LLC, or Allen & Co., and Citigroup Global Markets Inc., or Citigroup, in their capacity as financial
advisors, Goldman Sachs, J.P. Morgan, Allen & Co., and Citigroup will exercise any consultation rights only to the extent that they may do so consistent with the anti-manipulation
provisions of the federal securities laws, including Regulation M (to the extent applicable), or applicable relief granted thereunder. The registered stockholders will not be involved in
Nasdaq’s price-setting mechanism, including any decision to delay or proceed with trading, nor will they control or influence Goldman Sachs, J.P. Morgan, Allen & Co., and Citigroup
in carrying out their roles as financial advisors. Goldman Sachs will determine when our shares of Class A common stock are ready to trade and approve proceeding at the Current
Reference Price primarily based on consideration of volume, timing, and price. In particular, Goldman Sachs will determine, based primarily on pre-opening buy and sell orders, when
a reasonable amount of volume will cross on the opening trade such that sufficient price discovery has been made to open trading at the Current Reference Price. For more
information, see the section titled “Plan of Distribution.”
We have applied to list our Class A common stock on the Nasdaq Global Select Market under the symbol “COIN.” We expect our Class A common stock to begin trading on or
about , 2021.
We will be treated as an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012 for certain purposes until we complete this listing. As
such, in this prospectus we have taken advantage of certain reduced disclosure obligations that apply to emerging growth companies regarding selected financial data and executive
compensation arrangements.
See the section titled “Risk Factors” beginning on page 15 to read about factors you should consider before buying shares of our Class A common stock.
NeithertheSecuritiesandExchangeCommissionnoranyotherregulatorybodyhasapprovedordisapprovedofthesesecuritiesorpassedupontheaccuracyor
adequacyofthisprospectus.Anyrepresentationtothecontraryisacriminaloffense.
,2021
TABLEOFCONTENTS
About This Prospectus ii
Glossary to the Cryptoeconomy iii
A Letter from our Co-Founder and CEO vi
Prospectus Summary 1
Risk Factors 15
Special Note Regarding Forward-Looking Statements 75
Market and Industry Data 77
Use of Proceeds 78
Dividend Policy 79
Capitalization 80
Selected Consolidated Financials and Other Data 83
Management’s Discussion and Analysis of Financial Condition and Results of Operations 88
Business 120
Management 155
Executive Compensation 166
Certain Relationships and Related Party Transactions 178
Principal and Registered Stockholders 182
Description of Capital Stock 186
Shares Eligible for Future Sale 196
Sale Price History of our Capital Stock 198
Certain Material U.S. Federal Income Tax Consequences to Non-U.S. Holders of Our Common Stock 199
Plan of Distribution 204
Legal Matters 207
Change In Accountants 207
Experts 207
Additional Information 208
Index to Consolidated Financial Statements F-1
_______________
You should rely only on the information contained in this prospectus or contained in any free writing prospectus filed with the Securities and Exchange Commission, or SEC.
Neither we nor the registered stockholders have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any
free writing prospectuses we have prepared. Neither we nor the registered stockholders take responsibility for, and can provide no assurance as to the reliability of, any other
information that others may give you. The registered stockholders are offering to sell, and seeking offers to buy, shares of their Class A common stock only in jurisdictions where it is
lawful to do so. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the
Class A common stock. Our business, financial condition, operating results, and prospects may have changed since that date.
For investors outside of the United States: Neither we nor any of the registered stockholders have done anything that would permit this offering or possession or distribution of this
prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this
prospectus must inform themselves about, and observe any restrictions relating to, the offering of Class A common stock by the registered stockholders and the distribution of this
prospectus outside of the United States.
i
ABOUTTHISPROSPECTUS
This prospectus is a part of a registration statement on Form S-1 that we filed with the SEC using a “shelf” registration or continuous offering process. Under this shelf process, the
registered stockholders may, from time to time, sell the Class A common stock covered by this prospectus in the manner described in the section titled “Plan of Distribution.”
Additionally, we may provide a prospectus supplement to add information to, or update or change information contained in, this prospectus (except for the section titled “Plan of
Distribution,” which additions, updates, or changes that are material shall only be made pursuant to a post-effective amendment). You may obtain this information without charge by
following the instructions under the section titled “Additional Information” appearing elsewhere in this prospectus. You should read this prospectus and any prospectus supplement
before deciding to invest in our Class A common stock.
As used in this registration statement, the term “registered stockholders” refers to the stockholders with shares registered hereunder pursuant to the table appearing in the section
titled “Principal and Registered Stockholders” and their pledgees, donees, transferees, assignees, or other successors-in-interest.
ii
GlossarytotheCryptoeconomy
Throughout this prospectus, we use a number of industry terms and concepts which are defined as follows:
• Address: An alphanumeric reference to where crypto assets can be sent or stored.
• Bitcoin: The first system of global, decentralized, scarce, digital money as initially introduced in a white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System by
Satoshi Nakamoto.
• Block: Synonymous with digital pages in a ledger. Blocks are added to an existing blockchain as transactions occur on the network. Miners are rewarded for “mining” a new
block.
• Blockchain: A cryptographically secure digital ledger that maintains a record of all transactions that occur on the network and follows a consensus protocol for confirming new
blocks to be added to the blockchain.
• Coldstorage: The storage of private keys in any fashion that is disconnected from the internet. Common cold storage examples include offline computers, USB drives, or
paper records.
• Crypto: A broad term for any cryptography-based market, system, application, or decentralized network.
• Cryptoasset(or‘token’): Any digital asset built using blockchain technology, including cryptocurrencies, stablecoins, and security tokens.
• CryptoAssetVolatility: Represents our internal measure of crypto volatility in the market relative to prior periods. The volatility of crypto assets is measured on an hourly
basis (using 10 minute price intervals within each hour) for each crypto asset supported for trading on Coinbase, averaged over the applicable time period (quarterly), then
weighted by each crypto asset’s share of total trading volume during the same time period across a select set of trading platforms, in addition to the Coinbase platform, that
operate in similar markets including itBit, Bitfinex, Bitstamp, bitFlyer, Binance.US, Binance, Kraken, Gemini, Bittrex, and Poloniex.
• Cryptocurrency: Bitcoin and alternative coins, or ‘altcoins’, launched after the success of Bitcoin. This category of crypto asset is designed to work as a medium of exchange,
store of value, or to power applications and excludes security tokens.
• Cryptoeconomy: A new open financial system built upon crypto.
• Customer: A retail user, institution, or ecosystem partner on our platform.
• DeFi: Short for Decentralized Finance. Peer-to-peer software-based network of protocols that can be used to facilitate traditional financial services like borrowing, lending,
trading derivatives, insurance, and more through smart contracts.
• Ecosystempartners: Developers, creators, merchants, asset issuers, organizations and financial institutions, and other groups building decentralized protocols, applications,
products, or other services for the cryptoeconomy.
• Ethereum: A decentralized global computing platform that supports smart contract transactions and peer-to-peer applications, or “Ether,” the native crypto assets on the
Ethereum network.
• Fork: A fundamental change to the software underlying a blockchain which results in two different blockchains, the original, and the new version. In some instances, the fork
results in the creation of a new token.
iii
• Hodl: A term used in the crypto community for holding a crypto asset through ups and downs, rather than selling it.
• Hotwallet: A wallet that is connected to the internet, enabling it to broadcast transactions.
• Institutions: Businesses that include hedge funds, small to large financial institutions, and corporations.
• Miner: Individuals or entities who operate a computer or group of computers that add new transactions to blocks, and verify blocks created by other miners. Miners collect
transaction fees and are rewarded with new tokens for their services.
• Mining: The process by which new blocks are created, and thus new transactions are added to the blockchain.
• Network: The collection of all miners that use computing power to maintain the ledger and add new blocks to the blockchain. Most networks are decentralized, reducing the
risk of a single point of failure.
• Protocol: A type of algorithm or software that governs how a blockchain operates.
• Publickeyorprivatekey: Each public address has a corresponding public key and private key that are cryptographically generated. A private key allows the recipient to
access any funds belonging to the address, similar to a bank account password. A public key helps validate transactions that are broadcasted to and from the address.
Addresses are shortened versions of public keys, which are derived from private keys.
• Retailusers: Individual users with an account on our platform.
• Securitytoken: A crypto asset that is a security. This includes digital forms of traditional equity or fixed income securities, or may be assets deemed to be a security based on
their characterization as an investment contract or note.
• Smartcontract: Software that digitally facilitates or enforces a rules-based agreement or terms between transacting parties.
• Stablecoin: Crypto assets designed to minimize price volatility. A stablecoin is designed to track the price of an underlying asset such as fiat money or an exchange-traded
commodity (such as precious metals or industrial metals). Stablecoins can be backed by fiat money or other crypto assets.
• Staking: An energy efficient equivalent of mining. Stakers use pools of tokens as collateral to validate transactions and create blocks. In exchange for this service, stakers
earn a reward.
• Supportedcryptoassets: The crypto assets we support for trading and/or custody on our platform, which included over 90 crypto assets as of December 31, 2020.
• USDCoinorUSDC: A stablecoin issued through the Centre Consortium (co-founded by Coinbase and Circle Internet Financial Limited, or Circle), backed by fully reserved
assets, held by the issuer, and able to be purchased and sold on a 1:1 basis for U.S. dollars.
• Wallet: A place to store public and private keys for crypto assets. Wallets are typically software, hardware, or paper-based.
• Walletuser: A retail user who has established an account with a username on our non-custodial software-based product. Coinbase Wallet is an application that allows the
user to connect to DeFi applications and self-custody crypto assets. While they operate separately from our main
iv
platform, wallet users are included in the following key business metrics: Verified Users and Monthly Transacting Users.
For additional information regarding our key business metrics, which include Verified Users, Monthly Transacting Users, Assets on Platform, and Trading Volume as well as our
use of Adjusted EBITDA, a non-GAAP financial measure, see the section titled “Selected Consolidated Financial and Other Data—Key Business Metrics and Non-GAAP Financial
Measure.”
v
vii
viii
PROSPECTUSSUMMARY
This summary highlights selected information that is presented in greater detail elsewhere in this prospectus. This summary does not contain all of the
information you should consider before investing in our Class A common stock. You should carefully read this prospectus in its entirety before investing in our Class
A common stock, including the sections titled “Risk Factors,” “Special Note Regarding Forward-Looking Statements,” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations,” and our consolidated financial statements and the accompanying notes, provided elsewhere in this prospectus. Some
of the statements in this prospectus constitute forward-looking statements. See the section titled “Special Note Regarding Forward-Looking Statements.” Unless the
context otherwise requires, the terms “Coinbase,” “the company,” “we,” “us,” and “our” in this prospectus refer to Coinbase Global, Inc. and our consolidated
subsidiaries.
Overview
Coinbase powers the cryptoeconomy.
Our mission is to create an open financial system for the world. Today, the way that we invest, spend, save, and generally manage our money remains
cumbersome, inaccessible, expensive, and regionally isolated. In contrast, the internet has transformed our society by connecting the world and enabling the
seamless exchange of information. The legacy financial system is struggling to keep pace with the speed of technological advancements in a global and digitally
interconnected society, resulting in the need for a new, natively digital financial system.
We are building the cryptoeconomy – a more fair, accessible, efficient, and transparent financial system for the internet age that leverages crypto assets: digital
assets built using blockchain technology.
We started in 2012 with the radical idea that anyone, anywhere, should be able to easily and securely send and receive Bitcoin, the first crypto asset. We built a
trusted platform for accessing Bitcoin and the broader cryptoeconomy by reducing the complexity of the industry through a simple and intuitive user experience.
Today, we are a leading provider of end-to-end financial infrastructure and technology for the cryptoeconomy. Customers around the world discover and begin
their journeys with crypto through Coinbase. In the early days of the internet, Google democratized access to information through its user-friendly search engine,
enabling virtually any user with an internet connection to discover the world’s information. Similarly, Coinbase is democratizing access to the cryptoeconomy by
enabling anyone with an internet connection to easily and securely invest in and use crypto assets.
Customers that start with us, grow with us as they experience the benefits of the open financial system by using crypto-based products for staking, spending,
saving, and borrowing. Today, our platform enables approximately 43 million retail users, 7,000 institutions, and 115,000 ecosystem partners in over 100 countries to
participate in the cryptoeconomy:
• Retail users: We offer the primary financial account for the cryptoeconomy – a safe, trusted, and easy-to-use platform to invest, store, spend, earn, and use
crypto assets.
• Institutions: We provide hedge funds, money managers, and corporations a one-stop shop for accessing crypto markets through advanced trading and
custody technology, built on top of a robust security infrastructure. We also offer a state of the art marketplace with a deep pool of liquidity for transacting in
crypto assets.
• Ecosystem partners: We provide developers, merchants, and asset issuers a platform with technology and services that enables them to build applications
that leverage crypto protocols, actively participate in crypto networks, and securely accept cryptocurrencies as payment.
2
Bitcoin sparked a revolution by proving the ability to create digital scarcity: a unique and finite digital asset whose ownership could be proven with certainty. This
innovation laid the foundation for an open financial system. Today, all forms of value – from those natively created online such as in-game digital goods to traditional
securities like equities and bonds – can be represented digitally, as crypto assets. Like the bits of data that power the internet, these crypto assets can be dynamically
transmitted, stored, and programmed to serve the needs of an increasingly digital and globally interconnected economy.
Today, we enable customers around the world to store their savings in a wide range of crypto assets, including Bitcoin and USD Coin, and to instantly transfer
value globally with the tap of a finger on a smartphone. We provide companies with new ways to transact, incentivize, and reward their users, from offering
compounding rewards on savings that pay out by the second to compensating users for virtually completing tasks through global micropayments.
We power the cryptoeconomy by combining the best of both emerging blockchain technology and traditional finance to create trusted and easy-to-use products
for the industry. We have built a robust backend technology platform to support the global, real-time, and 24/7/365 demands of crypto asset markets. We invest
heavily in regulatory compliance by working with regulators around the world to shape policy, and have pioneered industry-leading security practices for safeguarding
crypto assets. Our early focus on trust and usability has allowed us to become the primary on-ramp to the cryptoeconomy from the fiat-based financial system.
Our unique approach draws retail users, institutions, and ecosystem partners to our platform, creating a powerful flywheel: retail users and institutions store
assets and drive liquidity, enabling us to expand the depth and breadth of crypto assets that we offer, and launch new, innovative products and services that attract
new customers. Our scale and leadership position draws ecosystem partners to connect with our millions of customers around the world, further enhancing the value
of our platform.
This self-reinforcing dynamic is enabled by our culture of repeatable innovation and continuous investment in our proprietary technology platform that is purpose
built to address the unique engineering, cybersecurity, compliance, and usability challenges of directly interacting with blockchain protocols. With every turn of our
flywheel, we develop a deeper understanding of our customers’ needs and leverage our scalable platform to intelligently design, develop, launch, and market new,
innovative products and services to our customers. This allows us to build a more tailored suite of products and services and enhances the value of our platform over
time. By providing the necessary infrastructure and distribution for our current and future ecosystem partners to build and extend their reach, we also foster the
growth of the ecosystem.
We have seen this flywheel work effectively across our business and we have grown rapidly as a result. As of December 31, 2020, our customers had traded
over $456 billion on our platform since inception and stored over $90 billion worth of assets across our platform. This growth has come with minimal outbound sales
and marketing effort – since inception over 90% of our retail users had found us organically or through word-of-mouth.
Since inception through December 31, 2020, we generated over $3.4 billion in total revenue, largely from transaction fees that we earn from volume-based trades
on our platform by retail users and institutions. For the year ended December 31, 2020, transaction revenue represented over 96% of our net revenue. We have
leveraged the strength of our trading business to scale and broaden our platform by investing in our flywheel to launch new products and services and grow the
ecosystem.
Today, we directly integrate with over 15 blockchain protocols, support over 90 crypto assets for trading or custody, and offer a suite of subscription products and
services that have enhanced the customer value proposition and power of our platform. Retail users are now engaging with multiple products — across the four
quarters ended December 31, 2020, on average, 21% of retail users who invested also engaged with at least one non-investing product per quarter. When retail
users invested
Non-investing products include our Distribute, Stake, Save, Spend, and Borrow & Lend products.
2
2
3
and engaged with at least one non-investing product, we saw average net revenue per retail user increase by approximately 90%. Although subscription products
and services do not currently contribute a significant portion of net revenue relative to our trading business, we experienced 126% annual growth in revenue from
these products and services from 2019 to 2020. We are committed to growing more stable revenue from subscription products and services, and expect that they will
contribute a larger portion of our total revenue over time as our customers connect with the broader cryptoeconomy.
The overall market capitalization of crypto assets grew from less than $500 million to $782 billion between December 31, 2012 and December 31, 2020,
representing a compound annual growth rate, or CAGR, of over 150%. Over the same period, our retail users grew from approximately 13,000 to 43 million. More
recently, we have experienced significant growth in the number of institutions on our platform, increasing from over 1,000 as of December 31, 2017 to 7,000 as of
December 31, 2020.
While we have grown rapidly, similar to the evolution of the internet, e-commerce, and prior paradigm shifts in technology, our journey has not been linear. Our
growth has come in waves driven by innovation in the cryptoeconomy and requires long-term perspective to evaluate our performance. Each wave expands the
existing retail user community and further diversifies the ecosystem by attracting new market participants such as institutions and developers. In the short-term, we
experience high variance in Trading Volume and net revenue between quarters driven by the volatile nature of the crypto asset markets. Over longer periods, we
have experienced clear growth, with median quarterly Trading Volume increasing from $17 billion to $21 billion to $38 billion in 2018, 2019, and 2020, respectively.
We have grown quickly and in a capital-efficient manner since our founding. For the years ended December 31, 2020 and December 31, 2019, we generated
total revenue of $1.3 billion and $533.7 million, respectively, net income (loss) of $322.3 million and $(30.4) million, respectively, and Adjusted EBITDA of $527.4
million and $24.3 million, respectively. See the section titled “Selected Consolidated Financial and Other Data—Key Business Metrics and Non-GAAP Financial
Measure—Non-GAAP Financial Measure” for information regarding our use of Adjusted EBITDA and a reconciliation of net income (loss) to Adjusted EBITDA.
LimitationsofToday’sFinancialSystem
Today’s financial system relies upon a patchwork of intermediaries that spans banks, brokers, clearinghouses, custodians, exchanges, payment processors, and
their networks to facilitate money movement, safekeeping, lending, credit, and other capital markets activity. The trust and reliance on this complex web of
intermediaries imposes the following limitations:
• Access. Geographic and socioeconomic factors often limit access to legacy financial infrastructure, such as bank accounts, that are required to send, store,
or receive funds.
• Efficiency. Multiple administrative layers, including protocols, people, procedures, and infrastructure are required to facilitate the movement of money,
imposing legacy constraints on financial transactions, adding friction, and leading to the duplication of functions across the value chain.
• Cost. Redundancy and inefficiency result in higher costs for end users.
Many companies in the technology and financial technology industries have recognized and attempted to address some of these issues. However, these
companies have built their products and services on top of the same antiquated financial infrastructure, effectively porting the limitations, inefficiencies, and costs of
the traditional financial system online. As a result, these solutions do not address the core limitations of the current financial system.
Based on publicly available data from the earliest available date. Calculation period is December 31, 2012 to December 31, 2020.
3
3
4
TheNeedforAnInternetofValue
While the internet has transformed how we communicate and purchase goods and services, the existing financial system has hardly changed. We have reached
a tipping point for the need for a new, natively digital financial system.
Crypto deeply integrates the concept of money into the internet ecosystem as a means of value exchange, storage, and unit of account, effectively creating a
resilient internet of value. This enables network participants to transact with each other on the basis of trust without intermediaries. Crypto enables the digital
representation and instant, secure exchange of nearly any asset of value globally in a manner as fast and seamless as the exchange of information on the internet.
Today, over 50 distinct blockchain protocols support more than 7,500 crypto assets that enable all forms of digital records and transactions, including contracts,
documents, identity, rights, securities, titles, in-game digital goods, and many others, to be controlled programmatically.
Anyone, anywhere with an internet connection can directly access this network of value exchange.
ApplicationsintheCryptoeconomyareExpansive
A fundamental advantage of the cryptoeconomy is that unlike the traditional financial system that relies on rigid infrastructure, crypto assets rely on software-
based networks built on top of the internet. As a result, crypto assets are easily programmed, maneuvered, and as frictionless to send and receive as information on
the internet.
The inherent programmability of crypto assets enables the creation of “smart contracts,” self-enforcing agreements between transacting parties directly written
into lines of code. Smart contracts represent a step change in the utility of blockchain-based networks by allowing parties to enter into contractual agreements without
the need for a centralized intermediary.
Today, the applications of crypto assets span core financial and non-financial applications:
• Store of value. Adoption of crypto assets with attributes such as a finite supply, such as Bitcoin, or inherent parity with a fiat currency, such as USD Coin,
have emerged as stores of value around the world.
• 24/7/365 real-time cross-border payments. Crypto asset markets operate 24/7/365 and facilitate the instant transfer of value, eliminating the need for any
intermediary, siloed payment networks, or specialized infrastructure.
• Democratization of financial markets. Blockchain protocols establish a universal source of truth, eliminating reconciliation workflows, allowing for near
instantaneous settlement, enabling capital to flow more freely, and simplifying transactions that require significant documentation.
• Peer-to-peer financial applications (DeFi applications). Crypto assets rely on software-based networks that can be used to facilitate traditional financial
services like borrowing, lending, trading derivatives, and insurance through smart contracts.
• Digital marketplaces for…anything. Crypto allows for the creation of new digital global marketplaces and business models that were previously not
possible by substituting centralized intermediaries with open markets governed by programmable rules and incentives.
OurOpportunity
Crypto has the potential to be as revolutionary and widely adopted as the internet. The unique properties of crypto assets naturally position them as digital
alternatives to store of value analogs such as gold, enable the creation of an internet-based financial system, and provide a development platform for
5
applications that are unimaginable today. These markets and asset classes collectively represent hundreds of trillions of dollars of value today.
Similar to the early days of the internet, this evolution will take time, but we expect the cryptoeconomy to expand into the mainstream and touch every individual
and business around the world in the coming decades. While we are still in the early stages of adoption, the market value of exchange-traded crypto assets was
already approximately $782 billion as of December 31, 2020. Our objective is to drive the growth of the overall cryptoeconomy by serving the needs of all consumers
who manage their financial lives on a mobile device, and every institution – large or small – that embraces the emerging internet of value.
We expect our customer base to grow alongside the ecosystem we serve as we continue to support more asset classes and add more products to our platform.
Our objective is to bring crypto-based financial services to anyone with a smartphone, a population of approximately 3.5 billion people today.
OurPlatform
We have developed a complementary suite of products and services that are designed to meet the distinct needs of our customers as they transact in the
cryptoeconomy. Our customers – retail users, institutions, and ecosystem partners – come together on our platform to create a powerful flywheel for our business.
Our platform and flywheel are powered by a robust backend technology system that enables us to develop, launch, and market scalable new products and
services. Our technology platform includes the following elements:
• 15+ native blockchain integrations and counting. We have developed custom technology and processes to directly integrate with over 15 blockchain
protocols and efficiently support new protocols.
• Advanced cybersecurity and cryptography technology. We have pioneered industry-leading standards for managing private cryptographic keys and use
sophisticated cybersecurity technologies such as multi-party computation to safeguard a wide range of crypto assets.
• Proprietary crypto compliance infrastructure. We have built bespoke transaction monitoring systems to analyze crypto asset transactions in real-time on
the blockchain, allowing us to support new products and services.
• Powerful product experiences. Investments in our technology platform give us the ability to create unique product experiences for our customers that allow
them to easily participate in technically complex parts of the cryptoeconomy.
WhatSetsUsApart
We believe the following advantages set us apart from our competitors:
• We are a market leading brand exclusively focused on the cryptoeconomy. Keeping pace with the breadth and depth of innovation in the
cryptoeconomy requires focus. We have and remain solely focused on building technology to power the cryptoeconomy since 2012. Our focus allows us to
nimbly adapt to quickly shifting trends and support the growth of the industry. As the cryptoeconomy grows, our competitive advantage grows.
• We have a trusted platform owing to our heritage of security and culture of regulatory compliance. We are a financial technology provider that offers
services to customers in over 100 countries, and we are proud to be one of the longest running crypto platforms where customers have not lost funds due to
a security breach of the platform. We are also licensed to engage in
6
money transmission and virtual currency business in almost all U.S. states and we continue to pursue licensing in select jurisdictions internationally.
• We are the default starting place for new user journeys into the cryptoeconomy. By reducing the complexity of crypto and emphasizing intuitive product
design, we have become a primary on-ramp for customers’ journeys into the cryptoeconomy.
• We have significant scale, securely storing over $90 billion in total assets. We believe our market leading share of assets on our platform is a
competitive advantage, and that we have a substantial opportunity to build on our customer relationships by growing with our customers and offering a
broader suite of products and services.
• We have a robust technology platform that enables unique product experiences for our industry. Our custom technology platform is built to deal with
the real-time, global and 24/7/365 nature of crypto asset markets, enabling us to rapidly research, develop, and launch new products and features.
• We operate a marketplace with one of the deepest pools of liquidity and a network effect. We have a deep pool of liquidity for exchanging a wide range
of crypto assets, supported by a healthy mix of retail and institutional activity.
GrowthStrategy
Coinbase grows as the cryptoeconomy grows. We live in a world that is increasingly global, digital generations control a growing share of the world’s wealth, and
each year we see more commerce happening online. Each of these secular trends supports the growth of the cryptoeconomy and Coinbase. More importantly, we
feel we have a tremendous opportunity to actively drive our business by:
• Adding more customers. Any person or business with an internet connection that is looking to access or interact with the cryptoeconomy can be an active
user and customer on our platform. We intend to add more customers by expanding and growing:
• touchpoints with our customers to increase adoption and engagement with our products.
• retail user reach through growth marketing.
• institutional sales coverage and trading operations support to better serve large institutional customers.
• ecosystem relationships through targeted community engagement and product development.
• access to our products and services by adding support for geographically local payment methods.
• internationally to broaden local access to the cryptoeconomy.
• Expanding the depth and breadth of assets. Any asset or form of value can be represented as a crypto asset and be supported on our platform, subject to
meeting our security, legal, and compliance requirements. We plan to expand the depth and breadth of assets offered by expanding:
• support for digitally native crypto assets.
• support for new and novel native blockchain protocol features.
• investments in infrastructure and regulatory clarity to help pave the path for new assets to be represented as crypto assets.
7
• Launching innovative products. Any known, and many yet to be created financial and non-financial products can be built for the cryptoeconomy. We will
continue to innovate by providing:
• customers more opportunities to engage with crypto by developing and launching innovative products and services across our platform.
• partnerships to create more opportunities for our customers to engage in new crypto-based financial transactions.
• technology to help our ecosystem partners better connect and transact with customers.
SummaryofRiskFactors
Our business and an investment in our Class A common stock is subject to numerous risks and uncertainties, including those highlighted in the section titled
“Risk Factors” immediately following this prospectus summary. Some of these risks include:
• Our operating results have and will significantly fluctuate due to the highly volatile nature of crypto.
• Our net revenue is substantially dependent on the prices of crypto assets and volume of transactions conducted on our platform. If such price or volume
declines, our business, operating results, and financial condition would be adversely affected.
• A majority of our net revenue is derived from transactions in Bitcoin and Ethereum. If demand for these crypto assets declines and is not replaced by new
crypto asset demand, our business, operating results, and financial condition could be adversely affected.
• The future development and growth of crypto is subject to a variety of factors that are difficult to predict and evaluate. If crypto does not grow as we expect,
our business, operating results, and financial condition could be adversely affected.
• Cyberattacks and security breaches of our platform, or those impacting our customers or third parties, could adversely impact our brand and reputation and
our business, operating results, and financial condition.
• We are subject to an extensive and highly-evolving regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations
could adversely affect our brand, reputation, business, operating results, and financial condition.
• We operate in a highly competitive industry and we compete against unregulated companies and companies with greater financial and other resources, and
our business, operating results, and financial condition may be adversely affected if we are unable to respond to our competitors effectively.
• We compete against a growing number of decentralized and noncustodial platforms and our business may be adversely affected if we fail to compete
effectively against them.
• As we continue to expand and localize our international activities, our obligations to comply with the laws, rules, regulations, and policies of a variety of
jurisdictions will increase and we may be subject to investigations and enforcement actions by regulators and governmental authorities.
• We are and may continue to be subject to material litigation, including individual and class action lawsuits, as well as investigations and enforcement actions
by regulators and governmental authorities, which may adversely affect our business, operating results, and financial condition.
8
• If we cannot keep pace with rapid industry changes to provide new and innovative products and services, the use of our products and services and,
consequently, our revenue could decline, and our business, operating results, and financial condition could be adversely impacted.
• A particular crypto asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty and if we are unable to properly
characterize a crypto asset, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, and our business, operating results, and
financial condition may be adversely affected.
• We currently rely on third-party service providers for certain aspects of our operations, and any interruptions in services provided by these third parties may
impair our ability to support our customers.
• Loss of a critical banking or insurance relationship could adversely impact our business, operating results, and financial condition.
• Any significant disruption in our products and services, in our information technology systems, or in any of the blockchain networks we support, could result in
a loss of customers or funds and adversely impact our brand and reputation and business, operating results, and financial condition.
• Our failure to safeguard and manage our customers’ fiat currencies and crypto assets could adversely impact our business, operating results and financial
condition.
• The loss or destruction of private keys required to access any crypto asset held in custody for our own account or for our customers may be irreversible. If we
are unable to access our private keys or if we experience a hack or other data loss relating to our ability to access any crypto assets, it could cause
regulatory scrutiny, reputational harm, and other losses.
• The registration and listing of our Class A common stock differs significantly from an underwritten initial public offering.
• The price of our Class A common stock may be volatile, and could, upon listing on the Nasdaq Global Select Market, decline significantly and rapidly. Market
volatility may affect the value of an investment in our Class A common stock and could subject us to litigation.
• The dual class structure of our common stock will have the effect of concentrating voting control with those stockholders, including our directors, executive
officers, and their respective affiliates, who held in the aggregate % of the voting power of our capital stock upon the effectiveness of the registration
statement of which this prospectus forms a part. This ownership will limit or preclude your ability to influence corporate matters, including the election of
directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate
transaction requiring stockholder approval.
• None of our stockholders are party to any contractual lock-up agreement or other contractual restrictions on transfer. Following our listing, the sales or
distribution of substantial amounts of our Class A common stock, or the perception that such sales or distributions might occur, could cause the market price
of our Class A common stock to decline.
ChannelsforDisclosureofInformation
Following the effectiveness of the registration statement of which this prospectus forms a part, we intend to announce material information to the public through
filings with the SEC, the investor relations page on our website (www.coinbase.com), press releases, public conference calls, public webcasts, our Twitter feed
(@coinbase), our Facebook page, our LinkedIn page, our YouTube channel, and Brian Armstrong’s Twitter feed (@brian_armstrong).
9
The information disclosed by the foregoing channels could be deemed to be material information. As such, we encourage investors, the media, and others to
follow the channels listed above and to review the information disclosed through such channels.
Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website.
CorporateInformation
We were initially incorporated in May 2012 as Coinbase, Inc., a Delaware corporation. In January 2014, Coinbase Global, Inc. was incorporated as a Delaware
corporation to act as the holding company of Coinbase, Inc. and our other subsidiaries. In April 2014, we completed a corporate reorganization whereby Coinbase,
Inc. became a wholly-owned subsidiary of Coinbase Global, Inc. Coinbase Global, Inc.’s principal assets are the equity interests of Coinbase, Inc. In addition to
Coinbase, Inc., Coinbase Global, Inc. is the parent company of a number of other operating subsidiaries, including (i) CB Payments, Ltd, a private limited company
incorporated under the laws of the United Kingdom, which provides fiat currency payment processing services to our international customers and (ii) Coinbase
Custody Trust Company, LLC, a New York limited liability trust company, which is authorized to exercise fiduciary powers under New York state banking law and
holds certain crypto assets in trust for the benefit of our institutional customers.
In May 2020, following the global pandemic resulting from the coronavirus known as COVID-19, we became a remote-first company, meaning that for the vast
majority of roles, our employees have the option to work remotely. Due to this, we do not currently have a principal executive office. Our telephone number is (415)
843-1515. Our website address is www.coinbase.com. The information contained on, or that can be accessed through, our website is not incorporated by reference
into, and is not a part of, this prospectus. Investors should not rely on any such information in deciding whether to purchase our Class A common stock.
Coinbase, the Coinbase logo, Coinbase Analytics, Coinbase Commerce, and other registered or common law trade names, trademarks, or service marks of
Coinbase appearing in this prospectus are the property of Coinbase. This prospectus contains additional trade names, trademarks, and service marks of other
companies that are the property of their respective owners. We do not intend our use or display of other companies’ trade names, trademarks, or service marks to
imply a relationship with, or endorsement or sponsorship of us by, these other companies. Solely for convenience, our trademarks and trade names referred to in this
prospectus appear without the ® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under
applicable law, our rights, or the right of the applicable licensor, to these trademarks and trade names.
JOBSAct
We will be treated as an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, for certain purposes until the
earlier of the date on which we complete this listing or December 31, 2021. As such, in this prospectus we have elected to take advantage of certain reduced
disclosure obligations that apply to emerging growth companies regarding selected financial data and executive compensation arrangements.
HowtheCryptoCommunityCanParticipateinOurDirectListing
• Eligible Investors. Coinbase is offering our Class A common stock for sale via a direct listing. A direct listing provides any person or business with a
brokerage account the opportunity to place an order for our shares in the opening order book.
• Find a broker. In order to buy a share of our Class A common stock, a potential investor will first need to find a broker. A broker is an individual or firm that
helps a potential investor purchase a share trading on a securities exchange, like Nasdaq. In exchange for their services, a broker will
10
typically charge a fee to the investor wishing to purchase shares. Some brokers are self-service, meaning a potential investor trades shares through an
online portal or website. Other brokers are full service, meaning a potential investor will reach out to a person to help them trade their shares. We make no
recommendation as to a particular broker to use, but do suggest any potential investor use the BrokerCheck system of the Financial Industry Regulatory
Authority, or FINRA, to research the background and experience of brokers. FINRA is an independent, non-governmental regulator for all securities firms
doing business with the public in the United States. FINRA is authorized by Congress to protect investors by making sure the securities industry operates
fairly and honestly.
• Open an account with the broker. After finding a broker, the broker will provide instructions on trading shares of our Class A common stock. A potential
investor will likely need to open an account with that broker, which requires providing personal information. A potential investor will also need to provide the
broker with money to purchase shares in advance of being able to trade shares of our Class A common stock. Contact a broker at least a week in advance of
the first day of trading to minimize the possibility of any issues setting up and funding an account prior to purchasing shares of our Class A common stock.
• Purchasing shares. Our shares will be listed on Nasdaq on , which means that shares of our Class A common stock may be bought and sold on Nasdaq on
such date. A broker will be able to advise on how to purchase shares of our Class A common stock in the opening order book, the listing date or any time
after such date.
We and the financial advisors make no recommendation as to whether a potential investor should purchase or sell shares of our Class A common
stock or which broker to use for facilitating such transactions. Furthermore, there can be no guarantee that a potential investor who has placed an order
for our shares will receive such shares in the opening book order or otherwise.
11
SUMMARYCONSOLIDATEDFINANCIALANDOTHERDATA
The following tables summarize our consolidated financial and other data. We derived our summary consolidated statements of operations data for the years
ended December 31, 2020 and December 31, 2019 (except for the pro forma share and pro forma net income per share information) and the consolidated balance
sheet data as of December 31, 2020 from our audited consolidated financial statements included elsewhere in this prospectus. Our historical results are not
necessarily indicative of the results that may be expected in any other period in the future. The following summary consolidated financial and other data should be
read in conjunction with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial
statements and related notes included elsewhere in this prospectus.
12
YearEndedDecember31,
2020 2019
ConsolidatedStatementofOperationsData (in thousands, except per share data)
Revenue:
Net revenue $ 1,141,167 $ 482,949
Other revenue 136,314 50,786
Total revenue 1,277,481 533,735
Operating expenses:
Transaction expense 135,514 82,055
Technology and development 271,732 185,044
Sales and marketing 56,782 24,150
General and administrative 279,880 231,929
Restructuring — 10,140
Other operating expense 124,622 46,200
Total operating expenses 868,530 579,518
Operating income (loss) 408,951 (45,783)
Other income, net
(248) (367)
Income (loss) before provision for (benefit from) income taxes
409,199 (45,416)
Provision for (benefit from) income taxes
86,882 (15,029)
Net income (loss)
$ 322,317 $ (30,387)
Net income (loss) attributable to common stockholders:
Basic
$ 108,256 $ (30,387)
Diluted
$ 127,471 $ (30,387)
Net income (loss) per share attributable to common stockholders:
Basic
$ 1.58 $ (0.50)
Diluted
$ 1.40 $ (0.50)
Weighted-average shares of common stock used to compute net income (loss) per share attributable to common
stockholders:
Basic
68,671 61,317
Diluted
91,209 61,317
Pro forma net income per share attributable to common stockholders (unaudited):
Basic
$ 1.76
Diluted
$ 1.57
Pro forma weighted-average shares of common stock used to compute pro forma net income per share attributable to
common stockholders (unaudited):
Basic
182,945
Diluted
205,575
13
AsofDecember31,2020
Actual ProForma
ConsolidatedBalanceSheetData (in thousands)
Cash and cash equivalents
$ 1,061,850 $ 1,061,850
Customer custodial funds
3,763,392 3,763,392
Total assets
5,855,414 5,855,414
Custodial funds due to customers
3,849,468 3,849,468
Total liabilities
4,329,363 4,329,363
Convertible preferred stock
562,467 —
Total stockholders’ equity
963,584 1,526,051
__________________
(1) The pro forma column reflects the automatic conversion of all outstanding shares of our Series FF, Series A, Series B, Series C, and Series D convertible preferred stock as of December 31,
2020 into 104,046,301 shares of our Class B common stock and all outstanding shares of our Series E convertible preferred stock as of December 31, 2020 into 8,831,952 shares of our
Class A common stock.
KeyBusinessMetricsandNon-GAAPFinancialMeasure
In addition to our financial results, we use the following business metrics to evaluate our business, measure our performance, identify trends affecting our
business, and make strategic decisions. To evaluate our operating performance, and for internal planning and forecasting purposes, we also use Adjusted EBITDA, a
non-GAAP financial measure. For additional information regarding these measures, see the section titled “Selected Consolidated Financial and Other Data—Key
Business Metrics and Non-GAAP Financial Measure.”
AsoforfortheYearEndedDecember31,
%
Change2020 2019
(in millions, except percentages)
Verified Users
43 32
34.4 %
Monthly Transacting Users
2.8 1.0
180.0 %
Assets on Platform
$ 90,307 $ 16,969
432.2 %
Trading Volume
$ 193,097 $ 79,906
141.7 %
Net income (loss)
$ 322 $ (30)
NM
Adjusted EBITDA $ 527 $ 24 2,095.8 %
__________________
(1) Adjusted EBITDA is a non-GAAP financial measure. For more information regarding our use of this measure and a reconciliation of net income to Adjusted EBITDA, see “Selected
Consolidated Financial and Other Data—Key Business Metrics and Non-GAAP Financial Measure—Non-GAAP Financial Measure.”
* NM—Not meaningful
(1)
(1)
14
RISKFACTORS
Investing in our Class A common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other
information in this prospectus, before making a decision to invest in our Class A common stock. The risks and uncertainties described below are not the only ones we face. Additional
risks and uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business. If any of the following risks occur, our
business, operating results, financial condition and future prospects could be materially and adversely affected. In that event, the market price of our Class A common stock could
decline, and you could lose part or all of your investment.
TheMostMaterialRisksRelatedtoOurBusinessandFinancialPosition
Our operating results have and will significantly fluctuate due to the highly volatile nature of crypto.
All of our sources of revenue are dependent on crypto assets and the broader cryptoeconomy. Due to the highly volatile nature of the cryptoeconomy and the prices of crypto
assets, our operating results have, and will continue to, fluctuate significantly from quarter to quarter in accordance with market sentiments and movements in the broader
cryptoeconomy. For example, the average three month Crypto Asset Volatility (as defined in our Glossary to the Cryptoeconomy) supported on our platform increased by 73% from
the fourth quarter of 2019 to the first quarter of 2020, before decreasing by 36% from the first quarter of 2020 to the second quarter of 2020. Our operating results will continue to
fluctuate significantly as a result of a variety of factors, many of which are unpredictable and in certain instances are outside of our control, including:
• our dependence on offerings that are dependent on crypto asset trading activity, including trading volume and the prevailing trading prices for crypto assets, whose trading
prices and volume can be highly volatile;
• our ability to attract, maintain, and grow our customer base and engage our customers;
• changes in the legislative or regulatory environment, or actions by governments or regulators, including fines, orders, or consent decrees;
• regulatory changes that impact our ability to offer certain products or services;
• our ability to diversify and grow our subscription and services revenue;
• pricing for our products and services;
• investments we make in the development of products and services as well as technology offered to our ecosystem partners, international expansion, and sales and marketing;
• adding and removing of crypto assets on our platform;
• macroeconomic conditions;
• adverse legal proceedings or regulatory enforcement actions, judgments, settlements, or other legal proceeding and enforcement-related costs;
• the development and introduction of existing and new products and services by us or our competitors;
• increases in operating expenses that we expect to incur to grow and expand our operations and to remain competitive;
16
• system failure or outages, including with respect to our crypto platform and third-party crypto networks;
• breaches of security or privacy;
• inaccessibility of our platform due to our or third-party actions;
• our ability to attract and retain talent; and
• our ability to compete with our competitors.
As a result of these factors, it is difficult for us to forecast growth trends accurately and our business and future prospects are difficult to evaluate, particularly in the short term. In
view of the rapidly evolving nature of our business and the cryptoeconomy, period-to-period comparisons of our operating results may not be meaningful, and you should not rely upon
them as an indication of future performance. Quarterly and annual expenses reflected in our financial statements may be significantly different from historical or projected rates. Our
operating results in one or more future quarters may fall below the expectations of securities analysts and investors. As a result, the trading price of our Class A common stock may
increase or decrease significantly.
Our total revenue is substantially dependent on the prices of crypto assets and volume of transactions conducted on our platform. If such price or volume declines, our
business, operating results, and financial condition would be adversely affected.
We generate substantially all of our total revenue from transaction fees on our platform in connection with the purchase, sale, and trading of crypto assets by our customers.
Transaction revenue is based on transaction fees that are either a flat fee or a percentage of the value of each transaction. For our retail brokerage product, we also charge a spread
to ensure that we are able to settle purchases and sales at the price we quote to customers. We also generate total revenue from our subscription products and services and, while
revenue from these products and services have not been significant to date, most of this revenue will also fluctuate based on the price of crypto assets. As such, any declines in the
volume of crypto asset transactions, the price of crypto assets, or market liquidity for crypto assets generally may result in lower total revenue to us.
The price of crypto assets and associated demand for buying, selling, and trading crypto assets have historically been subject to significant volatility. For instance, in 2017, the
value of certain crypto assets, including Bitcoin, experienced steep increases in value, and our customer base expanded worldwide. The increase in value of Bitcoin from 2016 to 2017
was followed by a steep decline in 2018, which adversely affected our net revenue and operating results. The price and trading volume of any crypto asset is subject to significant
uncertainty and volatility, depending on a number of factors, including:
• market conditions across the cryptoeconomy;
• changes in liquidity, market-making volume, and trading activities;
• trading activities on other crypto platforms worldwide, many of which may be unregulated, and may include manipulative activities;
• investment and trading activities of highly active retail and institutional users, speculators, miners, and investors;
• the speed and rate at which crypto is able to gain adoption as a medium of exchange, utility, store of value, consumptive asset, security instrument, or other financial assets
worldwide, if at all;
• decreased user and investor confidence in crypto assets and crypto platforms;
• negative publicity and events relating to the cryptoeconomy;
17
• unpredictable social media coverage or “trending” of crypto assets;
• the ability for crypto assets to meet user and investor demands;
• the functionality and utility of crypto assets and their associated ecosystems and networks, including crypto assets designed for use in various applications;
• consumer preferences and perceived value of crypto assets and crypto asset markets;
• increased competition from other payment services or other crypto assets that exhibit better speed, security, scalability, or other characteristics;
• regulatory or legislative changes and updates affecting the cryptoeconomy;
• the characterization of crypto assets under the laws of various jurisdictions around the world;
• the maintenance, troubleshooting, and development of the blockchain networks underlying crypto assets, including by miners, validators, and developers worldwide;
• the ability for crypto networks to attract and retain miners or validators to secure and confirm transactions accurately and efficiently;
• ongoing technological viability and security of crypto assets and their associated smart contracts, applications and networks, including vulnerabilities against hacks and
scalability;
• fees and speed associated with processing crypto asset transactions, including on the underlying blockchain networks and on crypto platforms;
• financial strength of market participants;
• the availability and cost of funding and capital;
• the liquidity of crypto platforms;
• interruptions in service from or failures of major crypto platforms;
• availability of an active derivatives market for various crypto assets;
• availability of banking and payment services to support crypto-related projects;
• level of interest rates and inflation;
• monetary policies of governments, trade restrictions, and fiat currency devaluations; and
• national and international economic and political conditions.
There is no assurance that any supported crypto asset will maintain its value or that there will be meaningful levels of trading activities. In the event that the price of crypto assets
or the demand for trading crypto assets decline, our business, operating results, and financial condition would be adversely affected.
A majority of our net revenue is from transactions in Bitcoin and Ethereum. If demand for these crypto assets declines and is not replaced by new demand for crypto
assets, our business, operating results, and financial condition could be adversely affected.
We support a diverse portfolio of crypto assets for trading and custody. However, for the year ended December 31, 2020, we derived the majority of our net revenue from
transaction fees generated in connection with the purchase, sale, and trading of Bitcoin and Ethereum; these trading pairs drove over 56% of total Trading Volume on our platform. As
such, in addition to the factors impacting the broader
18
cryptoeconomy described in this section, our business may be adversely affected if the markets for Bitcoin and Ethereum deteriorate or if their prices decline, including as a result of
the following factors:
• the reduction in mining rewards of Bitcoin, including block reward halving events, which are events that occur after a specific period of time which reduces the block reward
earned by miners;
• the development and launch timeline of Ethereum 2.0, including the potential migration of Ethereum to a proof-of-stake model;
• disruptions, hacks, splits in the underlying network also known as “forks”, attacks by malicious actors who control a significant portion of the networks’ hash rate such as
double spend or 51% attacks, or other similar incidents affecting the Bitcoin or Ethereum blockchain networks;
• hard “forks” resulting in the creation of and divergence into multiple separate networks, such as Bitcoin Cash and Ethereum Classic;
• informal governance led by Bitcoin and Ethereum’s core developers that lead to revisions to the underlying source code or inactions that prevent network scaling, and which
evolve over time largely based on self-determined participation, which may result in new changes or updates that affect their speed, security, usability, or value;
• the ability for Bitcoin and Ethereum blockchain networks to resolve significant scaling challenges and increase the volume and speed of transactions;
• the ability to attract and retain developers and customers to use Bitcoin and Ethereum for payment, store of value, unit of accounting, and other intended uses;
• transaction congestion and fees associated with processing transactions on the Bitcoin and Ethereum networks;
• the identification of Satoshi Nakamoto, the pseudonymous person or persons who developed Bitcoin, or the transfer of Satoshi’s Bitcoins;
• negative perception of Bitcoin or Ethereum;
• development in mathematics, technology, including in digital computing, algebraic geometry, and quantum computing that could result in the cryptography being used by
Bitcoin and Ethereum becoming insecure or ineffective; and
• laws and regulations affecting the Bitcoin and Ethereum networks or access to these networks, including a determination that either Bitcoin or Ethereum constitutes a security
or other regulated financial instrument under the laws of any jurisdiction.
The future development and growth of crypto is subject to a variety of factors that are difficult to predict and evaluate. If crypto does not grow as we expect, our
business, operating results, and financial condition could be adversely affected.
Crypto assets built on blockchain technology were only introduced in 2008 and remain in the early stages of development. In addition, different crypto assets are designed for
different purposes. Bitcoin, for instance, was designed to serve as a peer-to-peer electronic cash system, while Ethereum was designed to be a smart contract and decentralized
application platform. Many other crypto networks—ranging from cloud computing to tokenized securities networks—have only recently been established. The further growth and
development of any crypto assets and their underlying networks and other cryptographic and
19
algorithmic protocols governing the creation, transfer, and usage of crypto assets represent a new and evolving paradigm that is subject to a variety of factors that are difficult to
evaluate, including:
• Many crypto networks have limited operating histories, have not been validated in production, and are still in the process of developing and making significant decisions that
will affect the design, supply, issuance, functionality, and governance of their respective crypto assets and underlying blockchain networks, any of which could adversely affect
their respective crypto assets.
• Many crypto networks are in the process of implementing software upgrades and other changes to their protocols, which could introduce bugs, security risks, or adversely
affect the respective crypto networks.
• Several large networks, including Bitcoin and Ethereum, are developing new features to address fundamental speed, scalability, and energy usage issues. If these issues are
not successfully addressed, or are unable to receive widespread adoption, it could adversely affect the underlying crypto assets.
• Security issues, bugs, and software errors have been identified with many crypto assets and their underlying blockchain networks, some of which have been exploited by
malicious actors. There are also inherent security weaknesses in some crypto assets, such as when creators of certain crypto networks use procedures that could allow
hackers to counterfeit tokens. Any weaknesses identified with a crypto assets could adversely affect its price, security, liquidity, and adoption. If a malicious actor or botnet (a
volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains a majority of the compute or staking power
on a crypto network, as has happened in the past, it may be able to manipulate transactions, which could cause financial losses to holders, damage the network’s reputation
and security, and adversely affect its value.
• The development of new technologies for mining, such as improved application-specific integrated circuits (commonly referred to as ASICs), or changes in industry patterns,
such as the consolidation of mining power in a small number of large mining farms, could reduce the security of blockchain networks, lead to increased liquid supply of crypto
assets, and reduce a crypto’s price and attractiveness.
• If rewards and transaction fees for miners or validators on any particular crypto network are not sufficiently high to attract and retain miners, a crypto network’s security and
speed may be adversely affected, increasing the likelihood of a malicious attack.
• Many crypto assets have concentrated ownership or an “admin key”, allowing a small group of holders to have significant unilateral control and influence over key decisions
relating to their crypto networks, such as governance decisions and protocol changes, as well as the market price of such crypto assets.
• The governance of many decentralized blockchain networks is by voluntary consensus and open competition, and many developers are not directly compensated for their
contributions. As a result, there may be a lack of consensus or clarity on the governance of any particular crypto network, a lack of incentives for developers to maintain or
develop the network, and other unforeseen issues, any of which could result in unexpected or undesirable errors, bugs, or changes, or stymie such network’s utility and ability
to respond to challenges and grow.
• Many crypto networks are in the early stages of developing partnerships and collaborations, all of which may not succeed and adversely affect the usability and adoption of
the respective crypto assets.
Various other technical issues have also been uncovered from time to time that resulted in disabled functionalities, exposure of certain users’ personal information, theft of users’
assets, and other negative
20
consequences, and which required resolution with the attention and efforts of their global miner, user, and development communities. If any such risks or other risks materialize, and in
particular if they are not resolved, the development and growth of crypto may be significantly affected and, as a result, our business, operating results, and financial condition could be
adversely affected.
Cyberattacks and security breaches of our platform, or those impacting our customers or third parties, could adversely impact our brand and reputation and our
business, operating results, and financial condition.
Our business involves the collection, storage, processing, and transmission of confidential information, customer, employee, service provider, and other personal data, as well as
information required to access customer assets. We have built our reputation on the premise that our platform offers customers a secure way to purchase, store, and transact in crypto
assets. As a result, any actual or perceived security breach of us or our third-party partners may:
• harm our reputation and brand;
• result in our systems or services being unavailable and interrupt our operations;
• result in improper disclosure of data and violations of applicable privacy and other laws;
• result in significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, and financial exposure;
• cause us to incur significant remediation costs;
• lead to theft or irretrievable loss of our or our customers’ fiat currencies or crypto assets;
• reduce customer confidence in, or decreased use of, our products and services;
• divert the attention of management from the operation of our business;
• result in significant compensation or contractual penalties from us to our customers or third parties as a result of losses to them or claims by them; and
• adversely affect our business and operating results.
Further, any actual or perceived breach or cybersecurity attack directed at other financial institutions or crypto companies, whether or not we are directly impacted, could lead to a
general loss of customer confidence in the cryptoeconomy or in the use of technology to conduct financial transactions, which could negatively impact us, including the market
perception of the effectiveness of our security measures and technology infrastructure.
An increasing number of organizations, including large merchants, businesses, technology companies, and financial institutions, as well as government institutions, have disclosed
breaches of their information security systems, some of which have involved sophisticated and highly targeted attacks, including on their websites, mobile applications, and
infrastructure.
Attacks upon systems across a variety of industries, including the crypto industry, are increasing in their frequency, persistence, and sophistication, and, in many cases, are being
conducted by sophisticated, well-funded, and organized groups and individuals, including state actors. The techniques used to obtain unauthorized, improper, or illegal access to
systems and information (including customers’ personal data and crypto assets), disable or degrade services, or sabotage systems are constantly evolving, may be difficult to detect
quickly, and often are not recognized or detected until after they have been launched against a target. These attacks may occur on our systems or those of our third-party service
providers or partners. Certain types of cyberattacks could harm us even if our systems are left undisturbed. For example, attacks may be designed to deceive employees and service
providers into
21
releasing control of our systems to a hacker, while others may aim to introduce computer viruses or malware into our systems with a view to stealing confidential or proprietary data.
Additionally, certain threats are designed to remain dormant or undetectable until launched against a target and we may not be able to implement adequate preventative measures.
Although we have developed systems and processes designed to protect the data we manage, prevent data loss and other security breaches, effectively respond to known and
potential risks, and expect to continue to expend significant resources to bolster these protections, there can be no assurance that these security measures will provide absolute
security or prevent breaches or attacks. We have experienced from time to time, and may experience in the future, breaches of our security measures due to human error,
malfeasance, insider threats, system errors or vulnerabilities, or other irregularities. Unauthorized parties have attempted, and we expect that they will continue to attempt, to gain
access to our systems and facilities, as well as those of our customers, partners, and third-party service providers, through various means, including hacking, social engineering,
phishing, and attempting to fraudulently induce individuals (including employees, service providers, and our customers) into disclosing usernames, passwords, payment card
information, or other sensitive information, which may in turn be used to access our information technology systems and customers’ crypto assets. Threats can come from a variety of
sources, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, and insiders. Certain threat actors may be supported by significant financial and
technological resources, making them even more sophisticated and difficult to detect. Further, there has been an increase in such activities as a result of the novel coronavirus, or
COVID-19, pandemic. As a result, our costs and the resources we devote to protecting against these advanced threats and their consequences may continue to increase over time.
Although we maintain insurance coverage that we believe is adequate for our business, it may be insufficient to protect us against all losses and costs stemming from security
breaches, cyberattacks, and other types of unlawful activity, or any resulting disruptions from such events. Outages and disruptions of our platform, including any caused by
cyberattacks, may harm our reputation and our business, operating results, and financial condition.
We are subject to an extensive and highly-evolving regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations could
adversely affect our brand, reputation, business, operating results, and financial condition.
Our business is subject to extensive laws, rules, regulations, policies, orders, determinations, directives, treaties, and legal and regulatory interpretations and guidance in the
markets in which we operate, including those governing financial services and banking, trust companies, securities, broker-dealers and ATS, commodities, credit, crypto asset
custody, exchange, and transfer, cross-border and domestic money and crypto asset transmission, consumer and commercial lending, usury, foreign currency exchange, privacy, data
governance, data protection, cybersecurity, fraud detection, payment services (including payment processing and settlement services), consumer protection, escheatment, antitrust
and competition, bankruptcy, tax, anti-bribery, economic and trade sanctions, anti-money laundering, and counter-terrorist financing. Many of these legal and regulatory regimes were
adopted prior to the advent of the internet, mobile technologies, crypto assets, and related technologies. As a result, they do not contemplate or address unique issues associated with
the cryptoeconomy, are subject to significant uncertainty, and vary widely across U.S. federal, state, and local and international jurisdictions. These legal and regulatory regimes,
including the laws, rules, and regulations thereunder, evolve frequently and may be modified, interpreted, and applied in an inconsistent manner from one jurisdiction to another, and
may conflict with one another. Moreover, the complexity and evolving nature of our business and the significant uncertainty surrounding the regulation of the cryptoeconomy requires
us to exercise our judgement as to whether certain laws, rules, and regulations apply to us, and it is possible that governmental bodies and regulators may disagree with our
conclusions. To the extent we have not complied with such laws, rules, and regulations, we could be subject to significant fines, revocation of licenses, limitations on our products and
services, reputational harm, and other regulatory consequences,
22
each of which may be significant and could adversely affect our business, operating results, and financial condition.
In addition to existing laws and regulations, various governmental and regulatory bodies, including legislative and executive bodies, in the United States and in other countries
may adopt new laws and regulations, or new interpretations of existing laws and regulations may be issued by such bodies or the judiciary, which may adversely impact the
development of the cryptoeconomy as a whole and our legal and regulatory status in particular by changing how we operate our business, how our products and services are
regulated, and what products or services we and our competitors can offer, requiring changes to our compliance and risk mitigation measures, imposing new licensing requirements,
or imposing a total ban on certain crypto asset transactions, as has occurred in certain jurisdictions in the past. For example, under recommendations from the Financial Crimes
Enforcement Network, or FinCEN, and the Financial Action Task Force, or FATF, the United States and several foreign jurisdictions are likely to impose the Funds Travel Rule and the
Funds Transfer Rule (commonly referred to collectively as the Travel Rule) on financial service providers in the cryptoeconomy. We may face substantial compliance costs to
operationalize and comply with the Travel Rule and may be further subject to administrative sanctions for technical violations or customer attrition if the user experience suffers as a
result. More recently, in December 2020, FinCEN released a proposed rule that would require us to collect personal information from the owners of self-custodied wallets that transfer
cryptocurrencies to or receive cryptocurrencies from Coinbase, and report certain transactions to the federal government. There are substantial uncertainties on how these
requirements would apply in practice, and we may face substantial compliance costs to operationalize and comply with these rules. We may be further subject to administrative
sanctions for technical violations or customer attrition if the user experience suffers as a result. As another example, the recent extension of anti-money laundering requirements to
certain crypto-related activities by the E.U. Fifth Money Laundering Directive has increased the regulatory compliance burden for our business in Europe and, as a result of the
fragmented approach to the implementation of its provisions, resulted in distinct and divergent national licensing and registration regimes for us in different E.U. member states.
Further E.U.-level legislation imposing additional regulatory requirements in relation to crypto-related activities is also expected in the intermediate term which, among other things,
may impose new or additional regulatory requirements on both crypto service providers and issuers of certain crypto assets, which may impact the our operations in the E.U.
Because we have offered and will continue to offer a variety of innovative products and services to our customers, many of our offerings are subject to significant regulatory
uncertainty. For instance, we are a founding member of the Centre Consortium and the principal reseller of the USD Coin, a stablecoin issued by Circle that is backed one-to-one by
U.S. dollar denominated reserves. The regulatory treatment of fiat-backed stablecoins is highly uncertain and has drawn significant attention from legislative and regulatory bodies
around the world. The issuance and resale of such stablecoins may implicate a variety of banking, deposit, money transmission, prepaid access and stored value, anti-money
laundering, commodities, securities, sanctions, and other laws and regulations in the United States and in other jurisdictions. Certain products and services offered by us that we
believe are not subject to regulatory oversight, or are only subject to certain regulatory regimes, such as Coinbase Wallet, a standalone mobile application that allows customers to
manage their own private keys and store their crypto assets directly on their mobile devices, may cause us to be deemed to be engaged in a form of regulated activity for which
licensure is required or cause us to become subject to new and additional forms of regulatory oversight. We also offer various staking, rewards, and lending products, all of which are
subject to significant regulatory uncertainty, and could implicate a variety of laws and regulations worldwide. For example, there is regulatory uncertainty regarding the status of our
staking activities under the U.S. federal securities laws. While we have implemented policies and procedures designed to help monitor for and ensure compliance with existing and
new laws and regulations, there can be no assurance that we and our employees, contractors, and agents will not violate or otherwise fail to comply with such laws and regulations.
To the extent that we or our employees, contractors, or agents are deemed or alleged to have violated or failed to comply with any laws or regulations, including related
interpretations, orders, determinations, directives, or guidance, we or they could be subject to a litany of civil, criminal, and
23
administrative fines, penalties, orders and actions, including being required to suspend or terminate the offering of certain products and services.
Due to our business activities, we are subject to ongoing examinations, oversight, and reviews by U.S. federal and state regulators, including the New York State Department of
Financial Services, or NYDFS, and foreign financial service regulators, including the U.K. Financial Conduct Authority and the Central Bank of Ireland, which each have broad
discretion to audit and examine our business. We are periodically subject to audits and examinations by these regulatory authorities. As a result of findings from these audits and
examinations, regulators have, are, and may in the future require us to take certain actions, including amending, updating, or revising our compliance measures from time to time,
limiting the kinds of customers which we provide services to, changing, terminating, or delaying the introduction of our existing or new product and services, and undertaking further
external audit or being subject to further regulatory scrutiny. We have received, and may in the future receive, examination reports citing violations of rules and regulations,
inadequacies in existing compliance programs, and requiring us to enhance certain practices with respect to our compliance program, including due diligence, monitoring, training,
reporting, and recordkeeping. Implementing appropriate measures to properly remediate these examination findings may require us to incur significant costs, and if we fail to properly
remediate any of these examination findings, we could face civil litigation, significant fines, damage awards, forced removal of certain employees including members of our executive
team, barring of certain employees from participating in our business in whole or in part, revocation of existing licenses, limitations on existing and new products and services,
reputational harm, negative impact to our existing relationships with regulators, exposure to criminal liability, or other regulatory consequences. Further, we believe increasingly strict
legal and regulatory requirements and additional regulatory investigations and enforcement, any of which could occur or intensify, may continue to result in changes to our business,
as well as increased costs, and supervision and examination for both ourselves and our agents and service providers. Moreover, new laws, regulations, or interpretations may result in
additional litigation, regulatory investigations, and enforcement or other actions, including preventing or delaying us from offering certain products or services offered by our
competitors or could impact how we offer such products and services. Adverse changes to, or our failure to comply with, any laws and regulations have had, and may continue to
have, an adverse effect on our reputation and brand and our business, operating results, and financial condition.
We operate in a highly competitive industry and we compete against unregulated or less regulated companies and companies with greater financial and other resources,
and our business, operating results, and financial condition may be adversely affected if we are unable to respond to our competitors effectively.
The cryptoeconomy is highly innovative, rapidly evolving, and characterized by healthy competition, experimentation, changing customer needs, frequent introductions of new
products and services, and subject to uncertain and evolving industry and regulatory requirements. We expect competition to further intensify in the future as existing and new
competitors introduce new products or enhance existing products. We compete against a number of companies operating both within the United States and abroad, and both those
that focus on traditional financial services and those that focus on crypto-based services. Our main competitors fall into the following categories:
• Traditional financial technology and brokerage firms that have entered the crypto asset market in recent years and offer overlapping features targeted at our customers.
• Companies focused on the crypto asset market, some of whom adhere to local regulations and directly compete with our platform, and many who choose to operate outside of
local rules and regulations or in jurisdictions with less stringent local rules and regulations and are potentially able to more quickly adapt to trends, support a greater number of
crypto assets, and develop new crypto-based products and services due to a different standard of regulatory scrutiny.
24
• Crypto-focused companies and traditional financial incumbents that offer point or siloed solutions specifically targeted at institutional customers.
Our primary source of competition to date has been from companies, in particular those located outside the United States, who are subject to significantly less stringent regulatory
and compliance requirements in their local jurisdictions. Their business models rely on being unregulated or only regulated in a small number of lower compliance jurisdictions, whilst
also offering their products in highly regulated jurisdictions, including the United States, without necessarily complying with the relevant regulatory requirements in such jurisdictions.
To date, due to limited enforcement by U.S. and foreign regulators, many of these competitors have been able to operate from offshore while offering large numbers of products
and services to consumers, including in the United States, Europe, and other highly regulated jurisdictions, without complying with the relevant licensing and other requirements in
these jurisdictions, and seemingly without penalty. Due to our regulated status in several jurisdictions and our commitment to legal and regulatory compliance, we have not been able
to offer many popular products and services, including products and services that our unregulated or less regulated competitors are able to offer to a group that includes many of our
customers, which may adversely impact our business, financial condition, and results of operations.
In recent years, our commitment to compliance and the attendant customer-facing requirements, including customer due diligence requirements, have resulted in our customers
transferring significant funds and crypto assets to these unregulated or less regulated competitors. We also have expended significant managerial, operational, and compliance costs
to meet the legal and regulatory requirements applicable to us in the United States and other jurisdictions in which we operate, and expect to continue to incur significant costs to
comply with these requirements, which these unregulated or less regulated competitors have not had to incur.
Additionally, due to the broad nature of our products and services, we also compete with, and expect additional competition from, digital and mobile payment companies and other
traditional financial services companies.
Many innovative start-up companies and larger companies have made, and continue to make, significant investments in research and development, and we expect these
companies to continue to develop similar or superior products and technologies that compete with our products. Further, more traditional financial and non-financial services
businesses may choose to offer crypto-based services in the future as the industry gains adoption. Our current and potential competitors may establish cooperative relationships
among themselves or with third parties that may further enhance their resources.
Our existing competitors have, and our potential competitors are expected to have, various competitive advantages over us, such as:
• the ability to trade crypto assets and offer products and services that we do not support or offer on our platform (due to constraints from regulatory authorities, our banking
partners, and other factors) such as tokens that constitute securities or derivative instruments under U.S. or foreign laws;
• greater name recognition, longer operating histories, larger customer bases, and larger market shares;
• larger sales and marketing budgets and organizations;
• more established marketing, banking, and compliance relationships;
• greater customer support resources;
• greater resources to make acquisitions;
25
• lower labor, compliance, risk mitigation, and research and development costs;
• larger and more mature intellectual property portfolios;
• greater number of applicable licenses or similar authorizations;
• established core business models outside of the trading of crypto assets, allowing them to operate on lesser margins or at a loss;
• operations in certain jurisdictions with lower compliance costs and greater flexibility to explore new product offerings; and
• substantially greater financial, technical, and other resources.
If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, operating
results, and financial condition could be adversely affected.
We compete against a growing number of decentralized and noncustodial platforms and our business may be adversely affected if we fail to compete effectively against
them.
We also compete against an increasing number of decentralized and noncustodial platforms. On these platforms, users can interact directly with a market-making smart contract
or on-chain trading mechanism to exchange one type of crypto asset for another without any centralized intermediary. These platforms are typically not as easy to use as our platform,
and generally lack the speed and liquidity of centralized platforms, but various innovative models and incentives have been designed to bridge the gap. In addition, such platforms
have low startup and entry costs as market entrants often remain unregulated and have minimal operating and regulatory costs. A significant number of decentralized platforms have
recently been developed and released, including on Ethereum, Tron, Polkadot, and Solana, and many such platforms have experienced significant growth and adoption. For instance,
we have seen increased interest in certain decentralized platforms with transaction volumes rivaling our own platform on multiple occasions, and expect interest in decentralized and
noncustodial platforms to grow further as the industry develops. If the demand for decentralized platforms grows and we are unable to compete with these decentralized and
noncustodial platforms, our business may be adversely affected.
As we continue to expand and localize our international activities, our obligations to comply with the laws, rules, regulations, and policies of a variety of jurisdictions will
increase and we may be subject to investigations and enforcement actions by U.S. and non-U.S. regulators and governmental authorities.
As we expand and localize our international activities, we have become increasingly obligated to comply with the laws, rules, regulations, policies, and legal interpretations both of
the jurisdictions in which we operate and those into which we offer services on a cross-border basis. Laws regulating financial services, the internet, mobile technologies, crypto, and
related technologies outside of the United States often impose different, more specific, or even conflicting obligations on us, as well as broader liability. For example, we are required
to comply with laws and regulations related to sanctions and export controls enforced by U.S. Department of Treasury’s Office of Foreign Assets Control, or OFAC, and U.S. anti-
money laundering and counter-terrorist financing laws and regulations, enforced by FinCEN and certain state financial services regulators. U.S. sanctions laws and regulations
generally restrict dealings by persons subject to U.S. jurisdiction with certain governments, countries, or territories that are the target of comprehensive sanctions, currently the Crimea
Region of Ukraine, Cuba, Iran, North Korea, Syria, and Venezuela as well as with persons identified on certain prohibited lists. We have shared key particulars of our compliance
program with OFAC and we believe we have a reasonable risk-based program in place. That program includes monitoring of IP addresses to identify prohibited jurisdictions and of
blockchain addresses that have either been identified by OFAC as prohibited or that otherwise are believed by us to be associated with prohibited persons or jurisdictions.
Nonetheless, there can be no guarantee that these
26
measures will be viewed as compliant. In particular, the nature of the blockchain and of our services makes it technically infeasible in all circumstances to prevent transactions with
particular persons or addresses. From time to time, we have submitted voluntary disclosures to OFAC or responded to administrative subpoenas from OFAC that have identified such
transactions. Certain of these voluntary self-disclosures are currently under review by OFAC. To date, none of those proceedings has resulted in a monetary penalty or other adverse
action. However, if we were to be found to have violated sanctions, or become involved in government investigations, that could result in negative consequences for us, including
costs related to government investigations, financial penalties, and harm to our reputation. The impact on us related to these matters could be substantial. Although we have
implemented controls, and are working to implement additional controls and screening tools designed to prevent similar activity from occurring in the future, there is no guarantee that
we will not inadvertently provide our products and services to additional individuals, entities, or governments prohibited by U.S. sanctions in the future.
Regulators worldwide frequently study each other’s approaches to the regulation of the cryptoeconomy. Consequently, developments in any jurisdiction may influence other
jurisdictions. New developments in one jurisdiction may be extended to additional services and other jurisdictions. As a result, the risks created by any new law or regulation in one
jurisdiction are magnified by the potential that they may be replicated, affecting our business in another place or involving another service. Conversely, if regulations diverge
worldwide, we may face difficulty adjusting our products, services, and other aspects of our business with the same effect. These risks are heightened as we face increased
competitive pressure from other similarly situated businesses that engage in regulatory arbitrage to avoid the compliance costs associated with regulatory changes.
The complexity of U.S. federal and state and international regulatory and enforcement regimes, coupled with the global scope of our operations and the evolving global regulatory
environment, could result in a single event prompting a large number of overlapping investigations and legal and regulatory proceedings by multiple government authorities in different
jurisdictions. Any of the foregoing could, individually or in the aggregate, harm our reputation, damage our brands and business, and adversely affect our operating results and
financial condition. Due to the uncertain application of existing laws and regulations, it may be that, despite our regulatory and legal analysis concluding that certain products and
services are currently unregulated, such products or services may indeed be subject to financial regulation, licensing, or authorization obligations that we have not obtained or with
which we have not complied. As a result, we are at a heightened risk of enforcement action, litigation, regulatory, and legal scrutiny which could lead to sanctions, cease, and desist
orders, or other penalties and censures which could significantly and adversely affect our continued operations and financial condition.
We are and may continue to be subject to material litigation, including individual and class action lawsuits, as well as investigations and enforcement actions by
regulators and governmental authorities.
We have been, currently are, and may from time to time become subject to claims, arbitrations, individual and class action lawsuits, government and regulatory investigations,
inquiries, actions or requests, including with respect to both consumer and employment matters, and other proceedings alleging violations of laws, rules, and regulations, both foreign
and domestic. The scope, determination, and impact of claims, lawsuits, government and regulatory investigations, enforcement actions, disputes, and proceedings to which we are
subject cannot be predicted with certainty, and may result in:
• substantial payments to satisfy judgments, fines, or penalties;
• substantial outside counsel legal fees and costs;
• additional compliance and licensure requirements;
• loss or non-renewal of existing licenses or authorizations, or prohibition from or delays in obtaining additional licenses or authorizations, required for our business;
27
• loss of productivity and high demands on employee time;
• criminal sanctions or consent decrees;
• termination of certain employees, including members of our executive team;
• barring of certain employees from participating in our business in whole or in part;
• orders that restrict our business or prevent us from offering certain products or services;
• changes to our business model and practices;
• delays to planned transactions, product launches or improvements; and
• damage to our brand and reputation.
Because of our large customer base, actions against us may claim large monetary damages, even if the alleged per-customer harm is small or non-existent. Regardless of the
outcome, any such matters can have an adverse impact, which may be material, on our business, operating results, or financial condition because of legal costs, diversion of
management resources, reputational damage, and other factors. For additional information, see the section titled “Business—Legal Proceedings.”
If we cannot keep pace with rapid industry changes to provide new and innovative products and services, the use of our products and services, and consequently our net
revenue, could decline, which could adversely impact our business, operating results, and financial condition.
Our industry has been characterized by many rapid, significant, and disruptive products and services in recent years. These include decentralized applications, DeFi, yield
farming, staking, token wrapping, governance tokens, innovative programs to attract customers such as transaction fee mining programs, initiatives to attract traders such as trading
competitions, airdrops and giveaways, staking reward programs, and novel cryptocurrency fundraising and distribution schemes, such as “initial exchange offerings.” We expect new
services and technologies to continue to emerge and evolve, which may be superior to, or render obsolete, the products and services that we currently provide. We cannot predict the
effects of new services and technologies on our business. However, our ability to grow our customer base and net revenue will depend heavily on our ability to innovate and create
successful new products and services, both independently and in conjunction with third-party developers. In particular, developing and incorporating new products and services into
our business may require substantial expenditures, take considerable time, and ultimately may not be successful. Any new products or services could fail to attract customers,
generate revenue, or perform or integrate well with third-party applications and platforms. In addition, our ability to adapt and compete with new products and services may be inhibited
by regulatory requirements and general uncertainty in the law, constraints by our banking partners and payment processors, third-party intellectual property rights, or other factors.
Moreover, we must continue to enhance our technical infrastructure and other technology offerings to remain competitive and maintain a platform that has the required functionality,
performance, capacity, security, and speed to attract and retain customers, including large, institutional, high-frequency and high-volume traders. As a result, we expect to expend
significant costs and expenses to develop and upgrade our technical infrastructure to meet the evolving needs of the industry. Our success will depend on our ability to develop and
incorporate new offerings and adapt to technological changes and evolving industry practices. If we are unable to do so in a timely or cost-effective manner, our business and our
ability to successfully compete, to retain existing customers, and to attract new customers may be adversely affected.
28
A particular crypto asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty and if we are unable to properly characterize a
crypto asset, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, operating results, and
financial condition.
The SEC and its staff have taken the position that certain crypto assets fall within the definition of a “security” under the U.S. federal securities laws. The legal test for determining
whether any given crypto asset is a security is a highly complex, fact-driven analysis that evolves over time, and the outcome is difficult to predict. The SEC generally does not provide
advance guidance or confirmation on the status of any particular crypto asset as a security. Furthermore, the SEC’s views in this area have evolved over time and it is difficult to
predict the direction or timing of any continuing evolution. It is also possible that a change in the governing administration or the appointment of new SEC commissioners could
substantially impact the views of the SEC and its staff. Public statements by senior officials at the SEC indicate that the SEC does not intend to take the position that Bitcoin or
Ethereum are securities (in their current form). Bitcoin and Ethereum are the only crypto assets as to which senior officials at the SEC have publicly expressed such a view. Moreover,
such statements are not official policy statements by the SEC and reflect only the speakers’ views, which are not binding on the SEC or any other agency or court and cannot be
generalized to any other crypto asset. With respect to all other crypto assets, there is currently no certainty under the applicable legal test that such assets are not securities,
notwithstanding the conclusions we may draw based on our risk-based assessment regarding the likelihood that a particular crypto asset could be deemed a “security” under
applicable laws. Similarly, though the SEC’s Strategic Hub for Innovation and Financial Technology published a framework for analyzing whether any given crypto asset is a security in
April 2019, this framework is also not a rule, regulation or statement of the SEC and is not binding on the SEC.
Several foreign jurisdictions have taken a broad-based approach to classifying crypto assets as “securities,” while other foreign jurisdictions, such as Switzerland, Malta, and
Singapore, have adopted a narrower approach. As a result, certain crypto assets may be deemed to be a “security” under the laws of some jurisdictions but not others. Various foreign
jurisdictions may, in the future, adopt additional laws, regulations, or directives that affect the characterization of crypto assets as “securities,”
The classification of a crypto asset as a security under applicable law has wide-ranging implications for the regulatory obligations that flow from the offer, sale, trading, and
clearing of such assets. For example, a crypto asset that is a security in the United States may generally only be offered or sold in the United States pursuant to a registration
statement filed with the SEC or in an offering that qualifies for an exemption from registration. Persons that effect transactions in crypto assets that are securities in the United States
may be subject to registration with the SEC as a “broker” or “dealer.” Platforms that bring together purchasers and sellers to trade crypto assets that are securities in the United States
are generally subject to registration as national securities exchanges, or must qualify for an exemption, such as by being operated by a registered broker-dealer as an alternative
trading system, or ATS, in compliance with rules for ATSs. Persons facilitating clearing and settlement of securities may be subject to registration with the SEC as a clearing agency.
Foreign jurisdictions may have similar licensing, registration, and qualification requirements.
We have policies and procedures to analyze whether each crypto asset that we seek to facilitate trading on our platform could be deemed to be a “security” under applicable laws.
Our policies and procedures do not constitute a legal standard, but rather represent our company-developed scoring model, which permits us to make a risk-based assessment
regarding the likelihood that a particular crypto asset could be deemed a “security” under applicable laws. Regardless of our conclusions, we could be subject to legal or regulatory
action in the event the SEC, a foreign regulatory authority, or a court were to determine that a supported crypto asset currently offered, sold, or traded on our platform is a “security”
under applicable laws. Because our platform is not registered or licensed with the SEC or foreign authorities as a broker-dealer, national securities exchange, or ATS (or foreign
equivalents), and we do not seek to register or rely on an exemption from such registration or license to facilitate the offer and sale of crypto assets on our platform, we only permit
trading on our core platform of those crypto assets for
29
which we determine there are reasonably strong arguments to conclude that the crypto asset is not a security. We believe that our process reflects a comprehensive and thoughtful
analysis and is reasonably designed to facilitate consistent application of available legal guidance to crypto assets to facilitate informed risk-based business judgment. However, we
recognize that the application of securities laws to the specific facts and circumstances of crypto assets may be complex and subject to change, and that a listing determination does
not guarantee any conclusion under the U.S. federal securities laws. For example, in December 2020, we announced that we had made a decision to suspend all XRP trading pairs on
our platform in light of the SEC’s lawsuit filed against Ripple Labs, Inc. and two of its executives, alleging that they have engaged in an unregistered, ongoing securities offering
through the sale of XRP. We expect our risk assessment policies and procedures to continuously evolve to take into account case law, facts, and developments in technology.
Although we have applied to operate an ATS in the United States that would allow us to trade crypto assets that are deemed “securities” under U.S. federal securities laws, we
have not yet received regulatory approval to, and do not currently, operate an ATS for trading of crypto assets deemed to be securities. Even though we have incurred substantial
expenses and compliance costs, we may never receive regulatory approval to operate an ATS for the trading of crypto assets that constitute securities and, even if we were to receive
such regulatory approval, the markets for trading crypto assets that constitute securities may lack the depth and liquidity of our platform. There can be no assurances that we will
properly characterize any given crypto asset as a security or non-security for purposes of determining which of our platforms that crypto asset is allowed to trade on, or that the SEC,
foreign regulatory authority, or a court, if the question was presented to it, would agree with our assessment. If the SEC, foreign regulatory authority, or a court were to determine that
a supported crypto asset currently offered, sold, or traded on our platform is a security, we would not be able to offer such crypto asset for trading until we are able to do so in a
compliant manner, such as through an ATS approved to trade crypto asset that constitute securities. A determination by the SEC, a foreign regulatory authority, or a court that an
asset that we currently support for trading on our platform constitutes a security may also result in us determining that it is advisable to remove assets from our platform that have
similar characteristics to the asset that was determined to be a security. In addition, we could be subject to judicial or administrative sanctions for failing to offer or sell the crypto asset
in compliance with the registration requirements, or for acting as a broker, dealer, or national securities exchange without appropriate registration. Such an action could result in
injunctions, cease and desist orders, as well as civil monetary penalties, fines, and disgorgement, criminal liability, and reputational harm. Customers that traded such supported
crypto asset on our platform and suffered trading losses could also seek to rescind a transaction that we facilitated as the basis that it was conducted in violation of applicable law,
which could subject us to significant liability. We may also be required to cease facilitating transactions in the supported crypto asset other than via our licensed subsidiaries, which
could negatively impact our business, operating results, and financial condition. Furthermore, if we remove any assets from trading on our platform, our decision may be unpopular
with users and may reduce our ability to attract and retain customers, especially if such assets remain traded on unregulated exchanges, which includes many of our competitors.
Further, if Bitcoin, Ethereum, or any other supported crypto asset is deemed to be a security under any U.S. federal, state, or foreign jurisdiction, or in a proceeding in a court of
law or otherwise, it may have adverse consequences for such supported crypto asset. For instance, all transactions in such supported crypto asset would have to be registered with
the SEC or other foreign authority, or conducted in accordance with an exemption from registration, which could severely limit its liquidity, usability and transactability. Moreover, the
networks on which such supported crypto assets are utilized may be required to be regulated as securities intermediaries, and subject to applicable rules, which could effectively
render the network impracticable for its existing purposes. Further, it could draw negative publicity and a decline in the general acceptance of the crypto asset. Also, it may make it
difficult for such supported crypto asset to be traded, cleared, and custodied as compared to other crypto asset that are not considered to be securities.
30
We currently rely on third-party service providers for certain aspects of our operations, and any interruptions in services provided by these third parties may impair our
ability to support our customers.
We rely on third parties in connection with many aspects of our business, including payment processors, banks, and payment gateways to process transactions; cloud computing
services and data centers that provide facilities, infrastructure, website functionality and access, components, and services, including databases and data center facilities and cloud
computing; as well as third parties that provide outsourced customer service, compliance support and product development functions, which are critical to our operations. Because we
rely on third parties to provide these services and to facilitate certain of our business activities, we face increased operational risks. We do not control the operation of any of these
third parties, including the data center facilities we use. These third parties may be subject to financial, legal, regulatory, and labor issues, cybersecurity incidents, break-ins, computer
viruses, denial-of-service attacks, sabotage, acts of vandalism, privacy breaches, service terminations, disruptions, interruptions, and other misconduct. They are also vulnerable to
damage or interruption from human error, power loss, telecommunications failures, fires, floods, earthquakes, hurricanes, tornadoes, pandemics (including the COVID-19 pandemic)
and similar events. For example, on February 24, 2021, the U.S. Federal Reserve’s payments network experienced an outage, which had the potential to result in reduced
functionality for certain of our products. In addition, these third parties may breach their agreements with us, disagree with our interpretation of contract terms or applicable laws and
regulations, refuse to continue or renew these agreements on commercially reasonable terms or at all, fail or refuse to process transactions or provide other services adequately, take
actions that degrade the functionality of our services, impose additional costs or requirements on us or our customers, or give preferential treatment to competitors. There can be no
assurance that third parties that provide services to us or to our customers on our behalf will continue to do so on acceptable terms, or at all. If any third parties do not adequately or
appropriately provide their services or perform their responsibilities to us or our customers on our behalf, such as if third-party service providers to close their data center facilities
without adequate notice, are unable to restore operations and data, fail to perform as expected, or experience other unanticipated problems, we may be unable to procure alternatives
in a timely and efficient manner and on acceptable terms, or at all, and we may be subject to business disruptions, losses or costs to remediate any of the deficiencies, customer
dissatisfaction, reputational damage, legal or regulatory proceedings, or other adverse consequences which could harm our business.
Loss of a critical banking or insurance relationship could adversely impact our business, operating results, and financial condition.
We rely on bank accounts to provide our platform and custodial services. In particular, customer cash holdings on our platform are held with one or more of our banking partners.
As a registered money services business with FinCEN under the Bank Secrecy Act, as amended by the USA PATRIOT Act of 2001, and its implementing regulations enforced by
FinCEN, or collectively, the BSA, a licensed money transmitter in a number of U.S. states and territories, a licensee under NYDFS’s Virtual Currency Business Activity regime,
commonly referred to as a BitLicense, a licensed electronic money institution under both the U.K. Financial Conduct Authority and the Central Bank of Ireland, and a limited purpose
trust company chartered by the NYDFS, our banking partners view us as a higher risk customer for purposes of their anti-money laundering programs. We may face difficulty
establishing or maintaining banking relationships due to our banking partners’ policies and some prior bank partners have terminated their relationship with Coinbase or have limited
access to bank services. The loss of these banking partners or the imposition of operational restrictions by these banking partners and the inability for us to utilize other redundant
financial institutions may result in a disruption of business activity as well as regulatory risks. In addition, financial institutions in the United States and globally may, as a result of the
myriad of regulations or the risks of crypto assets generally, decide to not provide account, custody, or other financial services to us or the cryptoeconomy generally. We also rely on
insurance carriers to insure customer losses resulting from a breach of our physical security, cyber security, or by employee or service provider theft. Our ability to maintain crime and
specie insurance is subject to the insurance carriers’
31
ongoing underwriting criteria and our inability to obtain and maintain appropriate insurance coverage could cause a substantial business disruption, adverse reputational impact,
inability to compete with our competitors, and regulatory scrutiny.
Any significant disruption in our products and services, in our information technology systems, or in any of the blockchain networks we support, could result in a loss of
customers or funds and adversely impact our brand and reputation and our business, operating results, and financial condition.
Our reputation and ability to attract and retain customers and grow our business depends on our ability to operate our service at high levels of reliability, scalability, and
performance, including the ability to process and monitor, on a daily basis, a large number of transactions that occur at high volume and frequencies across multiple systems. Our
platform, the ability of our customers to trade, and our ability to operate at a high level, are dependent on our ability to access the blockchain networks underlying the supported crypto
assets, for which access is dependent on our systems’ ability to access the internet. Further, the successful and continued operations of such blockchain networks will depend on a
network of computers, miners, or validators, and their continued operations, all of which may be impacted by service interruptions.
Our systems, the systems of our third-party service providers and partners, and certain crypto asset and blockchain networks have experienced from time to time, and may
experience in the future service interruptions or degradation because of hardware and software defects or malfunctions, distributed denial-of-service and other cyberattacks, insider
threats, break-ins, sabotage, human error, vandalism, earthquakes, hurricanes, floods, fires, and other natural disasters, power losses, disruptions in telecommunications services,
fraud, military or political conflicts, terrorist attacks, computer viruses or other malware, or other events. In addition, extraordinary Trading Volumes or site usage could cause our
computer systems to operate at an unacceptably slow speed or even fail. Some of our systems, including systems of companies we have acquired, or the systems of our third-party
service providers and partners are not fully redundant, and our or their disaster recovery planning may not be sufficient for all possible outcomes or events.
If any of our systems, or those of our third-party service providers, are disrupted for any reason, our products and services may fail, resulting in unanticipated disruptions, slower
response times and delays in our customers’ trade execution and processing, failed settlement of trades, incomplete or inaccurate accounting, recording or processing of trades,
unauthorized trades, loss of customer information, increased demand on limited customer support resources, customer claims, complaints with regulatory organizations, lawsuits, or
enforcement actions. A prolonged interruption in the availability or reduction in the availability, speed, or functionality of our products and services could harm our business. Frequent
or persistent interruptions in our services could cause current or potential customers or partners to believe that our systems are unreliable, leading them to switch to our competitors or
to avoid or reduce the use of our products and services, and could permanently harm our reputation and brands. Moreover, to the extent that any system failure or similar event results
in damages to our customers or their business partners, these customers or partners could seek significant compensation or contractual penalties from us for their losses, and those
claims, even if unsuccessful, would likely be time-consuming and costly for us to address. Problems with the reliability or security of our systems would harm our reputation, and
damage to our reputation and the cost of remedying these problems could negatively affect our business, operating results, and financial condition.
Because we are a regulated financial institution in certain jurisdictions, frequent or persistent interruptions could also lead to regulatory scrutiny, significant fines and penalties, and
mandatory and costly changes to our business practices, and ultimately could cause us to lose existing licenses or banking relationships that we need to operate or prevent or delay
us from obtaining additional licenses that may be required for our business.
32
In addition, we are continually improving and upgrading our information systems and technologies. Implementation of new systems and technologies is complex, expensive, time-
consuming, and may not be successful. If we fail to timely and successfully implement new information systems and technologies, or improvements or upgrades to existing information
systems and technologies, or if such systems and technologies do not operate as intended, it could have an adverse impact on our business, internal controls (including internal
controls over financial reporting), operating results, and financial condition.
Our failure to safeguard and manage our customers’ fiat currencies and crypto assets could adversely impact our business, operating results, and financial condition.
As of December 31, 2020, we held $90 billion in custodial fiat currencies and cryptocurrencies on behalf of customers. Supported crypto assets are not insured or guaranteed by
any government or government agency. We have also entered into partnerships with third parties, such as with the Centre Consortium, as the chief reseller of USD Coin, where we or
our partners receive and hold funds for the benefit of our customers. Our and our partners’ abilities to manage and accurately safeguard these customer assets requires a high level of
internal controls. As our business continues to grow and we expand our product and service offerings, we must continue to strengthen our associated internal controls and ensure that
our partners do the same. Our success and the success of our offerings requires significant public confidence in our and our partners’ ability to properly manage customers’ balances
and handle large and growing transaction volumes and amounts of customer funds. In addition, we are dependent on our partners’ operations, liquidity, and financial condition for the
proper maintenance, use, and safekeeping of these customer assets. Any failure by us or our partners to maintain the necessary controls or to manage customer crypto assets and
funds appropriately and in compliance with applicable regulatory requirements could result in reputational harm, significant financial losses, lead customers to discontinue or reduce
their use of our and our partners’ products, and result in significant penalties and fines and additional restrictions, which could adversely impact our business, operating results, and
financial condition.
We deposit, transfer, and custody customer cash and crypto assets in multiple jurisdictions. In each instance, we are required to safeguard customers’ assets using bank-level
security standards applicable to our hot and cold wallet and storage systems, as well as our financial management systems related to such custodial functions. Our security
technology is designed to prevent, detect, and mitigate inappropriate access to our systems, by internal or external threats. We believe we have developed and maintained
administrative, technical, and physical safeguards designed to comply with applicable legal requirements and industry standards. However, it is nevertheless possible that hackers,
employees or service providers acting contrary to our policies, or others could circumvent these safeguards to improperly access our systems or documents, or the systems or
documents of our business partners, agents, or service providers, and improperly access, obtain, misuse customer crypto assets and funds. The methods used to obtain unauthorized
access, disable, or degrade service or sabotage systems are also constantly changing and evolving and may be difficult to anticipate or detect for long periods of time. Our fidelity
insurance coverage for such impropriety is limited and may not cover the extent of loss nor the nature of such loss, in which case we may be liable for the full amount of losses
suffered, which could be greater than all of our assets. Our ability to maintain fidelity insurance is also subject to the insurance carriers’ ongoing underwriting criteria. Any loss of
customer cash or crypto assets could result in a subsequent lapse in insurance coverage, which could cause a substantial business disruption, adverse reputational impact, inability to
compete with our competitors, and regulatory investigations, inquiries, or actions. Additionally, transactions undertaken through our websites or other electronic channels may create
risks of fraud, hacking, unauthorized access or acquisition, and other deceptive practices. Any security incident resulting in a compromise of customer assets could result in
substantial costs to us and require us to notify impacted individuals, and in some cases regulators, of a possible or actual incident, expose us to regulatory enforcement actions,
including substantial fines, limit our ability to provide services, subject us to litigation, significant financial losses, damage our reputation, and adversely affect our business, operating
results, financial condition, and cash flows.
33
The loss or destruction of private keys required to access any crypto assets held in custody for our own account or for our customers may be irreversible. If we are
unable to access our private keys or if we experience a hack or other data loss relating to our ability to access any crypto assets, it could cause regulatory scrutiny,
reputational harm, and other losses.
Crypto assets are generally controllable only by the possessor of the unique private key relating to the digital wallet in which the crypto assets are held. While blockchain protocols
typically require public addresses to be published when used in a transaction, private keys must be safeguarded and kept private in order to prevent a third party from accessing the
crypto assets held in such a wallet. To the extent that any of the private keys relating to our hot or cold wallets containing crypto assets held for our own account or for our customers
is lost, destroyed, or otherwise compromised or unavailable, and no backup of the private key is accessible, we will be unable to access the crypto assets held in the related wallet.
Further, we cannot provide assurance that our wallet will not be hacked or compromised. Crypto assets and blockchain technologies have been, and may in the future be, subject to
security breaches, hacking, or other malicious activities. Any loss of private keys relating to, or hack or other compromise of, digital wallets used to store our customers’ crypto assets
could adversely affect our customers’ ability to access or sell their crypto assets, require us to reimburse our customers for their losses, and subject us to significant financial losses in
addition to losing customer trust in us and our products. As such, any loss of private keys due to a hack, employee or service provider misconduct or error, or other compromise by
third parties could hurt our brand and reputation, result in significant losses, and adversely impact our business. The total value of crypto assets in our possession and control is
significantly greater than the total value of insurance coverage that would compensate Coinbase in the event of theft or other loss of funds.
OtherRisksRelatedtoOurBusinessandFinancialPosition
If we fail to retain existing customers or add new customers, or if our customers decrease their level of engagement with our products, services and platform, our
business, operating results, and financial condition may be significantly harmed.
Our success depends on our ability to retain existing customers and attract new customers, including ecosystem partners, to increase engagement with our products, services,
and platform. To do so, we must continue to offer leading technologies and ensure that our products and services are secure, reliable, and engaging. We must also expand our
products and services, and offer competitive prices in an increasingly crowded and price-sensitive market. There is no assurance that we will be able to continue to do so, that we will
be able to retain our current customers or attract new customers, or keep our customers engaged. Any number of factors can negatively affect customer retention, growth, and
engagement, including if:
• customers increasingly engage with competing products and services, including products and services that we are unable to offer due to regulatory reasons;
• we fail to introduce new and improved products and services, or if we introduce new products or services that are not favorably received;
• we fail to support new and in-demand crypto assets or if we elect to support crypto assets with negative reputations;
• there are changes in sentiment about the quality or usefulness of our products and services or concerns related to privacy, security, or other factors;
• there are adverse changes in our products and services that are mandated by legislation, regulatory authorities, or litigation;
• customers perceiving the crypto assets on our platform to be bad investments, or experiencing significant losses in investments made on our platform;
34
• technical or other problems prevent us from delivering our products and services with the speed, functionality, security, and reliability that our customers expect;
• cybersecurity incidents, employee or service provider misconduct, or other unforeseen activities that causes losses to us or our customers, including losses to assets held by
us on behalf of our customers;
• modifications to our pricing model or modifications by competitors to their pricing;
• we fail to provide adequate customer service to customers; or
• we or other companies in our industry are the subject of adverse media reports or other negative publicity.
From time to time, certain of these factors have negatively affected customer retention, growth, and engagement to varying degrees. If we are unable to maintain or increase our
customer base and customer engagement, our revenue and financial results may be adversely affected. Any decrease in user retention, growth, or engagement could render our
products and services less attractive to customers, which may have an adverse impact on our revenue, business, operating results, and financial condition. If our customer growth rate
slows or declines, we will become increasingly dependent on our ability to maintain or increase levels of user engagement and monetization in order to drive growth of revenue.
We expect our operating expenses to increase significantly in the foreseeable future and may not be able to achieve profitability or achieve positive cash flow from
operations on a consistent basis, which may cause our business, operating results, and financial condition to be adversely impacted.
We anticipate that our operating expenses will increase substantially in the foreseeable future as we continue to hire additional employees, expand our sales and marketing
efforts, develop additional products and services, and expand our international business. Moreover, we expect to incur significant legal, accounting, and other expenses, including
substantially higher costs to obtain and maintain director and officer liability insurance, as a result of becoming a public company. This may prove more expensive than we currently
anticipate, and we may not succeed in increasing our net revenue sufficiently to offset these higher expenses. Our revenue growth may slow, or our net revenue may decline for a
number of other reasons, including reduced demand for our offerings, increased competition, a decrease in the growth or size of the cryptoeconomy, or any failure to capitalize on
growth opportunities. Any failure to increase our revenue could prevent us from achieving profitability. We cannot be certain that we will be able to achieve profitability or achieve
positive operating cash flow on any quarterly or annual basis. If we are unable to effectively manage these risks and difficulties as we encounter them, our business, operating results,
and financial condition may suffer.
Our business and operations have experienced significant growth, and if we do not effectively manage our growth, or are unable to improve our systems and processes,
our operating results will be negatively affected.
We have significantly expanded our operations in recent years, both in terms of employee headcount as well as the number of customers. For example, we have grown from 199
employees as of December 31, 2017 to 1,249 employees as of December 31, 2020. We expect such growth to continue for the foreseeable future. As we grow, our business becomes
increasingly complex. To effectively manage and capitalize on our growth, we must continue to expand our information technology and financial, operating, and administrative systems
and controls, and continue to manage headcount, capital, and processes efficiently. Our continued growth could strain our existing resources, and we could experience ongoing
operating difficulties in managing our business as it expands across numerous jurisdictions, including difficulties in hiring, training, and managing a diffuse and growing employee
base. Failure to scale and preserve our company culture with growth could harm our future success, including our ability to retain and recruit personnel and to effectively focus on and
pursue our corporate objectives. If we do not adapt
35
to meet these evolving challenges, or if our management team does not effectively scale with our growth, we may experience erosion to our brand, the quality of our products and
services may suffer, and our company culture may be harmed. Moreover, the failure of our systems and processes could undermine our ability to provide accurate, timely, and reliable
reports on our financial and operating results, including the financial statements provided herein, and could impact the effectiveness of our internal controls over financial reporting. In
addition, our systems and processes may not prevent or detect all errors, omissions, or fraud. Any of the foregoing operational failures could lead to noncompliance with laws, loss of
operating licenses or other authorizations, or loss of bank relationships that could substantially impair or even suspend company operations.
Successful implementation of our growth strategy will also require significant expenditures before any substantial associated revenue is generated and we cannot guarantee that
these increased investments will result in corresponding and offsetting revenue growth. Because we have a limited history operating our business at its current scale, it is difficult to
evaluate our current business and future prospects, including our ability to plan for and model future growth. Our limited operating experience at this scale, combined with the rapidly
evolving nature of the crypto asset market in which we operate, substantial uncertainty concerning how these markets may develop, and other economic factors beyond our control,
reduces our ability to accurately forecast quarterly or annual revenue. Failure to manage our future growth effectively could have an adverse effect on our business, operating results,
and financial condition.
Our strategy and focus on delivering high-quality, compliant, easy-to-use, and secure crypto-related financial services may not maximize short-term or medium-term
financial results.
We have taken, and expect to continue to take, actions that we believe are in the best interests of our customers and the long-term interests of our business, even if those actions
do not necessarily maximize short-term or medium-term results. These include expending significant managerial, technical, and legal efforts on complying with laws and regulations
that are applicable to our products and services and ensuring that our products are secure. We also focus on driving long-term engagement with our customers through innovation and
developing new industry-leading products and technologies. These decisions may not be consistent with the short-term and medium-term expectations of our stockholders and may
not produce the long-term benefits that we expect, which could have an adverse effect on our business, operating results, and financial condition.
A significant amount of the Trading Volume on our platform is derived from a relatively small number of customers, and the loss of these customers, or a reduction in
their Trading Volume, could have an adverse effect on our business, operating results, and financial condition.
A relatively small number of institutional market makers and high-transaction volume retail customers account for a significant amount of the Trading Volume on our platform and
our net revenue. We expect significant Trading Volume and net revenue attributable to these customers for the foreseeable future. As a result, a loss of these customers, or a
reduction in their Trading Volume, and our inability to replace these customers with other customers, could have an adverse effect on our business, operating results, and financial
condition.
Due to our limited operating history, it may be difficult to evaluate our business and future prospects, and we may not be able to achieve or maintain profitability in any
given period.
We began our operations in 2012 and since then our business model has continued to evolve. Our net revenue has significantly grown since our formation, but there is no
assurance that this growth rate will continue in future periods and you should not rely on the revenue growth of any given prior quarterly or annual period as an indication of our future
performance. We may not always generate sufficient total revenue to achieve positive cash flow from operations or profitability in any given period, and our limited operating history
and the volatile nature of our business make it difficult to evaluate our current business and our future prospects. For instance, although we generated net income of $322.3 million
in 2020, we incurred a net loss of $30.4 million in 2019. We have encountered and will continue to encounter risks
36
and difficulties as described in this section. If we do not manage these risks successfully, our business may be adversely impacted. If our growth rate were to decline significantly or
become negative, it could adversely affect our operating results and financial condition. If we are not able to achieve or maintain positive cash flow from operations, our business may
be adversely impacted and we may require additional financing, which may not be available on favorable terms or at all, or which would be dilutive to our stockholders.
Because our long-term success depends, in part, on our ability to expand our sales to customers outside the United States, our business is susceptible to risks
associated with international operations.
We currently have subsidiaries in the United Kingdom, Japan, Singapore, Brazil, Germany, the Cayman Islands, the Philippines, and Ireland, as well as the United States. We
plan to enter into or increase our presence in additional markets around the world. We have a limited operating history outside the United States, and our ability to manage our
business and conduct our operations internationally requires considerable management attention and resources and is subject to particular challenges of supporting a rapidly growing
business in an environment of diverse cultures, languages, customs, tax laws, legal systems, alternate dispute systems and regulatory systems. As we continue to expand our
business and customer base outside the United States, we will be increasingly susceptible to risks associated with international operations. These risks and challenges include:
• difficulty establishing and managing international operations and the increased operations, travel, infrastructure, including establishment of local customer service operations,
and legal and regulatory compliance costs associated with different jurisdictions;
• the need to vary pricing and margins to effectively compete in international markets;
• the need to adapt and localize our products and services for specific countries, including offering services and support in local languages;
• compliance with multiple, potentially conflicting and changing governmental laws and regulations across different jurisdictions;
• compliance with U.S. and foreign laws designed to combat money laundering and the financing of terrorist activities, as well as economic and trade sanctions;
• difficulties obtaining required licensing from regulators in foreign jurisdictions;
• competition with companies that have greater experience in the local markets, pre-existing relationships with customers in these markets or are subject to less regulatory
requirements in local jurisdictions;
• varying levels of payments and blockchain technology adoption and infrastructure, and increased network, payment processing, banking, and other costs;
• compliance with anti-bribery laws, including compliance with the FCPA, the U.K. Bribery Act 2010, and other local anticorruption laws;
• difficulties in collecting in foreign currencies and associated foreign currency exposure;
• difficulties holding, repatriating, and transferring funds held in offshore bank accounts;
• difficulties in enforcing contracts and collecting accounts receivable, longer payment cycles and other collection difficulties;
• restrictions on crypto asset trading;
• stringent local labor laws and regulations;
37
• potentially adverse tax developments and consequences;
• antitrust and competition regulations; and
• regional economic and political conditions.
We have limited experience with international regulatory environments and market practices and may not be able to penetrate or successfully operate in the markets we choose to
enter. In addition, we may incur significant expenses as a result of our international expansion, and we may not be successful. We may face limited brand recognition in certain parts
of the world that could lead to non-acceptance or delayed acceptance of our products and services by customers in new markets. We may also face challenges in complying with local
laws and regulations. Our failure to successfully manage these risks could harm our international operations and have an adverse effect on our business, operating results, and
financial condition.
Disputes with our customers could adversely impact our brand and reputation and our business, operating results, and financial condition.
From time to time we have been, and may in the future be, subject to claims and disputes with our customers with respect to our products and services, such as regarding the
execution and settlement of crypto asset trades, fraudulent or unauthorized transactions, account takeovers, deposits and withdrawals of crypto assets, failures or malfunctions of our
systems and services, or other issues relating to our products services. For example, during periods of heavy Trading Volumes, we have received increased customer complaints.
Additionally, the ingenuity of criminal fraudsters, combined with many consumers’ susceptibility to fraud, may cause our customers to be subject to ongoing account takeovers and
identity fraud issues. While we have taken measures to detect and reduce the risk of fraud, there is no guarantee that they will be successful and, in any case, require continuous
improvement and optimization for continually evolving forms of fraud to be effective. There can be no guarantee that we will be successful in detecting and resolving these disputes or
defending ourselves in any of these matters, and any failure may result in impaired relationships with our customers, damage to our brand and reputation, and substantial fines and
damages. In some cases, the measures we have implemented to detect and deter fraud have led to poor customer experiences, including indefinite account inaccessibility for some of
our customers, which increases our customer support costs and can compound damages. We could incur significant costs in compensating our customers, such as if a transaction
was unauthorized, erroneous, or fraudulent. We could also incur significant legal expenses resolving and defending claims, even those without merit. To the extent we are found to
have failed to fulfill our regulatory obligations, we could also lose our authorizations or licenses or become subject to conditions that could make future operations more costly, impair
our ability to grow, and adversely impact our operating results. We currently are, and may in the future become, subject to investigation and enforcement action by state, federal, and
international consumer protection agencies, including the Consumer Financial Protection Bureau, the Federal Trade Commission, state attorneys general in the United States, the
U.K. Financial Conduct Authority, the U.K. Financial Ombudsman Service, and the U.K. Office of Fair Trading, each of which monitor customer complaints against us and, from time to
time, escalate matters for investigation and potential enforcement against us.
While certain of our customer agreements contain arbitration provisions with class action waiver provisions that may limit our exposure to consumer class action litigation, some
federal, state, and foreign courts have refused to enforce one or more of these provisions, and there can be no assurance that we will be successful in enforcing these arbitration
provisions, including the class action waiver provisions, in the future or in any given case. Legislative, administrative, or regulatory developments may directly or indirectly prohibit or
limit the use of pre-dispute arbitration clauses and class action waiver provisions. Any such prohibitions or limitations on or discontinuation of the use of, such arbitration or class
action waiver provisions could subject us to additional lawsuits, including additional consumer class action litigation, and significantly limit our ability to avoid exposure from consumer
class action litigation.
38
We may suffer losses due to staking, delegating, and other related services we provide to our customers.
Certain supported crypto assets enable holders to earn rewards by participating in decentralized governance, bookkeeping and transaction confirmation activities on their
underlying blockchain networks, such as through staking, delegating, baking, and voting the crypto assets. We currently provide and expect to continue to provide such services for
certain supported crypto assets to our customers in order to enable them to earn rewards based on crypto assets that we hold on their behalf. For instance, as a service to customers,
we operate staking nodes on certain blockchain networks utilizing customers’ crypto assets and pass through the rewards received to those customers, less a service fee. In other
cases, upon customers’ instructions, we may delegate or transfer our customers’ assets to third party service providers that are unaffiliated with us. Some networks further require
customer assets to be transferred into smart contracts on the underlying blockchain networks not under our or anyone’s control. If our validator, any third-party service providers, or
smart contracts fail to behave as expected, suffer cybersecurity attacks, experience security issues, or encounter other problems, our customers’ assets may be irretrievably lost. In
addition, certain blockchain networks dictate requirements for participation in the relevant decentralized governance activity, and may impose penalties, or “slashing,” if the relevant
activities are not performed correctly, such as if the staker, delegator, or baker acts maliciously on the network, “double signs” any transactions, or experience extended downtimes. If
we or any of our service providers are slashed by the underlying blockchain network, our customers’ assets may be confiscated, withdrawn, or burnt by the network, resulting in losses
for which we are responsible. Furthermore, certain types of staking require the payment of transaction fees on the underlying blockchain network and such fees can become
significant as the amount and complexity of the transaction grows, depending on the degree of network congestion and the price of Ethereum. If we experience a high volume of such
staking requests from our customers on an ongoing basis, we could incur significant costs. Any penalties or slashing events could damage our brand and reputation, cause us to
suffer financial losses, discourage existing and future customers from utilizing our products and services, and adversely impact our business.
We provide secured loans to our customers, which exposes us to credit risks and may cause us to incur financial or reputational harm.
We provide consumer and commercial loans to qualified customers secured by their crypto asset holdings on our platform, which exposes us to the risk of our borrowers’ inability
to repay such loans. In addition, such activity results in us being subject to lending laws and regulations in the applicable jurisdiction and as a result we may be subject to additional
regulatory scrutiny. In the future we may enter into credit arrangements with financial institutions to obtain the capital we provide under this offering. Any termination or interruption in
the financial institutions’ ability to lend to us could interrupt our ability to provide capital to qualified customers to the extent we rely on such credit lines to continue to offer or to grow
such products. Further, our credit decision process and underwriting, pricing, loss forecasting, and scoring models used to evaluate loan applications may contain errors or may not
adequately assess creditworthiness of our borrowers, or may be otherwise ineffective, resulting in incorrect approvals or denials of loans. It is also possible that loan applicants could
provide false or incorrect information.
Borrower loan loss rates may be significantly affected by economic downturns or general economic conditions beyond our control and beyond the control of individual borrowers.
In particular, loss rates on loans may increase due to factors such as prevailing market conditions in the cryptoeconomy, the price of Bitcoin and other crypto assets, the amount of
liquidity in the markets, and other factors. Borrowers may seek protection under federal bankruptcy law or similar laws. If a borrower files for bankruptcy (or becomes the subject of an
involuntary petition), a stay will go into effect that will automatically put any pending collection actions on the loan on hold and prevent further collection action absent bankruptcy court
approval. The efficacy of our security interest in customer collateral is not guaranteed under Delaware law or the Uniform Commercial Code and therefore we may be exposed to loss
in the event of a customer default, even if we appear to be secured against such default. While we have not incurred any material losses to date, if any of the foregoing events were to
occur, our reputation and relationships with
39
borrowers, and our financial results, could be harmed. We intend to continue to explore other products, models, and structures for offering consumer and commercial financing, and
other forms of credit and loan products. Some of those models or structures may require, or be deemed to require, additional data, procedures, partnerships, licenses, regulatory
approvals, or capabilities that we have not yet obtained or developed.
We are exposed to transaction losses due to chargebacks as a result of fraud or uncollectibility that may adversely impact our business, operating results, and financial
condition.
Certain of our products and services are paid for by credit and debit cards through payment processors which exposes us to risks associated with chargebacks and refunds.
These claims could arise from fraud, misuse, unintentional use, settlement delay, or other activities. Also, criminals are using increasingly sophisticated methods to engage in illegal
activities, such as counterfeiting and fraud. If we are unable to collect such amounts from the customer, or if the customer refuses or is unable, due to bankruptcy or other reasons, to
reimburse us, we bear the loss for the amount of the chargeback or refund.
While we have policies to manage and mitigate chargeback and fraud risks, there is no assurance that such policies will be effective. Our failure to limit chargebacks and
fraudulent transactions could increase the number of refunds and chargebacks that we have to process. In addition, if the number of refunds and chargebacks increase, our payment
processors could require us to increase reserves, impose penalties on us, charge additional fees, or terminate their relationships with us. Failure to effectively manage risk and
prevent fraud could increase our chargeback and refund losses or cause us to incur other liabilities. Increases in chargebacks, refunds or other liabilities could have an adverse effect
on our operating results, financial condition, and cash flows.
We plan to continue to make acquisitions and investments, which could require significant management attention, disrupt our business, result in dilution to our
stockholders, and adversely affect our financial results.
As part of our business strategy, we have made and intend to continue making acquisitions to add specialized employees, complementary companies, products, services,
licenses, or technologies. We also invest in companies and technologies, many of which are private companies and technologies that are highly speculative in nature. In the future, we
may not be able to find other suitable acquisition and investment candidates, and we may not be able to complete acquisitions or make investments on favorable terms, if at all. In
some cases, the costs of such acquisitions may be substantial, and there is no assurance that we will receive a favorable return on investment for our acquisitions. We may in the
future be required to write off acquisitions or investment. Moreover, our previous and future acquisitions may not achieve our goals, and any future acquisitions we complete could be
viewed negatively by customers, developers, advertisers, or investors. For example, in February 2019, we announced the acquisition of Neutrino S.r.l., a blockchain intelligence
platform, whose founders were directly affiliated with the software firm the Hacking Team, which purportedly sold software with surveillance capabilities to governments with
authoritarian regimes, resulting in reputational harm to our business, a loss of customers, and increased cost. In addition, if we fail to successfully close or integrate any acquisitions,
or integrate the products or technologies associated with such acquisitions into our company, our net revenue and operating results could be adversely affected. Our ability to acquire
and integrate companies, products, services, licenses, or technologies in a successful manner is unproven. Any integration process may require significant time and resources, and
we may not be able to manage the process successfully, including successfully securing regulatory approvals which may be required to close the transaction and/or to continue to
operate the target firm’s business or products in a manner that is useful to Coinbase. We may not successfully evaluate or utilize the acquired products, services, technology, or
personnel, or accurately forecast the financial impact of an acquisition transaction, including accounting charges. We may have to pay cash, incur debt, or issue equity securities to
pay for any such acquisition, any of which could adversely affect our financial results. The sale of equity or issuance of debt to finance any such acquisitions could result in dilution to
our stockholders. The incurrence of indebtedness would result in
40
increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations.
If we fail to develop, maintain, and enhance our brand and reputation, our business, operating results, and financial condition may be adversely affected.
Our brand and reputation are key assets and a competitive advantage. Maintaining, protecting, and enhancing our brand depends largely on the success of our marketing efforts,
ability to provide consistent, high-quality, and secure products, services, features, and support, and our ability to successfully secure, maintain, and defend our rights to use the
“Coinbase” mark and other trademarks important to our brand. We believe that the importance of our brand will increase as competition further intensifies. Our brand and reputation
could be harmed if we fail to achieve these objectives or if our public image were to be tarnished by negative publicity, unexpected events, or actions by third parties. Unfavorable
publicity about us, including our products, services, technology, customer service, personnel, and crypto asset or crypto asset platforms generally could diminish confidence in, and
the use of, our products and services. In addition, because we are a founder-led company, actions by, or unfavorable publicity about, Brian Armstrong, our co-founder and Chief
Executive Officer, may adversely impact our brand and reputation. Such negative publicity also could have an adverse effect on the size and engagement of our customers and could
result in decreased revenue, which could have an adverse effect on our business, operating results, and financial condition.
Key business metrics and other estimates are subject to inherent challenges in measurement, and our business, operating results, and financial condition could be
adversely affected by real or perceived inaccuracies in those metrics.
We regularly review key business metrics, including the number of our Verified Users and MTUs, our Trading Volume and other measures to evaluate growth trends, measure our
performance, and make strategic decisions. These key metrics are calculated using internal company data and have not been validated by an independent third party. While these
numbers are based on what we currently believe to be reasonable estimates for the applicable period of measurement, there are inherent challenges in such measurements. If we fail
to maintain an effective analytics platform, our key metrics calculations may be inaccurate, and we may not be able to identify those inaccuracies.
Our key business metrics may also be impacted by compliance or fraud-related bans, technical incidents, or false or spam accounts in existence on our platform. We regularly
deactivate fraudulent and spam accounts that violate our terms of service, and exclude these users from the calculation of our key business metrics; however, we may not succeed in
identifying and removing all such accounts from our platform. Additionally, users are not prohibited from having more than one account and our Verified Users metric may overstate
the number of unique customers who have registered an account on our platform as one customer may register for, and use, multiple accounts with different email addresses, phone
numbers, or usernames. If our metrics provide us with incorrect or incomplete information about users and their behavior, we may make inaccurate conclusions about our business.
Unfavorable media coverage could negatively affect our business.
We receive a high degree of media coverage in the cryptoeconomy and around the world. Unfavorable publicity regarding, for example, our product changes, product quality,
litigation or regulatory activity, privacy practices, terms of service, employment matters, the use of our products, services, or supported crypto assets for illicit or objectionable ends,
the actions of our customers, or the actions of other companies that provide similar services to ours, has in the past, and could in the future, adversely affect our reputation. Further,
we have in the past, and may in the future, be the target of social media campaigns criticizing actual or perceived actions or inactions that are disfavored by our customers,
employees, or society at-large, which campaigns could materially impact our customers’ decisions to trade on our platform. Any such negative publicity could have an adverse effect
on the size, activity, and
41
loyalty of our customers and result in a decrease in net revenue, which could adversely affect our business, operating results, and financial condition.
Our platform may be exploited to facilitate illegal activity such as fraud, money laundering, gambling, tax evasion, and scams. If any of our customers use our platform to
further such illegal activities, our business could be adversely affected.
Our platform may be exploited to facilitate illegal activity including fraud, money laundering, gambling, tax evasion, and scams. We or our partners may be specifically targeted by
individuals seeking to conduct fraudulent transfers, and it may be difficult or impossible for us to detect and avoid such transactions in certain circumstances. The use of our platform
for illegal or improper purposes could subject us to claims, individual and class action lawsuits, and government and regulatory investigations, prosecutions, enforcement actions,
inquiries, or requests that could result in liability and reputational harm for us. Moreover, certain activity that may be legal in one jurisdiction may be illegal in another jurisdiction, and
certain activities that are at one time legal may in the future be deemed illegal in the same jurisdiction. As a result, there is significant uncertainty and cost associated with detecting
and monitoring transactions for compliance with local laws. In the event that a customer is found responsible for intentionally or inadvertently violating the laws in any jurisdiction, we
may be subject to governmental inquiries, enforcement actions, prosecuted, or otherwise held secondarily liable for aiding or facilitating such activities. Changes in law have also
increased the penalties for money transmitters for certain illegal activities, and government authorities may consider increased or additional penalties from time to time. Owners of
intellectual property rights or government authorities may seek to bring legal action against money transmitters, including us, for involvement in the sale of infringing or allegedly
infringing items. Any threatened or resulting claims could result in reputational harm, and any resulting liabilities, loss of transaction volume, or increased costs could harm our
business.
Moreover, while fiat currencies can be used to facilitate illegal activities, crypto assets are relatively new and, in many jurisdictions, may be lightly regulated or largely unregulated.
Many types of crypto assets have characteristics, such as the speed with which digital currency transactions can be conducted, the ability to conduct transactions without the
involvement of regulated intermediaries, the ability to engage in transactions across multiple jurisdictions, the irreversible nature of certain crypto asset transactions, and encryption
technology that anonymizes these transactions, that make crypto assets susceptible to use in illegal activity. U.S. federal and state and foreign regulatory authorities and law
enforcement agencies, such as the Department of Justice, SEC, Commodity Futures Trading Commission, Federal Trade Commission, Internal Revenue Service, or IRS, and various
state securities and financial regulators have taken and continue to take legal action against persons and entities alleged to be engaged in fraudulent schemes or other illicit activity
involving crypto assets. We also support crypto assets that incorporate privacy-enhancing features, and may from time to time support additional crypto assets with similar
functionalities. These privacy-enhancing crypto assets obscure the identities of sender and receiver, and may prevent law enforcement officials from tracing the source of funds on the
blockchain. Facilitating transactions in these crypto assets may cause us to be at increased risk of liability arising out of anti-money laundering and economic sanctions laws and
regulations.
While we believe that our risk management and compliance framework is designed to detect significant illicit activities conducted by our potential or existing customers, we cannot
ensure that we will be able to detect all illegal activity on our platform. If any of our customers use our platform to further such illegal activities, our business could be adversely
affected.
Our compliance and risk management methods might not be effective and may result in outcomes that could adversely affect our reputation, operating results, and
financial condition.
Our ability to comply with applicable complex and evolving laws, regulations, and rules is largely dependent on the establishment and maintenance of our compliance, audit, and
reporting systems, as well as our ability to attract and retain qualified compliance and other risk management personnel. While we have devoted significant resources to develop
policies and procedures to identify, monitor, and
42
manage our risks, and expect to continue to do so in the future, we cannot assure you that our policies and procedures will always be effective or that we will always be successful in
monitoring or evaluating the risks to which we are or may be exposed in all market environments or against all types of risks, including unidentified or unanticipated risks. Our risk
management policies and procedures rely on a combination of technical and human controls and supervision that are subject to error and failure. Some of our methods for managing
risk are discretionary by nature and are based on internally developed controls and observed historical market behavior, and also involve reliance on standard industry practices.
These methods may not adequately prevent losses, particularly as they relate to extreme market movements, which may be significantly greater than historical fluctuations in the
market. Our risk management policies and procedures also may not adequately prevent losses due to technical errors if our testing and quality control practices are not effective in
preventing failures. In addition, we may elect to adjust our risk management policies and procedures to allow for an increase in risk tolerance, which could expose us to the risk of
greater losses.
Regulators periodically review our compliance with our own policies and procedures and with a variety of laws and regulations. We have received in the past and may from time to
time receive additional examination reports citing violations of rules and regulations and inadequacies in existing compliance programs, and requiring us to enhance certain practices
with respect to our compliance program, including due diligence, training, monitoring, reporting, and recordkeeping. If we fail to comply with these, or do not adequately remediate
certain findings, regulators could take a variety of actions that could impair our ability to conduct our business, including delaying, denying, withdrawing, or conditioning approval of
certain products and services. In addition, regulators have broad enforcement powers to censure, fine, issue cease-and-desist orders or prohibit us from engaging in some of our
business activities. We face the risk of significant intervention by regulatory authorities, including extensive examination and surveillance activities. In the case of non-compliance or
alleged non-compliance, we could be subject to investigations and proceedings that may result in substantial penalties or civil lawsuits, including by customers, for damages which can
be significant. Any of these outcomes would adversely affect our reputation and brand and our business, operating results, and financial condition. Some of these outcomes could
adversely affect our ability to conduct our business.
Low short-term interest rates negatively impact us.
The level of prevailing short-term interest rates affects our profitability because we derive a portion of our revenue from interest earned from funds deposited with us by our
customers which we hold on their behalf in custodial accounts at banks. Higher interest rates increase the amount of interest income earned from these customer deposits. If short-
term interest rates remain low or start to decline further, our revenue derived from interest will correspondingly decline which would negatively impact our profitability.
We hold certain investments in DeFi protocols and may suffer losses if they do not function as expected.
We hold investments in various DeFi protocols. These protocols achieve their investment purposes through self-executing smart contracts that allow users to invest crypto assets
in a pool from which other users can borrow without requiring an intermediate party to facilitate these transactions. These investments earn interest to the investor based on the rates
at which borrowers repay the loan, and can generally be withdrawn with no restrictions. However, these DeFi protocols are subject to various risks, including the risk that the
underlying smart contract is insecure, the risk that borrowers may default and the investor will not be able to recover its investment, the risk that any underlying collateral may
experience significant volatility, and the risk of certain core developers with protocol administration rights can make unauthorized or harmful changes to the underlying smart contract.
If any of these risks materialize, our investments in these DeFi protocols may be adversely impacted.
43
We may suffer losses due to abrupt and erratic market movements.
The crypto asset market has been characterized by significant volatility and unexpected price movements. Certain crypto assets may become more volatile and less liquid in a
very short period of time, resulting in market prices being subject to erratic and abrupt market movement, which could harm our business. For instance, abrupt changes in volatility or
market movement can lead to extreme pressures on our platform and infrastructure that can lead to inadvertent suspension of services across parts of the platform or the entire
platform. For example, in 2020, we experienced approximately 30 outages, with an average outage duration of 64.6 minutes. These outages lead to increased customer service
expense, can cause customer loss and reputational damage, and can lead to other damages for which we may be responsible.
RisksRelatedtoCryptoAssets
Due to unfamiliarity and some negative publicity associated with crypto asset platforms, existing and potential customers may lose confidence in crypto asset platforms.
Crypto asset platforms are relatively new. Many of our competitors are unlicensed, unregulated, operate without supervision by any governmental authorities, and do not provide
the public with significant information regarding their ownership structure, management team, corporate practices, cybersecurity, and regulatory compliance. As a result, customers
and the general public may lose confidence in crypto asset platforms, including regulated platforms like ours.
Since the inception of the cryptoeconomy, numerous crypto asset platforms have been sued, investigated, or shut down due to fraud, manipulative practices, business failure, and
security breaches. In many of these instances, customers of these platforms were not compensated or made whole for their losses. Larger platforms like us are more appealing
targets for hackers and malware, and may also be more likely to be targets of regulatory enforcement actions. For example, in February 2014, Mt. Gox, the then largest crypto asset
platform worldwide, filed for bankruptcy protection in Japan after an estimated 700,000 Bitcoins were stolen from its wallets. In May 2019, Binance, one of the world’s largest
platforms, was hacked, resulting in losses of approximately $40 million and since 2019, the Attorney General of the State of New York has been investigating the alleged misuse of
over $800 million of customer assets by Bitfinex and its associated entities.
In addition, there have been reports that a significant amount of crypto asset trading volume on crypto asset platforms is fabricated and false in nature, with a specific focus on
unregulated platforms located outside the United States. Such reports may indicate that the market for crypto asset platform activities is significantly smaller than otherwise
understood.
Negative perception, a lack of stability and standardized regulation in the cryptoeconomy, and the closure or temporary shutdown of crypto asset platforms due to fraud, business
failure, hackers or malware, or government mandated regulation, and associated losses suffered by customers may reduce confidence in the cryptoeconomy and result in greater
volatility of the prices of assets, including significant depreciation in value. Any of these events could harm an adverse impact on our business.
Depositing and withdrawing crypto assets into and from our platform involve risks, which could result in loss of customer assets, customer disputes and other liabilities,
which could adversely impact our business.
In order to own, transfer and use a crypto asset on its underlying blockchain network, a person must have a private and public key pair associated with a network address,
commonly referred to as a “wallet”. Each wallet is associated with a unique “public key” and “private key” pair, each of which is a string of alphanumerical characters. To deposit crypto
assets held by a customer onto our platform or custody platform, a customer must “sign” a transaction that consists of the private key of the wallet from where the customer is
transferring crypto assets, the public key of a wallet that we control which we provide to the customer, and broadcast the deposit transaction onto the underlying blockchain network.
Similarly, to
44
withdraw crypto assets from our platform or custody platform, the customer must provide us with the public key of the wallet that the crypto assets are to be transferred to, and we
would be required to “sign” a transaction authorizing the transfer. In addition, some crypto networks require additional information to be provided in connection with any transfer of
crypto assets to or from our platforms. A number of errors can occur in the process of depositing or withdrawing crypto assets into or from our platform, such as typos, mistakes, or the
failure to include the information required by the blockchain network. For instance, a user may incorrectly enter our wallet’s public key or the desired recipient’s public key when
depositing and withdrawing from our platforms, respectively. Alternatively, a user may transfer crypto assets to a wallet address that he does not own, control or hold the private keys
to. In addition, each wallet address is only compatible with the underlying blockchain network on which it is created. For instance, a Bitcoin wallet address can only be used to send
and receive Bitcoins. If any Ethereum or other crypto assets is sent to a Bitcoin wallet address, or if any of the foregoing errors occur, all of the customer’s crypto assets will be
permanently and irretrievably lost with no means of recovery. We have encountered and expect to continue to encounter similar incidents with our customers. Such incidents could
result in customer disputes, damage to our brand and reputation, legal claims against us, and financial liabilities, any of which could adversely affect our business.
A temporary or permanent blockchain “fork” to any supported crypto asset could adversely affect our business.
Blockchain protocols, including Bitcoin and Ethereum, are open source. Any user can download the software, modify it, and then propose that Bitcoin, Ethereum or other
blockchain protocols users and miners adopt the modification. When a modification is introduced and a substantial majority of users and miners consent to the modification, the
change is implemented and the Bitcoin, Ethereum or other blockchain protocol networks, as applicable, remain uninterrupted. However, if less than a substantial majority of users and
miners consent to the proposed modification, and the modification is not compatible with the software prior to its modification, the consequence would be what is known as a “fork”
(i.e., “split”) of the impacted blockchain protocol network and respective blockchain, with one prong running the pre-modified software and the other running the modified software. The
effect of such a fork would be the existence of two parallel versions of the Bitcoin, Ethereum or other blockchain protocol network, as applicable, running simultaneously, but with each
split network’s crypto asset lacking interchangeability.
Both Bitcoin and Ethereum protocols have been subject to “forks” that resulted in the creation of new networks, including Bitcoin Cash ABC, Bitcoin Cash SV, Bitcoin Diamond,
Bitcoin Gold, Ethereum Classic, and others. Some of these forks have caused fragmentation among platforms as to the correct naming convention for forked crypto assets. Due to the
lack of a central registry or rulemaking body, no single entity has the ability to dictate the nomenclature of forked crypto assets, causing disagreements and a lack of uniformity among
platforms on the nomenclature of forked crypto assets, and which results in further confusion to customers as to the nature of assets they hold on platforms. In addition, several of
these forks were contentious and as a result, participants in certain communities may harbor ill will towards other communities. As a result, certain community members may take
actions that adversely impact the use, adoption, and price of Bitcoin, Ethereum, or any of their forked alternatives.
Furthermore, hard forks can lead to new security concerns. For instance, when the Ethereum and Ethereum Classic networks split in July 2016, replay attacks, in which
transactions from one network were rebroadcast on the other network to achieve “double-spending”, plagued platforms that traded Ethereum through at least October 2016, resulting
in significant losses to some crypto asset platforms. Similar replay attacks occurred in connection with the Bitcoin Cash and Bitcoin Cash SV network split in November 2018. Another
possible result of a hard fork is an inherent decrease in the level of security due to the splitting of some mining power across networks, making it easier for a malicious actor to exceed
50% of the mining power of that network, thereby making crypto assets that rely on proof-of-work more susceptible to attack, as has occurred with Ethereum Classic.
We do not believe that we are required to support any fork or provide the benefit of any forked crypto asset to our customers. However, we have in the past and may in the future
continue to be subject to
45
claims by customers arguing that they are entitled to receive certain forked or airdropped crypto assets by virtue of crypto assets that they hold with us. If any customers succeed on a
claim that they are entitled to receive the benefits of a forked or airdropped crypto asset that we do not or are unable to support, we may be required to pay significant damages, fines
or other fees to compensate customers for their losses.
Future forks may occur at any time. A fork can lead to a disruption of networks and our information technology systems, cybersecurity attacks, replay attacks, or security
weaknesses, any of which can further lead to temporary or even permanent loss of our and our customers’ assets. Such disruption and loss could cause us to be exposed to liability,
even in circumstances where we have no intention of supporting an asset compromised by a fork.
We currently support, and expect to continue to support, certain smart contract-based crypto assets. If the underlying smart contracts for these crypto assets do not
operate as expected, they could lose value and our business could be adversely affected.
We currently support, and expect to continue to support, various crypto assets that represent units of value on smart contracts deployed on a third party blockchain. Smart
contracts are programs that store and transfer value and execute automatically when certain conditions are met. Since smart contracts typically cannot be stopped or reversed,
vulnerabilities in their programming and design can have damaging effects. For instance, in April 2018, a batch overflow bug was found in many Ethereum-based ERC20-compatible
smart contract tokens that allows hackers to create a large number of smart contract tokens, causing multiple crypto asset platforms worldwide to shut down ERC20-compatible token
trading. Similarly, in March 2020, a design flaw in the MakerDAO smart contract caused forced liquidations of crypto assets at significantly discounted prices, resulting in millions of
dollars of losses to users who had deposited crypto assets into the smart contract. If any such vulnerabilities or flaws come to fruition, smart contract-based crypto assets, including
those held by our customers on our platforms, may suffer negative publicity, be exposed to security vulnerabilities, decline significantly in value, and lose liquidity over a short period of
time.
In some cases, smart contracts can be controlled by one or more “admin keys” or users with special privileges, or “super users”. These users have the ability to unilaterally make
changes to the smart contract, enable or disable features on the smart contract, change how the smart contract receives external inputs and data, and make other changes to the
smart contract. For smart contracts that hold a pool of reserves, these users may also be able to extract funds from the pool, liquidate assets held in the pool, or take other actions that
decrease the value of the assets held by the smart contract in reserves. Even for crypto assets that have adopted a decentralized governance mechanism, such as smart contracts
that are governed by the holders of a governance token, such governance tokens can be concentrated in the hands of a small group of core community members, who would be able
to make similar changes unilaterally to the smart contract. If any such super user or group of core members unilaterally make adverse changes to a smart contract, the design,
functionality, features and value of the smart contract, its related crypto assets may be harmed. In addition, assets held by the smart contract in reserves may be stolen, misused,
burnt, locked up or otherwise become unusable and irrecoverable. These super users can also become targets of hackers and malicious attackers. If an attacker is able to access or
obtain the super user privileges of a smart contract, or if a smart contract’s super-users or core community members take actions that adversely affects the smart contract, Coinbase
customers who hold and transact in the affected crypto assets may experience decreased functionality and value of the applicable crypto assets, up to and including a total loss of the
value of such crypto assets. Although we do not control these smart contracts, any such events could cause customers to seek damages against us for their losses, result in
reputational damage to us, or in other ways adversely impact our business.
46
From time to time, we may encounter technical issues in connection with the integration of supported crypto assets and changes and upgrades to their underlying
networks, which could adversely affect our business.
In order to support any supported crypto asset, a variety of front and back-end technical and development work is required to implement our wallet, custody, trading, staking and
other solutions for our customers, and to integrate such supported crypto asset with our existing technical infrastructure. For certain crypto assets, a significant amount of development
work is required and there is no guarantee that we will be able to integrate successfully with any existing or future crypto asset. In addition, such integration may introduce software
errors or weaknesses into our platform, including our existing infrastructure. Even if such integration is initially successful, any number of technical changes, software upgrades, soft or
hard forks, cybersecurity incidents, or other changes to the underlying blockchain network may occur from time to time, causing incompatibility, technical issues, disruptions, or
security weaknesses to our platform. If we are unable to identify, troubleshoot and resolve any such issues successfully, we may no longer be able to support such crypto asset, our
customers’ assets may be frozen or lost, the security of our hot, warm, or cold wallets may be compromised, and our platform and technical infrastructure may be affected, all of which
could adversely impact our business.
If miners or validators of any supported crypto asset demand high transaction fees, our operating results may be adversely affected.
We charge miner fees when a customer sends certain crypto assets from their Coinbase account to a non-Coinbase account. We estimate the miner fee based on the cost that
we will incur to process the withdrawal transaction on the underlying blockchain network. In addition, we also pay miner fees when we move crypto assets for various operational
purposes, such as when we transfer crypto assets between our hot and cold wallets, for which we do not charge our customers. However, miner fees can be unpredictable. For
instance, in 2017, Bitcoin miner fees increased from approximately $0.35 per transaction in January 2017 to over $50 per transaction in December 2017. Even though Bitcoin’s miner
fees have since decreased, if the block rewards for miners on any blockchain network are not sufficiently high to incentivize miners, miners may demand higher transaction fees, or
collude to reject low transaction fees and force users to pay higher fees. Although we generally attempt to pass miner fees relating to customer withdrawals through to our customers,
we have in the past incurred, and expect to incur from time to time, losses associated with the payment of miner fees in excess of what we charge our customers, resulting in adverse
impacts on our operating results.
Future developments regarding the treatment of crypto assets for U.S. federal income and foreign tax purposes could adversely impact our business.
Due to the new and evolving nature of crypto assets and the absence of comprehensive legal guidance with respect to crypto asset products and transactions, many significant
aspects of the U.S. federal income and foreign tax treatment of transactions involving crypto assets, such as the purchase and sale of Bitcoin and other crypto assets on our platform,
as well as the provision of staking rewards and other crypto asset incentives and rewards products, are uncertain, and it is unclear what guidance may be issued in the future on the
treatment of crypto asset transactions for U.S. federal income and foreign tax purposes.
In 2014, the IRS released a notice, or IRS Notice, discussing certain aspects of “convertible virtual currency” (that is, digital currency that has an equivalent value in fiat currency
or that acts as a substitute for fiat currency) for U.S. federal income tax purposes and, in particular, stating that such digital currency (i) is “property” (ii) is not “currency” for purposes of
the rules relating to foreign currency gain or loss and (iii) may be held as a capital asset. In 2019, the IRS released a revenue ruling and a set of “Frequently Asked Questions”, or the
Ruling & FAQs, that provide some additional guidance, including guidance to the effect that, under certain circumstances, hard forks of digital currencies are taxable events giving rise
to ordinary income and guidance with respect to the determination of the tax basis of digital currency. However, the IRS Notice and the Ruling & FAQs do not address other significant
aspects of the U.S.
47
federal income tax treatment of crypto assets and related transactions. Moreover, although the Ruling & FAQs address the treatment of forks, there continues to be uncertainty with
respect to the timing and amount of income inclusions for various crypto asset transactions including, but not limited to staking rewards and other crypto asset incentives and rewards
products that we offer. Although we believe our treatment of crypto asset transactions is consistent with existing guidance provided by the IRS, because of the rapidly evolving nature
of crypto asset innovations and the increasing variety and complexity of crypto asset products, it is possible the IRS may disagree with our treatment of certain of our crypto asset
offerings for U.S. federal income tax purposes, which could adversely affect our customers and the vitality of our business. Similar uncertainties exist in the foreign markets in which
we operate, affecting our non-U.S. customer base, and these uncertainties and potential adverse interpretations of tax law could affect our non-U.S. customers and the vitality of our
platforms outside of the United States.
There can be no assurance that the IRS or other foreign tax authority will not alter its existing position with respect to crypto assets in the future or that a court would uphold the
treatment set forth in the IRS Notice and the Ruling & FAQs. It is also unclear what additional guidance may be issued in the future on the treatment of existing crypto asset
transactions and future crypto asset innovations for purposes of U.S. federal income tax or other foreign tax regulations. Any such alteration of existing IRS and foreign tax authority
positions or additional guidance regarding crypto asset products and transactions could result in adverse tax consequences for holders of crypto assets and could have an adverse
effect on the value of crypto assets and the broader crypto assets markets. Future technological and operational developments that may arise with respect to digital currencies may
increase the uncertainty with respect to the treatment of digital currencies for U.S. federal income and foreign tax purposes. The uncertainty regarding tax treatment of crypto asset
transactions impacts our customers, and could impact our business, both domestically and abroad.
Although we believe we are compliant with U.S. federal income tax reporting and withholding requirements with respect to customer cryptocurrency transactions, the exact scope
and application of such requirements, including but not limited to U.S. onboarding requirements through Form W, backup withholding, and Form 1099 reporting obligations, is not
entirely clear for all of the crypto asset transactions that we facilitate. It is likely that the IRS will introduce new rules related to our tax reporting and withholding obligations on our
customer transactions in the future, possibly in ways that differ from our existing compliance protocols and where there is risk that we do not have proper records to ensure
compliance for certain legacy customers. If the IRS determines that we are not in compliance with our tax reporting or withholding requirements with respect to customer crypto asset
transactions, we may be exposed to significant penalties, which could adversely affect our financial position. We anticipate additional guidance from the IRS regarding tax reporting
and withholding obligations with respect to customer crypto asset transactions that will likely require us to invest substantially in new compliance measures and may require significant
retroactive compliance efforts, which could adversely affect our financial position.
Similarly, it is likely that new rules for reporting crypto assets under the “common reporting standard” will be implemented on our international operations, creating new obligations
and a need to invest in new onboarding and reporting infrastructure. Such rules are under discussion today by the member and observer states of the “Organization for Economic
Cooperation and Development” and may give rise to potential liabilities or disclosure requirements for prior customer arrangements and new rules that affect how we onboard our
customers and report their transactions to taxing authorities.
The nature of our business requires the application of complex financial accounting rules, and there is limited guidance from accounting standard setting bodies. If
financial accounting standards undergo significant changes, our operating results could be adversely affected.
The accounting rules and regulations that we must comply with are complex and subject to interpretation by the Financial Accounting Standards Board, or the FASB, the SEC,
and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported
financial results, and may even affect the
48
reporting of transactions completed before the announcement or effectiveness of a change. Recent actions and public comments from the FASB and the SEC have focused on the
integrity of financial reporting and internal controls. In addition, many companies’ accounting policies are being subject to heightened scrutiny by regulators and the public. Further,
there has been limited precedents for the financial accounting of crypto assets and related valuation and revenue recognition, and no official guidance has been provided by the FASB
or the SEC. As such, there remains significant uncertainty on how companies can account for crypto assets transactions, crypto assets, and related revenue. Uncertainties in or
changes to in regulatory or financial accounting standards could result in the need to changing our accounting methods and restate our financial statements and impair our ability to
provide timely and accurate financial information, which could adversely affect our financial statements, result in a loss of investor confidence, and more generally impact our
business, operating results, and financial condition.
RisksRelatedtoGovernmentRegulationandPrivacyMatters
The cryptoeconomy is novel and has little to no access to policymakers or lobbying organizations, which may harm our ability to effectively react to proposed legislation
and regulation of crypto assets or crypto asset platforms adverse to our business.
As crypto assets have grown in both popularity and market size, various U.S. federal, state, and local and foreign governmental organizations, consumer agencies and public
advocacy groups have been examining the operations of crypto networks, users and platforms, with a focus on how crypto assets can be used to launder the proceeds of illegal
activities, fund criminal or terrorist enterprises, and the safety and soundness of platforms and other service providers that hold crypto assets for users. Many of these entities have
called for heightened regulatory oversight, and have issued consumer advisories describing the risks posed by crypto assets to users and investors. For instance, in July 2019, U.S.
Treasury Secretary Steven Mnuchin stated that he had “very serious concerns” about crypto assets, and indicated that FinCEN is planning to release new requirements relating to
crypto asset activities in 2020. Outside the United States, several jurisdictions have banned so-called initial coin offerings, such as China and South Korea, while Canada, Singapore,
Hong Kong, have opined that token offerings may constitute securities offerings subject to local securities regulations. In July 2019, the United Kingdom’s Financial Conduct Authority
proposed rules to address harm to retail customers arising from the sale of derivatives and exchange-traded notes that reference certain types of cryptocurrencies, contending that
they are “ill-suited” to retail investors due to extreme volatility, valuation challenges and association with financial crimes.
The cryptoeconomy is novel and has little to no access to policymakers and lobbying organizations in many jurisdictions. Competitors from other, more established industries,
including traditional financial services, may have greater access to lobbyists or governmental officials, and regulators that are concerned about the potential for crypto assets for illicit
usage may effect statutory and regulatory changes with minimal or discounted inputs from the cryptoeconomy. As a result, new laws and regulations may be proposed and adopted in
the United States and internationally, or existing laws and regulations may be interpreted in new ways, that harm the cryptoeconomy or crypto asset platforms, which could adversely
impact our business.
Our consolidated balance sheets may not contain sufficient amounts or types of regulatory capital to meet the changing requirements of our various regulators
worldwide, which could adversely affect our business, operating results, and financial condition.
We are required to possess sufficient financial soundness and strength to adequately support our regulated subsidiaries. We may from time to time incur indebtedness and other
obligations which could make it more difficult to meet these capitalization requirements or any additional regulatory requirements. In addition, although we are not a bank holding
company for purposes of United States law or the law of any other jurisdiction, as a global provider of financial services and in light of the changing regulatory environment in various
jurisdictions, we could become subject to new capital requirements introduced or
49
imposed by U.S. and international regulators. Any change or increase in these regulatory requirements could have an adverse effect on our business, operating results, and financial
condition.
As a financial institution licensed to engage in money transmission in the United States, to conduct virtual currency business activity in New York, and issue electronic money in
Europe, we are subject to strict rules governing how we manage and hold customer fiat currency and crypto asset. We maintain complex treasury operations to manage and move
customer fiat currency and crypto asset across our platforms and to comply with regulatory requirements. However, it is possible we may experience errors in fiat currency and crypto
asset handling, accounting, and regulatory reporting that lead us to be out of compliance with these requirements. In addition, regulators may increase the amount of fiat currency
reserves that we are required to maintain for our operations, as has happened in the past. For instance, in 2017, the Hawaii Division of Financial Institutions imposed a new policy
whereby digital currency businesses are required to maintain cash reserves in an amount equal to the aggregate face value of digital currency funds held on behalf of customers,
making our operations in Hawaii impracticable and forcing us to shut down operations in the state. Any similar events, can lead to sanctions, penalties, changes to our business
operations, or the revocation of licenses. Frequent launch of new products and services, including Earn campaigns, margin trading, lending functions, and the addition of new payment
rails increase these risks.
Many of the crypto assets in which we facilitate trading are subject to regulatory authority by the Commodity Futures Trading Commission, or CFTC. Any fraudulent or
manipulative activity in a crypto asset occurring on our platform could subject us to increased regulatory scrutiny, regulatory enforcement, and litigation.
The CFTC has stated and judicial decisions involving CFTC enforcement actions have confirmed that at least some crypto assets, including Bitcoin, fall within the definition of a
“commodity” under the U.S. Commodities Exchange Act of 1936, or CEA. As a result, the CFTC has general enforcement authority to police against manipulation and fraud in at least
some spot crypto asset markets. From time to time, manipulation, fraud, and other forms of improper trading by market participants have resulted in, and may in the future result in,
CFTC investigations, inquiries, enforcement action, and similar actions by other regulators, government agencies, and civil litigation. Such investigations, inquiries, enforcement
actions, and litigation may cause us to incur substantial costs and could result in negative publicity. For additional information, see the section titled “Business—Legal Proceedings.”
Certain transactions in crypto asset may constitute “retail leveraged commodity transactions” subject to regulation by the CFTC as futures contracts. If crypto asset
transactions we facilitate are deemed to be such retail commodity transactions, we would be subject to additional regulatory requirements, licenses and approvals, and
potentially face regulatory enforcement, civil liability, and significant increased compliance and operational costs.
Any transaction in a commodity, including a crypto asset, entered into with or offered to retail investors using leverage, margin, or other financing arrangements (a “retail leveraged
commodity transaction”) is subject to CFTC regulation as a futures contract unless such transaction results in actual delivery within 28 days. The meaning of “actual delivery” has been
the subject of commentary and litigation, and the CFTC has recently adopted interpretive guidance addressing the “actual delivery” of a crypto asset. To the extent that crypto asset
transactions that we facilitate or facilitated are deemed retail leveraged commodity transactions, including pursuant to current or subsequent rulemaking or guidance by the CFTC, we
may be subject to additional regulatory requirements and oversight, and we could be subject to judicial or administrative sanctions if we do not or did not at a relevant time possess
appropriate registrations. The CFTC has previously brought enforcement actions against entities engaged in retail leveraged commodity transactions without appropriate registrations.
50
Particular crypto assets or transactions therein could be deemed “commodity interests” (e.g., futures, options, swaps) or security-based swaps subject to regulation by
the CFTC or SEC, respectively. If a crypto asset that we facilitate trading in is deemed a commodity interest or a security-based swap, we would be subject to additional
regulatory requirements, licenses and approvals, and potentially face regulatory enforcement, civil liability, and significant increased compliance and operational costs.
Commodity interests, as such term is defined by the CEA and CFTC rules and regulations, are subject to more extensive supervisory oversight by the CFTC, including licensing of
entities engaged in, and platforms offering, commodity interest transactions. This CFTC authority extends to crypto asset futures contracts and swaps, including transactions that are
based on current and future prices of crypto assets and indices of crypto assets. To the extent that a crypto asset in which we facilitate or facilitated trading or transactions in a crypto
asset which we facilitate or facilitated are deemed to fall within the definition of a commodity interest, whether as a swap or otherwise and including pursuant to subsequent rulemaking
or guidance by the CFTC, we may be subject to additional regulatory requirements and oversight and could be subject to judicial or administrative sanctions if we do not or did not at a
relevant time possess appropriate registrations as an exchange (for example, as a designated contract market for trading futures or options on futures, or as a swaps execution facility
for trading swaps) or as a registered intermediary (for example, as a futures commission merchant or introducing broker). Such actions could result in injunctions, cease and desist
orders, as well as civil monetary penalties, fines, and disgorgement, as well as reputational harm. The CFTC has previously brought enforcement actions against entities engaged in
crypto asset activities for failure to obtain appropriate exchange, execution facility and intermediary registrations.
Furthermore, the CFTC and the SEC have jointly adopted regulations defining “security-based swaps,” which include swaps based on single securities and narrow-based indices
of securities. If a crypto asset is deemed to be a security, certain transactions referencing that crypto asset could constitute a security-based swap. A crypto asset or transaction
therein that is based on or references a security or index of securities, whether or not such securities are themselves crypto assets, could also constitute a security-based swap. To
the extent that a crypto asset in which we facilitate or have facilitated trading or transactions in a crypto asset which we facilitate or have facilitated are deemed to fall within the
definition of a security-based swap, including pursuant to subsequent rulemaking or guidance by the CFTC or SEC, we may be subject to additional regulatory requirements and
oversight by the SEC and could be subject to judicial or administrative sanctions if we do not or did not a relevant time possess appropriate registrations as an exchange (for example,
as a security-based swaps execution facility) or as a registered intermediary (for example, as a security-based swap dealer or broker-dealer). This could result in injunctions, cease
and desist orders, as well as civil monetary penalties, fines, and disgorgement, as well as reputational harm.
We obtain and process a large amount of sensitive customer data. Any real or perceived improper use of, disclosure of, or access to such data could harm our
reputation, as well as have an adverse effect on our business.
We obtain and process large amounts of sensitive data, including personal data related to our customers and their transactions, such as their names, addresses, social security
numbers, visa information, copies of government-issued identification, trading data, tax identification, and bank account information. We face risks, including to our reputation, in the
handling and protection of this data, and these risks will increase as our business continues to expand. Federal, state, and international laws and regulations governing privacy, data
protection, and e-commerce transactions require us to safeguard our customers’, employees’, and service providers’ personal data.
We have administrative, technical, and physical security measures and controls in place and maintain a robust information security program. However, our security measures may
be inadequate or breached as a result of third-party action, employee or service provider error, malfeasance, malware, phishing, hacking attacks, system error, trickery, advances in
computer capabilities, new discoveries in the field of
51
cryptography, inadequate facility security or otherwise, and, as a result, someone may be able to obtain unauthorized access to sensitive information, including personal data, on our
systems. Additionally, privacy and data protection laws are evolving, and it is possible that these laws may be interpreted and applied in a manner that is inconsistent with our data
handling safeguards and practices that could result in fines, lawsuits, and other penalties, and significant changes to our or our third-party partners business practices and products
and service offerings.
Our future success depends on the reliability and security of our platform. To the extent that the measures we or our third-party business partners have taken prove to be
insufficient or inadequate, we may become subject to litigation, breach notification obligations, or regulatory or administrative sanctions, which could result in significant fines,
penalties, damages, harm to our reputation, or loss of customers. If our own confidential business information or sensitive customer information were improperly disclosed, our
business could be adversely affected. Additionally, a party who circumvents our security measures could, among other effects, appropriate customer information or other proprietary
data, cause interruptions in our operations, or expose customers to hacks, viruses, and other disruptions.
Depending on the nature of the information compromised, in the event of a data breach or other unauthorized access to our customer data, we may also have obligations to notify
customers and regulators about the incident, and we may need to provide some form of remedy, such as a subscription to credit monitoring services, pay significant fines to one or
more regulators, or pay compensation in connection with a class-action settlement (including under the new private right of action under the California Consumer Privacy Act of 2018,
or the CCPA, which is expected to increase security breach litigation). Such breach notification laws continue to evolve and may be inconsistent from one jurisdiction to another.
Complying with these obligations could cause us to incur substantial costs and could increase negative publicity surrounding any incident that compromises customer data.
Additionally, the financial exposure from the events referenced above could either not be insured against or not be fully covered through any insurance that we may maintain, and
there can be no assurance that the limitations of liability in any of our contracts would be enforceable or adequate or would otherwise protect us from liabilities or damages as a result
of the events referenced above. Any of the foregoing could have an adverse effect on our business, reputation, operating results, and financial condition.
Furthermore, we may be required to disclose personal data pursuant to demands from individuals, regulators, government agencies, and law enforcement agencies in various
jurisdictions with conflicting privacy and security laws, which could result in a breach of privacy and data protection policies, notices, laws, rules, court orders, and regulations.
Additionally, changes in the laws and regulations that govern our collection, use, and disclosure of customer data could impose additional requirements with respect to the retention
and security of customer data, could limit our marketing activities, and have an adverse effect on our business, operating results, and financial condition.
We are subject to laws, regulations, and industry requirements related to data privacy, data protection and information security, and consumer protection across
different markets where we conduct our business, including in the United States and EEA and industry requirements and such laws, regulations, and industry
requirements are constantly evolving and changing. Our actual or perceived failure to comply with such laws, regulations, and industry requirements, or our privacy
policies could harm our business.
Various local, state, federal, and international laws, directives, and regulations apply to our collection, use, retention, protection, disclosure, transfer, and processing of personal
data. These data protection and privacy laws and regulations are subject to uncertainty and continue to evolve in ways that could adversely impact our business. These laws have a
substantial impact on our operations both outside and in the United States, either directly or as a data processor and handler for various offshore entities.
In the United States, state and federal lawmakers and regulatory authorities have increased their attention on the collection and use of consumer data. In the United States, non-
sensitive consumer data generally may be used under current rules and regulations, subject to certain restrictions, so long as the
52
person does not affirmatively “opt-out” of the collection or use of such data. If an “opt-in” model or additional required “opt-outs”, were to be adopted in the United States, less data
would be available, and the cost of data would be higher. For example, California recently enacted the CCPA, which became operative on January 1, 2020 and became enforceable
by California Attorney General on July 1, 2020, along with related regulations which came into force on August 14, 2020. Additionally, although not effective until January 1, 2023, the
California Privacy Rights Act, or the CPRA, which expands upon the CCPA, was passed in the recent election on November 3, 2020.
The CCPA gives California residents new rights to access and require deletion of their personal data, opt out of certain personal data sharing, and receive detailed information
about how their personal data is processed. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that result in the loss of personal
data, as discussed above. This private right of action may increase the likelihood of, and risks associated with, data breach litigation. The CPRA significantly modifies the CCPA,
including by expanding consumers’ rights with respect to certain personal data and creating a new state agency to oversee implementation and enforcement efforts. The CCPA and
CPRA may increase our compliance costs and potential liability, particularly in the event of a data breach, and could have a material adverse effect on our business, including how we
use personal data, our financial condition, and our operating results. Additionally, the CCPA has prompted a number of proposals for new federal and state-level privacy legislation,
such as in Nevada, Virginia, New Hampshire, and others. If passed, these new laws could add additional complexity, impact our business strategies, increase our potential liability,
increase our compliance costs, and adversely affect our business.
In Europe, the European General Data Protection Regulation, or the GDPR, took effect on May 25, 2018. As a result of our presence in Europe and our service offering in the
European Union, or the E.U., we are subject to the GDPR, which imposes stringent E.U. data protection requirements, and could increase the risk of non-compliance and the costs of
providing our products and services in a compliant manner. A breach of the GDPR could result in regulatory investigations, reputational damage, fines and sanctions, orders to cease
or change our processing of our data, enforcement notices, or assessment notices (for a compulsory audit). We may also face civil claims including representative actions and other
class action type litigation (where individuals have suffered harm), potentially amounting to significant compensation or damages liabilities, as well as associated costs, diversion of
internal resources, and reputational harm.
Additionally, the United Kingdom, or the U.K., implemented the Data Protection Act, effective in May 2018 and statutorily amended in 2019, that contains provisions, including its
own derogations, for how GDPR is applied in the U.K. From the beginning of 2021 (when the transitional period following Brexit expired), we have to continue to comply with the
GDPR and also the U.K.’s Data Protection Act, with each regime having the ability to fine up to the greater of €20 million (£17 million) or 4% of global turnover. The relationship
between the U.K. and the E.U. remains uncertain, for example how data transfers between the U.K. and the E.U. and other jurisdictions will be treated and the role of the U.K.’s
supervisory authority. In February 2021, the European Commission proposed to issue the U.K. with an “adequacy” decision to facilitate the continued free flow of personal data from
E.U. member states to the U.K.; however, this decision is subject to the review and/or approval of the European Data Protection Board and a Committee composed of the
representatives of the E.U. Member States. In the meantime, the U.K. remains a "third country" for the purposes of data transfers from the E.U. to the U.K. following the expiration of
the four to six-month personal data transfer grace period (from 1 January 2021) set out in the E.U. and U.K. Trade and Cooperation Agreement, unless the adequacy decision is
adopted in favor of the U.K. These changes will lead to additional costs as we try to ensure compliance with new privacy legislation, and will increase our overall risk exposure.
In addition, the GDPR imposes strict rules on the transfer of personal data out of the E.U. to a “third country” including the United States. These obligations may be interpreted and
applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other requirements or our practices.
53
On July 16, 2020, the Court of Justice of the European Union, or CJEU, invalidated the European Union-United States, or E.U.-U.S., Privacy Shield (under which personal data
could be transferred from the E.U. to U.S. entities that had self-certified under the Privacy Shield scheme) on the grounds that the Privacy Shield failed to offer adequate protections to
E.U. personal data transferred to the United States. In addition, while the CJEU upheld the adequacy of the standard contractual clauses (a standard form of contract approved by the
European Commission as an adequate personal data transfer mechanism, and potential alternative to the Privacy Shield), it made clear that reliance on them alone may not
necessarily be sufficient in all circumstances. Use of the standard contractual clauses must now be assessed on a case by case basis taking into account the legal regime applicable
in the destination country, in particular applicable surveillance laws and rights of individuals. The use of standard contractual clauses for the transfer of personal data specifically to the
United States remains under review by a number of European data protection supervisory authorities, along with those of some other E.U. member states. German and Irish
supervisory authorities have indicated, and enforced in recent rulings, that the standard contractual clauses alone provide inadequate protection for E.U.-U.S. data transfers. On
August 10, 2020, the U.S. Department of Commerce and the European Commission announced new discussions to evaluate the potential for an enhanced E.U.-U.S. Privacy Shield
framework to comply with the July 16 judgment of the CJEU. Further, the European Commission published new versions of the standard contractual clauses for comment. While the
comment period ended in December 2020, the European Commission is expected to finalize and implement the new standard contractual clauses in early 2021. The CJEU’s decision,
along with the subsequent guidance issued by the European Data Protection Board on November 11, 2020, and recent statements by E.U. supervisory authorities, and the new
versions of the standard contractual clauses, have led to uncertainty regarding the legality of E.U.-U.S. data flows in general and those conducted under the Privacy Shield in
particular.
While we maintain a Privacy Shield certification, we rely on the standard contractual clauses for intercompany data transfers from the E.U. to the United States and have reviewed
and amended any existing vendor agreements that rely only on Privacy Shield as the data transfer mechanism. As supervisory authorities continue to issue further guidance on
personal data, we could suffer additional costs, complaints, or regulatory investigations or fines, and if we are otherwise unable to transfer personal data between and among
countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and
operations, and could adversely affect our financial results.
We are also subject to evolving E.U. privacy laws on cookies and e-marketing. In the E.U., regulators are increasingly focusing on compliance with requirements in the online
behavioral advertising ecosystem, and a E.U. regulation known as the ePrivacy Regulation will significantly increase fines for non-compliance once in effect. In the E.U., informed
consent, including a prohibition on pre-checked consents and a requirement to ensure separate consents for each cookie, is required for the placement of a cookie or similar
technologies on a user’s device and for direct electronic marketing. As regulators start to enforce the strict approach in recent guidance, this could lead to substantial costs, require
significant systems changes, limit the effectiveness of our marketing activities, divert the attention of our technology personnel, negatively impact our efforts to understand users,
adversely affect our margins, increase costs, and subject us to additional liabilities.
There is a risk that as we expand, we may assume liabilities for breaches experienced by the companies we acquire. Despite our efforts to comply with applicable laws,
regulations and other obligations relating to privacy, data protection, and information security, it is possible that our practices, offerings, or platform could fail, or be alleged to fail to
meet applicable requirements. For instance, the overall regulatory framework governing the application of privacy laws to blockchain technology is still highly undeveloped and likely to
evolve. Our failure, or the failure by our third-party providers or partners, to comply with applicable laws or regulations and to prevent unauthorized access to, or use or release of
personal data, or the perception that any of the foregoing types of failure has occurred, could damage our reputation or result in fines or proceedings by governmental agencies and
private claims and litigation, any of which could adversely affect our business, operating results, and financial condition.
54
RisksRelatedtoThirdParties
Our current and future services are dependent on payment networks and acquiring processors, and any changes to their rules or practices could adversely impact our
business.
We rely on banks and other payment processors to process customers’ payments in connection with the purchase of crypto assets on our platform and we pay these providers
fees for their services. From time to time, payment networks have increased, and may increase in the future, the interchange fees and assessments that they charge for transactions
that use their networks. Payment networks have imposed, and may impose in the future, special fees on the purchase of crypto assets, including on our platform, which could
negatively impact us and significantly increase our costs. Our payment card processors may have the right to pass any increases in interchange fees and assessments on to us, and
may impose additional use charges which would increase our operating costs and reduce our operating income. We could attempt to pass these increases along to our customers, but
this strategy might result in the loss of customers to our competitors that may not pass along the increases, thereby reducing our revenue and earnings. If competitive practices
prevent us from passing along the higher fees to our customers in the future, we may have to absorb all or a portion of such increases, thereby increasing our operating costs and
reducing our earnings.
We may also be directly or indirectly liable to the payment networks for rule violations. Payment networks set and interpret their network operating rules and have alleged from
time to time that various aspects of our business model violate these operating rules. If such allegations are not resolved favorably, they may result in significant fines and penalties or
require changes in our business practices that may be costly and adversely affect our business. The payment networks could adopt new operating rules or interpret or reinterpret
existing rules that we or our processors might find difficult or even impossible to follow, or costly to implement. As a result, we could lose our ability to give customers the option of
using cards to fund their purchases or the choice of currency in which they would like their card to be charged. If we are unable to accept cards or are limited in our ability to do so, our
business would be adversely affected.
We depend on major mobile operating systems and third-party platforms for the distribution of certain products. If Google Play, the Apple App Store, or other platforms
prevent customers from downloading our apps, our ability to grow may be adversely affected.
We rely upon third-party platforms for the distribution of certain products and services. Our Coinbase, Coinbase Pro, and Coinbase Wallet apps are provided as free applications
through both the Apple App Store and the Google Play Store, and are also accessible via mobile and traditional websites. The Google Play Store and Apple App Store are global
application distribution platforms and the main distribution channels for our apps. As such, the promotion, distribution, and operation of our apps are subject to the respective
platforms’ terms and policies for application developers, which are very broad and subject to frequent changes and re-interpretation. Further, these distribution platforms often contain
restrictions related to crypto assets that are uncertain, broadly construed, and can limit the nature and scope of services that can be offered. For example, Apple App Store’s
restrictions related to crypto assets have disrupted the proposed launch of many features within the Coinbase and Coinbase Wallet apps, including our Earn services and access to
decentralized applications. If our products are found to be in violation of any such terms and conditions, we may no longer be able to offer our products through such third-party
platforms. There can be no guarantee that third-party platforms will continue to support our product offerings, or that customers will be able to continue to use our products. For
example, in November 2013, our iOS app was temporarily removed by Apple from the Apple App Store. In December 2019, we were similarly instructed by both Google and Apple to
remove certain features relating to decentralized applications from our apps to comply with both companies’ policies. Any changes, bugs, technical or regulatory issues with third-party
platforms, our relationships with mobile manufacturers and carriers, or changes to their terms of service or policies could degrade our products’ functionalities, reduce or eliminate our
ability to distribute our products, give preferential treatment to competitive products, limit our
55
ability to deliver high quality offerings, or impose fees or other charges, any of which could affect our product usage and harm our business.
RisksRelatedtoIntellectualProperty
Our intellectual property rights are valuable, and any inability to protect them could adversely impact our business, operating results, and financial condition.
Our business depends in large part on our proprietary technology and our brand. We rely on, and expect to continue to rely on, a combination of trademark, trade dress, domain
name, copyright, and trade secret and laws, as well as confidentiality and license agreements with our employees, contractors, consultants, and third parties with whom we have
relationships, to establish and protect our brand and other intellectual property rights. However, our efforts to protect our intellectual property rights may not be sufficient or effective.
Our proprietary technology and trade secrets could be lost through misappropriation or breach of our confidentiality and license agreements, and any of our intellectual property rights
may be challenged, which could result in them being narrowed in scope or declared invalid or unenforceable. There can be no assurance that our intellectual property rights will be
sufficient to protect against others offering products, services, or technologies that are substantially similar to ours and that compete with our business.
We do not intend to monetize our patents or attempt to block third parties from competing with us by asserting our patents offensively against third parties, but our ability to
successfully defend intellectual property challenges from competitors and other parties may depend, in part, on our ability to counter-assert our patents defensively. Effective
protection of patents, trademarks, and domain names is expensive and difficult to maintain, both in terms of application and registration costs as well as the costs of defending and
enforcing those rights, and in some countries our rights to protect our core domain (coinbase.com) are currently subject to dispute. As we have grown, we have sought to obtain and
protect our intellectual property rights in an increasing number of countries, a process that can be expensive and may not always be successful. For example, the U.S. Patent and
Trademark Office and various foreign governmental patent agencies require compliance with a number of procedural requirements to complete the patent application process and to
maintain issued patents, and noncompliance or non-payment could result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent
rights in a relevant jurisdiction. Further, intellectual property protection may not be available to us in every country in which our products and services are available. For example, some
foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the enforceability of patents against
certain third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. We may also agree to license our patents
to third parties as part of various patent pools and open patent projects. Those licenses may diminish our ability, though, to counter-assert our patents against certain parties that may
bring claims against us.
We have been, and in the future may be, sued by third parties for alleged infringement of their proprietary rights.
In recent years, there has been considerable patent, copyright, trademark, domain name, trade secret and other intellectual property development activity in the cryptoeconomy,
as well as litigation, based on allegations of infringement or other violations of intellectual property, including by large financial institutions. Furthermore, individuals and groups can
purchase patents and other intellectual property assets for the purpose of making claims of infringement to extract settlements from companies like ours. Our use of third-party
intellectual property rights also may be subject to claims of infringement or misappropriation. We cannot guarantee that our internally developed or acquired technologies and content
do not or will not infringe the intellectual property rights of others. From time to time, our competitors or other third parties may claim that we are infringing upon or misappropriating
their intellectual property rights, and we may be found to be infringing upon such rights. Any claims or litigation could cause us to incur significant expenses and, if successfully
asserted against us, could require that
56
we pay substantial damages or ongoing royalty payments, prevent us from offering our products or services or using certain technologies, force us to implement expensive work-
arounds, or impose other unfavorable terms. We expect that the occurrence of infringement claims is likely to grow as the crypto assets market grows and matures. Accordingly, our
exposure to damages resulting from infringement claims could increase and this could further exhaust our financial and management resources. Further, during the course of any
litigation, we may make announcements regarding the results of hearings and motions, and other interim developments. If securities analysts and investors regard these
announcements as negative, the market price of our Class A common stock may decline. Even if intellectual property claims do not result in litigation or are resolved in our favor,
these claims, and the time and resources necessary to resolve them, could divert the resources of our management and require significant expenditures. Any of the foregoing could
prevent us from competing effectively and could have an adverse effect on our business, operating results, and financial condition.
Our platform contains third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could harm
our business.
Our platform contains software modules licensed to us by third-party authors under “open source” licenses. We also make certain of our own software available to users for free
under various open source licenses. Use and distribution of open source software may entail greater risks than use of third-party commercial software, as open source licensors
generally do not provide support, warranties, indemnification or other contractual protections regarding infringement claims or the quality of the code. In addition, the public availability
of such software may make it easier for others to compromise our platform.
Some open source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the type of open source
software we use, or grant other licenses to our intellectual property. If we combine our proprietary software with open source software in a certain manner, we could, under certain
open source licenses, be required to release the source code of our proprietary software to the public. This would allow our competitors to create similar offerings with lower
development effort and time and ultimately could result in a loss of our competitive advantages. Alternatively, to avoid the public release of the affected portions of our source code,
we could be required to expend substantial time and resources to re-engineer some or all of our software.
Although we monitor our use of open source software to avoid subjecting our platform to conditions we do not intend, we have not recently conducted an extensive audit of our
use of open source software and, as a result, we cannot assure you that our processes for controlling our use of open source software in our platform are, or will be, effective. If we
are held to have breached or failed to fully comply with all the terms and conditions of an open source software license, we could face litigation, infringement or other liability, or be
required to seek costly licenses from third parties to continue providing our offerings on terms that are not economically feasible, to re-engineer our platform, to discontinue or delay
the provision of our offerings if re-engineering could not be accomplished on a timely basis or to make generally available, in source code form, our proprietary code, any of which
could adversely affect our business, operating results, and financial condition. Moreover, the terms of many open source licenses have not been interpreted by U.S. or foreign courts.
As a result, there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to provide or distribute our platform.
From time to time, there have been claims challenging the ownership of open source software against companies that incorporate open source software into their solutions. As a
result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open source software.
57
RisksRelatedtoOurEmployeesandOtherServiceProviders
The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could adversely impact our business,
operating results, and financial condition.
We operate in a relatively new industry that is not widely understood and requires highly skilled and technical personnel. We believe that our future success is highly dependent on
the talents and contributions of our senior management team, including Brian Armstrong, our co-founder and Chief Executive Officer, members of our executive team, and other key
employees across product, engineering, risk management, finance, compliance and legal, and marketing. Our future success depends on our ability to attract, develop, motivate, and
retain highly qualified and skilled employees. Due to the nascent nature of the cryptoeconomy, the pool of qualified talent is extremely limited, particularly with respect to executive
talent, engineering, risk management, and financial regulatory expertise. We face intense competition for qualified individuals from numerous software and other technology
companies. To attract and retain key personnel, we incur significant costs, including salaries and benefits and equity incentives. Even so, these measures may not be enough to
attract and retain the personnel we require to operate our business effectively. The loss of even a few qualified employees, or an inability to attract, retain and motivate additional
highly skilled employees required for the planned expansion of our business could adversely impact our operating results and impair our ability to grow.
Our culture emphasizes innovation, and if we cannot maintain this culture as we grow, our business and operating results could be adversely impacted.
We believe that our entrepreneurial and innovative corporate culture has been a key contributor to our success. We encourage and empower our employees to develop and
launch new and innovative products and services, which we believe is essential to attracting high quality talent, partners, and developers, as well as serving the best, long-term
interests of our company. If we cannot maintain this culture as we grow, we could lose the innovation, creativity and teamwork that has been integral to our business, in which case
our products and services may suffer and our business, operating results, and financial condition could be adversely impacted.
In the event of employee or service provider misconduct or error, our business may be adversely impacted.
Employee or service provider misconduct or error could subject us to legal liability, financial losses, and regulatory sanctions and could seriously harm our reputation and
negatively affect our business. Such misconduct could include engaging in improper or unauthorized transactions or activities, misappropriation of customer funds, insider trading and
misappropriation of information, failing to supervise other employees or service providers, improperly using confidential information, as well as improper trading activity such as
spoofing, layering, wash trading, manipulation and front-running. Employee or service provider errors, including mistakes in executing, recording, or processing transactions for
customers, could expose us to the risk of material losses even if the errors are detected. Although we have implemented processes and procedures and provide trainings to our
employees and service providers to reduce the likelihood of misconduct and error, these efforts may not be successful. Moreover, the risk of employee or service provider error or
misconduct may be even greater for novel products and services and is compounded by the fact that many of our employees and service providers are accustomed to working at tech
companies which generally do not maintain the same compliance customs and rules as financial services firms. This can lead to high risk of confusion among employees and service
providers, particularly in a fast growth company like ours, with respect to compliance obligations, particularly including confidentiality, data access, trading, and conflicts. It is not
always possible to deter misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases. If we were found to have not met our regulatory
oversight and compliance and other obligations, we could be subject to regulatory sanctions, financial penalties, restrictions on our activities for failure to properly identify, monitor and
respond to potentially problematic activity and seriously
58
damage our reputation. Our employees, contractors, and agents could also commit errors that subject us to financial claims for negligence, as well as regulatory actions, or result in
financial liability. Further, allegations by regulatory or criminal authorities of improper trading activities could affect our brand and reputation.
Our officers, directors, employees, and large stockholders may encounter potential conflicts of interests with respect to their positions or interests in certain crypto
assets, entities, and other initiatives, which could adversely affect our business and reputation.
We frequently engage in a wide variety of transactions and maintain relationships with a significant number of crypto projects, their developers, members of their ecosystem, and
investors. These transactions and relationships could create potential conflicts of interests in management decisions that we make. For instance, certain of our officers, directors, and
employees are active investors in crypto projects themselves, and may make investment decisions that favor projects that they have personally invested in. Many of our large
stockholders also make investments in these crypto projects. For more information, see the section titled “Certain Relationships and Related Party Transactions.” In addition, our co-
founder and Chief Executive Officer, Mr. Armstrong, is involved in a number of initiatives related to the cryptoeconomy and more broadly. For example, Mr. Armstrong currently serves
as the chief executive officer of ResearchHub Technologies, Inc., a scientific research development platform. This and other initiatives he is involved in could divert Mr. Armstrong's
time and attention from overseeing our business operations which could have a negative impact on our business. Moreover, we are involved in litigation and may in the future be
subject to litigation as a result of his involvement with these other initiatives.
Similarly, certain of our directors, officers, employees, and large stockholders may hold crypto assets that we are considering supporting for trading on our platform, and may be
more supportive of such listing notwithstanding legal, regulatory, and other issues associated with such crypto assets. While we have instituted policies and procedures to limit and
mitigate such risks, there is no assurance that such policies and procedures will be effective, or that we will be able to manage such conflicts of interests adequately. If we fail to
manage these conflicts of interests, our business may be harmed and the brand, reputation and credibility of our company may be adversely affected.
GeneralRiskFactors
Adverse economic conditions may adversely affect our business.
Our performance is subject to general economic conditions, and their impact on the crypto asset markets and our customers. The United States and other key international
economies have experienced cyclical downturns from time to time in which economic activity declined resulting in lower consumption rates, restricted credit, reduced profitability,
weaknesses in financial markets, bankruptcies, and overall uncertainty with respect to the economy. The impact of general economic conditions on the cryptoeconomy is highly
uncertain and dependent on a variety of factors, including market adoption of crypto assets, global trends in the cryptoeconomy, central bank monetary policies, and other events
beyond our control. Geopolitical developments, such as trade wars and foreign exchange limitations can also increase the severity and levels of unpredictability globally and increase
the volatility of global financial and crypto asset markets. To the extent that conditions in the general economic and crypto assets markets materially deteriorate, our ability to attract
and retain customers may suffer.
The COVID-19 pandemic could have an adverse effect on our business, operating results, and financial condition.
We are responding to the global outbreak of COVID-19 by taking steps to mitigate the potential risks to us posed by its spread and the impact of the restrictions put in place by
governments to protect the population. Our employees and service providers have transitioned to work-from-home and we are now a remote-first company. This subjects us to
heightened operational risks. For example, technologies in our employees’ and service providers’ homes may not be as robust as in our offices and could cause the networks,
information systems, applications, and other tools available to employees and service providers
59
to be more limited or less reliable than in our offices. Further, the security systems in place at our employees’ and service providers’ homes may be less secure than those used in our
offices, and while we have implemented technical and administrative safeguards to help protect our systems as our employees and service providers work from home, we may be
subject to increased cybersecurity risk, which could expose us to risks of data or financial loss, and could disrupt our business operations. There is no guarantee that the data security
and privacy safeguards we have put in place will be completely effective or that we will not encounter risks associated with employees and service providers accessing company data
and systems remotely. We also face challenges due to the need to operate with the remote workforce and are addressing those challenges to minimize the impact on our ability to
operate.
The transition to a remote-first company may make it more difficult for us to preserve our corporate culture and our employees may have decreased opportunities to collaborate in
meaningful ways. Further, we cannot guarantee that our transition to becoming a remote-first company will not have a negative impact on employee morale and productivity. Any
failure to preserve our corporate culture and foster collaboration could harm our future success, including our ability to retain and recruit personnel, innovate and operate effectively,
and execute on our business strategy.
In addition, the continued spread of COVID-19 and the imposition of related public health measures have resulted in, and is expected to continue to result in, increased volatility
and uncertainty in the cryptoeconomy. We also rely on third party service providers to perform certain functions. Any disruptions to a service providers’ business operations resulting
from business restrictions, quarantines, or restrictions on the ability of personnel to perform their jobs could have an adverse impact on our service providers’ ability to provide services
to us. The continued spread of COVID-19 and efforts to contain the virus could adversely impact our strategic business plans and growth strategy, reduce demand for our products
and services, reduce the availability and productivity of our employees, service providers, and third-party resources, cause us to experience an increase in costs due to emergency
measures, and otherwise adversely impact our business.
Our management team has limited experience managing a public company.
Our management team has limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws
pertaining to public companies. Our management team may not successfully or efficiently manage our transition to being a public company subject to significant regulatory oversight
and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require
significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business,
operating results, and financial condition.
Changes in U.S. and foreign tax laws, as well as the application of such laws, could adversely impact our financial position and operating results.
We are subject to complex tax laws and regulations in the United States and a variety of foreign jurisdictions. All of these jurisdictions have in the past and may in the future make
changes to their corporate income tax rates and other income tax laws which could increase our future income tax provision. For example, our future income tax obligations could be
adversely affected by earnings that are lower than anticipated in jurisdictions where we have lower statutory rates and by earnings that are higher than anticipated in jurisdictions
where we have higher statutory rates, by changes in the valuation of our deferred tax assets and liabilities, by changes in the amount of unrecognized tax benefits, or by changes in
tax laws, regulations, accounting principles, or interpretations thereof, including changes with possible retroactive application or effect.
Our determination of our tax liability is subject to review and may be challenged by applicable U.S. and foreign tax authorities. Any adverse outcome of such challenge could harm
our operating results and financial condition. The determination of our worldwide provision for income taxes and other tax liabilities
60
requires significant judgment and, in the ordinary course of business, there are many transactions and calculations where the ultimate tax determination is complex and uncertain.
Moreover, as a multinational business, we have subsidiaries that engage in many intercompany transactions in a variety of tax jurisdictions where the ultimate tax determination is
complex and uncertain. Our existing corporate structure and intercompany arrangements have been implemented in a manner we believe is in compliance with current prevailing tax
laws. Furthermore, as we operate in multiple taxing jurisdictions, the application of tax laws can be subject to diverging and sometimes conflicting interpretations by tax authorities of
these jurisdictions. It is not uncommon for taxing authorities in different countries to have conflicting views with respect to, among other things, the characterization and source of
income or other tax items, the manner in which the arm’s-length standard is applied for transfer pricing purposes, or with respect to the valuation of intellectual property. The taxing
authorities of the jurisdictions in which we operate may challenge our tax treatment of certain items or the methodologies we use for valuing developed technology or intercompany
arrangements, which could impact our worldwide effective tax rate and harm our financial position and operating results.
The Tax Cuts and Jobs Act, or TCJA, enacted on December 22, 2017, significantly affected U.S. tax law, including by changing how the U.S. imposes tax on certain types of
income of corporations and by reducing the U.S. federal corporate income tax rate to 21%. It also imposed new limitations on a number of tax benefits, including deductions for
business interest, use of net operating loss carry forwards, taxation of foreign income, and the foreign tax credit, among others. The Coronavirus Aid, Relief, and Economic Security
Act, or the CARES Act, enacted on March 27, 2020, in response to the COVID-19 pandemic, further amended the U.S. federal tax code, including in respect of certain changes that
were made by the TCJA, generally on a temporary basis. There can be no assurance that future tax law changes will not increase the rate of the corporate income tax significantly,
impose new limitations on deductions, credits or other tax benefits, or make other changes that may adversely affect our business, cash flows or financial performance. In addition, the
IRS has yet to issue guidance on a number of important issues regarding the changes made by the TCJA and the CARES Act. In the absence of such guidance, we will take positions
with respect to any such unsettled issues. There is no assurance that the IRS or a court will agree with the positions taken by us, in which case tax penalties and interest may be
imposed that could adversely affect our business, cash flows or financial performance.
We are also subject to non-income taxes, such as payroll, sales, use, value-added, net worth, property, and goods and services taxes in the United States and various foreign
jurisdictions. Specifically, we may be subject to “digital service taxes” or new allocations of tax as a result of increasing efforts by certain jurisdictions to tax cross border activities that
may not have been subject to tax under existing international tax principles. Technology companies such as ours may be subject to such taxes. Tax authorities may disagree with
certain positions we have taken. As a result, we may have exposure to additional tax liabilities that could have an adverse effect on our operating results and financial condition.
In addition, our future effective tax rates could be favorably or unfavorably affected by changes in tax rates, changes in the valuation of our deferred tax assets or liabilities, the
effectiveness of our tax planning strategies, or changes in tax laws or their interpretation. Such changes could have an adverse impact on our financial condition.
As a result of these and other factors, the ultimate amount of tax obligations owed may differ from the amounts recorded in our financial statements and any such difference may
harm our operating results in future periods in which we change our estimates of our tax obligations or in which the ultimate tax outcome is determined.
Our ability to use any current or future net operating loss to offset future taxable income may be subject to certain limitations under U.S. or foreign law.
As of December 31, 2020, we had Japanese net operating loss carryforwards, or NOLs, of approximately $3.8 million, due to prior period losses which if not utilized will begin to
expire beginning in 2027. Additionally, as of December 31, 2020, we had $24.5 million of U.S. Federal NOLs with an indefinite
61
carryforward and $13.0 million of U.S. State NOLs, primarily with a twenty-year carryforward. Realization of these NOLs, and any future domestic or foreign NOLs that we may
generate will depend on future income, and there is a risk that some or all of such NOLs could be subject to limitation or otherwise unavailable to offset future income tax liabilities,
which could adversely affect our operating results.
Under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to
utilize its NOLs to offset future taxable income. Future changes in our stock ownership, the causes of which may be outside of our control, could result in an ownership change under
Section 382 of the Code. Any future NOLs we generate may also be impaired under state laws. In addition, under the 2017 Tax Cuts and Jobs Act, or Tax Act, future tax losses may
be utilized to offset no more than 80% of taxable income annually. Under the Coronavirus Aid, Relief, and Economic Security, or CARES Act, signed into law in March 2020, the
limitation on the deduction of NOLs to 80% of current year taxable income is eliminated for taxable years beginning before January 1, 2021. Notwithstanding the CARES Act, we may
be required to pay federal income taxes in future years despite generating a loss for federal income tax purposes. There is also a risk that due to statutory or regulatory changes, such
as suspensions on the use of NOLs, or other unforeseen reasons, our future NOLs could expire or otherwise be unavailable to offset future income tax liabilities. It is uncertain if and
to what extent various states will conform to the Tax Act, as modified by the CARES Act. For these reasons, we may not be able to realize a tax benefit from the use of any future
NOLs we generate, whether or not we attain profitability.
Fluctuations in currency exchange rates could harm our operating results and financial condition.
Revenue generated and expenses incurred from our international operations are often denominated in the currencies of the local countries. Accordingly, changes in the value of
foreign currencies relative to the U.S. dollar can affect our revenue and operating results reflected in our U.S. dollar-denominated financial statements. Our financial results are also
subject to changes in exchange rates that impact the settlement of transactions in non-local currencies. As a result, it could be more difficult to detect underlying trends in our business
and operating results. To the extent that fluctuations in currency exchange rates cause our operating results to differ from expectations of investors, the market price of our Class A
common stock could be adversely impacted. To date, we have not engaged in currency hedging activities to limit the risk of exchange fluctuations. Even if we use derivative
instruments to hedge exposure to fluctuations in foreign currency exchange rates, the use of such hedging activities may not offset any or more than a portion of the adverse financial
effects of unfavorable movements in foreign exchange rates over the limited time the hedges are in place, and may introduce additional risks if we are unable to structure effective
hedges with such instruments.
If our estimates or judgment relating to our critical accounting policies prove to be incorrect, our operating results could be adversely affected.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the
circumstances, as provided in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and
Estimates.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities, and equity, and the amount of revenue and expenses
that are not readily apparent from other sources. Significant estimates and judgments involve the identification of performance obligations in revenue recognition, evaluation of tax
positions, inter-company transactions, and the valuation of stock-based awards and crypto assets we hold, among others. Our operating results may be adversely affected if our
assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of analysts and investors,
resulting in a decline in the trading price of our Class A common stock.
62
We may be adversely affected by natural disasters, pandemics, and other catastrophic events, and by man-made problems such as terrorism, that could disrupt our
business operations, and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.
Natural disasters or other catastrophic events may also cause damage or disruption to our operations, international commerce, and the global economy, and could have an
adverse effect on our business, operating results, and financial condition. Our business operations are subject to interruption by natural disasters, fire, power shortages, and other
events beyond our control. In addition, our global operations expose us to risks associated with public health crises, such as pandemics and epidemics, which could harm our
business and cause our operating results to suffer. For example, the ongoing effects of the COVID-19 pandemic and/or the precautionary measures that we have adopted have
resulted, and could continue to result, in difficulties or changes to our customer support, or create operational or other challenges, any of which could adversely impact our business
and operating results. Further, acts of terrorism, labor activism or unrest, and other geo-political unrest could cause disruptions in our business or the businesses of our partners or the
economy as a whole. In the event of a natural disaster, including a major earthquake, blizzard, or hurricane, or a catastrophic event such as a fire, power loss, or telecommunications
failure, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in development of our platform, lengthy interruptions in service,
breaches of data security, and loss of critical data, all of which could have an adverse effect on our future operating results. For example, certain of our corporate offices are located in
the San Francisco Bay Area, a region known for seismic activity. We do not maintain insurance sufficient to compensate us for the potentially significant losses that could result from
disruptions to our services. Additionally, all the aforementioned risks may be further increased if we do not implement a disaster recovery plan or our partners’ disaster recovery plans
prove to be inadequate. To the extent natural disasters or other catastrophic events concurrently impact data centers we rely on in connection with private key restoration, customers
will experience significant delays in withdrawing funds, or in the extreme we may suffer loss of customer funds.
The requirements of being a public company, including maintaining adequate internal control over our financial and management systems, may strain our resources,
divert management’s attention, and affect our ability to attract and retain executive management and qualified board members.
As a public company we will incur significant legal, accounting, and other expenses that we did not incur as a private company. We will be subject to reporting requirements of the
Exchange Act, the Sarbanes-Oxley Act, the rules subsequently implemented by the SEC, the rules and regulations of the listing standards of The Nasdaq Stock Market LLC, or
Nasdaq, and other applicable securities rules and regulations. Stockholder activism, the current political and social environment and the current high level of government intervention
and regulatory reform may lead to substantial new regulations and disclosure obligations, which will likely result in additional compliance costs and could impact the manner in which
we operate our business in ways we cannot currently anticipate. Compliance with these rules and regulations may strain our financial and management systems, internal controls, and
employees. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results. Moreover, the
Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures, and internal control, over financial reporting. In order to maintain and,
if required, improve our disclosure controls and procedures, and internal control over, financial reporting to meet this standard, significant resources and management oversight may
be required. If we encounter material weaknesses or deficiencies in our internal control over financial reporting, we may not detect errors on a timely basis and our consolidated
financial statements may be materially misstated. Effective internal control is necessary for us to produce reliable financial reports and is important to prevent fraud.
We expect our independent registered public accounting firm will be required to formally attest to the effectiveness of our internal control over financial reporting commencing with
our second annual report on Form 10-K. We expect to incur significant expenses and devote substantial management effort toward
63
ensuring compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. As a result of the complexity involved in complying with the rules and
regulations applicable to public companies, our management’s attention may be diverted from other business concerns, which could harm our business, operating results, and
financial condition. Although we have already hired additional employees to assist us in complying with these requirements, our finance team is small and we may need to hire more
employees in the future, or engage outside consultants, which will increase our operating expenses.
We also expect that being a public company and complying with applicable rules and regulations will make it more expensive for us to obtain director and officer liability insurance,
and we may be required to incur substantially higher costs to obtain and maintain the same or similar coverage. These factors could also make it more difficult for us to attract and
retain qualified members of our board of directors and qualified executive officers.
We might require additional capital to support business growth, and this capital might not be available.
We have funded our operations since inception primarily through equity financings and revenue generated by our products and services. We cannot be certain when or if our
operations will generate sufficient cash to fully fund our ongoing operations or the growth of our business. We intend to continue to make investments in our business to respond to
business challenges, including developing new products and services, enhancing our operating infrastructure, expanding our international operations, and acquiring complementary
businesses and technologies, all of which may require us to secure additional funds. Additional financing may not be available on terms favorable to us, if at all. If we incur additional
debt, the debt holders would have rights senior to holders of our common stock to make claims on our assets, and the terms of any debt could restrict our operations, including our
ability to pay dividends on our common stock. Furthermore, we have authorized the issuance of “blank check” preferred stock and common stock that our board of directors could use
to, among other things, issue shares of our capital stock in the form of blockchain tokens, implement a stockholder rights plan, or issue other shares of preferred stock or common
stock. We may issue shares of capital stock, including in the form of blockchain tokens, to our customers in connection with customer reward or loyalty programs. If we issue additional
equity securities, including in the form of blockchain tokens, stockholders will experience dilution, and the new equity securities could have rights senior to those of our currently
authorized and issued common stock. The trading prices for our common stock may be highly volatile, which may reduce our ability to access capital on favorable terms or at all. In
addition, a slowdown or other sustained adverse downturn in the general economic or crypto asset markets could adversely affect our business and the value of our Class A common
stock. Because our decision to raise capital in the future will depend on numerous considerations, including factors beyond our control, we cannot predict or estimate the amount,
timing, or nature of any future issuances of securities. As a result, our stockholders bear the risk of future issuances of debt or equity securities reducing the value of our Class A
common stock and diluting their interests. Our inability to obtain adequate financing or financing on terms satisfactory to us, when we require it, could significantly limit our ability to
continue supporting our business growth and responding to business challenges.
Although we ceased to be an emerging growth company, we have continued to take advantage of certain reduced disclosure requirements in the registration statement
of which this prospectus forms a part, which may make our Class A common stock less attractive to investors.
We ceased to be an emerging growth company, as defined in the JOBS Act, on December 31, 2020. However, because we ceased to be an emerging growth company after we
confidentially submitted our draft registration statement related to this offering to the SEC, we will continue to be treated as an emerging growth company for certain purposes until the
earlier of the date on which we complete this listing or December 31, 2021. As such, we have continued to take advantage of certain exemptions that allow us to comply with reduced
disclosure obligations regarding selected financial data and executive compensation arrangements in the registration statement of which this prospectus forms a part that are
64
not available to non-emerging growth companies. We cannot predict if investors will find our Class A common stock less attractive because we have relied on these exemptions. If
some investors find our Class A common stock less attractive as a result, there may be less demand for our Class A common stock and the market price of our Class A common stock
may fall.
RisksRelatedtoOwnershipofOurClassACommonStock
The registration and listing of our Class A common stock differs significantly from an underwritten initial public offering.
This listing is not an underwritten initial public offering of our Class A common stock. The registration and listing of our Class A common stock on the Nasdaq Global Select Market
differs from an underwritten initial public offering in several significant ways, which include the following:
• There are no underwriters. Consequently, prior to the opening of trading of our Class A common stock on the Nasdaq Global Select Market, there will be no book building
process and no price at which underwriters initially sold shares to the public to help inform efficient and sufficient price discovery with respect to the opening trades on the
Nasdaq Global Select Market. Therefore, buy and sell orders submitted prior to and at the opening of trading of our Class A common stock on the Nasdaq Global Select
Market will not have the benefit of being informed by a published price range or a price at which the underwriters initially sold shares to the public, as would be the case in an
underwritten initial public offering. Moreover, there will be no underwriters assuming risk in connection with resales of shares of our Class A common stock. Additionally,
because there are no underwriters, there is no underwriters’ option to purchase additional shares of our Class A common stock. In an underwritten initial public offering, the
underwriters may engage in “covered” short sales in an amount of shares representing the underwriters’ option to purchase additional shares. To close a covered short
position, the underwriters purchase shares in the open market or exercise the underwriters’ option to purchase additional shares. In determining the source of shares to close
the covered short position, the underwriters typically consider, among other things, the price of shares available for purchase in the open market as compared to the price at
which they may purchase shares through the underwriters’ option to purchase additional shares. Purchases in the open market to cover short positions, as well as other
purchases underwriters may undertake for their own accounts, may have the effect of preventing a decline in the market price of shares. Given that there will be no
underwriters’ option to purchase additional shares and no underwriters engaging in stabilizing transactions, there could be greater volatility in the public price of our Class A
common stock during the period immediately following the listing. See also “—The price of our Class A common stock may be volatile, and could, upon listing on the Nasdaq
Global Select Market, decline significantly and rapidly. Market volatility may affect the value of an investment in our Class A common stock and could subject us to litigation.”
• There is not a fixed or determined number of shares of Class A common stock available for sale in connection with the registration and listing of the Class A common stock on
the Nasdaq Global Select Market. Therefore, there can be no assurance that any registered stockholders or other existing stockholders will sell any of their shares of Class A
common stock and there may initially be a lack of supply of, or demand for, shares of Class A common stock on the Nasdaq Global Select Market. Alternatively, we may have
a large number of registered stockholders or other existing stockholders who choose to sell their shares of Class A common stock in the near term, resulting in potential
oversupply of our Class A common stock, which could adversely impact the price of our Class A common stock.
• None of our registered stockholders or other existing stockholders have entered into contractual lock-up agreements or other contractual restrictions on transfer. In an
underwritten initial public offering, it is customary for an issuer’s officers, directors, and most or all of its other stockholders to enter into a 180-day contractual lock-up
arrangement with the underwriters to help promote orderly trading immediately after such initial public offering. Consequently, any of our
65
stockholders, including our directors and officers who own our common stock and other significant stockholders, may sell any or all of their shares of Class A common stock,
including shares of Class B common stock convertible into Class A common stock at the time of sale (subject to any restrictions under applicable law), including immediately
upon listing. If such sales were to occur in a significant volume in a short period of time, it may result in an oversupply of our Class A common stock in the market, which could
adversely impact the price of our Class A common stock. See also “—None of our stockholders are party to any contractual lock-up agreement or other contractual restrictions
on transfer. Following our listing, the sales or distribution of substantial amounts of our Class A common stock, or the perception that such sales or distributions might occur,
could cause the market price of our Class A common stock to decline.”
• We will not conduct a traditional “roadshow” with underwriters prior to the opening of trading of our Class A common stock on the Nasdaq Global Select Market. Instead, we
may host one or more investor day presentations and/or post presentations regarding our company, our management team, and the listing through our website or other
broadly-available means and intend to engage in additional investor education meetings. In advance of any investor day presentations and/or the posting of presentations
regarding our company, our management team, and the listing through our website or other broadly-available means, we intend to announce the date for such day over
financial news outlets in a manner consistent with typical corporate outreach to investors. We intend to prepare electronic presentations for any such investor days or other
presentations regarding our company, our management team, and the listing, which will have content similar to a traditional roadshow presentation, and to make a version of
any such presentation publicly available, without restrictions, on our website. There can be no guarantee that any investor day presentations, other investor education
presentations, and other investor education meetings will have the same impact on investor education as a traditional “roadshow” conducted in connection with an
underwritten initial public offering. As a result, there may not be efficient or sufficient price discovery with respect to our Class A common stock or sufficient demand among
potential investors immediately after our listing, which could result in a more volatile price of our Class A common stock.
• Since we are not conducting an underwritten initial public offering for our Class A common stock, the market price for our Class A common stock may be volatile and trading
volume may be uncertain, which may adversely affect your ability to sell any shares of Class A common stock that you may purchase.
The price of our Class A common stock may be volatile, and could, upon listing on the Nasdaq Global Select Market, decline significantly and rapidly. Market volatility
may affect the value of an investment in our Class A common stock and could subject us to litigation.
The listing of our Class A common stock on the Nasdaq Global Select Market and the registration of the registered stockholders’ shares of Class A common stock is a relatively
novel process that is not an underwritten initial public offering. We have engaged Goldman Sachs, J.P. Morgan, Allen & Co., and Citigroup as our financial advisors. There will be no
book building process and no price at which underwriters initially will sell shares of Class A common stock to the public to help inform efficient and sufficient price discovery with
respect to the opening trades of the Class A common stock on the Nasdaq Global Select Market.
Pursuant to Nasdaq’s rules, once Goldman Sachs, in its capacity as our designated financial advisor to perform the functions under Nasdaq Rule 4120(c)(8), has notified Nasdaq
that our shares of Class A common stock are ready to trade, Nasdaq will calculate the Current Reference Price for our shares of Class A common stock, in accordance with Nasdaq’s
rules. If Goldman Sachs then approves proceeding at the Current Reference Price, Nasdaq will conduct price validation checks in accordance with Nasdaq rules. As part of
conducting its price validation checks, Nasdaq may consult with Goldman Sachs and other market participants (including the other financial advisors). Upon completion of such price
validation
66
checks, the applicable orders that have been entered will then be executed at such price and regular trading of our shares of Class A common stock on the Nasdaq Global Select
Market will commence. Under Nasdaq’s rules, the “Current Reference Price” means: (i) the single price at which the maximum number of orders to buy or sell our shares of Class A
common stock can be matched; (ii) if more than one price exists under clause (i), then the price that minimizes the number of our shares of Class A common stock for which orders
cannot be matched; (iii) if more than one price exists under clause (ii), then the entered price (i.e. the specified price entered in an order by a customer to buy or sell) at which our
shares of Class A common stock will remain unmatched (i.e. will not be bought or sold); and (iv) if more than one price exists under clause (iii), a price determined by Nasdaq after
consultation with Goldman Sachs, J.P. Morgan, Allen & Co., and Citigroup in their capacity as financial advisors, Goldman Sachs, J.P. Morgan, Allen & Co., and Citigroup will exercise
any consultation rights only to the extent that they may do so consistent with the anti-manipulation provisions of the federal securities laws, including Regulation M (to the extent
applicable), or applicable relief granted thereunder. Goldman Sachs will determine when our shares of Class A common stock are ready to trade and approve proceeding at the
Current Reference Price primarily based on consideration of volume, timing, and price. In particular, Goldman Sachs will determine, based primarily on pre-opening buy and sell
orders, when a reasonable amount of volume will cross on the opening trade such that sufficient price discovery has been made to open trading at the Current Reference Price. If
Goldman Sachs does not approve proceeding at the Current Reference Price (for example, due to the absence of adequate pre-opening buy and sell interest), Goldman Sachs will
request that Nasdaq delay the open until such a time that sufficient price discovery has been made to ensure a reasonable amount of volume crosses on the opening trade. The
length of such delay could vary greatly, from a short period of time such as one day, to a decision to not list our shares on the Nasdaq Global Select Market at all. As a result, the
absence of sufficient price discovery may result in delays in the opening of trading and, volatile prices and supply once trading commences. The opening public price may bear no
relationship to the market price for our Class A common stock after our listing, and thus may decline below the opening public price.
Moreover, prior to the opening trade on the Nasdaq Global Select Market, there will not be a price at which underwriters initially sold shares of Class A common stock to the public
as there would be in an underwritten initial public offering. The absence of a predetermined initial public offering price could impact the range of buy and sell orders collected by
Nasdaq from various broker-dealers. Consequently, upon listing on the Nasdaq Global Select Market, the public price of our Class A common stock may be more volatile than in an
underwritten initial public offering and could decline significantly and rapidly.
Moreover, because of the relatively novel listing process and the broad consumer awareness and brand recognition of our company, individual investors, retail, or otherwise, may
have greater influence in setting the opening public price and subsequent public prices of our Class A common stock on the Nasdaq Global Select Market and may participate more in
our initial trading than is typical for an underwritten initial public offering. These factors could result in a public price of our Class A common stock that is higher than other investors
(such as institutional investors) are willing to pay, which could cause volatility in the trading price of our Class A common stock and an unsustainable trading price if the price of our
Class A common stock significantly rises upon listing and institutional investors believe our Class A common stock is worth less than retail investors, in which case the price of our
Class A common stock may decline over time. Further, if the public price of our Class A common stock is above the level that investors determine is reasonable for our Class A
common stock, some investors may attempt to short our Class A common stock after trading begins, which would create additional downward pressure on the public price of our Class
A common stock. Moreover, to the extent that there is a lack of consumer awareness among retail investors, such lack of consumer awareness could reduce the value of our Class A
common stock and cause volatility in the trading price of our Class A common stock.
67
Technology stocks have historically experienced high levels of volatility. The price of our Class A common stock also could be subject to wide fluctuations in response to the risk
factors described in this prospectus and others beyond our control, including:
• the number of shares of our Class A common stock publicly owned and available for trading;
• overall performance of the equity markets or publicly-listed financial services and technology companies;
• our actual or anticipated operating performance and the operating performance of our competitors;
• changes in the projected operational and financial results we provide to the public or our failure to meet those projections;
• failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet the
estimates or the expectations of investors;
• any major change in our board of directors, management, or key personnel;
• if we issue additional shares of capital stock, including in the form of blockchain tokens, in connection with customer reward or loyalty programs;
• rumors and market speculation involving us or other companies in our industry;
• announcements by us or our competitors of significant innovations, new products, services, features, integrations or capabilities, acquisitions, strategic investments,
partnerships, joint ventures, or capital commitments; and
• other events or factors, including those resulting from COVID-19, war, incidents of terrorism, or responses to these events.
Furthermore, the stock market has recently experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of
many companies and financial services and technology companies in particular. These fluctuations often have been unrelated or disproportionate to the operating performance of
those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes, or
international currency fluctuations, may negatively impact the market price of our Class A common stock. These fluctuations may be even more pronounced in the trading market for
our Class A common stock shortly following the listing of our Class A common stock on the Nasdaq Global Select Market as a result of the supply and demand forces described
above. If the market price of our Class A common stock after our listing does not exceed the opening public price, you may not realize any return on your investment in us and may
lose some or all of your investment. In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We
may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business
concerns, which could harm our business.
The price of our Class A common stock may have little or no relationship to the historical sales prices of our capital stock in private transactions.
Prior to the registration and listing of our Class A common stock on the Nasdaq Global Select Market there has been no public market for our capital stock. The historical sales
prices of our capital stock are primarily from sales of shares of our capital stock in private transactions. In the section titled “Sale Price History of our Capital Stock,” we have provided
the historical sales prices of our capital stock in private transactions. However, given the limited history of sales, among other factors, this information may have
68
little or no relation to broader market demand for our Class A common stock and thus the price of our Class A common stock. As a result, you should not place undue reliance on
these historical sales prices as they may differ materially from the opening price of the Class A common stock and subsequent prices of our Class A common stock. For more
information about how the initial listing price of the Class A common stock on the Nasdaq Global Select Market will be determined, see the section titled “Plan of Distribution.”
An active, liquid, and orderly market for our Class A common stock may not develop or be sustained. You may be unable to sell your shares of Class A common stock at
or above the price you bought them for.
We currently expect our Class A common stock to be listed and traded on the Nasdaq Global Select Market. Prior to the listing of our Class A common stock on the Nasdaq
Global Select Market, there has been no public market for our Class A common stock. Moreover, consistent with Regulation M and other federal securities laws applicable to our
listing, we have not consulted with registered stockholders or other existing stockholders regarding their desire or plans to sell shares in the public market following the listing or
discussed with potential investors their intentions to buy our Class A common stock in the open market. While our Class A common stock may be sold after our listing of the Class A
common stock on Nasdaq Global Select Market by the registered stockholders pursuant to this prospectus or by our other existing stockholders in accordance with Rule 144 of the
Securities Act, unlike an underwritten initial public offering, there can be no assurance that any registered stockholders or other existing stockholders will sell any of their shares of
Class A common stock. As a result, there may initially be a lack of supply of, or demand for, Class A common stock on the Nasdaq Global Select Market. In the case of a lack of
supply of our Class A common stock, the trading price of our Class A common stock may rise to an unsustainable level. Further, institutional investors may be discouraged from
purchasing our Class A common stock if they are unable to purchase a block of our Class A common stock in the open market due to a potential unwillingness of our existing
stockholders to sell a sufficient amount of Class A common stock at the price offered by such institutional investors and the greater influence individual investors have in setting the
trading price. If institutional investors are unable to purchase our Class A common stock, the market for our Class A common stock may be more volatile without the influence of long-
term institutional investors holding significant amounts of our Class A common stock. Conversely, there can be no assurance that the registered stockholders and other existing
stockholders will not sell all of their shares of Class A common stock, resulting in an oversupply of our Class A common stock on the Nasdaq Global Select Market. In the case of a
lack of demand for our Class A common stock, the trading price of our Class A common stock could decline significantly and rapidly after the listing of our Class A common stock on
the Nasdaq Global Select Market. Therefore, an active, liquid, and orderly trading market for our Class A common stock may not initially develop or be sustained, which could
significantly depress and result in significant volatility in the price of our Class A common stock. This could affect your ability to sell your shares of Class A common stock.
The dual class structure of our common stock will have the effect of concentrating voting control with those stockholders, including our directors, executive officers, and
their respective affiliates, who held in the aggregate % of the voting power of our capital stock upon the effectiveness of the registration statement of which
this prospectus forms a part. This ownership will limit or preclude your ability to influence corporate matters, including the election of directors, amendments of our
organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder
approval.
Our Class B common stock has twenty votes per share, and our Class A common stock has one vote per share. Upon the effectiveness of the registration statement of which this
prospectus forms a part, our directors, executive officers, and their affiliates held in the aggregate % of the voting power of our capital stock. Because of the twenty-to-one voting
ratio between our Class B common stock and our Class A common stock, the holders of our Class B common stock collectively could continue to control a significant percentage of
the combined voting power of our common stock and therefore be able to control
69
all matters submitted to our stockholders for approval until the earliest to occur of (i) the date fixed by the board of directors that is no less than 61 days and no more than 180 days
following the first time after the date of effectiveness of the registration statement of which this prospectus forms a part that the aggregate number of shares of Class B common stock
held by Brian Armstrong and his affiliates is less than 25% of the aggregate number of shares of Class B common stock held by Mr. Armstrong and his affiliates on the date of
effectiveness of the registration statement of which this prospectus forms a part; (ii) the date and time specified by affirmative vote of the holders of at least 66-2/3% of the outstanding
shares of Class B common stock, voting as a single class, and the affirmative vote of at least 66-2/3% of the then serving members of our board of directors, which must include the
affirmative vote of Mr. Armstrong, if either (A) Mr. Armstrong is serving on our board of directors and has not been terminated for cause or resigned except for good reason (as each
term is defined in our restated certificate of incorporation) from his position as our Chief Executive Officer or (B) Mr. Armstrong has not been removed for cause or resigned from the
position of Chairman of the board of directors; and (iii) the death or disability (as defined in our and restated certificate of incorporation) of Mr. Armstrong, when all outstanding shares
of Class B common stock will convert automatically into shares of Class A common stock. Holders of our Class A common stock will not be entitled to vote separately as a single class
except under certain limited circumstances as described in the section titled “Description of Capital Stock—Class A Common Stock and Class B Common Stock—Voting Rights”. This
concentrated control may limit or preclude your ability to influence corporate matters for the foreseeable future, including the election of directors, amendments of our organizational
documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval. In addition, this may
prevent or discourage unsolicited acquisition proposals or offers for our capital stock that you may believe are in your best interest as one of our stockholders.
Future transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, subject to limited exceptions, such as certain
transfers effected for estate planning purposes. The conversion of Class B common stock to Class A common stock will have the effect, over time, of increasing the relative voting
power of those holders of Class B common stock who retain their shares in the long term. As a result, it is possible that one or more of the persons or entities holding our Class B
common stock could gain significant voting control as other holders of Class B common stock sell or otherwise convert their shares into Class A common stock. See the section titled
“Description of Capital Stock—Anti-Takeover Provisions” for additional information.
The dual class structure of our common stock may adversely affect the trading market for our Class A common stock.
Certain stock index providers, such as S&P Dow Jones, exclude companies with multiple classes of shares of common stock from being added to certain stock indices, including
the S&P 500. In addition, several stockholder advisory firms and large institutional investors oppose the use of multiple class structures. As a result, the dual class structure of our
common stock may prevent the inclusion of our Class A common stock in such indices, may cause stockholder advisory firms to publish negative commentary about our corporate
governance practices or otherwise seek to cause us to change our capital structure, and may result in large institutional investors not purchasing shares of our Class A common stock.
Any exclusion from stock indices could result in a less active trading market for our Class A common stock. Any actions or publications by stockholder advisory firms or institutional
investors critical of our corporate governance practices or capital structure could also adversely affect the value of our Class A common stock.
None of our stockholders are party to any contractual lock-up agreement or other contractual restrictions on transfer. Following our listing, the sales or distribution of
substantial amounts of our Class A common stock, or the perception that such sales or distributions might occur, could cause the market price of our Class A common
stock to decline.
In addition to the supply and demand and volatility factors discussed above, the sale or distribution of a substantial number of shares of our Class A common stock, particularly
sales by us or our directors,
70
executive officers, and principal stockholders, or the perception that these sales or distributions might occur in large quantities, could cause the market price of our Class A common
stock to decline.
As of December 31, 2020, giving effect to the conversion and reclassification of our Series FF, Series A, Series B, Series C, and Series D convertible preferred stock into
104,046,301 shares of our Class B common stock, and our Series E convertible preferred stock into 8,831,952 shares of our Class A common stock, which will occur in connection
with the effectiveness of the registration statement of which this prospectus forms a part, we had 185,986,111 shares of common stock outstanding, all of which are “restricted
securities” (as defined in Rule 144 under the Securities Act).
Approximately shares of Class B common stock may be converted to Class A common stock and then immediately sold either by the registered stockholders
pursuant to this prospectus or by our other existing stockholders under Rule 144 since such shares held by such other stockholders will have been beneficially owned by non-affiliates
for at least one year. Moreover, once we have been a reporting company subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act for 90 days and
assuming the availability of certain public information about us, (i) non-affiliates who have beneficially owned our common stock for at least six months may rely on Rule 144 to sell
their shares of Class A common stock, and (ii) our directors, executive officers, and other affiliates who have beneficially owned our common stock for at least six months, including
certain of the shares of Class A common stock covered by this prospectus to the extent not sold hereunder, will be entitled to sell their shares of our Class A common stock subject to
volume limitations under Rule 144 under the Securities Act and various vesting agreements.
Further, as of December 31, 2020, we had 63,255,357 options outstanding that, if fully exercised, would result in the issuance of 22,442,017 shares of Class B common stock and
the issuance of 40,813,340 shares of Class A common stock and 3,765,760 shares of Class A common stock outstanding subject to RSUs. All of the shares of Class A common stock
and Class B common stock issuable upon the exercise of stock options or vesting and settlement of RSUs, and reserved for future issuance under our equity incentive plans, will be
registered for public resale under the Securities Act. Accordingly, these shares will be able to be freely sold in the public market upon issuance, subject to applicable vesting
requirements and compliance by affiliates with Rule 144.
None of our stockholders are subject to any contractual lock-up or other contractual restriction on the transfer or sale of their shares.
Following the effectiveness of the registration statement of which this prospectus forms a part, the holders of up to 109,385,725 shares of our common stock will have rights,
subject to some conditions, to require us to file registration statements for the public resale of the Class A common stock issuable upon conversion of such shares or to include such
shares in registration statements that we may file for us or other stockholders. Any registration statement we file to register additional shares, whether as a result of registration rights
or otherwise, could cause the market price of our Class A common stock to decline or be volatile.
We also may issue our capital stock or securities convertible into our capital stock, including in the form of blockchain tokens, from time to time in connection with a financing, an
acquisition, investments, pursuant to customer rewards, loyalty programs, and other incentive plans, or otherwise. Any such issuance could result in substantial dilution to our existing
stockholders and cause the public price of our Class A common stock to decline.
If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, the price of our Class A common stock and
its liquidity could decline.
The trading market for our Class A common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business, our market,
and our competitors. We do not have any control over these analysts. If few securities analysts commence coverage of us, if industry
71
analysts do not cover our Class A common stock, or if industry analysts cease coverage of us altogether, the trading price for our Class A common stock would be negatively affected.
If one or more of the analysts who cover us downgrade our Class A common stock, or publish inaccurate or unfavorable research about our business, the price of our Class A
common stock may decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our Class A common stock could decrease,
which might cause our Class A common stock price and trading volume to decline.
We are not obligated to, and do not intend to pay dividends on any class of our common stock for the foreseeable future.
We have never declared or paid any cash dividends on any class of our common stock, are not obligated to pay, and do not intend to pay any cash dividends in the foreseeable
future. We anticipate that for the foreseeable future we will retain all of our future earnings for use in the development of our business and for general corporate purposes. Any
determination to pay dividends in the future will be at the discretion of our board of directors.
Our payment of any dividends will be subject to contractual and legal restrictions and other factors that our board of directors deems relevant. Moreover, agreements governing
any future indebtedness of ours may further limit our ability to pay dividends. In addition, our ability to pay dividends is limited by law. There is no assurance that we will be able or that
our board of directors will decide to declare any dividends on any class of our common stock.
Accordingly, investors may have to rely on sales of their Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on
their investment.
Provisions in our charter documents and under Delaware law, and certain rules imposed by regulatory authorities, could make an acquisition of us, which may be
beneficial to our stockholders, more difficult, limit attempts by our stockholders to replace or remove our current management, limit our stockholders’ ability to obtain a
favorable judicial forum for disputes with us or our directors, officers, or employees, and limit the price of our Class A common stock.
Provisions in our restated certificate of incorporation and restated bylaws that will become effective shortly following the effectiveness of the registration statement of which this
prospectus forms a part may have the effect of delaying or preventing a merger, acquisition, or other change of control of our company that the stockholders may consider favorable.
In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our
stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Among other things, our restated
certificate of incorporation and restated bylaws include provisions that:
• provide that our board of directors will be classified into three classes of directors with staggered three-year terms, subject to staggered board end dates as defined and
further described in the section titled “Description of Capital Stock”;
• permit our board of directors to establish the number of directors and fill any vacancies and newly-created directorships;
• require unanimous approval of our board of directors for the nomination of directors for election, or to fill vacancies, on our board of directors, subject to staggered board end
dates as defined and further described in the section titled “Description of Capital Stock”;
• require super-majority voting to amend some provisions in our restated certificate of incorporation and restated bylaws;
72
• authorize the issuance of “blank check” preferred stock and common stock that our board of directors could use to implement a stockholder rights plan or issue other shares of
preferred stock or common stock, including blockchain tokens;
• provide that only our Chief Executive Officer or a majority of our board of directors will be authorized to call a special meeting of stockholders;
• eliminate the ability of our stockholders to call special meetings of stockholders;
• prohibit cumulative voting;
• provide that directors may only be removed “for cause” and only with the approval of two-thirds of our stockholders, subject to staggered board end dates as defined and
further described in the section titled “Description of Capital Stock”;
• provide for a dual class common stock structure in which holders of our Class B common stock have the ability to control the outcome of matters requiring stockholder
approval, even if they own significantly less than a majority of the outstanding shares of our Class A common stock and Class B common stock, including the election of
directors and significant corporate transactions, such as a merger or other sale of our company or its assets;
• prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders, subject to staggered board end dates as
defined and further described in the section titled “Description of Capital Stock”;
• provide that the board of directors is expressly authorized to make, alter, or repeal our restated bylaws; and
• advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder
meetings.
Moreover, Section 203 of the Delaware General Corporation Law may discourage, delay, or prevent a change of control of our company. Section 203 imposes certain restrictions
on mergers, business combinations, and other transactions between us and holders of 15% or more of our common stock. See the section titled “Description of Capital Stock” for
additional information.
In addition, a third party attempting to acquire us or a substantial position in our common stock may be delayed or ultimately prevented from doing so by change in ownership or
control regulations to which our regulated broker-dealer subsidiaries are subject. FINRA Rule 1017 generally provides that FINRA approval must be obtained in connection with any
transaction resulting in a single person or entity owning, directly or indirectly, 25% or more of a member firm’s equity and would include a change of control of a parent company.
Our restated certificate of incorporation will contain an exclusive forum provision for certain claims, which could limit our stockholders’ ability to obtain a favorable
judicial forum for disputes with us or our directors, officers, or employees.
Our restated certificate of incorporation, to the fullest extent permitted by law, will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for any
derivative action or proceeding brought on our behalf; any action asserting a claim that is based upon a breach of fiduciary duty; any action asserting a claim against us or any current
or former director, officer, stockholder, employee or agent of ours, arising pursuant to the DGCL, our restated certificate of incorporation, or our restated bylaws; any action asserting a
claim against us that is governed by the internal affairs doctrine; or any action asserting an “internal corporate claim” as defined in Section 115 of the DGCL.
Moreover, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all claims brought to enforce any duty or liability created by the
Securities Act or the rules and
73
regulations thereunder and our restated certificate of incorporation will provide that the federal district courts of the United States of America will, to the fullest extent permitted by law,
be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, or a Federal Forum Provision, unless we consent in writing to the
selection of an alternative forum. Our decision to adopt a Federal Forum Provision followed a decision by the Supreme Court of the State of Delaware holding that such provisions are
facially valid under Delaware law. While there can be no assurance that federal or state courts will follow the holding of the Delaware Supreme Court or determine that the Federal
Forum Provision should be enforced in a particular case, application of the Federal Forum Provision means that suits brought by our stockholders to enforce any duty or liability
created by the Securities Act must be brought in federal court and cannot be brought in state court. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all
claims brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder and neither the exclusive forum provision nor the Federal Forum
Provision applies to suits brought to enforce any duty or liability created by the Exchange Act. Accordingly, actions by our stockholders to enforce any duty or liability created by the
Exchange Act or the rules and regulations thereunder must be brought in federal court. Our stockholders will not be deemed to have waived our compliance with the federal securities
laws and the regulations promulgated thereunder.
Any person or entity purchasing or otherwise acquiring or holding any interest in any of our securities will be deemed to have notice of and consented to our exclusive forum
provisions, including the Federal Forum Provision. These provisions may limit our stockholders’ ability to bring a claim in a judicial forum they find favorable for disputes with us or our
directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees. Alternatively, if a court were to find the choice of
forum provision contained in our restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such
action in other jurisdictions, which could harm our business, operating results, and financial condition.
74
SPECIALNOTEREGARDINGFORWARD-LOOKINGSTATEMENTS
This prospectus contains forward-looking statements. All statements contained in this prospectus other than statements of historical fact, including statements regarding our future
operating results and financial position, our business strategy and plans, market growth, and our objectives for future operations, are forward-looking statements. The words “believe,”
“may,” “will,” “estimate,” “potential,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “target,” and similar expressions are intended to identify forward-
looking statements.
Forward-looking statements contained in this prospectus include, but are not limited to, statements about:
• our future financial performance, including our expectations regarding our net revenue, operating expenses, and our ability to achieve and maintain future profitability;
• our business plan and our ability to effectively manage our growth;
• anticipated trends, growth rates, and challenges in our business, the cryptoeconomy, and in the markets in which we operate;
• market acceptance of our products and services;
• beliefs and objectives for future operations;
• our ability to further penetrate our existing customer base and maintain and expand our customer base;
• our ability to develop new products and services and grow our business in response to changing technologies, customer demand, and competitive pressures;
• our expectations concerning relationships with third parties;
• our ability to maintain, protect, and enhance our intellectual property;
• our ability to continue to expand internationally;
• the effects of increased competition in our markets and our ability to compete effectively;
• future acquisitions of or investments in complementary companies, products, services, or technologies and our ability to successfully integrate such companies or assets;
• our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business both in the United States and internationally;
• economic and industry trends, projected growth, or trend analysis;
• trends in revenue, cost of revenue, and gross margin;
• trends in operating expenses, including technology and development expenses, sales and marketing expenses, and general and administrative expenses, and expectations
regarding these expenses as a percentage of revenue;
• increased expenses associated with being a public company; and
• other statements regarding our future operations, financial condition, and prospects and business strategies.
We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our operating
results, financial condition,
75
business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties,
and assumptions, including those described in the section titled “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from
time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the
future events and trends discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking
statements.
You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be
achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance, or
achievements. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this prospectus or to conform these statements to actual
results or revised expectations, except as required by law.
You should read this prospectus and the documents that we reference in this prospectus and have filed with the SEC as exhibits to the registration statement of which this
prospectus forms a part with the understanding that our actual future results, performance, and events and circumstances may be materially different from what we expect.
76
MARKETANDINDUSTRYDATA
Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, including our general expectations, market
position, market opportunity, and market size, is based on information from various third-party industry and research sources, as well as assumptions that we have made that are
based on those data and other similar sources, and on our knowledge of the markets for our products and services. This information involves a number of assumptions and limitations,
and you are cautioned not to give undue weight to such estimates. While we believe the market position, market opportunity, and market size information included in this prospectus is
generally reliable, information of this sort is inherently imprecise. In addition, projections, assumptions, and estimates of our future performance and the future performance of the
industry in which we operate is necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section titled “Risk Factors” and
elsewhere in this prospectus. These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.
This prospectus contains statistical data, estimates, and forecasts that are based on industry publications or reports generated by third-party providers, or other publicly available
information, as well as other information based on internal estimates.
77
USEOFPROCEEDS
Registered stockholders may elect to sell shares of our Class A common stock covered by this prospectus. To the extent any registered stockholder chooses to sell shares of our
Class A common stock covered by this prospectus, we will not receive any proceeds from any such sales of our Class A common stock. See the section titled “Principal and
Registered Stockholders.”
78
DIVIDENDPOLICY
We have never declared or paid cash dividends on our capital stock. We are not obligated to pay any dividends on the Class A common stock or Class B common stock and we
currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any dividends on our capital stock in the
foreseeable future. Any future determination to declare dividends will be made at the discretion of our board of directors and will depend on our financial condition, operating results,
capital requirements, general business conditions, and other factors that our board of directors may deem relevant.
79
CAPITALIZATION
The following table sets forth cash and cash equivalents, as well as our capitalization, as of December 31, 2020 on:
• an actual basis; and
• a pro forma basis, giving effect to (i) the automatic conversion of all outstanding shares of our Series FF, Series A, Series B, Series C, and Series D convertible preferred
stock as of December 31, 2020 into 104,046,301 shares of our Class B common stock, as if such conversion had occurred on December 31, 2020, (ii) the automatic
conversion of all outstanding shares of our Series E convertible preferred stock as of December 31, 2020 into 8,831,952 shares of our Class A common stock, as if such
conversion had occurred on December 31, 2020, and (iii) the filing and effectiveness of our restated certificate of incorporation.
You should read this table together with our consolidated financial statements and related notes, and the sections titled “Selected Consolidated Financial and Other Data” and
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” each included elsewhere in this prospectus.
AsofDecember31,2020
Actual ProForma
(in thousands, except share and per share data)
Cash and cash equivalents
$ 1,061,850 $ 1,061,850
Convertible preferred stock, $0.00001 par value; 126,605,028 shares authorized, 112,878,253 shares issued and outstanding,
actual; no shares authorized, issued and outstanding, pro forma
$ 562,467 $ —
Stockholders’ equity
Preferred stock, $0.00001 par value; no shares authorized, issued, and outstanding, actual; 500,000,000 shares authorized, no
shares issued and outstanding, pro forma — —
Class A common stock, $0.00001 par value; 267,640,000 shares authorized, 12,203,539 shares issued and outstanding, actual;
10,000,000,000 shares authorized, 21,035,491 shares issued and outstanding, pro forma
— —
Class B common stock, $0.00001 par value; 208,413,936 shares authorized, 60,904,319 shares issued and outstanding, actual;
500,000,000 shares authorized, 164,950,620 shares issued and outstanding, pro forma
— 1
Common stock, $0.00001 par value; no shares authorized, issued, and outstanding, actual; 500,000,000 shares authorized, no
shares issued and outstanding, pro forma — —
Additional paid-in capital
231,024 793,490
Accumulated other comprehensive income
6,256 6,256
Retained earnings
726,304 726,304
Total stockholders’ equity
963,584 1,526,051
Total capitalization
$ 1,526,051 $ 1,526,051
The number of shares of our Class A common stock and Class B common stock to be outstanding following the effectiveness of this registration statement is based upon
21,035,491 shares of our Class A
80
common stock outstanding and 164,950,620 shares of our Class B common stock outstanding, in each case, as of December 31, 2020 and does not include:
• 3,550,279 shares of our Class A common stock and 22,442,017 shares of our Class B common stock issuable upon the exercise of options to purchase shares of our
common stock as of December 31, 2020 under our Amended and Restated 2013 Stock Plan, or 2013 Plan, with a weighted-average exercise price of $5.26 per share;
• 37,230,658 shares of our Class A common stock issuable upon the exercise of options to purchase shares of our Class A common stock as of December 31, 2020 under our
2019 Equity Incentive Plan, or 2019 Plan, with a weighted-average exercise price of $21.54 per share;
• 3,765,760 restricted stock units, or RSUs, covering shares of our Class A common stock that are issuable upon satisfaction of a service-based vesting condition outstanding
as of December 31, 2020, for which the service-based vesting condition was not yet satisfied as of December 31, 2020, pursuant to our 2019 Plan;
• 1,607,982 RSUs covering shares of our Class A common stock that are issuable upon satisfaction of a service-based vesting condition that were granted after December 31,
2020, pursuant to our 2019 Plan;
• 32,403 shares of our Class A common stock issuable upon the exercise of options to purchase shares of our Class A common stock that were assumed and converted from
options to purchase shares of Tagomi Holdings Inc. common stock upon completion of our acquisition of Tagomi Holdings Inc. in July 2020, with a weighted-average exercise
price of $5.31 per share;
• 470,128 shares of our Class A common stock issuable upon the exercise of options to purchase shares of our Class A common stock that were assumed and converted from
options to purchase shares of Bison Trails Co. common stock upon completion of our acquisition of Bison Trails Co. in February 2021, with a weighted average exercise price
of $3.45 per share;
• 407,928 shares of our Class B common stock issuable upon the exercise of a warrant to purchase Class B common stock outstanding as of December 31, 2020, with an
exercise price of $1.01 per share;
• 2,295,766 shares of Class A common stock reserved for the potential issuance pursuant to warrants to purchase shares of our Class A common stock that may be approved
by our board of directors from time to time, of which, as of December 31, 2020, our board of directors had approved the issuance of a warrant exercisable for an aggregate of
229,577 shares of our Class A common stock at an exercise price of $0.00001 per share;
• 4,201 shares of our Class A common stock issuable upon the exercise of a warrant to purchase Class A common stock which we assumed in July 2020 in connection with the
acquisition of Tagomi Holdings Inc., with an exercise price of $5.26 per share;
• 3,584,228 shares of our Class A common stock that we issued in connection with our acquisition of Bison Trails Co. in February 2021, 647,692 shares of which are subject to
holdback; and
• 38,416,002 shares of our common stock reserved for future issuance under our equity compensation plans, consisting of (i) 2,193,489 shares of our Class A common stock
reserved for future issuance under our 2019 Plan as of December 31, 2020 (which reserve does not reflect the options to purchase shares of our Class A common stock
granted after December 31, 2020), (ii) 31,047,869 shares of our Class A common stock reserved for future issuance under our 2021 Equity Incentive Plan, or 2021 Plan,
which will become effective on the date immediately prior to the date of the effectiveness of this registration statement of which this prospectus forms a part, and
(iii) 5,174,644 shares of our Class A common stock reserved for issuance under our 2021
81
ESPP, which will become effective on the date of the effectiveness of this registration statement of which this prospectus forms a part.
On the date immediately prior to the date of the effectiveness of this registration statement of which this prospectus forms a part, any remaining shares available for issuance
under our 2019 Plan will be added to the shares of our Class A common stock reserved for issuance under our 2021 Plan, and we will cease granting awards under our 2019 Plan.
Our 2021 Plan and 2021 ESPP also provide for automatic annual increases in the number of shares reserved thereunder. See the section titled “Executive Compensation—Employee
Benefit Plans” for additional information.
Except as otherwise indicated, all information in this prospectus assumes:
• the automatic conversion of all outstanding shares of our Series FF, Series A, Series B, Series C, and Series D convertible preferred stock as of December 31, 2020 into
104,046,301 shares of our Class B common stock;
• the automatic conversion of all outstanding shares of our Class E convertible preferred stock as of December 31, 2020 into 8,831,952 shares of our Class A common stock;
• no exercise, forfeitures, or expirations of outstanding stock options or warrants after December 31, 2020; and
• the filing and effectiveness of our restated certificate of incorporation and the effectiveness of our restated bylaws, each of which will occur shortly following the effectiveness
of the registration statement of which this prospectus forms a part.
82
SELECTEDCONSOLIDATEDFINANCIALANDOTHERDATA
The following section presents our selected consolidated financial and other data. We derived our selected consolidated statements of operations data for the years ended
December 31, 2020 and December 31, 2019 (except for the pro forma share and pro forma net income per share information) and our consolidated balance sheet data as of
December 31, 2020 and December 31, 2019 from our audited consolidated financial statements included elsewhere in this prospectus. Our historical results are not necessarily
indicative of the results that may be expected for any other period in the future. The following summary consolidated financial and other data should be read in conjunction with the
section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included
elsewhere in this prospectus.
83
ConsolidatedStatementofOperationsData
YearEndedDecember31,
2020 2019
(in thousands, except per share data)
Revenue:
Net revenue $ 1,141,167 $ 482,949
Other revenue 136,314 50,786
Total revenue 1,277,481 533,735
Operating expenses:
Transaction expense 135,514 82,055
Technology and development 271,732 185,044
Sales and marketing 56,782 24,150
General and administrative 279,880 231,929
Restructuring — 10,140
Other operating expense 124,622 46,200
Total operating expenses 868,530 579,518
Operating income (loss) 408,951 (45,783)
Other income, net (248) (367)
Income (loss) before provision for (benefit from) income taxes 409,199 (45,416)
Provision for (benefit from) income taxes
86,882 (15,029)
Net income (loss)
$ 322,317 $ (30,387)
Net income (loss) attributable to common stockholders:
Basic
$ 108,256 $ (30,387)
Diluted
$ 127,471 $ (30,387)
Net income (loss) per share attributable to common stockholders:
Basic
$ 1.58 $ (0.50)
Diluted
$ 1.40 $ (0.50)
Weighted-average shares of common stock used to compute net income (loss) per share attributable to common stockholders:
Basic
68,671 61,317
Diluted
91,209 61,317
Pro forma net income per share attributable to common stockholders (unaudited):
Basic
$ 1.76
Diluted
$ 1.57
Pro forma weighted-average shares of common stock used to compute pro forma net income per share attributable to common
stockholders (unaudited):
Basic
182,945
Diluted
205,575
84
ConsolidatedBalanceSheetData
AsofDecember31,
2020 2019
(in thousands)
Cash and cash equivalents $ 1,061,850 $ 548,945
Customer custodial funds 3,763,392 1,201,350
Total assets 5,855,414 2,391,769
Custodial funds due to customers 3,849,468 1,106,815
Total liabilities 4,329,363 1,329,986
Convertible preferred stock 562,467 564,697
Total stockholders’ equity 963,584 497,086
KeyBusinessMetricsandNon-GAAPFinancialMeasure
AsoforfortheYearEndedDecember31,
%
Change
2020 2019
(in millions, except percentages)
Verified Users
43 32
34.4 %
Monthly Transacting Users
2.8 1.0
180.0 %
Assets on Platform
$ 90,307 $ 16,969
432.2 %
Trading Volume
$ 193,097 $ 79,906
141.7 %
Net income (loss) $ 322 $ (30)
NM
Adjusted EBITDA
$ 527 $ 24 2,095.8 %
___________________
(1) Adjusted EBITDA is a non-GAAP financial measure. For more information regarding our use of this measure and a reconciliation of net income to Adjusted EBITDA, see “—Non-GAAP Financial Measure”
included within this section.
* NM—Not meaningful
Key business metrics
In addition to our financial results, we use the following business metrics to evaluate our business, measure our performance, identify trends affecting our business, and make
strategic decisions:
Verified Users
We define Verified Users as all retail users, institutions, and ecosystem partners that have registered an account on our platform and confirmed either their email address or
phone number, or that have established an account with a username on our non-custodial wallet application, as of the date of measurement. Verified Users are an indication of our
scale and represent a potential revenue opportunity for us. These customers have demonstrated an interest in our platform or direct intent to transact with crypto assets. Verified
Users represent the top level of our customer acquisition funnel. We believe we have an opportunity to engage Verified Users and convert them to MTUs by marketing our growing
suite of products and services. Verified Users may overstate the number of unique customers who have registered an account on our platform as one customer may register for, and
use, multiple accounts with different email addresses, phone numbers, or usernames.
Monthly Transacting Users (MTU)
We define a Monthly Transacting User, or MTU, as a retail user who actively or passively transacts in one or more products on our platform at least once during the rolling 28-day
period ending on the date of measurement. MTUs presented for the end of a quarter are the average of each month’s MTUs in each respective quarter. MTUs represent our
transacting base of retail users who drive potential revenue generating transactions on our platform. Revenue generating transactions include active transactions,
(1)
85
such as buying or selling crypto assets through our Invest product and spending on the Coinbase Card, or passive transactions such as earning a staking or savings reward. MTUs
also engage in transactions that are non-revenue generating such as Send and Receive. MTUs engage in transactions that drive both transaction revenue and subscription and
services revenue.
Assets on Platform
We define Assets on Platform as the total U.S. dollar equivalent value of both fiat currency and crypto assets held or managed in digital wallets on our platform, including our
custody services, calculated based on the market price on the date of measurement. Assets on Platform demonstrates the scale of balances held across our suite of products and
services, the trust customers place in us to securely store their assets, and the underlying growth of the cryptoeconomy. Assets on Platform also represent our monetization
opportunity for subscription products and services, including current products such as Store, Stake, Save, Borrow, and Lend. Assets on Platform generate fees that are recorded as
subscription and services revenue when customers engage with these products.
Trading Volume
We define Trading Volume as the total U.S. dollar equivalent value of matched trades transacted between a buyer and seller through our platform during the period of
measurement. Trading Volume represents the product of the quantity of asset transacted and the trade price at the time the transaction was executed. As trading activity directly
impacts transaction revenue, we believe this measure is a reflection of liquidity on our order books, trading health, and the underlying growth of the cryptoeconomy. Trading Volume
on our platform is influenced by the price of Bitcoin and Crypto Asset Volatility. In periods of high Bitcoin price and/or Crypto Asset Volatility, we have experienced correspondingly
high levels of Trading Volume on our platform.
Non-GAAP financial measure
In addition to our results determined in accordance with GAAP, we believe Adjusted EBITDA, a non-GAAP measure, is useful in evaluating our operating performance. We use
Adjusted EBITDA to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that Adjusted EBITDA may be helpful to investors because it
provides consistency and comparability with past financial performance. However, Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an
analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Among other non-cash and non-recurring
items, Adjusted EBITDA excludes stock-based compensation expense, which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for
our business and an important part of our compensation strategy. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP measures
differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A
reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged
to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to
rely on any single financial measure to evaluate our business.
We calculate Adjusted EBITDA as net income (loss), adjusted to exclude interest expense, provision for (benefit from) income taxes, depreciation and amortization, interest
expense, stock-based compensation expense, impairment of goodwill, acquired intangibles and crypto assets, restructuring expenses, non-recurring acquisition-related compensation
expenses, unrealized gain or loss on foreign exchange, fair value adjustments on derivatives, and non-recurring legal reserves and related costs. For the years ended December 31,
2020 and December 31, 2019, we did not have any significant interest expense.
86
The following table provides a reconciliation of net income (loss) to Adjusted EBITDA:
YearEndedDecember31,
2020 2019
(in thousands)
Net income (loss) $ 322,317 $ (30,387)
Adjusted to exclude the following:
Provision for (benefit from) income taxes 86,882 (15,029)
Depreciation and amortization 30,962 16,878
Interest expense 2,634 —
Stock-based compensation 69,889 31,147
Impairment 8,355 2,252
Restructuring
—
10,140
Non-recurring acquisition-related compensation expenses
—
7,370
Unrealized loss (gain) on foreign exchange 1,057 (3,106)
Fair value adjustments on derivatives 5,254 —
Legal reserves and related costs — 5,000
Adjusted EBITDA
$ 527,350 $ 24,265
__________________
(1) For more information, see the section titled "Neutrino" in note 4 to our consolidated financial statements included elsewhere in this prospectus.
(1)
87
MANAGEMENT’SDISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTSOFOPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with the section titled “Selected Consolidated Financial and
Other Data” and our consolidated financial statements and the related notes appearing elsewhere in this prospectus. Some of the information contained in this discussion and analysis
or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and
uncertainties. You should read the sections titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements” for a discussion of important factors that could cause
actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
Coinbase powers the cryptoeconomy.
Our mission is to create an open financial system for the world. Today, the way that we invest, spend, save, and generally manage our money remains cumbersome, inaccessible,
expensive, and regionally isolated. In contrast, the internet has transformed our society by connecting the world and enabling the seamless exchange of information. The legacy
financial system is struggling to keep pace with the speed of technological advancements in a global and digitally interconnected society, resulting in the need for a new, natively
digital financial system.
We are building the cryptoeconomy – a more fair, accessible, efficient, and transparent financial system for the internet age that leverages crypto assets: digital assets built using
blockchain technology.
We started in 2012 with the radical idea that anyone, anywhere, should be able to easily and securely send and receive Bitcoin, the first crypto asset. We built a trusted platform
for accessing Bitcoin and the broader cryptoeconomy by reducing the complexity of the industry through a simple and intuitive user experience.
Today, we are a leading provider of end-to-end financial infrastructure and technology for the cryptoeconomy. Customers around the world discover and begin their journeys with
crypto through Coinbase. In the early days of the internet, Google democratized access to information through its user-friendly search engine, enabling virtually any user with an
internet connection to discover the world’s information. Similarly, Coinbase is democratizing access to the cryptoeconomy by enabling anyone with an internet connection to easily and
securely invest in and use crypto assets.
Customers that start with us, grow with us as they experience the benefits of the open financial system by using crypto-based products for staking, spending, saving, and
borrowing. Today, our platform enables approximately 43 million retail users, 7,000 institutions, and 115,000 ecosystem partners in over 100 countries to participate in the
cryptoeconomy:
• Retail users: We offer the primary financial account for the cryptoeconomy – a safe, trusted, and easy-to-use platform to invest, store, spend, earn, and use crypto assets.
• Institutions: We provide hedge funds, money managers, and corporations a one-stop shop for accessing crypto markets through advanced trading and custody technology,
built on top of a robust security infrastructure. We also offer a state of the art marketplace with a deep pool of liquidity for transacting in crypto assets.
• Ecosystem partners: We provide developers, merchants, and asset issuers a platform with technology and services that enables them to build applications that leverage
crypto protocols, actively participate in crypto networks, and securely accept cryptocurrencies as payment.
89
Our unique approach draws retail users, institutions, and ecosystem partners to our platform, creating a powerful flywheel: retail users and institutions store assets and drive
liquidity, enabling us to expand the depth and breadth of crypto assets that we offer, and launch new, innovative products and services that attract new customers. Our scale and
leadership position draws ecosystem partners to connect with our millions of customers around the world, further enhancing the value of our platform.
This self-reinforcing dynamic is enabled by our culture of repeatable innovation and continuous investment in our proprietary technology platform that is purpose built to address
the unique engineering, cybersecurity, compliance, and usability challenges of directly interacting with blockchain protocols. With every turn of our flywheel, we develop a deeper
understanding of our customers’ needs and leverage our scalable platform to intelligently design, develop, launch, and market new, innovative products and services to our customers.
This allows us to build a more tailored suite of products and services and enhances the value of our platform over time. By providing the necessary infrastructure and distribution for
our current and future ecosystem partners to build and extend their reach, we also foster the growth of the ecosystem.
We have grown quickly and in a capital-efficient manner since our founding. However, similar to the evolution of the internet, e-commerce, and prior paradigm shifts in technology,
our journey has not been linear. Due to the highly volatile nature of crypto asset prices and trading activity, historically our operating results have, and we expect will, continue to
fluctuate significantly from quarter to quarter in line with market sentiment and trading activity. Transaction revenue is our primary source of revenue today and is derived directly from
Trading Volume. Historically, we have observed a correlation between Trading Volume and both Bitcoin price and Crypto Asset Volatility. These correlations have generally been more
pronounced with retail than institutional Trading Volume, and over the course of 2020, we saw an increase in institutional trading activity. Between June 30, 2020 and December 31,
2020, we saw the correlation between Crypto Asset Volatility and Trading Volume begin to weaken, while the correlation between Bitcoin price and Trading Volume remained.
While we experience high variance in Trading Volume and transaction revenue between quarters, we evaluate our business and key metrics over longer periods of time, and have
seen clear growth with median quarterly Trading Volume increasing from $17 billion to $21 billion to $38 billion in 2018, 2019, and 2020, respectively. Over the long term, we expect
further diversification of market participants, to add support for more crypto assets, and for crypto asset use cases to expand. We believe these factors will contribute to diversification
in the composition of our Trading Volume and reduce the correlation to both Bitcoin price and Crypto Asset Volatility, subsequently leading to lower volatility in transaction revenues.
Further, we expect that diversifying our sources of revenue towards subscription and services revenue will contribute to less fluctuation in our results from operations.
For the years ended December 31, 2020 and December 31, 2019, we generated total revenue of $1.3 billion and $533.7 million, respectively, net income (loss) of $322.3 million
and $(30.4) million, respectively, and Adjusted EBITDA of $527.4 million and $24.3 million, respectively. See the section titled “Selected Consolidated Financial and Other Data—Key
Business Metrics and Non-GAAP Financial Measure—Non-GAAP Financial Measure” for information regarding our use of Adjusted EBITDA and a reconciliation of net income (loss)
to Adjusted EBITDA.
OurBusinessModel
We believe that we are in the early stages in the development of the cryptoeconomy. While we have grown rapidly, our growth has not been linear. Instead, it has come in waves
aligned with crypto asset price cycles which tend to be volatile and draw new customers, investment, and developers into the ecosystem, and typically lead to higher Trading Volume
and Monthly Transacting Users, or MTUs, on our platform. For example, in 2020, as the price of Bitcoin increased from approximately $7,000 to $29,000, we experienced a
correspondingly high increase in Trading Volume, which grew from nearly $80 billion in 2019 to $193 billion in 2020.
90
We have observed four major crypto asset price cycles since 2010. Each cycle has had a variable duration ranging from approximately two to four years, and has increased the
overall crypto market capitalization significantly from the prior cycle. In the three price cycles prior to the current one, which we believe we entered in late 2020, crypto prices have
subsequently declined from each peak and settled at a trough higher than the prior peak. These cycles are visible when viewing the price of Bitcoin, the first and largest crypto asset,
over time on a logarithmic scale.
Bitcoin Price (Log Scale)
In the past, crypto markets have not appeared correlated with the broader U.S. equity markets. This trend held true until February 2020, when the U.S. stock market and crypto
markets experienced a significant downturn due to the COVID-19 pandemic. Through December 31, 2020, these markets subsequently appeared more correlated as each market
recovered.
91
Crypto Market Capitalization vs. S&P 500
At this stage in the development of the cryptoeconomy, we choose to prioritize growth because we believe that global scale is central to achieving our mission and the potential of
our business model. We intend to continue to invest to drive growth in our business and the ecosystem. While our financial performance has and will fluctuate significantly between
periods, our expenses are largely independent of our net revenue. Historically, we have benefited from profits during periods of higher Bitcoin prices or Crypto Asset Volatility and
experienced a loss during periods of lower Bitcoin prices or Crypto Asset Volatility. While we have benefited overall from past profitability, going forward, we may see periods of profit
or loss. For the foreseeable future, our intent is to reinvest profits to drive growth in both our business and the ecosystem.
Since inception through December 31, 2020, we generated over $3.4 billion in total revenue, largely from transaction fees that we earn from volume-based trades on our platform
by retail users and institutions. For the year ended December 31, 2020, transaction revenue represented over 96% of our net revenue. Due to the volatile nature of crypto asset prices
and trading activity, our operating results fluctuate significantly between periods. To better understand our performance, we evaluate our business, including our key metrics, over
longer periods of time and across crypto asset price cycles. Due to the nature of our business and the early stage of the industry, we believe evaluating our business over longer time
horizons is more informative than evaluating quarter-over-quarter fluctuations in operating results and metrics.
Since late 2018, we have focused on launching a suite of subscription products and services, such as Store, Stake, and Borrow & Lend, with the goal of providing a full service,
diversified platform for the broader cryptoeconomy. These products and services reduce dependence on transaction revenue, which is highly volatile. For most of these products and
services, such as Store, Save, Stake, and Borrow & Lend, we generate revenue based on a percentage of the assets on our platform participating in the product or service. As a
result, we believe growing Assets on Platform will drive growth in subscription
92
and services revenue. In the future, we also expect to grow revenue from our ecosystem partner products – Distribute, Build, and Pay – based on a fixed fee and/or usage of the
product or service. We believe we have demonstrated the ability to repeatedly innovate, and since inception have launched the following products and services:
Today, we directly integrate with over 15 blockchain protocols, support over 90 crypto assets for trading or custody, and offer a suite of subscription products and services that
have enhanced the customer value proposition and power of our platform.
Supported Assets
Retail users are now engaging with multiple products — across the four quarters ended December 31, 2020, on average, 21% of retail users who invested also engaged with at
least one non-investing
93
product per quarter. When retail users invested and engaged with at least one non-investing product, we saw average net revenue per retail user increase by approximately 90%.
Although subscription products and services do not currently contribute a significant portion of net revenue relative to our trading business, we experienced 126% annual growth in
revenue from these products and services from 2019 to 2020. We are committed to growing more stable revenue from subscription products and services, and expect that they will
contribute a larger portion of our total revenue over time as our customers connect with the broader cryptoeconomy.
KeyBusinessMetricsandNon-GAAPFinancialMeasureandTrends
Key business metrics
In addition to our financial results, we use the following business metrics to evaluate our business, measure our performance, identify trends affecting our business, and make
strategic decisions. For a definition of these key business metrics, see the section titled “Selected Consolidated Financial and Other Data—Key Business Metrics and Non-GAAP
Financial Measure—Key Business Metrics.”
Verified Users
Verified Users represent users who have demonstrated an interest in our platform. Our Verified Users increased sequentially for all quarters in the years ended December 31,
2018, 2019, and 2020, primarily due to growth in our products and services and the overall increase in interest in the cryptoeconomy. Our retail Wallet application, which launched in
mid-2018, had grown to over 2 million users through the year ended December 31, 2020.
Verified Users
Monthly Transacting Users
MTUs represent our active and passive transacting base of retail users and reflect revenue opportunities on our platform. MTUs drive retail Trading Volume, and include retail
users who engage with
Non-investing products include our Distribute, Stake, Save, Spend, and Borrow & Lend products.
4
4
94
transaction-based products such as Invest, Spend, Send and Receive, Stake, and Distribute. MTUs have historically been correlated with both the price of Bitcoin and Crypto Asset
Volatility.
In the fourth quarter of 2018, we began launching subscription products and services, which have driven broader engagement across our platform. MTUs have begun to appear
less correlated to Crypto Asset Volatility, but have remained correlated with the price of Bitcoin. Over time, as we add additional products and services, and expand the assets
supported on our platform, we expect these correlations to decrease.
Monthly Transacting Users and Crypto Asset Volatility
Assets on Platform
Assets on Platform is a measure of the scale of total value held on our platform. We believe Assets on Platform reflects the trusted nature of our platform and a monetization
opportunity. Assets on Platform generate fees that are recorded as subscription and services revenue when customers engage with these products. The value of Assets on Platform is
driven by three factors – the price, quantity, and type of crypto assets held by customers on our platform.
Changes in the price and quantity, particularly for Bitcoin and Ethereum, or type of crypto asset held on our platform can result in the growth or decline in Assets on Platform in a
particular period. For example, we could see an increase in the quantity of assets held on our platform – measured in units of crypto assets or fiat currencies – but the value of Assets
on Platform could decline if the corresponding price of a crypto asset declines. Conversely, Assets on Platform can increase in a particular period despite a decline in the quantity of
assets held on our platform if the decline is offset by rising crypto asset prices.
Because Assets on Platform is driven by multiple factors, some of which are market-dependent, this metric has fluctuated in the short term. For example, Assets on Platform
decreased in 2018 as crypto asset prices, in particular those of Bitcoin and Ethereum, fell from their highs in 2017. Between December 31, 2017 and December 31, 2018, Bitcoin and
Ethereum prices fell approximately 74% and 82%, respectively, and total crypto asset market capitalization decreased by 80%. During the same period, our
95
Assets on Platform decreased by 73%. Despite short term fluctuations, Assets on Platform has grown over the longer term from $7 billion to $17 billion to $90 billion as of December
31, 2018, 2019, and 2020, respectively, driven by growth in the price, quantity, and types of crypto assets we support.
Assets on Platform and Crypto Market Capitalization
In 2019, the quantity of assets we stored increased significantly driven by both organic growth and our acquisition of Xapo’s institutional custody business. To normalize for
fluctuations in price, we evaluate our share of the total market capitalization of crypto assets. We measure this by comparing the total value of crypto assets on our platform, a subset
of Assets on Platform, to the total market capitalization of crypto assets.
As of December 31, 2020, the total value of crypto assets on our platform represented 11.1% of the total market capitalization of crypto assets, increasing from 8.3% and 4.5% as
of December 31, 2019 and December 31, 2018, respectively. In 2020, our Assets on Platform initially decreased before subsequently increasing driven by growth in the quantity, price,
and breadth of crypto assets we support. We expect that the quantity of crypto assets held on our platform will steadily increase as we expand our suite of products and services and
the number and types of supported crypto assets.
96
Share of Crypto Market Capitalization
Historically, we have derived a material portion of our Assets on Platform from the storage of Bitcoin and Ethereum. For the year ended December 31, 2019, Bitcoin, Ethereum,
and other crypto assets represented 70%, 9%, and 15% of Assets on Platform, respectively, and for the year ended December 31, 2020, Bitcoin, Ethereum, and other crypto assets
represented 70%, 13%, and 13% of Assets on Platform,respectively. For each period, the remaining balance consisted of fiat currencies held on behalf of our customers.
Assets on Platform Concentration
97
Trading Volume
Trading Volume is directly correlated with transaction revenue and is influenced by both Bitcoin price and Crypto Asset Volatility. We have experienced periods of low and high
Trading Volume, and therefore transaction revenue, driven by periods of rising or declining Bitcoin prices and/or lower or higher Crypto Asset Volatility. During periods of rising Bitcoin
prices and higher Crypto Asset Volatility, we have generally observed higher Trading Volume on our platform and across the broader cryptoeconomy.
There are a number of factors that contribute to changes in Bitcoin price and Crypto Asset Volatility, including, but not limited to, changes in the supply and demand for a particular
crypto asset, crypto market sentiment, macroeconomic factors, utility of a particular crypto asset, and idiosyncratic events such as exchange outages or social media. For example,
over the course of 2020 we observed institutions invest in Bitcoin as a hedge against inflation at an accelerated rate. Further, we saw growth in the use of crypto assets to participate
in decentralized finance, or DeFi, applications such as peer-to-peer borrowing and lending, with the total value allocated towards decentralized finance globally growing from under $1
billion to over $15 billion from December 31, 2019 to December 31, 2020.
Occasionally, planned network events such as an airdrop, where the network provides holders of a particular crypto asset with a reward, or a “halving”, when the reward for
validating transactions for a crypto network is reduced by half, can lead to shifts in customer interest for a specific crypto asset. Event-driven changes in customer interest tend to be
temporary, and as a result, our financial performance following such events may not be indicative of future operating performance or financial condition.
Retail Trading Volume is more influenced by Bitcoin price and Crypto Asset Volatility than institutional Trading Volume, and we have experienced lower period over period
fluctuations in volume from institutions. As institutional trading increases, we expand the number and types of crypto assets we support, and the utility of crypto assets expands, and
we expect the correlation between Bitcoin price, Crypto Asset Volatility and Trading Volume to decrease.
Trading Volume and Crypto Asset Volatility
98
Historically, a significant portion of Trading Volume and transaction fee revenue has been driven by the purchase, sale, and trading of Bitcoin and Ethereum, and in 2019, Litecoin.
For example, for the year ended December 31, 2019, Bitcoin, Ethereum, Litecoin, and other crypto assets represented approximately 58%, 14%, 10%, and 18% of Trading Volume
and 60%, 11%, 8%, and 21% of our transaction revenue, respectively, and for the year ended December 31, 2020, Bitcoin, Ethereum, and other crypto assets represented
approximately 41%, 15%, and 44% of Trading Volume and 44%, 12%, and 44% of our transaction revenue, respectively.
Trading Volume Concentration
Concentration in Trading Volume can vary widely between periods. In 2020, other crypto assets contributed a greater share of Trading Volume. This growth was driven by the
addition of over 20 crypto assets, including multiple DeFi crypto assets, which diversified Trading Volume away from Bitcoin and Ethereum. During the year ended December 31,
2019, no asset other than Bitcoin, Ethereum, and Litecoin individually represented more than 10% of our Trading Volume or transaction revenue, respectively. During the year ended
December 31, 2020, no asset other than Bitcoin and Ethereum individually represented more than 10% of our Trading Volume or transaction revenue, respectively.
Going forward, we expect greater diversification of Trading Volume and transaction revenue by crypto asset as we continue to expand the breadth of assets available through our
platform and as other crypto assets gain broader adoption. However, should the availability of one or more crypto assets on our platform change, it may have an adverse effect on our
operating performance.
Non-GAAP financial measure
YearEndedDecember31,
2020 2019
(in thousands)
Adjusted EBITDA
$ 527,350 $ 24,265
We define Adjusted EBITDA as net income (loss), adjusted to exclude interest expense, provision for (benefit from) income taxes, depreciation and amortization, stock-based
compensation expense, impairment of goodwill, acquired intangibles and crypto assets, restructuring expenses, non-recurring
99
acquisition-related compensation expenses, unrealized gain or loss on foreign exchange, fair value adjustments on derivatives, and non-recurring legal reserves and related costs.
Adjusted EBITDA increased in the year ended December 31, 2020 compared to the year ended December 31, 2019 primarily due to increased transaction revenue.
See the section titled “Selected Consolidated Financial and Other Data—Key Business Metrics and Non-GAAP Financial Measure—Non-GAAP Financial Measure” for information
regarding our use of Adjusted EBITDA and a reconciliation of net income (loss) to Adjusted EBITDA.
KeyFactorsAffectingOurPerformance
The growth and success of our business as well as our financial condition and operating results have been, and will continue to be affected by a number of factors, including:
Price and volatility of crypto assets
Transaction revenue is our primary source of revenue today and is derived directly from Trading Volume. As a result, transaction revenue is correlated with Bitcoin price and
Crypto Asset Volatility. There are a number of factors that contribute to changes in Bitcoin price and Crypto Asset Volatility, including, but not limited to, changes in the supply and
demand for a particular crypto asset, crypto market sentiment, macroeconomic factors, utility of a particular crypto asset, and idiosyncratic events such as exchange outages or social
media. While we have experienced periods of low and high Trading Volume driven by periods of rising or declining Bitcoin prices and/or higher or lower Crypto Asset Volatility, we
evaluate our business over longer periods of time and have seen clear growth with median quarterly Trading Volume increasing in 2018, 2019, and 2020, respectively.
We also have other products, including Store, which are priced based on the value of the underlying crypto assets. As such, the price of crypto assets in any given period may
have a significant impact on our revenue. Our continued growth is in part dependent upon the long term continued growth in the overall market capitalization of crypto assets.
We are also exposed to price volatility with respect to the corporate crypto assets we hold. A decline in price may require us to take an impairment charge on our crypto assets
and a decline in the value of the crypto assets we hold in higher concentrations may have a larger impact on our operating results in any given period. As of December 31, 2019,
Bitcoin, Ethereum, and Tezos represented 44%, 12%, and 16% of total crypto assets held, respectively; and as of December 31, 2020, Bitcoin and Ethereum represented 63% and
8% of total crypto assets held excluding crypto assets borrowed, respectively.
Adoption of crypto assets
We have and remain solely focused on building technology to power the cryptoeconomy. As such, our financial performance is dependent on the continued growth in interest and
adoption of crypto. Moreover, our growth strategy depends on our continued ability to add customers, expand the breadth of crypto assets on our platform, and launch innovative
products. Over time, we have observed a positive trend in the total market capitalization of crypto assets which indicates increased adoption. The compounded annual growth rate, or
CAGR, of crypto assets was over 150% between December 31, 2012 and December 31, 2020. However, historical trends are not indicative of future adoption, and it is possible that
the adoption of crypto assets and blockchain technology may slow, take longer to develop, or never be broadly adopted, which would negatively impact our business and operating
results.
Offering additional products and services
Our Verified User base represents a sizable opportunity to offer our expanding suite of products and services with minimal incremental sales and marketing expense. Products or
services we launch generally have the potential to be sold to each of our three customer segments: retail users, institutions, and ecosystem partners. We plan to continue to invest in
the development of new subscription products
100
and services and increase sales and marketing efforts to drive adoption across our customer base. To the extent we are able to successfully sell new products and services to our
customers, our revenue will be positively affected. For example, when retail users invested and engaged with at least one non-investing product, the average net revenue per retail
user increased by approximately 90% across the four quarters ended December 31, 2020. Conversely, if we are unable to sell additional products and services to new and existing
customers, our operating results may be negatively impacted.
Investments in growth
Our investments in growth include new products and services, sales and marketing, and global expansion.
We will continue to invest in the development of products and services to enhance the value proposition of our platform for our customers. In the near term, we are focused on
becoming the primary financial account for retail users to access the cryptoeconomy, touching every crypto transaction and building a one-stop shop for institutions, and solving our
ecosystem partners’ diverse problems, including a lack of distribution, trust and usability, and the availability of easy-to-use and scalable infrastructure. We expect to meaningfully
increase headcount to drive and support our anticipated growth. Although we expect these investments to benefit our business over the long term, we expect our total operating
expenses will increase on an absolute basis for the foreseeable future. In the short term, these investments may have negative effects on our operating results as a large portion of
our operating expenses are not correlated with transaction revenue which fluctuates with market conditions.
We also plan to invest in sales and marketing channels such as digital advertising and referral and affiliate programs, which we believe will drive further growth. Given the volatility
of our transaction revenue, investments in sales and marketing may not result in returns in the same period in which they are made but over subsequent periods, which could
adversely affect near-term operating results.
We intend to continue to develop products and services for our global customer base and to expand our reach internationally through investments in local offices, marketing,
strategic acquisitions, and partnerships. Our ability to expand into new markets depends on many factors including, but not limited to, compliance with local rules and regulations,
demand for crypto assets, competition, and infrastructure. We believe our brand and reputation as a trusted, compliant, and easy-to-use provider of services to the cryptoeconomy will
position us well to increase our global presence. Our ability to successfully navigate the aforementioned factors and continue to grow internationally will impact our future operating
results.
Ability to competitively price our products and services
Our operating results depend on our ability to competitively price our products and services. Similar to other financial products, as the industry matures we anticipate fee pressure
to emerge over time. Our strategy is to maintain our position as a trusted brand in the crypto space and develop new products to enhance our customer value proposition and offset
the effects of any future fee pressure. If we are unable to capture value through the development of new and existing products and services or if fee pressure emerges more rapidly
than we anticipate, our operating results may be adversely affected.
Control of transaction expense
Our transaction expense primarily consists of account verification fees, payment processing fees, and fraud loss expenses. We have made, and will continue to make, significant
investments in our bank, payment processor, and vendor partnerships in order to manage our overall transaction expense. Maintaining these relationships has always been and will
continue to be a top priority for us.
Our strategy to manage fraud is to continue investing in advanced technology for identity verification and fraud detection. Managing fraud is essential to operating profitably and
maintaining the trust of our customers and our transaction processing vendors. We believe our current efforts and our forward strategy put us in a strong position to reduce our fraud
rate as a percentage of total volume and capture
101
savings as we continue to scale our platform. If we are unsuccessful at managing these expenses, our operating results may be adversely affected.
Strategic acquisitions, investments, and partnerships
We intend to continue growing our platform through strategic acquisitions, investments, and partnerships. We plan to acquire and invest in companies with complementary
products and technologies. Our strategic acquisitions may affect our future financial results. We will also continue to enter into strategic partnerships with various companies to scale
our business, including, but not limited to, partnerships to increase traffic to our platform, banking and payment processor partnerships, such as our partnership with PayPal, that
enable us to bridge traditional finance with crypto assets, and partnerships to expand our product and service offerings such as our partnerships with Visa for the Coinbase Card or
with the Centre Consortium and Circle Internet Financial for USDC. We believe these partnerships benefit our users by expanding the opportunities for users to engage with the
cryptoeconomy. Over the long term, we expect these partnerships will drive an increase in our MTUs, which we believe, in turn, will drive an increase in both transaction and
subscription and services revenue.
Regulation in U.S. and international markets
Our financial prospects and continued growth depend in part on our ability to continue to operate in a compliant manner. Our business is subject to the oversight of numerous
regulatory agencies in the United States and other jurisdictions, including, but not limited to, FinCEN, the SEC, the CFTC, and NYDFS. Our strategy is to continue to invest
significantly in our finance, legal, compliance, and security functions in order to remain at the forefront of crypto policy initiatives and regulatory trends. As the industry matures, we
may experience fluctuations in our operating results as a result of changes in the law and regulations that are applicable to our business, which may limit our ability to support new
blockchains and crypto assets, onboard customers, and offer our products and services across jurisdictions.
ImpactofCOVID-19toourBusiness
The 2020 outbreak of the novel coronavirus and the COVID-19 disease that it causes has evolved into a global pandemic. In response to the pandemic and for the protection of
our employees, in March 2020, we implemented remote work arrangements for nearly all of our employees and restricted business travel. Our products and services are all accessible
through our technology platform and do not require physical customer interaction, thus, our ability to meet our customers’ needs has not been materially affected. While the broader
economic implications remain uncertain, the COVID-19 pandemic has, to date, not had any measurable material impact on our operating results.
ComponentsofResultsofOperations
Net revenue
Transaction revenue
We generate substantially all of our net revenue from transaction fees from trades that occur on our platform. The transaction fee earned is based on the price and quantity of the
crypto asset that is bought, sold, or withdrawn. Transaction revenue is recognized at the time the transaction is processed and is directly correlated with Trading Volume on our
platform, which has historically been influenced by the price of Bitcoin and Crypto Asset Volatility. We have experienced periods of low and high Trading Volume, and therefore
transaction revenue, driven by periods of rising or declining Bitcoin prices and/or lower or higher Crypto Asset Volatility. During periods of rising Bitcoin prices and higher Crypto Asset
Volatility, we have generally observed higher Trading Volume on our platform and across the broader cryptoeconomy.
Over the long term, we expect further diversification of market participants, to add support for more crypto assets, and for crypto asset use cases to expand. We believe these
factors will contribute to
102
diversification in the composition of our Trading Volume and reduce the correlation to Bitcoin price and Crypto Asset Volatility, subsequently leading to lower volatility in transaction
revenue.
Subscription and services revenue
Subscription and services revenue primarily consists of:
We also earn interest income on customer custodial fiat funds held at certain third-party banks, which is calculated using the interest method. Our interest income is dependent on
the balance of custodial fiat funds and the prevailing interest rate environment.
Other revenue
Other revenue includes the sale of crypto assets when we are the principal in the transaction. Periodically, as an accommodation to customers, we may fulfill customer
transactions using our own crypto assets. We fulfill customer accommodation transactions using our own assets for orders that do not meet the minimum trade size for execution on
our platform or to maintain customers’ trade execution and processing times during unanticipated system disruptions. We have custody and control of these crypto assets prior to the
sale to the customer and record revenue at the point in time when the sale is processed. Accordingly, we record the total value of the sale as revenue and the cost of the crypto asset
in other operating expense. Transactions involving our sale of crypto assets represented less than 11% of our total revenue for the fiscal year ended December 31, 2020.
Other revenue also includes interest income earned primarily on our cash and cash equivalents. Interest income is calculated using the interest method and depends on the
balance of cash and cash equivalents as well as the prevailing interest rate environment.
Operating expenses
Operating expenses consist of transaction, technology and development, sales and marketing, general and administrative, restructuring expenses, and other operating expense.
Transaction expense
Transaction expense includes costs incurred to operate our platform, process crypto asset trades, and perform wallet services. These costs include account verification fees, fees
to process transactions on blockchain network, fees paid to payment processors and other financial institutions for customer
103
transaction activity, and crypto asset losses due to transaction reversals. Fixed-fee costs are expensed over the term of the contract and transaction-level costs are expensed as
incurred.
We plan to continue to drive customer account activity and expand the reach of our platform. Transaction expense will fluctuate in absolute dollars in future periods and vary from
period-to-period as a percentage of transaction revenue.
Technology and development
Technology and development expenses include costs incurred in operating, maintaining, and enhancing our platform, including network, website hosting, and infrastructure costs.
Technology and development expenses also include costs incurred in developing new products and services, personnel-related expenses, and the amortization of acquired developed
technology. Personnel-related expenses include salaries, bonuses, benefits, and stock-based compensation.
We plan to continue to invest in developing new products and services and increasing the functionality of our platform. As a result, we expect that our technology and development
expenses will increase in absolute dollars in future periods and vary from period-to-period as a percentage of net revenue.
Sales and marketing
Sales and marketing expenses primarily include costs related to customer acquisition, advertising and marketing programs, and personnel-related expenses. Sales and marketing
costs are expensed as incurred.
We plan to continue to invest in sales and marketing efforts to drive additional customers to our platform and capitalize on cross-sell opportunities from our Verified User base, and
to increase our brand awareness. As a result, we expect sales and marketing costs to increase in absolute dollars in future periods and vary from period-to-period as a percentage of
net revenue.
General and administrative
General and administrative expenses include costs incurred to support our business, including legal, finance, compliance, human resources, executive, and other support
operations. General and administrative expenses also include personnel related expenses, software subscriptions for support services, facilities and equipment costs, depreciation,
amortization of acquired customer relationship intangible assets, sales and property taxes, gains and losses on disposal of fixed assets, legal reserves and settlements, and other
general overhead. General and administrative costs are expensed as incurred.
We expect general and administrative expenses to grow as we continue to invest to support the overall growth of our business. In addition, following the completion of this
offering, we expect to incur additional general and administrative expenses as a result of operating as a public company, including expenses related to compliance and reporting
obligations of a public company, and increased insurance, investor relations expenses, and legal, audit, and consulting fees. As a result, we expect that our general and administrative
expenses will increase in absolute dollars in future periods and vary from period-to-period as a percentage of net revenue. We expect general and administrative expenses to
generally grow in relation to technology and development costs.
Restructuring
Restructuring expenses primarily consist of non-recurring costs related to the closing of a Chicago office and related severance for employees in the year ended December 31,
2019. For more information, see note 3 to our consolidated financial statements included elsewhere in this prospectus.
104
Other operating expense
Other operating expense includes cost of our crypto assets used to fulfill customer accommodation transactions. Periodically, as an accommodation to customers, we may fulfill
customer transactions using our own crypto assets. We have custody and control of the crypto assets prior to the sale to the customer. Accordingly, we record the total value of the
sale in other revenue and the cost of the crypto asset in other operating expense.
Other operating expense also includes impairment and realized gains on the sale of crypto assets, realized gains and losses resulting from the settlement of derivative
instruments, and fair value gains and losses related to derivatives and derivatives designated in qualifying fair value hedge accounting relationships.
Other (income) expense, net
Other (income) expense, net includes the following items:
• gain and losses on investments, net, which consists primarily of unrealized gains and losses from investment fair value adjustments; and
• realized impacts on foreign exchange resulting from the settlement of our foreign currency assets and liabilities as well unrealized impacts on foreign exchange resulting from
remeasurement of transactions and monetary assets and liabilities denominated in non-functional currencies.
Provision for (benefit from) income taxes
Provision for (benefit from) income taxes includes income taxes related to foreign jurisdictions and U.S. Federal and state income taxes.
As we expand our international business activities, any changes in the U.S. and foreign taxation of such activities may increase our overall provision for income taxes in the future.
105
ResultsofOperations
The following table summarizes our historical consolidated statements of operations data:
YearEndedDecember31,
2020 2019
(in thousands)
Revenue:
Net revenue $ 1,141,167 $ 482,949
Other revenue 136,314 50,786
Total revenue 1,277,481 533,735
Operating expenses:
Transaction expense 135,514 82,055
Technology and development 271,732 185,044
Sales and marketing 56,782 24,150
General and administrative 279,880 231,929
Restructuring — 10,140
Other operating expense 124,622 46,200
Total operating expenses 868,530 579,518
Operating income (loss) 408,951 (45,783)
Other income, net (248) (367)
Income (loss) before provision for (benefit from) income taxes 409,199 (45,416)
Provision for (benefit from) income taxes 86,882 (15,029)
Net income (loss)
$ 322,317 $ (30,387)
The following table presents the components of our consolidated statements of operations data as a percentage of total revenue:
YearEndedDecember31,
2020 2019
(as a percentage of total revenue)
Total revenue 100 % 100 %
Operating expenses:
Transaction expense 11 15
Technology and development 21 35
Sales and marketing 4 5
General and administrative 22 43
Restructuring — 2
Other operating expense 10 9
Total operating expenses 68 109
Operating income (loss) 32 (9)
Other income, net — —
Income (loss) before provision for (benefit from) income taxes 32 (9)
Provision for (benefit from) income taxes 7 (3)
Net income (loss)
25 % (6)%
106
Comparison of the years ended December 31, 2020 and 2019
Revenue
YearEndedDecember31,
2020 2019 %Change
(in thousands)
Transaction revenue $ 1,096,174 $ 463,005 137 %
Subscription and services revenue 44,993 19,944 126
Other revenue 136,314 50,786 168
Total revenue
$ 1,277,481 $ 533,735
139
Transaction revenue increased $633.2 million, or 137%, for the year ended December 31, 2020 compared to the year ended December 31, 2019 primarily due to a 142% year
over year increase in Trading Volume.
Subscription and services revenue increased $25.0 million, or 126%, for the year ended December 31, 2020 as compared to the year ended December 31, 2019. The increase
was primarily due to a $15.6 million increase in custodial fee revenue driven by an increase in the number of customers and the value of crypto assets held under custody within our
Store product, a $10.2 million increase in staking revenues driven by an increase in value of customer crypto assets in staking protocols, and a $7.6 million increase as we started to
monetize our crypto asset earn campaigns. The increase was partially offset by a decrease of $8.0 million in interest income related to customer custodial funds driven by lower
interest rates.
Other revenue increased $85.5 million, or 168%, for the year ended December 31, 2020 compared to the year ended December 31, 2019 as a result of a $93.8 million increase in
crypto asset sales where the transactions were fulfilled with our crypto assets as a result of unanticipated system disruptions. The increase was partially offset by an $8.3 million
decrease in corporate interest income driven by lower interest rates.
Operating expenses
YearEndedDecember31,
2020 2019 %Change
(in thousands)
Transaction expense $ 135,514 $ 82,055 65 %
Technology and development 271,732 185,044 47
Sales and marketing 56,782 24,150 135
General and administrative 279,880 231,929 21
Restructuring — 10,140 (100)
Other operating expense 124,622 46,200 170
Total operating expenses
$ 868,530 $ 579,518
50
Transaction expense increased $53.5 million, or 65%, for the year ended December 31, 2020 compared to the year ended December 31, 2019. The increase was primarily due to
a $18.6 million increase in transaction reversal losses driven by an increase in Trading Volume, a $15.0 million increase in miner fees driven by increased blockchain network fees, a
$7.5 million increase in staking expenses driven by an increase in value of customer crypto assets in staking protocols, and a $7.1 million increase in account verification fees due to
an increase in new accounts.
107
Technology and development expenses increased $86.7 million, or 47%, for the year ended December 31, 2020 compared to the year ended December 31, 2019. The increase
was primarily driven by a $53.5 million increase in personnel-related costs due to a 59% increase in overall headcount, a $13.6 million increase in software licenses, and a $13.1
million increase in website hosting costs to support the growth of our platform.
Sales and marketing expenses increased $32.6 million, or 135%, for the year ended December 31, 2020 compared to the year ended December 31, 2019. The increase was
primarily due to a $23.3 million increase in digital advertising spend, a $5.0 million increase in personnel-related costs, and a $3.9 million increase in customer referral and promotion
fees.
General and administrative expense increased $48.0 million, or 21%, for the year ended December 31, 2020 compared to the year ended December 31, 2019. The increase was
driven by a $22.4 million increase in personnel-related costs due to an increase in headcount, an $12.0 million increase in professional services costs, a $10.3 million increase in
charitable contributions, and a $6.7 million increase in intangible amortization expense which primarily related to 2020 being the first full year of amortization expense for the
acquisition of Xapo’s institutional custody business in 2019. The increase was partially offset by a $12.6 million decrease in costs related to facilities, meals, and entertainment which
was primarily due to a reduction in an estimated meals and entertainment tax loss reserve and a shift to a remote working environment.
In April 2019, management approved a plan to cease development of a new trading engine, resulting in the closure of a Chicago office and incurring restructuring expenses of
$10.1 million for the year ended December 31, 2019. There were no restructuring expenses incurred in the year ended December 31, 2020.
Other operating expense increased $78.4 million, or 170%, for the year ended December 31, 2020 compared to the year ended December 31, 2019. The increase was primarily
driven by a $93.3 million increase in costs associated with crypto assets sold in order to fulfill customer accommodation transactions, a $8.4 million increase in crypto asset
impairments, and a $5.3 million fair value loss related to derivatives and derivatives designated in qualifying fair value hedge accounting relationships. The increase was partially offset
by $34.6 million increase in realized gains on crypto asset sales.
Other income, net
YearEndedDecember31,
2020 2019
(in thousands)
Other income, net $ (248) (367)
Other income was relatively unchanged for the year ended December 31, 2020 when compared to the year ended December 31, 2019.
Provision for (benefit from) income taxes
YearEndedDecember31,
2020 2019
(in thousands)
Provision for (benefit from) income taxes $ 86,882 (15,029)
The provision for income tax increased by $101.9 million for the year ended December 31, 2020 compared to the year ended December 31, 2019 due to an increase in our pre-tax
net income.
108
QuarterlyResultsofOperations
The following table sets forth our unaudited quarterly consolidated results of operations for each of the quarterly periods for the years ended December 31, 2020 and December
31, 2019. These unaudited quarterly results of operations have been prepared on the same basis as our audited consolidated financial statements included elsewhere in this
prospectus. In the opinion of management, the financial information set forth in the table below reflects all normal recurring adjustments necessary for the fair statement of results of
operations for these periods. Our historical results are not necessarily indicative of the results that may be expected in any other period in the future, and the results of a particular
quarter or other interim period are not necessarily indicative of the results to be expected for the full year or any other period. You should read the following unaudited quarterly
consolidated results of operations together with our consolidated financial statements and related notes, and the sections titled “Selected Consolidated Financial and Other Data” and
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” each included elsewhere in this prospectus.
Quarterly Consolidated Statements of Operations
ThreeMonthsEnded
Dec.31,
2020
Sep.30,
2020
Jun.30,
2020
Mar.31,
2020
Dec.31,
2019
Sep.30
2019
Jun.30,
2019
Mar.31,
2019
(in thousands)
Net revenue: $ 497,091 $ 286,663 $ 178,331 $ 179,082 $ 94,309 $ 143,417 $ 183,907 $ 61,316
Other revenue 88,021 28,694 8,051 11,548 3,962 15,100 26,928 4,796
Total revenue 585,112 315,357 186,382 190,630 98,271 158,517 210,835 66,112
Operating expenses:
Transaction expense 49,946 36,766 23,395 25,407 14,227 23,051 29,159 15,618
Technology and development 90,498 73,319 60,777 47,138 43,474 44,751 43,887 52,932
Sales and marketing 23,501 11,977 11,383 9,921 9,659 5,716 4,213 4,562
General and administrative 97,501 71,433 51,988 58,958 70,227 53,408 46,648 61,646
Restructuring — — — — — — 10,140 —
Other operating expense 97,081 20,357 (3,247) 10,431 4,379 16,705 20,761 4,355
Total operating expenses 358,527 213,852 144,296 151,855 141,966 143,631 154,808 139,113
Operating income (loss) 226,585 101,505 42,086 38,775 (43,695) 14,886 56,027 (73,001)
Other expense (income), net (6,183) (1,211) 3,280 3,866 (2,036) 2,929 (764) (496)
Income (loss) before provision for (benefit from) income taxes 232,768 102,716 38,806 34,909 (41,659) 11,957 56,791 (72,505)
Provision for (benefit from) income taxes 55,983 21,417 6,546 2,936 (13,786) 3,956 18,793 (23,992)
Net income (loss)
$ 176,785 $ 81,299 $ 32,260 $ 31,973 $ (27,873) $ 8,001 $ 37,998 $ (48,513)
ThreeMonthsEnded
Dec.31,
2020
Sep.30,
2020
Jun.30,
2020
Mar.31,
2020
Dec.31,
2019
Sep.30
2019
Jun.30,
2019
Mar.31,
2019
(as a percentage of revenue)
Total revenue 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 %
Operating expenses:
Transaction expense 9 12 13 13 14 15 14 24
Technology and development 15 23 33 25 44 28 21 80
Sales and marketing 4 4 6 5 10 4 2 7
General and administrative 17 23 28 31 71 34 22 93
Restructuring — — — — — — 5 —
Other operating expense 16 6 (3) 6 5 10 9 6
Total operating expenses 61 68 77 80 144 91 73 210
Operating income (loss) 39 32 23 20 (44) 9 27 (110)
Other expense (income), net (1) (1) 2 2 (2) 1 — —
Income (loss) before provision for (benefit from) income taxes 40 33 21 18 (42) 8 27 (110)
Provision for (benefit from) income taxes 10 7 4 1 (14) 3 9 (37)
Net income (loss)
30 % 26 % 17 % 17 % (28)% 5 % 18 % (73)%
109
Quarterly Trends
Revenue
ThreeMonthsEnded
Dec.31,
2020
Sep.30,
2020
Jun.30,
2020
Mar.31,
2020
Dec.31,
2019
Sep.30
2019
Jun.30,
2019
Mar.31,
2019
(in thousands)
Transaction revenue $ 476,415 $ 275,904 $ 171,864 $ 171,991 $ 89,029 $ 138,632 $ 178,675 $ 56,669
Subscription and services revenue 20,676 10,759 6,467 7,091 5,280 4,785 5,232 4,647
Other revenue 88,021 28,694 8,051 11,548 3,962 15,100 26,928 4,796
Total revenue
$ 585,112 $ 315,357 $ 186,382 $ 190,630 $ 98,271 $ 158,517 $ 210,835 $ 66,112
Transaction revenue is highly correlated with overall Trading Volume generated by customers on our platform and tends to align with crypto asset price cycles. See further
discussion in the section above, titled “—Our Business Model.”
Subscription and services revenue demonstrates less correlation with Trading Volume and is more closely tied to Assets on Platform, crypto asset prices, and growth in our Invest,
Spend, Send & Receive, Store, Save, Stake, Borrow & Lend, Build, Pay, and other products.
Other revenue is primarily driven by the amount of sales where we fulfill transactions with our crypto assets, often due to platform downtime. During the three months ended
September 30, 2020 and December 31, 2020, we experienced unanticipated system disruptions, which drove increases in other revenue.
Transaction expense
Similar to transaction revenue, transaction expense is closely tied to Trading Volume. Quarterly fluctuations in transaction expense tend to follow changes in Trading Volume and
transaction revenue.
Technology and development
Technology and development expenses have increased upwards on an annual basis, but have fluctuated during the periods presented. For quarters presented in 2019,
technology and development expenses remained relatively constant. Technology and development expenses increased for all quarters presented in 2020 due to increased headcount
and increased costs due to the growth of our platform.
Sales and marketing
Sales and marketing expenses have trended upwards for the quarters presented. Sales and marketing expenses are primarily driven by the timing and magnitude of online
advertising campaigns to increase traffic to our platform.
General and administrative
General and administrative expense generally trended upwards for the periods presented due to increased personnel-related costs, professional services, and other support as
we continue to grow our business, in particular during the three months ended September 30, 2020 and December 31, 2020.
Restructuring
In April 2019, management approved a plan to cease development of a new trading engine, resulting in the closure of a Chicago office and restructuring expenses of $10.1 million
for the year ended December 31, 2019. There were no restructuring expenses incurred in the year ended December 31, 2020.
110
Other operating expenses
Other operating expenses have trended with other revenue for the quarters presented, as we experienced unanticipated system disruptions, which drove increases in other
revenue, and therefore increases in other expenses, in particular during the three months ended September 30, 2020 and December 31, 2020.
Quarterly Reconciliation of Non-GAAP Financial Measure
In addition to our results determined in accordance with GAAP, we believe Adjusted EBITDA, a non-GAAP measure, is useful in evaluating our operating performance. We use
Adjusted EBITDA to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that Adjusted EBITDA may be helpful to investors because it
provides consistency and comparability with past financial performance. However, Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an
analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP.
Among other non-cash and non-recurring items, Adjusted EBITDA excludes stock-based compensation expense, a non-cash expense, which has recently been, and will continue
to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy. In addition, other companies, including
companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the
usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable
financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial
measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.
The following table provides a quarterly reconciliation of net income (loss) to Adjusted EBITDA:
ThreeMonthsEnded
Dec.31,
2020
Sep.30,
2020
Jun.30,
2020
Mar.31,
2020
Dec.31,
2019
Sep.30
2019
Jun.30,
2019
Mar.31,
2019
(in thousands)
Net income (loss) $ 176,785 $ 81,299 $ 32,260 $ 31,973 $ (27,873) $ 8,001 $ 37,998 $ (48,513)
Adjusted to exclude the following:
Provision for (benefit from) income taxes 55,983 21,417 6,546 2,936 (13,786) 3,956 18,793 (23,992)
Depreciation and amortization 8,577 8,007 7,484 6,894 8,970 2,958 2,535 2,415
Interest expense 2,354 280 — — — — — —
Stock-based compensation 32,880 15,590 12,647 8,772 11,509 5,724 8,536 5,378
Impairment 3 8,084 — 268 2,221 — — 31
Restructuring — — — — — — 10,140 —
Non-recurring acquisition-related compensation expenses — — — — — — — 7,370
Unrealized (gain) loss on foreign exchange (5,150) (462) 2,260 4,409 (3,591) 2,276 (740) (1,051)
Fair value adjustments on derivatives 16,249 (10,995) — — — — — —
Legal reserves and related costs — — — — 5,000 — — —
Adjusted EBITDA
$ 287,681 $ 123,220 $ 61,197 $ 55,252 $ (17,550) $ 22,915 $ 77,262 $ (58,362)
________________
(1) For more information, see the section titled "Neutrino" in note 4 to our consolidated financial statements included elsewhere in this prospectus.
(2)
(1)
111
LiquidityandCapitalResources
Since our inception, we have financed our operations primarily with cash flow from operating activities and net proceeds from the sale of convertible preferred stock. As of
December 31, 2020, we had cash and cash equivalents of $1.1 billion, exclusive of restricted cash and customer custodial funds. Cash equivalents consisted primarily of cash
deposits and money market funds denominated in U.S. dollars. As of December 31, 2020, we had restricted cash and cash equivalents of $30.8 million which consisted primarily of
amounts held in restricted bank accounts at certain third-party banks as security deposits or pledged as collateral to secure letters of credit. As of December 31, 2020, we had
customer custodial funds of $3.8 billion which consisted of amounts held at certain third-party banks for the exclusive benefit of customers. Crypto asset trading on our platform occurs
24 hours a day. We restrict the use of the assets underlying the customer custodial funds to meet regulatory requirements based on their purpose and availability to fulfill its direct
obligation under custodial funds due to customers.
Certain jurisdictions where we operate require us to hold eligible liquid assets, as defined by applicable regulatory requirements and commercial law in these jurisdictions, equal to
at least 100% of the aggregate amount of all custodial funds due to customers. Depending on the jurisdiction, eligible liquid assets can include cash and cash equivalents, customer
custodial funds, and in-transit funds receivable. As of December 31, 2020 and December 31, 2019, our eligible liquid assets were greater than the aggregate amount of custodial
funds due to customers.
As of December 31, 2020, we had $48.9 million of USDC, a stablecoin which can be redeemed one USDC for one U.S. dollar on demand. While not accounted for as cash or
cash equivalent, we believe our USDC holdings to be an important liquidity resource.
In addition to USDC, as of December 31, 2020, we held $62.3 million of crypto assets at cost, excluding crypto assets borrowed. The fair value as of December 31, 2020 was
$187.9 million which included $130.1 million of Bitcoin, $23.8 million of Ethereum and $34.0 million of other crypto assets for investment and operational purposes. The fair value is
primarily based on the closing quoted market prices on our exchange as of December 31, 2020.
Our cash flow from operating activities may materially fluctuate from period-to-period based on movement within our custodial funds due to customers liability. Since our customer
custodial funds are included in cash and cash equivalents, any large fluctuations in the related liability will directly impact our cash flow from operating activities. We believe our
existing cash and cash equivalents will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months.
Our future capital requirements will depend on many factors, including market acceptance of crypto assets and blockchain technology, our growth, our ability to attract and retain
customers on our platform, the continuing market acceptance of products and services, the introduction of new subscription products and services on our platform, expansion of sales
and marketing activities, and overall economic conditions. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and
requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our stockholders. The incurrence of
debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations.
In the event that additional financing is required from outside sources, there is a possibility we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise
additional capital when desired, our business, operating results, and financial condition could be adversely affected.
112
Cash flows
YearEndedDecember31,
2020 2019
(in thousands)
Net cash provided by (used in) operating activities $ 3,004,070 $ (80,594)
Net cash provided by (used in) investing activities 50,822 (105,353)
Net cash provided by (used in) financing activities 18,801 (16,605)
Net increase (decrease) in cash, cash equivalents, and restricted cash
$ 3,073,693 $ (202,552)
Change in custodial funds due to customers included in net cash provided by (used in) operating activities
2,710,522 (130,122)
Operating activities
Net cash provided by operating activities was $3.0 billion for the year ended December 31, 2020, of which $2.7 billion related to cash from the change in custodial funds due to
customers. Our net cash provided by operating activities reflected net income of $322.3 million, non-cash adjustments of $64.8 million, which primarily consisted of $70.5 million in
stock-based compensation, $31.0 million in depreciation and amortization, $25.0 million in non-cash lease expense, and $5.3 million in fair value derivative adjustments. This was
partially offset by $54.0 million of net crypto assets received from operating activities and $23.7 million in realized gains on crypto assets which is excluded from operating activities
and included in investing activities. In addition to these changes were changes in operating assets and liabilities, other than custodial funds due to customers, of $93.6 million.
Net cash used in operating activities was $80.6 million for the year ended December 31, 2019, of which $130.1 million related to cash from the change in custodial funds due to
customers. Our net cash used in operating activities reflected a net loss of $30.4 million, non-cash adjustments of $50.1 million, which primarily consisted of $31.1 million in stock-
based compensation and $16.9 million in depreciation and amortization, which was partially offset by $20.9 million in deferred income taxes. In addition to these changes were
changes in operating assets and liabilities, other than custodial funds due to customers, of $29.8 million
Investing activities
Net cash provided by investing activities of $50.8 million for the year ended December 31, 2020 primarily related to $46.0 million in net proceeds from the purchase and sale of
crypto assets and $33.6 million net cash and customer custodial funds acquired in the Tagomi acquisition. This was partially offset by $10.3 million and $9.9 million in purchases of
investments and property and equipment, respectively, and $8.9 million in capitalized internal-use software development costs.
Net cash used in investing activities of $105.4 million for the year ended December 31, 2019 primarily related to the cash portion of our acquisition of Xapo’s institutional custody
business of $55.4 million, $33.5 million for leasehold and real estate expenditures to support our increased headcount, investments in companies and technologies of $7.9 million, and
capitalized internal-use software development costs of $7.0 million which were offset by net proceeds from purchase and sale of crypto assets of $1.5 million.
Financing activities
Net cash provided by financing activities of $18.8 million for the year ended December 31, 2020 was due to $20.7 million in proceeds from the issuance of common stock, which
was partially offset by a $1.9 million cash outflow to repurchase equity awards.
Net cash used in financing activities of $16.6 million for the year ended December 31, 2019 was due to a $21.0 million cash outflow related to a tender offer, which was partially
offset by proceeds of $4.4 million from the issuance of common stock.
113
ContractualObligationsandCommitments
The following tables summarize our contractual obligations and commitments as of December 31, 2020:
PaymentsduebyperiodasofDecember31,2020
Total Lessthan1year 1-3years 3-5years >5years
(in thousands)
Operating lease commitments $ 118,427 $ 29,559 $ 54,308 $ 33,768 $ 792
Non-cancelable purchase obligation 93,179 50,462 42,717 — —
Total contractual obligations and commitments
$ 211,606 $ 80,021 $ 97,025 $ 33,768 $ 792
The tables above exclude unrecognized tax benefits of $12.3 million as of December 31, 2020, that, if recognized, would reduce income tax expense and our effective tax rate.
The table above also excludes uncertain tax liabilities due to the uncertainty of when the related tax settlements will become due.
In September 2018, we entered into an operating lease agreement for new office space in San Francisco, California. The lease commencement dates of floors in the building were
staggered, with the lease of the final floors of the office initially set to commence in November 2020 and expire on April 30, 2025. In September 2020, we renegotiated the terms of the
lease which included a partial giveback of space for which the lease had not yet commenced. The terms of the agreement include a cancellation fee of $7.9 million and commits us to
enter into leases at the lessor’s other properties, with a minimum committed spend of $15.5 million spread over the period from September 2020 to December 2025.
Off-BalanceSheetArrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or
financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet
arrangements or other contractually narrow or limited purposes.
CriticalAccountingPoliciesandEstimates
Our consolidated financial statements and the related notes included elsewhere in this prospectus are prepared in accordance with GAAP. The preparation of consolidated
financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, and expenses and related disclosures.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly
from our estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, operating results,
and cash flows will be affected.
We believe that the accounting policies described below involve a significant degree of judgment and complexity. Accordingly, we believe these are the most critical to aid in fully
understanding and evaluating our consolidated financial condition and results of operations. For more information, see note 2 to our consolidated financial statements included
elsewhere in this prospectus.
Revenue recognition
We primarily generate revenue through transaction fees charged on our platform. Our service comprises a single performance obligation to provide a crypto asset matching
service when customers buy, sell, or convert crypto assets on the platform. That is, we are an agent in transactions between customers and present revenue for the fees earned on a
net basis.
114
Judgment is required in determining whether we are the principal or the agent in transactions between customers. We evaluate the presentation of revenue on a gross or net basis
based on whether we control the crypto asset provided before it is transferred to the customer (gross) or whether we act as an agent by arranging for other customers on the platform
to provide the crypto asset to the customer (net). We do not control the crypto asset being provided before it is transferred to the buyer, do not have inventory risk related to the crypto
asset, and are not responsible for the fulfillment of the crypto asset. We also do not set the price for the crypto asset as the price is a market rate established by the platform. As a
result, we act as an agent in facilitating the ability for a customer to purchase crypto assets from another customer.
We consider our performance obligation satisfied, and recognize revenue, at the point in time the transaction is processed. Contracts with customers are usually open-ended and
can be terminated by either party without a termination penalty. Therefore, contracts are defined at the transaction level and do not extend beyond the service already provided.
We charge a fee at the transaction level. The transaction price, represented by the trading fee, is calculated based on volume and may vary depending on payment type and the
value of the transaction. Crypto asset purchase or sale transactions executed by a customer on our platform include tiered pricing, based primarily on transaction volume. The fee rate
charged per transaction is adjusted up or down if the volume processed for a specific historical period meets established thresholds. We have concluded that this volume-based
pricing approach does not constitute a future material right since the discount is within a range typically offered to a class of customers with similar volume. The transaction fee is
collected from the customer at the time the transaction is executed. In certain instances, the transaction fee can be collected in crypto assets, with revenue measured based on the
amount of crypto assets received and the fair value of the crypto assets at the time of the transaction. For the year ended December 31, 2020, we collected approximately 7.4% of
total revenue in crypto assets. In such instances, we conduct periodic checks over the course of a day and convert crypto assets received for transaction fees into fiat currency once
these assets reach a specified threshold of over $100. In the event the amount exceeds $5,000 at the time of our check, we will only convert crypto assets into fiat currency in the
amount of $5,000 at that time. We believe this process reduces the risk related to a change in fair value of these assets prior to their conversion into fiat currency.
The transaction price includes estimates for reductions in revenue from transaction fee reversals that may not be recovered from customers. Such reversals occur when the
customer disputes a transaction processed on their credit card or their bank account for a variety of reasons and seeks to have the charge reversed after we have processed the
transaction. These amounts are estimated based upon the most likely amount of consideration to which we will be entitled. All estimates are based on historical experience and our
best judgment at the time to the extent it is probable that a significant reversal of revenue recognized will not occur. All estimates of variable consideration are reassessed periodically.
The total transaction price is allocated to the single performance obligation. While we recognize transaction fee reversals due to transaction reversals as a reduction of net revenue,
crypto asset losses due to transaction reversals are included in transaction expense.
Business combinations
We account for our business combinations using the acquisition method of accounting, which requires, among other things, allocation of the fair value of purchase consideration to
the tangible and intangible assets acquired and liabilities assumed at their estimated fair values on the acquisition date. The excess of the fair value of purchase consideration over the
values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair value of assets acquired and liabilities assumed, we make significant estimates and
assumptions, especially with respect to intangible assets. Our estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and
unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which does not exceed one year from the date of acquisition, we may record
adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill if new
115
information is obtained related to facts and circumstances that existed as of the acquisition date. After the measurement period, any subsequent adjustments are reflected in the
consolidated statements of operations. Acquisition costs, such as legal and consulting fees, are expensed as incurred.
Impairment of long-lived assets
We assess potential impairments to our long-lived assets, which include property and equipment and intangible assets, whenever events or changing circumstances indicate that
the carrying amount may not be recoverable. When indicators of impairment exist, we estimate the future undiscounted cash flows expected to be generated by the asset or asset
group. In the event cash flows are not expected to be sufficient to recover the recorded value of the asset, an impairment loss is measured based upon the difference between the
carrying amount and the fair value of the asset.
The goodwill impairment test consists of a comparison of each reporting unit’s fair value to its carrying value. The fair value of a reporting unit is an estimate of the amount for
which the unit as a whole could be sold in a current transaction between willing parties. If the carrying value of a reporting unit exceeds its fair value, goodwill is written down to its
implied fair value. We are also permitted to make a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying value prior
to applying the quantitative assessment. If, based on our qualitative assessment, it is more likely than not that the carrying value of the reporting unit is less than its fair value, a
quantitative assessment may be required. We have identified a single reporting unit for purposes of impairment testing.
Our crypto assets held are accounted for as intangible assets with indefinite useful lives, and are initially measured at cost. Impairment exists when the carrying amount exceeds
its fair value, which is measured using the quoted price of the crypto asset at the time its fair value is being measured. We assign costs to transactions on a first-in, first-out basis.
We have selected October 1 as the date on which to perform our annual impairment tests. We also test for impairment whenever events or circumstances indicate that the fair
value of goodwill or intangible assets has been impaired. No impairment of goodwill was recorded during the years ended December 31, 2020 and December 31, 2019.
Stock-based compensation
We recognize stock-based compensation expense using a fair-value based method for costs related to all equity awards issued under our equity incentive plans, including
restricted stock, restricted stock units, or RSUs, and options granted to employees, directors, and non-employees. We estimate the fair value of stock options with only service-based
conditions on the date of grant using the Black-Scholes-Merton option-pricing model. The fair value of the stock option is expensed over the related service period which is typically
the vesting period and the straight-line method is used for expense attribution.
The model requires management to make a number of assumptions, including the fair value and expected volatility of our underlying common stock, expected term of the stock
option, risk-free interest rate, and expected dividend yield. The expected term of the stock option is based on the average period the stock option is expected to remain outstanding
based on the stock option’s vesting and contractual terms. We evaluate the assumptions used to value stock awards quarterly. We have elected to account for forfeitures of awards as
they occur, with previously recognized stock-based compensation reversed in the period that the awards are forfeited.
The fair value of RSUs is estimated based on the fair value of our common stock on the date of grant. Stock-based compensation expense related to the RSUs is recorded on a
straight-line basis over the requisite service period.
116
Common stock valuations
In the absence of a public trading market, the fair value of the common stock was determined by our board of directors, with input from management, taking into account our most
recent valuations from an independent third-party valuation specialist. Our board of directors intended all stock options granted to have an exercise price per share not less than the
per share fair value of our common stock on the date of the grant and we believe that our board of directors has the relevant experience and expertise to determine the fair value of
our common stock. The valuations of common stock were determined in accordance with the guidance provided by the American Institute of Certified Public Accountants Practice Aid,
Valuation of Privately-Held-Company Equity Securities Issued as Compensation. If stock options were granted a short period of time prior to the date of a valuation report, we
retrospectively assessed the fair value used for financial reporting purposes after considering the fair value reflected in the subsequent valuation report and other facts and
circumstances on the date of grant as discussed below. The assumptions we use in the models were based on future expectations combined with management judgment and
considered numerous and subjective factors to determine the fair value of our common stock as of the date of each option grant, including the following factors:
• the results of contemporaneous valuations performed at periodic intervals by an independent valuation firm;
• the prices, rights, preferences, and privileges of our convertible preferred stock relative to those of our common stock;
• the prices of our convertible preferred stock and common stock sold to investors in arms-length transactions or offered to investors through a tender offer;
• our actual operating and financial performance and estimated trends and prospects for our future performance;
• our stage of development;
• the likelihood of achieving a liquidity event, such as an initial public offering, direct listing, or sale of our company, given prevailing market conditions;
• the lack of marketability involving securities in a private company;
• the market performance of comparable publicly-traded companies; and
• U.S. and global capital market conditions.
In valuing our common stock, our board of directors determined the equity value of our business generally using a weighting of the income and market approach valuation
methods with input from management. The income approach estimates value based on the expectation of future cash flows that a company will generate. These future cash flows are
discounted to their present values using an appropriate discount rate based on a weighted-average cost of capital and are adjusted to reflect the risks inherent in us achieving these
estimated cash flows. The market approach estimates value based on a comparison of the subject company to comparable public companies in a similar line of business. From the
comparable companies, a representative market value multiple is determined and then applied to the subject company’s financial forecasts to estimate the value of the subject
company.
For valuations prior to June 30, 2020, the equity valuation was based on both the income and the market approach valuation methods. Then, the option pricing method, or OPM,
was used to allocate equity value to each class of our stock. When we had completed or were expecting to complete a convertible preferred stock financing, the terms and pricing of
the financing round were included in the analysis used to estimate our value and the value of our common stock. These methods were consistent with prior valuations.
117
For valuations as of and subsequent to June 30, 2020, we have used a hybrid method utilizing a combination of the OPM and the probability-weighted expected return method, or
PWERM, in estimating the value of our common stock. Using the PWERM, the value of our common stock is estimated based upon a probability-weighted analysis of varying values
for our common stock assuming possible future events for our company, including a scenario of an initial public offering or a direct listing of our common stock on a stock exchange
and a scenario assuming continued operation as a private entity. We also applied a discount for lack of marketability to account for a lack of access to an active public market.
Application of these approaches involves the use of estimates, judgment, and assumptions that are highly complex and subjective, such as those regarding our expected future
revenue, expenses, and future cash flows, discount rates, market multiples, the selection of comparable companies, and the probability of possible future events. Changes in any or all
of these estimates and assumptions or the relationships between those assumptions impact our valuations as of each valuation date and may have a material impact on the valuation
of our common stock.
Our board of directors’ assessments of the fair value of our common stock for grant dates between the dates of an available third-party valuation report were based in part on the
current available financial and operational information and the fair market value provided in the most recent available third-party valuation report as compared to the timing of each
grant.
For valuations after the completion of the listing of our Class A common stock on the Nasdaq Global Select Market, our board of directors will determine the fair value of each
share of underlying common stock based on the closing price of our Class A common stock as reported on the date of grant. Future expense amounts for any particular period could
be affected by changes in assumptions or market conditions.
Income taxes
We utilize the asset and liability method for computing our income tax provision. Deferred tax assets and liabilities reflect the expected future consequences of temporary
differences between the financial reporting and tax bases of assets and liabilities as well as operating loss, capital loss, and tax credit carryforwards, using enacted tax rates.
Management makes estimates, assumptions, and judgments to determine our provision for income taxes, deferred tax assets and liabilities, and any valuation allowance recorded
against deferred tax assets. We assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe that recovery is not likely,
we establish a valuation allowance.
We recognize the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the
technical merits of the position. The tax benefits recognized from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being
realized upon settlement. Interest and penalties related to unrecognized tax benefits are recognized within provision for income taxes.
For U.S. Federal tax purposes, crypto asset transactions are treated on the same tax principles as property transactions. We recognize a gain or loss when crypto assets are
exchanged for other property, in the amount of the difference between the fair market value of the property received and the tax basis of the exchanged crypto assets. Receipts of
crypto assets in exchange for goods or services are included in taxable income at the fair market value on the date of receipt.
RecentAccountingPronouncements
See note 2 to our consolidated financial statements included elsewhere in this prospectus for recently adopted accounting pronouncements and recently issued accounting
pronouncements not yet adopted as of the dates of the statement of financial position included in this prospectus.
118
QuantitativeandQualitativeDisclosuresaboutMarketRisk
Market risk is the risk associated with the effect of changes in market factors on the value of the assets and liabilities held on our balance sheet, including interest rates, foreign
exchange rates, prices of crypto assets, or volatilities such as market volatility or product liquidity.
Interest rate risk
We had cash and cash equivalents, including restricted cash and customer custodial funds, of $4.9 billion and $1.8 billion as of December 31, 2020 and December 31, 2019,
respectively. Our investment policy and strategy primarily attempts to preserve capital and meet liquidity requirements without significantly increasing risk. Our cash and cash
equivalents primarily consist of cash deposits and money market funds. We also earn interest based on the share of total USDC held on our platform. Changes in interest rates would
primarily impact interest income due to the relatively short-term nature of our investments. A hypothetical 100 basis points increase or decrease in interest rates would have resulted in
a $21.3 million and a $12.0 million increase or decrease in total revenue for the years ended December 31, 2020 and December 31, 2019, respectively.
Foreign currency risk
We have exposure to foreign currency translation gains and losses arising from our net investment in international subsidiaries. The revenues, expenses, and financial results of
these subsidiaries are recorded in the functional currency of the countries that these subsidiaries are located in, which is primarily Euros and Japanese Yen. Accordingly, changes in
exchange rates may negatively affect our future revenue and other operating results in these international subsidiaries upon translation into U.S. dollars. At this time, we do not, but
we may in the future, enter into derivatives or other financial instruments in an attempt to hedge our foreign currency exchange risk. It is difficult to predict the impact hedging activities
would have on our operating results. A 10% increase or decrease in current exchange rates would not have a material impact on our financial results.
Market volatility and other risks associated with derivatives
We have exposure to derivatives and related hedges measured at fair value. Market risk on derivatives is the exposure created by potential fluctuations in market prices and other
factors and is a function of the type of derivative product, the volume of transactions, the tenor and terms of the agreement and the underlying volatility.
As at December 31, 2020, we have entered into a warrant agreement to purchase crypto assets (derivative asset of $2.6 million) and embedded derivatives as a result of entering
into transactions to borrow crypto assets (derivative liabilities of $127.1 million), recorded on the consolidated balance sheets. A 10% increase or decrease in the fair value of the
derivative positions would not have a material impact on our financial results. For more information, see notes 2 and 12 to our consolidated financial statements included elsewhere in
this prospectus.
119
BUSINESS
CoinbaseOverview
Coinbase powers the cryptoeconomy.
Our mission is to create an open financial system for the world. Today, the way that we invest, spend, save, and generally manage our money remains cumbersome, inaccessible,
expensive, and regionally isolated. In contrast, the internet has transformed our society by connecting the world and enabling the seamless exchange of information. The legacy
financial system is struggling to keep pace with the speed of technological advancements in a global and digitally interconnected society, resulting in the need for a new, natively
digital financial system.
We are building the cryptoeconomy – a more fair, accessible, efficient, and transparent financial system for the internet age that leverages crypto assets: digital assets built using
blockchain technology.
We started in 2012 with the radical idea that anyone, anywhere, should be able to easily and securely send and receive Bitcoin, the first crypto asset. We built a trusted platform
for accessing Bitcoin and the broader cryptoeconomy by reducing the complexity of the industry through a simple and intuitive user experience.
Today, we are a leading provider of end-to-end financial infrastructure and technology for the cryptoeconomy. Customers around the world discover and begin their journeys with
crypto through Coinbase. In the early days of the internet, Google democratized access to information through its user-friendly search engine, enabling virtually any user with an
internet connection to discover the world’s information. Similarly, Coinbase is democratizing access to the cryptoeconomy by enabling anyone with an internet connection to easily and
securely invest in and use crypto assets.
Customers that start with us, grow with us as they experience the benefits of the open financial system by using crypto-based products for staking, spending, saving, and
borrowing. Today, our platform enables approximately 43 million retail users, 7,000 institutions, and 115,000 ecosystem partners in over 100 countries to participate in the
cryptoeconomy:
• Retail users: We offer the primary financial account for the cryptoeconomy – a safe, trusted, and easy-to-use platform to invest, store, spend, earn, and use crypto assets.
• Institutions: We provide hedge funds, money managers, and corporations a one-stop shop for accessing crypto markets through advanced trading and custody technology,
built on top of a robust security infrastructure. We also offer a state of the art marketplace with a deep pool of liquidity for transacting in crypto assets.
• Ecosystem partners: We provide developers, merchants, and asset issuers a platform with technology and services that enables them to build applications that leverage
crypto protocols, actively participate in crypto networks, and securely accept cryptocurrencies as payment.
Bitcoin sparked a revolution by proving the ability to create digital scarcity: a unique and finite digital asset whose ownership could be proven with certainty. This innovation laid
the foundation for an open financial system. Today, all forms of value – from those natively created online such as in-game digital goods to traditional securities like equities and bonds
– can be represented digitally, as crypto assets. Like the bits of data that power the internet, these crypto assets can be dynamically transmitted, stored, and programmed to serve the
needs of an increasingly digital and globally interconnected economy.
Today, we enable customers around the world to store their savings in a wide range of crypto assets, including Bitcoin and USD Coin, and to instantly transfer value globally with
the tap of a finger on a smartphone. We provide companies with new ways to transact, incentivize, and reward their users, from offering compounding rewards on savings that pay out
by the second to compensating users for virtually completing tasks through global micropayments.
121
We power the cryptoeconomy by combining the best of both emerging blockchain technology and traditional finance to create trusted and easy-to-use products for the industry.
We have built a robust backend technology platform to support the global, real-time, and 24/7/365 demands of crypto asset markets. We invest heavily in regulatory compliance by
working with regulators around the world to shape policy, and have pioneered industry-leading security practices for safeguarding crypto assets. Our early focus on trust and usability
has allowed us to become the primary on-ramp to the cryptoeconomy from the fiat-based financial system.
Our unique approach draws retail users, institutions, and ecosystem partners to our platform, creating a powerful flywheel: retail users and institutions store assets and drive
liquidity, enabling us to expand the depth and breadth of crypto assets that we offer and launch new, innovative products and services that attract new customers. Our scale and
leadership position draws ecosystem partners to connect with our millions of customers around the world, further enhancing the value of our platform.
This self-reinforcing dynamic is enabled by our culture of repeatable innovation and continuous investment in our proprietary technology platform that is purpose built to address
the unique engineering, cybersecurity, compliance, and usability challenges of directly interacting with blockchain protocols. With every turn of our flywheel, we develop a deeper
understanding of our customers’ needs and leverage our scalable platform to intelligently design, develop, launch, and market new, innovative products and services to our customers.
This allows us to build a more tailored suite of products and services and enhances the value of our platform over time. By providing the necessary infrastructure and distribution for
our current and future ecosystem partners to build and extend their reach, we also foster the growth of the ecosystem.
We have seen this flywheel work effectively across our business and we have grown rapidly as a result. As of December 31, 2020, our customers had traded over $456 billion on
our platform since inception and stored over $90 billion worth of assets across our platform. This growth has come with minimal outbound sales and marketing effort — since inception
over 90% of our retail users had found us organically or through word-of-mouth.
Since inception through December 31, 2020, we generated over $3.4 billion in total revenue, largely from transaction fees that we earn from volume-based trades on our platform
by retail users and institutions. For the year ended December 31, 2020, transaction revenue represented over 96% of our net revenue. We have leveraged the strength of our trading
business to scale and broaden our platform by investing in our flywheel to launch new products and services and grow the ecosystem.
Today, we directly integrate with over 15 blockchain protocols, support over 90 crypto assets for trading or custody, and since the fourth quarter of 2018, we have launched a suite
of subscription products and services that have enhanced the customer value proposition and power of our platform. Retail users are now engaging with multiple products — across
the four quarters ended December 31, 2020, on average, 21% of retail users who invested also engaged with at least one non-investing product per quarter. When retail users
invested and engaged with at least one non-investing product, we saw average net revenue per retail user increase by approximately 90%. Although subscription products and
services do not currently contribute a significant portion of net revenue relative to our trading business, we experienced 126% annual growth in revenue from these products and
services from 2019 to 2020. We are committed to growing more stable revenue from subscription products and services, and expect that they will contribute a larger portion of our
total revenue over time as our customers connect with the broader cryptoeconomy.
The overall market capitalization of crypto assets grew from less than $500 million to $782 billion between December 31, 2012 and December 31, 2020, representing a CAGR of
over 150%. Over the same period, our retail users grew from approximately 13,000 to 43 million. More recently, we have
Non-investing products include our Distribute, Stake, Save, Spend, and Borrow & Lend products.
Based on publicly available data from the earliest available date. Calculation period is December, 2012 to December 31, 2020.
5
6
5
6
122
experienced significant growth in the number of institutions on our platform, increasing from over 1,000 as of December 31, 2017 to 7,000 as of December 31, 2020.
While we have grown rapidly, similar to the evolution of the internet, e-commerce, and prior paradigm shifts in technology, our journey has not been linear. Our growth has come
in waves driven by innovation in the cryptoeconomy and requires long-term perspective to evaluate our performance. Each wave expands the existing retail user community and
further diversifies the ecosystem by attracting new market participants such as institutions and developers. In the short-term, we experience high variance in Trading Volume and net
revenue between quarters driven by the volatile nature of the crypto asset markets. Over longer periods, we have experienced clear growth, with median quarterly Trading Volume
increasing from $17 billion to $21 billion to $38 billion in 2018, 2019, and 2020, respectively.
We have grown quickly and in a capital-efficient manner since our founding. For the years ended December 31, 2020 and December 31, 2019, we generated total revenue of $1.3
billion and $533.7 million, respectively, net income (loss) of $322.3 million and $(30.4) million, respectively, and Adjusted EBITDA of $527.4 million and $24.3 million, respectively. See
the section titled “Selected Consolidated Financial and Other Data—Key Business Metrics and Non-GAAP Financial Measure—Non-GAAP Financial Measure” for information
regarding our use of Adjusted EBITDA and a reconciliation of net income (loss) to Adjusted EBITDA.
WelcometotheCryptoeconomy
Limitations of today’s financial system
Today’s financial system relies upon a patchwork of intermediaries that spans banks, brokers, clearinghouses, custodians, exchanges, payment processors, and their networks to
facilitate money movement, safekeeping, lending, credit, and other capital markets activity. Bound by legacy infrastructure and processes, the trust and reliance on this complex web
of intermediaries imposes limitations on access, efficiency, and cost.
• Access. To send, store, or receive funds, access to legacy financial infrastructure, such as bank accounts, is required. Geographic and socioeconomic factors often limit the
availability of such infrastructure. As an illustrative example, sending money from the United States to Mexico requires access to bank accounts or other intermediary outlets
for both the sender and receiver of funds, in addition to at least one financial intermediary.
• Efficiency. The protocols, people, procedures, and infrastructure that are required to facilitate money movement impose legacy constraints on financial transactions, which
effectively limit their availability and usability. Multiple administrative layers, geographic boundaries, and intermediaries standing between participants adds friction and leads
to duplication of functions across the value chain. The net result is inefficiency in the movement of value, exemplified by long settlement times, seemingly arbitrary maximum
and minimum transaction sizes, extended exposure to price volatility, and exposure to potential fraud. For example, an investor purchasing an institutional term loan in the
secondary market may have to wait several weeks for a trade to settle.
• Cost. Redundancy and inefficiency result in higher costs for end users. For example, a consumer in the United States sending a remittance payment to family abroad will often
incur significant fees.
Many companies in the technology and financial technology industries have recognized and attempted to address some of these issues with the current financial system. While
these companies offer products and services that incorporate modern user interfaces and technology layers, they are built on top of the same antiquated financial infrastructure,
effectively porting the limitations, inefficiencies, and costs of the traditional financial system online. As a result, these solutions do not address the core limitations of the current
financial system.
123
The need for an internet of value
The internet has unleashed multiple waves of innovation that are continuing to connect and transform many aspects of modern society across geographies. Near ubiquity of
access to real-time information has spurred the growth of economic activity and significantly increased the velocity of transactions. While technological innovation has transformed
how we communicate and purchase goods and services, the existing financial system has hardly changed. We have reached a tipping point for the need for a new, natively digital
financial system.
Sending value digitally without intermediaries has long been impractical. For example, once a picture is digital, it can be copied millions of times instantly. Once something is
infinitely replicable, it loses its value, making the digital format ill-suited for storing or transmitting value. The foundational innovation of blockchain technology was to bring uniqueness
and scarcity into the digital realm, allowing for the creation of natively digital assets. Based on an immutable, multi-party, consensus-based record-keeping system, crypto deeply
integrates the concept of money into the internet ecosystem as a means of value exchange, storage, and unit of account, effectively creating a resilient internet of value. This enables
network participants to transact with each other on the basis of trust without intermediaries. Crypto enables the digital representation and instant, secure exchange of nearly any asset
of value globally in a manner as fast and seamless as the exchange of information on the internet.
Just as digital photos removed the format restrictions of the 3x5 print, leading to new types of photos like panoramic or 3D, the digitization of value has led to a wave of innovation
that eliminates constraints inherent in the traditional financial system. Crypto enables global peer-to-peer financial applications such as borrowing and lending, but also allows for the
representation of value in formats that are not monetary. For instance, crypto allows brands and creators – musicians, artists, social influencers, or anyone with an internet connection
– to create verifiably unique crypto assets (known as non-fungible tokens or "NFTs") such as digital artwork, collectibles, and fan engagement tokens, which unlock new economic
opportunities for creators and their communities. The cryptoeconomy provides access to a full range of services 24 hours a day, 365 days a year at low cost and with near-instant
settlement. Today, over 50 distinct blockchain protocols support more than 7,500 crypto assets that enable all forms of digital records and transactions, including contracts,
documents, identity, rights, securities, titles, in-game digital goods, and many others, to be controlled programmatically.
Anyone, anywhere with an internet connection can directly access this network of value exchange. As crypto asset adoption scales to a greater share of this massive base of
internet users it has the potential to deliver on the promise of democratizing financial services to equal levels of ubiquity and inclusion.
Applications in the cryptoeconomy are expansive
A fundamental advantage of the cryptoeconomy is that unlike the traditional financial system that relies on rigid infrastructure, crypto assets rely on software-based networks built
on top of the internet. Crypto assets are forms of value represented as bits and bytes – much like other digital media, such as email or digital photographs. As a result, crypto assets
are easily programmed, maneuvered, and as frictionless to send and receive as any digital media. The costs incurred in the transfer of crypto assets are similarly low, allowing any
quantum of value to be exchanged.
The inherent programmability of crypto assets enables the creation of “smart contracts,” self-enforcing agreements between transacting parties directly written into lines of code.
Smart contracts represent a step change in the utility of blockchain-based networks by allowing parties to enter into contractual agreements without the need for a centralized
intermediary. For example, smart contracts can enable a distributed group of people to enter into a mutually beneficial economic relationship to share the risk of adverse events,
otherwise known as insurance. Software facilitates both the collection of premiums, as well as the release of claims automatically based on predetermined conditions. While the
concept is not new, smart contracts are distinct because they enable this complex economic arrangement to execute autonomously without the need for an intermediary.
124
The versatility of crypto assets has sparked waves of innovation that are only bounded by developers’ creativity. Today, the applications of crypto assets span core financial
functions such as store of value and medium of exchange, as well as non-financial applications such as enabling multi-sided marketplaces for goods and services. Some applications
include:
Store of value
Bitcoin has emerged as a new asset class by combining a finite supply with digital transferability. Gold has historically held a prominent role due its function as a decentralized
store of value – the inability of one actor to unilaterally manipulate its value. However, the scarcity value of gold lacks the mathematically limited finite supply of Bitcoin, and gold’s
physical properties limit transferability and impose significant storage costs.
While the economic function of storing value is adequately served by fiat currencies in some countries, many countries experience inflation levels above their long-term expected
real gross domestic product growth. Adoption of crypto assets with attributes such as a finite supply, such as Bitcoin, or inherent parity with a fiat currency, such as USD Coin, have
emerged as stores of value in regions around the world with major macroeconomic imbalances. As of December 31, 2020, the combined value of U.S. dollar stablecoins, crypto
assets that track the value of the U.S. dollar, exceeded $25 billion, an increase of over 375% from December 31, 2019.
24/7/365 real-time cross-border payments
Global payments exceed global GDP by a multiple, as every step of economic value creation is typically accompanied by an exchange of financial value. Nevertheless, a large
share of payments transactions still rely on cash and paper-based formats. The ongoing digitization of commerce is driving growth in digital payments, but their primary format – card-
based transactions – still relies on outdated infrastructure and communication protocols that impose costs and limitations. While most local payments can be initiated any time, back-
end processes remain subject to restrictions such as cut off times and often preclude cross-border payment transactions. Crypto asset markets operate 24/7/365 and facilitate the
instant transfer of value, eliminating the need for any intermediary, siloed payment networks, or specialized infrastructure. The “peer-to-peer” nature of cryptocurrency payments
extends the reach, lowers the cost, and increases the speed of a payment transaction.
Democratization of financial markets
The capital markets value chain – from sales to trading and execution, clearing and settlement, and servicing and administration has largely been translated to digital workflows
and execution. Nevertheless, several underlying functions such as transaction documentation, post-trade workflows (e.g., clearing and settlement), and asset servicing remain
complex, largely manual, and full of duplication. For individuals or institutions, access to financial markets is also often limited, complicated, and filled with outdated processes that can
be daunting.
Blockchain technology holds the potential to increase access to markets and reduce complexity, process redundancy, and cost by allowing market participants to connect, clear,
and settle peer-to-peer. Just as the internet has democratized access to information by removing information gatekeepers, blockchain technology can democratize access to the
financial markets. Blockchain protocols establish a universal source of truth, eliminating reconciliation workflows and allowing for near instantaneous settlement. The programmable
nature of crypto assets simplifies transactions in asset classes with heavy documentation requirements, such as loans. By removing the need for traditional market intermediaries and
streamlining processes, blockchain technology allows for capital to flow more freely to a larger universe of end users who need it.
125
Peer-to-peer financial applications (DeFi applications)
Crypto assets rely on software-based networks that can be used to facilitate traditional financial services like borrowing, lending, trading derivatives, and insurance through smart
contracts. This makes it possible for developers to design rules and actions that exist in finance today, and make those actions happen automatically. For example, a user could
receive a loan from a pool of other users with the terms of that loan dynamically and autonomously triggered by software. As of December 31, 2020, there was already more than
$15 billion of U.S. dollar equivalent value worldwide allocated towards decentralized finance applications and protocols. Further, the financial services enabled by crypto assets can be
combined in many different permutations – similar to open source software – and serve as building blocks for more complex combinations and new capabilities. Building on top of
decentralized blockchain networks lowers the barriers to access as anyone with an internet connection can become a counterparty to a transaction, putting individuals in control of
their own financial well-being and increasing global economic freedom.
Digital marketplaces for...anything
The trustless and programmable nature of crypto allows for the creation of new digital global marketplaces and business models that were previously not possible. For instance,
imagine a digital peer-to-peer marketplace that enables users to rent out underutilized resources such as computing services or internet bandwidth. Micropayments are autonomously
dispatched to mirror the commercial transactions in real time. Crypto assets make such marketplaces possible on a global scale by substituting centralized intermediaries with open
markets governed by programmable rules and incentives that are natively built into the marketplace infrastructure.
The possibilities do not stop with internet bandwidth – crypto-enabled marketplaces already facilitate a variety of use cases including digital collectibles and expert knowledge, and
the concept extends to any multi-sided marketplace. These examples are just scratching the surface of the full potential of the cryptoeconomy. Similar to how the internet and,
subsequently, the smartphone provided platforms for now common use cases such as social media and ride sharing, we are early in the evolution of the cryptoeconomy and just
beginning to realize its full transformative potential.
OurOpportunity
Crypto has the potential to be as revolutionary and widely adopted as the internet. The unique properties of crypto assets naturally position them as digital alternatives to store of
value analogs such as gold, enable the creation of an internet-based financial system, and provide a development platform for applications that are unimaginable today. These
markets and asset classes collectively represent hundreds of trillions of dollars of value today.
Similar to the early days of the internet, this evolution will take time, but we expect the cryptoeconomy to expand into the mainstream and touch every individual and business
around the world in the coming decades. While we are still in the early stages of adoption, the market value of exchange-traded crypto assets was already approximately $782 billion
as of December 31, 2020. Our objective is to drive the growth of the overall cryptoeconomy by serving the needs of all consumers who manage their financial lives on a mobile device,
and every institution – large or small – that embraces the emerging internet of value.
Today, we have approximately 43 million retail users and 7,000 institutional customers across 100 countries, and work with nearly 115,000 ecosystem partners. We expect our
customer base to grow alongside the ecosystem we serve as we continue to support more asset classes and add more products to our platform. Our objective is to bring crypto-based
financial services to anyone with a smartphone, a population of approximately 3.5 billion people today.
126
OurPlatform
We have developed a complementary suite of products and services that are designed to meet the distinct needs of our customers as they transact in the cryptoeconomy. All of
our customer-facing products and services are powered by a robust backend technology system that enables us to develop, launch, and market scalable new products and services.
Our customers – retail users, institutions, and ecosystem partners – come together on our platform to create a powerful flywheel for our business.
Retail users and institutions come to Coinbase to discover and access the cryptoeconomy because our platform is safe, trusted, and easy to use. Expanding the depth and
breadth of crypto assets that we support drives growth in transactions and assets on our platform, and enhances liquidity, in turn attracting more retail users and institutions. Our
superior scale enables ecosystem partners such as asset issuers, merchants, and application developers to connect with millions of customers participating in the cryptoeconomy
around the world. As customers and activity increase, we develop a deeper understanding of each customer’s needs, allowing us to intelligently design, develop, and launch new
innovative products. These products enhance the value of our platform, in turn attracting more customers and driving transactions, assets, and liquidity in a virtuous cycle.
Crypto asset markets are natively digital, real-time, and operate globally on a 24/7/365 basis. The “always on” nature of the cryptoeconomy demands a more scalable and higher
throughput technical architecture. Our proprietary platform is purpose-built to support the unique demands of the cryptoeconomy, and is built on top of modern technology designed
specifically to address the unique engineering, cybersecurity, compliance, and usability challenges of emerging blockchain technology, while seamlessly connecting to legacy
technology and financial systems. This infrastructure is highly extensible and investments we have made in platform-level capabilities allow us to quickly launch new products and
services that accelerate our flywheel.
15+ native blockchain integrations and counting
We have developed custom technology and processes to directly integrate with over 15blockchain protocols and efficiently support new protocols. Each protocol has a unique
design, with differences in characteristics such as its consensus mechanism and security model, and requires in-depth research and
127
specific expertise both for the initial integration and ongoing monitoring as transactions are recorded on the public blockchain. Our experience allows us to swiftly adapt to updates in
the blockchain protocol, or “forks,” safely support new products like staking, and creatively reduce fees for our customers through strategies like batching transactions. These
integrations also enable us to quickly expand our suite of products and services – connecting with a protocol once allows us to list the native crypto asset for trading and also offer a
variety of products and services unique to the cryptoeconomy across our platform.
Further, technical standards for particular crypto assets or “tokens”' have developed and once we support a particular standard, we are able to support other crypto assets based
on that standard. For example, Ethereum is a popular protocol with its own native crypto asset. The ERC-20 technical standard defines a common list of rules for tokens built on
Ethereum, commonly referred to as ERC-20 tokens. We directly integrate with the Ethereum blockchain and support the ERC-20 technical standard, enabling us to quickly and
securely support a range of ERC-20 tokens such as Compound, USDC, and Basic Attention Token.
Advanced cybersecurity and cryptography technology
Safely securing digital forms of value presents distinct challenges relative to securing analog assets. From a security standpoint, crypto assets are often viewed as bearer assets
and possession of the private key (akin to a “password”) generally determines who controls a crypto asset. Protecting private keys from unwarranted access and theft is critically
important, as once the private key is taken, in most circumstances, control over the crypto asset is gone. We have pioneered industry-leading standards for managing private
cryptographic keys and use sophisticated cybersecurity technologies such as multi-party computation to safeguard a wide range of crypto assets. We leverage data and machine
learning to proactively identify and prevent potential exploits. These investments enable us to secure idle crypto assets in cold storage (offline and disconnected from the internet)
while also offering customers the ability to quickly and safely move funds in and out of blockchain protocols.
Proprietary crypto compliance infrastructure
In addition to robust know-your-customer and anti-money laundering programs, we have built bespoke transaction monitoring systems to analyze crypto asset transactions in real-
time on the blockchain. This infrastructure allows us to quickly adapt to emerging threats in the cryptoeconomy, build scenarios and typologies around specific transaction types, and
gives us the flexibility to support new products and services.
Powerful product experiences
Investments in blockchain integrations, cybersecurity, and compliance infrastructure give us the ability to create unique product experiences that support our platform. For
example, our state-of-the-art platform is specifically built to support the global, always on crypto assets markets and offers a reliable and efficient marketplace for exchanging crypto
assets. Vertical integration with our technology platform gives us the ability to create unique product experiences for our customers that allow them to easily participate in technically
complex parts of the cryptoeconomy.
WhatSetsUsApart
We are a market leading brand exclusively focused on the cryptoeconomy
The cryptoeconomy is dynamic and rapidly evolving. Keeping pace with the breadth and depth of innovation in the cryptoeconomy requires focus.
We have and remain solely focused on building technology to power the cryptoeconomy since 2012. We have deep expertise in real-time distributed computing, novel consensus
mechanisms, smart contracts, cryptography, and native blockchain integrations that allow us to innovate with the industry. We
128
have invested heavily in the scarce talent required to safely power the cryptoeconomy and employ teams dedicated to blockchain research, operations, and development.
Our focus allows us to nimbly adapt to quickly shifting trends and support the growth of the industry. As the cryptoeconomy grows, our competitive advantage grows.
We have a trusted platform owing to our heritage of security and culture of regulatory compliance
We have made significant investments in regulatory compliance and cybersecurity to earn the trust of our customers. We are a financial technology provider that offers services to
customers in over 100 countries. We work with regulators and law enforcement agencies around the world to drive policy and practices favorable to the cryptoeconomy, and to ensure
we are licensed as appropriate under local law. We are proud to be one of the longest running crypto platforms where customers have not lost funds due to a security breach of the
platform, and we secure our customers’ funds with multiple layers of protection by employing what we believe to be the largest hot wallet crime program in the insurance market. We
are also licensed to engage in money transmission and virtual currency business in almost all U.S. states and we continue to pursue licensing in select jurisdictions internationally. As
of December 31, 2020, over 15% of our full-time employees were dedicated to legal, compliance, finance, and security.
We are the default starting place for new user journeys into the cryptoeconomy
Bitcoin was introduced in 2008 and found thousands of technically savvy early adopters, but navigating the complexity of acquiring Bitcoin required significant technical knowledge
that made it inaccessible to the average user.
We reduce the complexity of crypto by infusing usability at the core of each of our products and services. Our emphasis on intuitive product design has allowed us to become a
primary on ramp for customers’ journeys into the cryptoeconomy. This begins with our simple onboarding process that allows retail users to sign up and quickly purchase their first
crypto asset, and extends to new products and services that we launch to broaden access to the cryptoeconomy. Because of our approach, since inception over 90% of our retail
users had found us organically or through word-of-mouth.
We have significant scale, securely storing over $90 billion in total assets and we grow with our customers
Customers that start their journeys with us by investing and storing, grow with us as they experience the benefits of the open financial system by spending, staking, lending,
borrowing, and earning various crypto assets through Coinbase.
As of December 31, 2020, we stored and custodied over $90 billion in total fiat and crypto assets on behalf of our customers. The total value of crypto assets on our platform
represented approximately 11.1% of the total market capitalization of crypto assets as of December 31, 2020, an increase from 8.3% and 4.5% as of December 31, 2019 and
December 31, 2018, respectively. In addition, since inception, our customers have traded over $456 billion on our platform. Secure storage and investing serve as the bedrock of a
customer's relationship with the cryptoeconomy. We believe our market leading share of assets on our platform is a competitive advantage, and that we have a substantial opportunity
to build on our customer relationships by growing with our customers and offering a broader suite of products and services.
Our millions of customers also makes us a desirable partner for companies in our ecosystem such as asset issuers, developers, and merchants, that want to find and build
relationships with our retail users and institutions. This enables us to form favorable partnerships that underpin a subset of our products.
129
We have a robust technology platform that enables unique product experiences for our industry
We rapidly research, develop, and launch new products and features specifically for the cryptoeconomy. Our development agility is enabled by a highly scalable and extensible
technology platform that has been tailor-made to deal with the real-time, decentralized, global, and 24/7/365 nature of crypto asset markets.
Our investments in platform-level capabilities allow us to offer unique and differentiated product experiences for our industry. For example, institutions that store crypto assets
using our proprietary cold storage technology are able to trade directly on our platform, borrow against their crypto asset holdings as collateral, and actively participate in decentralized
networks without moving their holdings.
We operate a marketplace with one of the deepest pools of liquidity and a network effect
We have a deep pool of liquidity for exchanging a wide range of crypto assets. Our deep liquidity is supported by a healthy mix of retail and institutional activity, highlighting the
synergistic relationship and network effect between customers on our platform. Liquidity begets liquidity, and this advantage deepens as we continue to expand the breadth of crypto
assets that we support and attract new customers to our platform.
GrowthStrategy
Coinbase grows as the cryptoeconomy grows.
There is significant momentum driving nearly every aspect of economic activity to be represented and exchanged online. We live in a world that is increasingly global, digital
generations control a growing share of the world’s wealth, and each year we see more commerce happening online. Each of these secular trends supports the growth of the
cryptoeconomy and Coinbase.
More importantly, we feel we have a tremendous opportunity to actively drive our business by adding more customers, increasing the depth and breadth of crypto assets on our
platform, and introducing new, innovative products.
Add more customers
Any person or business with an internet connection that is looking to access or interact with the cryptoeconomy can be an active user and customer on our platform.
• Increase adoption and engagement with our products. We plan to increase communications to our millions of Verified Users by expanding touchpoints such as email and in-
app notifications to educate users about and drive engagement with our products and services. Education drives activity and monetization, and we plan to use these
touchpoints to offer customers new and existing products.
• Expand and accelerate retail user reach. We believe we have a strong opportunity to grow Monthly Transacting Users by increasing our investments in growth marketing,
broadening our position at the top of the customer acquisition funnel, and activating dormant Verified Users into MTUs. For the year ended December 31, 2020, we spent less
than 5% of net revenue on sales and marketing, and since inception, over 90% of our retail users had found us organically or through word-of-mouth, reflecting the strength of
our brand. We plan to make investments to efficiently drive retail user growth by expanding our marketing efforts across new and existing digital and offline channels.
• Enhanced institutional coverage and support. We have and continue to see growth with institutional customers. Verified institutions on our platform grew over 67% from
approximately 4,200 to 7,000 from December 31, 2019 to December 31, 2020. In addition, Assets on Platform
130
from institutions grew approximately 590% from about $6.5 billion to $44.8 billion over the same period. Institutions value trust and partners who can solve their often complex
business needs. To address this growing demand and better serve our institutional customers, we plan to expand our institutional customer coverage team to educate hedge
funds, corporate treasurers, family offices, and other institutions about the cryptoeconomy and our platform. We are also expanding our trading operations teams to provide a
comprehensive high touch support model for our large institutional customers.
• Grow our ecosystem relationships. Ecosystem partners are drawn to our platform for our products, scale, and distribution. We plan to attract new ecosystem partners and
better serve our existing partners’ needs through targeted community engagement and product development. We will build stronger relationships with the developer
community by holding and/or participating in developer conferences for builders in the cryptoeconomy. We will listen to the needs of the community and build technology for
the ecosystem, attracting developers to our platform.
• Increase payment methods. We will grow our customer base by continuing to improve access to our products and services. We will integrate with new local payment rails to
provide more opportunities for customers to convert between local fiat currencies like USD and GBP and crypto assets. For example, in 2019 through our partnership with
PayPal we enabled customers in the United States, United Kingdom, and Europe to transfer funds from Coinbase into their PayPal accounts.
• Expand Internationally. We serve customers in over 100 countries with a vast majority of our total revenue for the year ended December 31, 2020 generated from customers
in the United States (76%) and Europe (24%), where we support EUR and GBP deposits. We evaluate many factors when choosing to enter a new country, including market
opportunity, local bank partners, and the regulatory environment. We are expanding into additional countries to broaden local access to crypto assets and to increase our
market opportunity. We also believe we can leverage our strong brand to capture a higher market share outside of the United States, United Kingdom, and European Union in
the coming years.
Expand the depth and breadth of assets
Any asset or form of value can be represented as a crypto asset and be supported on our platform, subject to meeting our security, legal, and compliance requirements.
• Expand support for digitally native crypto assets. We will continue to safely support new crypto assets on our platform. We started in 2012 by enabling our customers to buy
and sell one crypto asset, Bitcoin. Today, we enable our customers to invest in over 45 and store over 90 crypto assets, and we plan to add support for new crypto assets
each quarter.
• Support native blockchain protocol features. We will continue to build support for new and novel features of blockchain protocols, enabling us to offer a broader suite of
financial services unique to the cryptoeconomy. Examples of protocol features include staking, on-chain governance, decentralized identity, and others unique to each
blockchain protocol.
• Tokenize new assets. Over time we expect to add other forms of crypto assets, such as security tokens, crypto assets that represent a traditional security. We will invest in
infrastructure and regulatory clarity to pave a path for the digitization of more traditional financial assets to help pave the path for new assets to be represented as crypto
assets.
Launch innovative products
Any known, and many yet to be created, financial and non-financial products can be built for the cryptoeconomy.
131
• Innovate to provide customers more opportunities to engage with crypto assets. Our goal is to become the primary financial account for our retail users and the one-stop shop
for institutions’ crypto asset investing needs. To achieve these goals, we are developing and launching innovative products and services across our platform to serve each
customer’s distinct needs. For example, in 2020 we launched support for post-trade credit to enable institutional customers to instantly invest in crypto assets without pre-
funding their trade. For retail users, we have added support for staking, offering our users a simple way to earn rewards on their crypto asset holdings.
• Expand partnerships. In 2019, in partnership with Visa we launched the Coinbase Card, a debit card for our U.K. and select European customers that allows them to spend
their crypto assets at any merchant who accepts Visa. We will look for additional partnerships to build and expand opportunities for our customers to engage in new crypto-
based financial transactions.
• Technology for ecosystem partners. Historically, financial intermediaries have provided, amongst other services, trust, identity verification, and payment functionality to
customers. DeFi allows peer-to-peer financial transactions without the need for centralized intermediaries. However, there remains a need for trust, identity verification,
payments, discovery, technology and services, and distribution to support these new products. We will accelerate innovation in the cryptoeconomy by building technology to
support the needs of our ecosystem partners, and enable them to connect and transact with customers without compromising the benefits of crypto. With foundational
infrastructure technology, developers can imagine, experiment, and create products that the world has never seen. Growing the cryptoeconomy ecosystem in turn helps grow
Coinbase. Examples of infrastructure technology include:
• Distribution. We will grow our Earn technology to further help asset issuers connect with our millions of retail users.
• Access and identity. We have an opportunity to leverage our large base of Verified Users to provide authentication and authorization services to ecosystem partners,
streamlining the login process for our customers.
• Developer toolkit. We will provide a suite of developer tools that make it easy for anyone to build applications that leverage crypto protocols, obtain information about
them (query), and write data such as transactions. Further, this may include code monitoring and reporting, alerts, blockchain data and analytics, and more tools to
make it easier to build for the cryptoeconomy.
• Payments. We can provide external-facing application programming interfaces, or APIs, to enable third-party developers to integrate buying and selling functionality
into their applications.
We are hard at work building our own suite of products and services. At the same time, we are also eagerly rooting for the best and brightest minds in the crypto space – both
inside and outside of Coinbase – to develop products and services that create meaningful customer value. We support the broader cryptoeconomy by investing in companies and
technologies through Coinbase Ventures, our venture capital arm. Through December 31, 2020, we had invested in over 100 companies. Our goal with these investments is to foster
the development and growth of the ecosystem, which we believe will in turn benefit Coinbase.
132
OurCustomers
Our goal is to provide an open, inclusive financial system for the world and our customers reflect this. We had approximately 43 million retail users, 7,000 institutions, and 115,000
ecosystem partners as of December 31, 2020. Our customers span continents and reside in over 100 countries.
Retail users
Our retail users are geographically and generationally diverse, demonstrating the reach and acceptance of Coinbase as a trusted provider to the cryptoeconomy. For the year
ended December 31, 2020, we had more than 43 million retail users. For the quarter ended December 31, 2020, 2.8 million were Monthly Transacting Users, an increase of
approximately 180% over the quarter ended December 31, 2019.
133
Institutions
Our institutional customers include hedge funds, principal trading firms, small to large financial institutions, family offices, and more recently, corporations who seek to allocate a
portion of their investment portfolio to crypto assets. As of December 31, 2020, we had 7,000 institutional customers on our platform.
Coinbase and One River
Institutions turn to Coinbase as their full-service partner for accessing crypto markets. For example, One River Asset Management, an innovative global macro investment
manager, selected Coinbase as its initial partner to acquire a large allocation of crypto assets in a matter of days. One River chose Coinbase because of our integrated solution that
marries custody, advanced trade execution, and prime services with our rigorous security standards, operational controls, and experienced trading and coverage teams who meet the
demands of large institutional clients.
Using the Coinbase suite of services for Institutions, Coinbase partnered with One River to execute a large and complex order over the course of five days. Our unified investing
experience provided the tools to execute the trade algorithmically, and supported by the Coinbase team, One River completed the order without moving the market. Once acquired,
these assets benefit from secure storage within our trusted Store product which provides a leading cold storage custody solution.
135
Ecosystem partners
The crypto ecosystem has experienced rapid growth and we expect it to continue to quickly evolve. Though it started with Bitcoin, today over 50 unique blockchain protocols
support more than 7,500 crypto assets and we have seen a proliferation of developers and projects innovating in the space. Today, our ecosystem partners include businesses who
seek to build their own products and services or distribute those products and services through our platform. Examples of our early ecosystem partners include:
• Developers building new blockchain protocols.
• Developers building applications that leverage blockchain protocols.
• Creators of new tokens on these protocols.
• Merchant partners who are seeing business value in accepting these tokens as new forms of payment for their businesses.
• Organizations and financial institutions who use our Coinbase Analytics technology to monitor blockchain transactions for a variety of use cases such as compliance.
Coinbase and Compound
DeFi protocols are an important and rapidly growing component of the cryptoeconomy, and a substantial business opportunity for us. DeFi seeks to revolutionize financial services
by establishing open, intermediary-free infrastructure for complex transactions. We have invested in building relationships with DeFi developers, and recently, we piloted a “Day 1
Launch” program to holistically support new crypto assets related to these protocols.
Compound is an autonomous interest rate protocol that allows users to supply and borrow digital assets at interest rates derived purely based on supply and demand. Today,
hundreds of thousands of users leverage Compound to earn interest on billions in digital assets, including over $700 million in USDC as of December 31, 2020. Compound is owned
and managed by a decentralized community of holders of the Compound Governance Token, or COMP, which was distributed in mid-2020.
Our relationship with Compound began in 2018 when Coinbase Ventures invested in Compound Labs, Inc., the DeFi pioneer behind the Compound protocol. Coinbase was also
an early adopter of Compound, supplying USDC liquidity to the protocol in 2019 and allowing Coinbase Wallet users to access Compound directly starting in early 2020.
Through our Day 1 Launch program, we facilitated Compound’s transition to decentralized governance in June 2020. The program highlights our ability to support new and
innovative protocol developers while also driving key business metrics for Coinbase. For Compound, the program provided:
• Trading support for COMP through our Invest product, yielding over $1 billion in matched Trading Volume on our exchange through December 31, 2020.
• Custody support for COMP through our Store product, including the ability for holders to participate directly in protocol governance without moving COMP, leading to over
$500 million in COMP Assets on Platform as of December 31, 2020.
• Education regarding Compound with an Earn campaign through our Distribute product, introducing over one million unique Coinbase retail users to the protocol through
December 31, 2020.
137
OurProducts
We create powerful products and services for our customers using our proprietary technology infrastructure that has been purpose-built to meet the needs of the cryptoeconomy.
We enable our customers to safely and easily invest, spend, send and receive, store, save, stake, borrow, and lend, distribute, build, pay and more generally access and transact with
crypto assets.
139
Retail
Our retail products and services started from humble beginnings: a user-friendly application for sending and receiving Bitcoin. Over time, we grew to serve our customers’ crypto
asset investing needs by adding support for fiat currencies such as the U.S. dollar, British pound, and Euro, and by adding advanced trading features. More recently, we have added
products and services that address our customers’ broader financial needs beyond investing, such as spending crypto assets and earning rewards on their crypto asset holdings. We
continue to grow our retail products and services to further our goal of becoming the primary financial account for all retail users to access the cryptoeconomy.
• Invest. Our secure, easy-to-use retail interface makes it simple to invest in crypto by buying and selling over 45 crypto assets. We enable our retail users to buy or sell crypto
assets with the U.S. dollar, Euro, British pound, Canadian dollar, and Singapore dollar in over 40 countries, which we call fiat-to-crypto trading. Our Invest product for retail
users facilitates trades on our platform, adding volume from retail users to our order books. In addition, we offer the ability to trade one crypto asset for another crypto asset,
which we call crypto-to-crypto trading, in over 100 countries. We charge a fee when customers buy, sell, or convert crypto assets in either a fiat-to-crypto or crypto-to-crypto
trade. Lastly, our separately managed retail software product, Coinbase Wallet, allows users to self-custody assets off-platform and interact with the cryptoeconomy.
• Spend. In 2019, in partnership with Visa, we launched the Coinbase Card, a debit card funded by a customer’s crypto asset balance on Coinbase. The Coinbase Card allows
our retail users in the United Kingdom and select countries in Europe to quickly and easily swipe or tap to pay for a purchase at any merchant that accepts Visa. A transaction
is shown in local fiat currency (e.g., GBP) and this transaction sells crypto from the customer’s crypto wallet to fund the purchase. We earn a transaction fee based on the
transaction volume of each purchase.
• Send & Receive. Through our peer-to-peer payment products and services, retail users can send crypto assets to any user globally on our platform using their email, phone
number, or a crypto wallet address. Sending and receiving funds to and from another Coinbase retail user is usually free, with some sends incurring a small variable
transaction fee.
• Save. Providing opportunities for retail users to put their crypto asset investments to work and earn a yield, which we call rewards, has been a priority for us. All eligible retail
users are automatically opted into available rewards programs. Today, our Save product supports two stablecoins, USDC and Dai, crypto assets that track the value of the
U.S. dollar.
• USDC. Retail users can earn rewards for holding USDC balances on our platform. USDC is issued by Circle and each USDC is backed 1:1 by a U.S. dollar. We earn
interest on the U.S. dollars backing USDC and share a portion of that interest in the form of a reward with our customers. We issue the reward to retail users and
rewards are recorded in transaction expense within our consolidated statement of operations.
• Dai. Retail users also earn rewards for holding Dai, a decentralized crypto asset that attempts to maintain a value of one U.S. dollar for each Dai, in their Coinbase
account. Unlike a traditional savings account where interest is earned monthly, users receive their first Dai reward within five business days, then every day following.
Users always maintain control of their funds – their Dai stays in their accounts and can be withdrawn instantly at any time. The reward is paid out through the
underlying protocols established by the MakerDAO network. We earn a commission on the Dai reward that is paid out to the user, which is recorded in subscription
and services revenue within our consolidated statement of operations.
• Stake. Certain blockchain protocols, such as Tezos, rely on staking, an alternative way to validate blockchain transactions. Network participants can designate a certain
amount of their crypto assets on the network as a stake (similar to a security deposit) to validate transactions and get rewarded in kind from the network. Today, staking crypto
assets is a technical challenge for most users. Staking independently requires a participant to run their own hardware, software, and maintain close to 100% up-time. We
provide a service known as "Delegated Proof of Stake,"
141
which reduces the complexities of staking and allows our retail users to maintain full ownership of their crypto assets while earning staking rewards. In return, we earn a
commission on all staking rewards received.
• Borrow & Lend. We allow our U.S. retail users to borrow against and lend their crypto asset portfolios. Our first product is a portfolio-backed loan: a flexible, non-purpose 12-
month term loan that allows retail users to borrow U.S. dollars using their crypto assets as collateral. Secured by their investment portfolio, customers can use the line of credit
to access U.S. dollars while maintaining a “hodl” investing strategy. Over time, we plan to offer our retail users the ability to opt into lending their crypto assets to earn a
passive return on their long term investments.
142
Institutions
We are building a “one-stop shop” for institutions to participate in the cryptoeconomy.
• Invest. Our institutional customers are data driven, want to be fully informed about the crypto market, and want to invest on their own terms. We help them achieve their goals
with our brokerage and crypto trading products which offer advanced trading features, real-time market data, different transaction order types, and smart order routing
capabilities to help customers achieve the best price on their trades. We also operate a crypto platform that aggregates and matches buy and sell orders for a number of
crypto assets. Advanced market makers and other brokers often trade directly on the marketplace. For execution of complex trades, our institutional customers can use our
over-the-counter, or OTC, trading desk, which offers white-glove service by a member of our trading operations team. We offer volume-based pricing and charge a transaction
fee for every matched trade.
• Send & Receive. We offer send and receive services to our institutions on the same terms that we provide to our retail users.
• Store. The number one concern for institutions is the safe storage of their crypto assets, and we address this concern with a highly secure cold storage solution made
available through our U.S. qualified custodian, which offers institutional grade audits, governance, digital key management, and physical security. Securely storing crypto
assets is critically important as crypto assets can be viewed from a security standpoint as bearer assets, that is assets that can potentially be accessed (and thus stolen) from
anywhere. This is a uniquely difficult problem to solve for the cryptoeconomy and we have, and continue, to make significant investments in developing a best-in-class security
program. Our solution is vertically integrated with our investing platform, providing institutions with access to liquidity and trading services – a true one-stop shop for investing
in crypto assets. We support over 90 crypto assets for trading and/or custody and continue to add support for new crypto assets. We charge a fee based on the total assets
stored in custody on our platform.
• Stake. We offer delegated proof of stake services for supported proof of stake crypto assets, and similar to our retail users, earn a commission on staking rewards received.
• Borrow & Lend. We have begun to offer credit-based products and services to offer institutional customers access to liquidity for their hedging, speculation, and working
capital needs.
• Post-trade credit. The crypto asset market is active 24/7/365 and trades settle instantaneously. Customers typically need to pre-fund their account and maintain fiat or
crypto assets on the platform in order to participate in the market. We introduced post-trade credit whereby we advance funds and settle on behalf of credit eligible
customers, removing a key point of friction by allowing customers to instantly trade on credit and settle within a few days.
144
Ecosystem partners
The cryptoeconomy is a young and quickly growing industry. Similar to the early days of the internet, infrastructure and technology are critical to support the growth of a vibrant
ecosystem. In the same way that Android powered an entire developer community, we are building technology to empower and support developers in the cryptoeconomy. Our goal is
to solve our ecosystem partners’ diverse problems, including a lack of distribution, trust and usability, and the availability of easy-to-use and scalable infrastructure. The growth and
success of our ecosystem partners directly drives the growth of the cryptoeconomy, which in turn benefits Coinbase.
• Distribute. With over 43 million Verified Users, we have a large audience of crypto enthusiasts on our platform. Asset issuers engage with our customers through our learn and
earn technology where we distribute educational videos to our retail users to learn about new crypto assets and applications. In exchange for completing a task, such as
watching the video or downloading an app, retail users can earn some of the crypto asset that they learned about. We earn a commission based on the value of crypto assets
that are distributed to our users. We believe we will have more opportunities to allow ecosystem partners to connect with our customer base and monetize that engagement.
• Build. While we are hard at work developing products and services for our retail users and institutions, we also offer infrastructure technology and services to empower current
and future builders of the cryptoeconomy. Examples include:
• Coinbase Analytics: A blockchain analytics tool that relies solely on publicly available blockchain data, to meet our regulatory requirements and protect our customers’
funds. We license this tool to law enforcement and financial institutions to monitor blockchain transactions. As a firm rule, we never share customer personal
information with third parties.
• Rosetta: A tool that makes it easier for developers to build applications that work across different blockchains. Rosetta has broad applicability for developers in the
cryptoeconomy. Instead of writing custom parsing for every blockchain, applications can use a blockchain’s Rosetta implementation to read on-chain data and
construct transactions in a standard format, minimizing development and simplifying maintenance.
• USDC: We are a member of the Centre Consortium, a group co-founded by Coinbase and Circle to support USDC, a crypto asset that represents and is backed 1:1
by a U.S. dollar. USDC is issued by Circle. We support our own internal products as well as ecosystem partners by creating technology that allows developers to build
with USDC, such as payment APIs.
• Pay. We build technology to enable businesses to connect to the cryptoeconomy. Coinbase Commerce is a platform that helps merchants anywhere in the world accept
cryptocurrency payments in a fully decentralized way. Our WalletLink API helps DeFi app, or “DApp", developers connect to and easily accept payments from mobile crypto
wallets.
Our products and services for ecosystem partners represent an emerging growth opportunity and we believe there is a tremendous opportunity to support the development of the
cryptoeconomy through additional technology and distribution for our ecosystem partners.
146
Competition
The cryptoeconomy is highly fragmented, quickly evolving, and competitive.
By combining the best of crypto and traditional finance, we believe that we are well-positioned to execute on our growth strategy, enable the cryptoeconomy, and achieve our
mission of creating an open financial system for the world.
However, we do face significant competition from parties ranging from large, established financial incumbents to smaller, early stage financial technology providers and companies
native to the cryptoeconomy, such as decentralized exchanges. Further, though we operate in regulated markets, some of our competitors have not or actively do not adhere to the
same standards of regulation as we do. Because of our comprehensive suite of products and services, some of our competitors may also be our customers, and we believe in the
benefits of ‘coopetition’ at these early stages of the cryptoeconomy’s development.
For retail users, we compete with traditional financial technology and brokerage firms like Square, Robinhood, and PayPal, who have recently introduced crypto products and
services. These companies have varying business models and focus areas and offer an overlapping, but limited, feature set, which includes buying and selling a subset of the crypto
assets supported on our platform. In some cases, users who purchase through these platforms own the economic interest in a given crypto asset, but not the underlying asset itself,
and therefore cannot use the asset to interact with the broader cryptoeconomy. We also compete with a number of companies that solely focus on the crypto market and have varying
degrees of regulatory adherence, such as Binance.
For institutions, we primarily compete with other crypto-focused companies and a few traditional financial incumbents that offer point or siloed solutions that are limited in scope.
We differentiate ourselves through our cohesive ecosystem of products and services that address the distinct needs of our customers, our full stack technology platform that is
purpose-built for the cryptoeconomy, significant investments in regulatory compliance and licensure, advanced cryptography and security expertise, and our emphasis on accessibility,
trust, and ease of use. Our ability to quickly and continuously innovate to support additional blockchains, provide products and services to our customers that are native to the
cryptoeconomy, such as staking and governance, and launch additional products and services further separates us from our competition.
This market is growing quickly and we expect that we will face competition from new entrants in the future that may increase competition in the markets we operate.
CultureandEmployees
Powering the cryptoeconomy is no small task. Our employees join Coinbase to put a dent in the universe, advance the cryptoeconomy, and help create economic freedom for
millions of people around the world.
Our employees are passionate about creating new products and services with technology. We hire entrepreneurs who are comfortable with ambiguity and thrive by innovating –
driving our culture of repeatable innovation. We work in small teams who are empowered to create and rapidly execute toward ideas. When the creative moment strikes, we embrace
efficient execution and adhere to robust security and compliance programs. However, we try not to let big company practices impede our speed to market. Our culture has and will
evolve but, at our core, we strive to:
• Attract top talent in every seat.
• Play as a championship team.
• Be candid and kind.
148
• Focus on our customers.
• Foster repeatable innovation.
• Act like owners.
We believe that allowing our employees to work in the location that best suits them provides us access to a large talent pool and a sustained advantage in hiring and retaining
employees in the United States, as well as in the United Kingdom, Ireland, Germany, Canada, Japan, Singapore, and the Philippines.
We are committed to diversity – in background, skill set, and perspective – which is business critical to ensuring we can continue to innovate and bring new products into the world
to serve the broadest base of customers. We are also committed to inclusion, which to us means ensuring all employees have opportunities to learn, grow, develop, and perform the
best work of their lives. And, most importantly, we are committed to belonging, such that all our employees feel they are a meaningful part of Coinbase and they matter.
As of December 31, 2020, we had 1,249 employees, of which over 40% were dedicated to engineering, product, or design roles. None of our employees are represented by a
labor organization or are a party to a collective bargaining arrangement. We work to identify, attract, and retain employees who are aligned with and will help us progress with our
mission, and we seek to provide competitive cash and equity compensation. We believe we have a good relationship with our employees and our unique, strong culture differentiates
us and is a key driver of business success.
Facilities
We are a remote-first company, meaning that for the vast majority of roles, our employees have the option to work remotely. As a result of this strategy, we do not maintain a
corporate headquarters, but do maintain physical offices in major cities around the world for purposes of collaboration and team building. We currently lease facilities in San Francisco,
California; Redwood City, California; New York City, New York; Portland, Oregon; London, United Kingdom; Tokyo, Japan; Dublin, Ireland; Berlin, Germany; Manila, Philippines; and
Singapore and may lease office space in additional cities where we find a future concentration of employees.
We believe that our facilities are adequate to meet our needs for the immediate future, and that, should we need additional physical office space, suitable additional space will be
available in the future.
CorporatePhilanthropy
At the core of our mission is the philosophy that all people should have access to a more fair, accessible, efficient, and transparent financial system to support economic freedom.
This philosophy extends to how we engage with our communities. We have subscribed to the Pledge 1% and to fulfill our intent under the Pledge 1% campaign, in April 2020, our
board of directors approved the reservation of up to 2,295,766 shares of Class A common stock that we may issue, over a period of ten years, pursuant to warrants to purchase
shares of our Class A common stock in connection with our philanthropic endeavors. As of December 31, 2020, our board of directors had approved the issuance of a warrant
exercisable for an aggregate of 229,577 shares of our Class A common stock at an exercise price of $0.00001 per share to fulfill our intent under the Pledge 1% campaign.
StateofRegulation
We operate globally in a complex and rapidly evolving regulatory environment and are subject to a wide range of laws and regulations enacted by U.S. federal, state, and local
and foreign governments, and regulatory authorities. We play a leadership role in driving innovative industry-wide solutions to new regulations. For example, we devote resources to
solving interoperability issues amongst virtual asset service providers to ensure compliance with the Travel Rule under the BSA. In addition, we are a
149
founding member of the Crypto Rating Council, a member-owned and operated organization whose purpose is to assess whether any given crypto asset, or whether the development,
issuance, and use of such asset, have characteristics that make it more or less likely to implicate U.S. federal securities laws.
The breadth of laws, rules, and regulations we are subject to include financial services and banking, consumer protection, money transmission, virtual currency, stored value and
prepaid access, electronic payments, payment services, securities, commodities, and unclaimed property, as well as bespoke digital asset and cryptocurrency laws that have been
promulgated in some jurisdictions. These laws, rules, and regulations evolve frequently and may be modified, interpreted, and applied in an inconsistent manner from one jurisdiction
to another, and may conflict with one another. Moreover, the complexity and evolving nature of our business and the significant uncertainty surrounding the regulation of the
cryptoeconomy, requires us to exercise our judgment as to whether certain laws, rules, and regulations apply to us, and it is possible that regulators may disagree with our
conclusions. We are not regulated as a federal bank regulated by the Office of the Comptroller of the Currency or a CFTC-regulated futures commission merchant, designated
contract market, or derivatives clearing organization. In addition, our crypto asset exchange is not an SEC-regulated national securities exchange or alternative trading system.
Globally, we are subject to increasingly strict legal and regulatory requirements relating to the detection and prevention of countering terrorist financing, anti-money laundering,
fraud, and other illicit activity, the regulation of competition, economic and trade sanctions, privacy, cybersecurity, information security, and data protection. These descriptions are not
exhaustive, and these laws, regulations and rules (and the interpretations thereof) frequently change and are increasing in number.
The laws and regulations to which we are subject, including those pertaining to digital assets and crypto assets, are rapidly evolving and increasing in scope. Therefore, we
monitor these areas closely and invest significant resources in our legal, compliance, product, and engineering teams to ensure our business practices evolve to help us comply with
the current laws, regulations, and legal standards to which we are subject, as well as to plan and prepare for changes in interpretations thereof, as well as additional laws, regulations
and legal standards that are introduced in the future.
Anti-money laundering and counter-terrorist financing
We are subject to various anti-money laundering and counter-terrorist financing laws, including the BSA in the United States, and similar laws and regulations abroad. In the
United States, as a money services business registered with FinCEN, the BSA requires us to among other things, develop, implement, and maintain a risk-based anti-money
laundering program, provide an anti-money laundering-related training program, report suspicious activities and transactions to FinCEN, comply with certain reporting and
recordkeeping requirements, and collect and maintain information about our customers. In addition, the BSA requires us to comply with certain customer due diligence requirements
as part of our anti-money laundering obligations, including developing risk-based policies, procedures, and internal controls reasonably designed to verify a customer’s identity. Many
states and other countries impose similar and, in some cases, more stringent requirements related to anti-money laundering and counter-terrorist financing. We have implemented a
compliance program designed to prevent our platform from being used to facilitate money laundering, terrorist financing, and other illicit activity in countries, or with persons or entities,
included on designated lists promulgated by OFAC and equivalent foreign authorities. Our compliance program includes policies, procedures, reporting protocols, and internal
controls, and is designed to address legal and regulatory requirements as well as to assist us in managing risks associated with money laundering and terrorist financing. Anti-money
laundering regulations are constantly evolving and vary from jurisdiction-to-jurisdiction. We continuously monitor our compliance with anti-money laundering and counter-terrorist
financing regulations and industry standards and implement policies, procedures, and controls in light of the most current legal requirements.
In the United States, we are registered as a money services business with FinCEN and have obtained licenses to operate as a money transmitter or its equivalent in a number of
states where such licenses are required, as well as in the District of Columbia and Puerto Rico. We have also obtained a BitLicense from
150
the NYDFS. As a registered money services business, a licensed money transmitter, and an entity subject to BitLicense compliance requirements, we are also subject to the BSA and
laws and regulations related to the detection and prevention of money laundering and terrorist financing.
Money transmission, stored value, and virtual currency business activity
In the United States, we have obtained licenses to operate as a money transmitter or its equivalent in the states where such licenses are required, as well as in the District of
Columbia and Puerto Rico. In addition, we have obtained a BitLicense from the NYDFS. As a licensed money transmitter and an entity subject to the BitLicense regulatory regime, we
are subject to, among other things, the BSA, restrictions and requirements with respect to the investment of customer funds and use and safeguarding of customer funds and crypto
assets, and bonding, net worth, customer notice and disclosure, reporting and recordkeeping requirements applicable to the company, as well as control persons and inspection and
examination by state regulatory agencies. These state licensing laws also cover matters such as regulatory approval of controlling shareholders, directors, and senior management of
the licensed entity.
New York state trust company
Our subsidiary, Coinbase Custody Trust Company, LLC, operates as a New York State-chartered limited purpose trust company, which is subject to regulation, examination, and
supervision by the NYDFS. NYDFS regulations impose various compliance requirements including, without limitation, operational limitations related to the nature of crypto assets we
can hold under custody, capital requirements, BSA and anti-money laundering program requirements, affiliate transaction limitations, and notice and reporting requirements.
Electronic money and payment institution
We serve our customers through Electronic Money Institutions authorized by the U.K. Financial Conduct Authority and the Central Bank of Ireland. We comply with rules and
regulations applicable to the European financial services industry, including those related to funds management, corporate governance, anti-money laundering, disclosure, reporting,
and inspection. We are, or may be, subject to banking-related regulations in other countries now or in the future related to our role in the financial industry.
Economic and trade sanctions
We are required to comply with economic and trade sanctions administered by the United States, the E.U., relevant E.U. member states, and other jurisdictions in which we
operate. Economic and trade sanctions programs administered by OFAC and by certain foreign jurisdictions prohibit or restrict transactions to or from (or dealings with or involving)
certain countries, regions, governments, and in certain circumstances, specified individuals and entities such as narcotics traffickers, terrorists, and terrorist organizations, as well as
certain digital currency addresses.
Securities
In recent years, the SEC and U.S. state securities regulators have stated that certain digital assets may be classified as securities under U.S. federal and state securities laws -
however, there has not been definitive guidance on this point. A number of enforcement actions and regulatory proceedings have since been initiated against digital assets and their
developers and proponents. Several foreign governments have also issued similar warnings cautioning that digital assets may be deemed to be securities under the laws of their
jurisdictions.
We have established policies and practices to evaluate each crypto asset we consider for listing or for storage and are a founding member of the Crypto Rating Council.
151
Broker-Dealer
Our broker-dealer business, operated by Coinbase Capital Markets, is registered with the SEC as a broker-dealer under the Exchange Act and in the states in which it conducts
business. It is also a member and subject to the rules of FINRA. In addition, we own and operate Coinbase Securities, an SEC-registered alternative trading system. All of our broker-
dealer and alternative trading system activities are subject to regulation, examination, investigation, and disciplinary action by the SEC, FINRA, and state securities regulators, as well
as other governmental authorities and self-regulatory organizations with which they are registered or licensed or of which they are a member.
Commodities and derivatives
The CFTC has stated and CFTC enforcement actions have confirmed that at least some crypto assets, including Bitcoin, fall within the definition of a “commodity” under the U.S.
Commodities Exchange Act of 1936, or CEA. Under the CEA, the CFTC has broad enforcement authority to police market manipulation and fraud in spot crypto asset markets. We
are subject to such authority with respect to improper trading on our platform. In addition, CFTC regulations and CFTC oversight and enforcement authority apply with respect to
futures, swaps, other derivative products, and certain retail leveraged commodity transactions involving crypto assets, including the markets on which these products trade.
Separately, security-based swaps are subject to SEC regulation and oversight. In general, we seek to ensure that crypto asset transactions on our platform do not constitute futures,
swaps, security-based swaps, other derivative products, or retail leveraged commodity transactions. Given our novel business model and uncertainty regarding application of some of
these laws and regulations, we may become subject to regulatory scrutiny or legal challenge with respect to our compliance with these requirements.
Prohibitions on bribery and anti-corruption
We are subject to regulations imposed by the FCPA in the United States and similar laws in other countries, such as the Bribery Act 2010 in the United Kingdom, which generally
prohibit companies and those acting on their behalf from making improper payments to foreign government officials for the purpose of obtaining or retaining business. Some of these
laws, such as the Bribery Act, also prohibit improper payments between private entities and persons.
Privacy and protection of user data
We are subject to a number of laws, rules, directives, and regulations relating to the collection, use, retention, security, processing, and transfer of personally identifiable
information about our customers and employees in the countries where we operate. Our business relies on the processing of personal data in many jurisdictions and the movement of
data across national borders. As a result, much of the personal data that we process, which may include certain financial information associated with individuals, is regulated by
multiple privacy and data protection laws and, in some cases, the privacy and data protection laws of multiple jurisdictions. In many cases, these laws apply not only to third-party
transactions, but also to transfers of information between or among us, our subsidiaries, and other parties with which we have commercial relationships.
Consumer protection
The Federal Trade Commission, or FTC, the Consumer Financial Protection Bureau, or CFPB, and other U.S. federal, state, and local and foreign regulatory agencies regulate
financial products, including money transfer services related to remittance or peer-to-peer transfers. These agencies, as well as certain other governmental bodies, in particular state
attorneys general, have broad consumer protection mandates and discretion in enforcing consumer protection laws, including matters related to unfair or deceptive, and, in the case of
the CFPB, abusive, acts or practices, or UDAAPs, and they promulgate, interpret, and enforce rules and regulations that affect our business. For example, all persons offering or
providing financial services or products to consumers in the United States, directly or indirectly, can be subject to enforcement actions related to the prohibition of UDAAPs. The CFPB
has enforcement
152
authority to prevent an entity that offers or provides consumer financial services or products or a service provider in the United States from committing or engaging in UDAAPs,
including the ability to engage in joint investigations with other agencies, issue subpoenas and civil investigative demands, conduct hearings and adjudication proceedings, commence
a civil action, grant relief (e.g., limit activities or functions; rescission of contracts), and refer matters for criminal proceedings.
Escheatment and unclaimed property regulations
We are subject to unclaimed property laws in the United States and in other jurisdictions where we operate. These laws require us to turn over to certain government authorities
the property of others held by us that has been unclaimed for a specified period of time, including airdropped tokens and forked crypto assets. We hold property subject to unclaimed
property laws, and we have an ongoing program designed to help us comply with these laws. However, there is significant regulatory uncertainty with how states and foreign
jurisdictions treat crypto assets under unclaimed property rules.
Lending law
We originate secured consumer and commercial loans in certain states in the United States. As a result, we are subject to certain federal laws, including: the Truth-in-Lending Act
and its implementing Regulation Z, which require creditors to provide consumers with uniform information regarding the terms of their loan and credit transactions; the Equal Credit
Opportunity Act and its implementing Regulation B, which prohibits creditors from discriminating on the basis of race, color, sex, age, religion, national origin, marital status, the fact
that all or part of an applicant’s income derives from public assistance, or the fact that the applicant has exercised any right under the federal Consumer Credit Protection Act; the Fair
Credit Reporting Act, and its implementing Regulation V administered by the CFPB, which imposes disclosure requirements on creditors who take adverse action on credit
applications based on information contained in a credit report; and the Fair Debt Collection Practices Act, which imposes guidelines and limitations on the conduct of debt collectors in
connection with the collection of consumer debts. Our lending activities are also subject to various state lending laws with respect to lending activities within such state. These state
lending laws may be enforced by state attorneys general, state financial regulators, and private litigants, among others.
We are also subject to and seek to comply with other state and federal laws and regulations applicable to consumer and commercial lending, including additional requirements
relating to loan disclosure, credit discrimination, credit reporting, debt collection, interest rate restrictions, and UDAAPs. These laws and regulations may be enforced by state financial
regulators, state attorneys general, the CFPB, and private litigants, among others. Given our novel business model and uncertainty regarding application of some of these laws and
regulations, particularly laws prohibiting UDAAPs, we may become subject to regulatory scrutiny or legal challenge with respect to our compliance with these requirements.
Interchange fees
Interchange fees associated with four-party payments systems are being reviewed or challenged in various jurisdictions. For example, in the E.U., the Multilateral Interchange Fee
Regulation caps interchange fees for credit and debit card payments and provides for business rules to be complied with by any company dealing with card transactions, including us.
As a result, the fees that we collect in certain jurisdictions may become the subject of regulatory challenge.
Association and network rules
The bylaws and agreements between clearing house participants and bankcard companies impose specific responsibilities and liabilities for issuers of debit cards. As the issuer of
the Coinbase Card, we are required to comply with the appropriate National Automated Clearing House Association, or NACHA, bylaws, operating rules, and agreements, as well as
card network rules and guidelines. Additional new products and services that we offer may also impose additional obligations on us to comply with NACHA and card network
obligations related to preventing fraud, money laundering, and IT security breaches.
153
IntellectualProperty
The protection of our technology and intellectual property is an important aspect of our business. We rely upon a combination of patents, trademarks, trade secrets, copyrights,
confidentiality procedures, contractual commitments, and other legal rights to establish and protect our intellectual property. We generally enter into agreements with our employees
and consultants that contain confidentiality provisions to control access to, and invention or work product assignment provisions to clarify ownership of, our proprietary information. We
may also in the future agree to license our patents to third parties as part of various patent pools and open patent projects.
As of December 31, 2020, we held 21 issued U.S. patents and had 86 U.S. patent applications pending. We also held one issued patent and five patent applications pending in
foreign jurisdictions, as well as six foreign applications pending pursuant to the Patent Cooperation Treaty. Our U.S. issued patents expire between 2035 and 2040. As of December
31, 2020, we held 14 registered trademarks in the United States, including Coinbase, and also held 82 registered trademarks in foreign jurisdictions. We also had 20 pending
trademark applications in the United States, as well as 40 pending trademark applications in foreign jurisdictions. We continually review our development efforts to assess the
existence and patentability of new intellectual property. We intend to continue to file additional patent applications with respect to our technology and trademark applications with
respect to our brands.
Intellectual property laws, procedures, and restrictions provide only limited protection and any of our intellectual property rights may be challenged, invalidated, circumvented,
infringed, or misappropriated. Further, the laws of certain countries do not protect proprietary rights to the same extent as the laws of the United States, and, therefore, in certain
jurisdictions, we may be unable to protect our proprietary technology.
LegalProceedings
CFTC matter
In July 2017, the Enforcement Division of the CFTC commenced an investigation that has covered topics including a 2017 Ethereum market event, trades made in 2017 by one of
our then-current employees, the listing of Bitcoin Cash on our platform, and the design and operation of certain algorithmic functions related to liquidity management on our platform.
During the course of its investigation, the CFTC has issued subpoenas to us and certain of our directors, executive officers, and former employees, including testimony subpoenas,
and other requests for information. We are cooperating fully with the investigation.
Other
We are and, from time to time, we may become, subject to various legal proceedings and regulatory investigation matters that arise in the ordinary course of our business. We are
also subject to regulatory oversight by numerous state, federal, and foreign regulators. For example, in December 2019, the Attorney General for the State of California issued an
investigative subpoena for documents covering our business practices and policies, customer complaints, asset launches, and certain of our ongoing litigation. Similarly, in September
2020, the Attorney General for the State of Massachusetts issued an investigative subpoena for documents covering our business practices and policies, customer complaints, certain
transfers of crypto assets, and certain of our ongoing litigation. In addition, in December 2020, the SEC issued an investigative subpoena for documents and information about certain
of our customer programs and operations. And in January 2021, the California Department of Fair Employment and Housing issued an investigative subpoena for documents and
information related to certain of our business practices and policies.We intend to cooperate fully with such investigations. We are not presently a party to any other legal or regulatory
proceedings that in the opinion of our management, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating
results, financial condition, or cash flows.
154
MANAGEMENT
ExecutiveOfficersandDirectors
The following table provides information regarding our executive officers and directors as of January 31, 2021:
Name Age Position(s)
Executive Officers
Brian Armstrong 38 Chief Executive Officer
Surojit Chatterjee 46 Chief Product Officer
Emilie Choi 42 President and Chief Operating Officer
Paul Grewal 49 Chief Legal Officer
Alesia J. Haas 44 Chief Financial Officer
Non-Employee Directors
Marc L. Andreessen
49
Director
Frederick Ernest Ehrsam III 32 Director
Kathryn Haun 46 Director
Kelly Kramer 53 Director
Gokul Rajaram 46 Director
Fred Wilson 59 Director
__________________
(1) Member of the audit and compliance committee.
(2) Member of the compensation committee.
(3) Member of the nominating and corporate governance committee.
Executive officers
Brian Armstrong is our co-founder and has served as our Chief Executive Officer and a member of our board of directors since our inception in May 2012. Before our founding, Mr.
Armstrong served as a software engineer at Airbnb, Inc., an online marketplace company, from May 2011 to June 2012. From August 2003 to May 2012, Mr. Armstrong served as the
founder and Chief Executive Officer of Universitytutor.com, an online tutoring directory and a subsidiary of Johnson Educational Technologies LLC. Mr. Armstrong also previously
served as a consultant for the enterprise risk management division at Deloitte & Touche LLP, an accounting and consulting firm, from July 2005 to November 2005. In January 2020,
Mr. Armstrong founded ResearchHub Technologies, Inc., a scientific research development platform, where he currently serves as Chief Executive Officer and a member of the board
of directors. Mr. Armstrong holds a B.A. in Computer Science and Economics and an M.S. in Computer Science from Rice University. We believe Mr. Armstrong is qualified to serve
on our board of directors because of the historical knowledge, operational expertise, leadership, and continuity that he brings to our board of directors as our co-founder and Chief
Executive Officer.
Surojit Chatterjee has served as our Chief Product Officer since February 2020. From February 2017 to February 2020, Mr. Chatterjee served as Vice President of Product
Management for Google Shopping at Google LLC, a multinational technology company and a subsidiary of Alphabet, Inc., a holding company. Mr. Chatterjee served as Senior Vice
President and Head of Product at Flipkart Internet Private Limited, an e-commerce company, from October 2015 to February 2017. Prior to Flipkart, Mr. Chatterjee held various
positions at Google, including Global Head of Product, Mobile Search Ads and AdSense for Search and Senior Product Manager, Mobile Search Ads, and served as Senior Product
Manager at Symantec Corporation. Mr. Chatterjee holds a B. Tech in Computer Science and Engineering from the Indian Institute of Technology, Kharagpur, India, an M.S. in
Computer Science from the State University of New York at Buffalo, and an M.B.A from the MIT Sloan School of Management.
(1)
(2)(3)
(1)
(2)
(1)(2)(3)
155
Emilie Choi has served as our Chief Operating Officer since June 2019 and our President since November 2020. Ms. Choi previously served as our Vice President of Business,
Data and International, from March 2018 to June 2019. From December 2009 to March 2018, Ms. Choi served as the Vice President and Head of Corporate Development for LinkedIn
Corporation, a professional networking site and, following its acquisition in December 2016, a subsidiary of Microsoft Corporation, a software company. From August 2007 to
December 2009, Ms. Choi served in various positions at Warner Bros. Entertainment Inc., a mass media and entertainment company, including as Director of Digital Business
Strategy and Operations and Manager of Corporate Business Development and Strategy. Ms. Choi currently serves as a member of the board of directors of Naspers Limited, a global
internet group, Prosus N.V., the international internet assets division of Naspers Limited, and ZipRecruiter, Inc., a jobs marketplace. Ms. Choi holds a B.A. in Economics from the
Johns Hopkins University and an M.B.A from the Wharton School at the University of Pennsylvania.
Paul Grewal has served as our Chief Legal Officer since August 2020. Prior to joining us, Mr. Grewal served as Vice President and Deputy General Counsel of Facebook, Inc., a
social media company, from June 2016 to August 2020. From December 2010 to June 2016, Mr. Grewal served as a U.S. Magistrate Judge for the U.S. District Court of the Northern
District of California. Mr. Grewal was previously a partner at Howrey LLP and served as a Judicial Law Clerk for the U.S. Court of Appeals for the Federal Circuit and the U.S. District
Court for the Northern District of Ohio. Mr. Grewal currently serves as a member of the board of directors of Epiq Systems, Inc., a global legal services company. Mr. Grewal holds a
S.B. in Civil and Environmental Engineering from the Massachusetts Institute of Technology and a J.D. from the University of Chicago Law School.
Alesia J. Haas has served as our Chief Financial Officer since April 2018. Prior to joining us, Ms. Haas served as the Chief Financial Officer for Sculptor Capital Management, Inc.
(formerly Och Ziff Capital Management Group LLC), a global institutional alternative asset manager, from December 2016 to April 2018. Prior to that, Ms. Haas served in various
leadership positions at OneWest Bank, N.A., a commercial bank, from March 2009 until shortly after its acquisition by CIT Group Inc. in December 2015, including most recently as its
Chief Financial Officer from January 2013 until the acquisition. Ms. Haas currently serves as a member of the board of directors of ANGI Homeservices Inc., an internet services
company, and previously served as a member of the board of directors of Sears Holding Corp., a retail holding company, from February 2016 to December 2016. Ms. Haas holds a
B.S. in Business Administration from California Polytechnic State University, San Luis Obispo.
Non-employee directors
Marc L. Andreessen has served as a member of our board of directors since December 2020. Mr. Andreessen is a co-founder and has been a general partner of Andreessen
Horowitz, a venture capital firm, since July 2009. Previously, Mr. Andreessen co-founded and served as the Chairman of the board of directors of Opsware, Inc. (formerly known as
Loudcloud Inc.), a software company, from September 1999 until its acquisition by Hewlett-Packard Company, an information technology company, in September 2007. Prior to that
time, Mr. Andreessen served as Chief Technology Officer of America Online, Inc., an Internet services company, during a portion of 1999. Mr. Andreessen also co-founded Netscape
Communications Corporation, a software company, serving in various positions, including Chief Technology Officer and Executive Vice President of Products from April 1994 until it
was acquired by America Online in March 1999. Mr. Andreessen has served as a member of the board of directors of Facebook, Inc., a social networking company, since June 2008.
Mr. Andreessen also currently serves on the board of directors of several privately held companies. Mr. Andreessen previously served on the boards of directors of eBay Inc., an e-
commerce corporation, from September 2008 to October 2014, Hewlett-Packard Company, an information technology company, from September 2009 to October 2015, and Hewlett
Packard Enterprise Company, an enterprise information technology company, from November 2015 to April 2018. Mr. Andreessen holds a B.S. in Computer Science from the
University of Illinois at Urbana-Champaign. We believe that Mr. Andreessen is qualified to serve as a member of our board of directors because of his extensive leadership and
business experience with the venture capital
156
and technology industries, as well as his service on the boards of directors of other privately and publicly held companies.
Frederick Ernest Ehrsam III is our co-founder and has served as a member of our board of directors since March 2013. Since June 2018, Mr. Ehrsam has served as co-founder
and a Managing Partner at Paradigm, a crypto-focused investment firm. From November 2012 to January 2017, Mr. Ehrsam served as our President. Prior to our founding, Mr.
Ehrsam was a foreign exchange trader at The Goldman Sachs Group, Inc., a multinational investment bank and financial services company, from July 2010 to June 2012. Mr. Ehrsam
holds a B.S. in Computer Science and Economics from Duke University. We believe Mr. Ehrsam is qualified to serve on our board of directors because of the historical knowledge,
operational expertise, leadership, and continuity that he brings to our board of directors as our co-founder as well as his understanding of the market dynamics and developments
within the crypto asset industry.
Kathryn Haun has served as a member of our board of directors since May 2017. Since June 2018, Ms. Haun has served as a general partner at Andreessen Horowitz, a venture
capital firm. Ms. Haun has also been a lecturer in management at the Stanford University Graduate School of Business since December 2017 and a lecturer in law at the Stanford Law
School since January 2016. From September 2006 to May 2017, Ms. Haun held several key positions at the U.S. Department of Justice, including Assistant U.S. Attorney & Digital
Currency Coordinator, Counselor to the Attorney General, and Counsel to the Assistant Attorney General for National Security. Prior to that, Ms. Haun was an attorney at Sidley Austin
LLP, a law firm, from 2001 to 2006, and clerked for Supreme Court Justice Anthony Kennedy from 2004 to 2005. Ms. Haun is a lifetime member of the Council on Foreign Relations.
Ms. Haun holds a B.A. Summa Cum Laude in International Relations from Boston University and a J.D. with Honors from Stanford Law School. We believe Ms. Haun is qualified to
serve as a member of our board of directors because of her deep understanding of the cryptocurrency market and the regulatory issues related thereto, and her experience in
investing in and advising technology companies.
Kelly A. Kramer has served as a member of our board of directors since December 2020. From January 2015 to December 2020, Ms. Kramer served as the Executive Vice
President and Chief Financial Officer of Cisco Systems, Inc., a worldwide technology company. Prior to that, from January 2012 to January 2015, Ms. Kramer served in various
finance roles at Cisco, including Senior Vice President, Corporate Finance and Senior Vice President, Business Technology and Operations Finance. Prior to Cisco, Ms. Kramer
served in various finance roles at GE Healthcare Systems, GE Healthcare Diagnostic Imaging, and GE Healthcare Biosciences, including Vice President and Chief Financial Officer of
GE Healthcare Systems. Ms. Kramer has served on the board of directors of Gilead Sciences, Inc., a biopharmaceutical company, since August 2016, and on the board of directors of
Snowflake Inc., a cloud-based data-warehousing company, since January 2020. Ms. Kramer also currently serves on the board of directors of a nonprofit organization. Ms. Kramer
holds a B.S. in Mathematics from the Purdue University. We believe Ms. Kramer is qualified to serve as a member of our board of directors because of her extensive financial
expertise and management experience.
Gokul Rajaram has served as a member of our board of directors since August 2020. Since November 2019, Mr. Rajaram has served on the executive team of DoorDash, Inc., an
on-demand prepared food delivery service. From July 2013 to October 2019, Mr. Rajaram held several key positions, including Caviar Lead and Register Lead, at Square, Inc., a
financial technology company. Prior to Square, Mr. Rajaram served as Product Director of Ads at Facebook, Inc., a social media company, from August 2010 to June 2013. Mr.
Rajaram was Co-Founder and Chief Executive Officer of Chai Labs Inc., a semantic technology startup, from December 2007 until it was acquired by Facebook in September 2010.
From January 2003 to November 2007, Mr. Rajaram served as Product Management Director for Google AdSense, an online advertising company. Mr. Rajaram previously served as
a member of the board of directors of RetailMeNot, Inc., a multinational company that maintained a collection of coupon websites, from October 2013 until it was acquired by Harland
Clarke Holdings Corp., a payment and marketing services firm, in May 2017. Mr. Rajaram has served as a member of the board of directors of Trade Desk Inc., a global technology
company focused on the digital advertising space, since May 2018, and as a member of the board of directors of Pinterest, Inc., an image sharing and social media service, since
157
February 2020. Mr. Rajaram also currently serves on the board of directors of a privately held company. Mr. Rajaram holds a B. Tech in Computer Science from the Indian Institute of
Technology Kanpur, a M.S. in Computer Science from the University of Texas, and an M.B.A. from the MIT Sloan School of Management. We believe Mr. Rajaram is qualified to serve
as a member of our board of directors because of his extensive experience working with the management teams of a number of privately and publicly held companies and his
knowledge and extensive experience with product development.
Fred Wilson has served as a member of our board of directors since January 2017. Since June 2003, Mr. Wilson has served as a Partner at Union Square Ventures, a venture
capital firm. Mr. Wilson has also served as a Managing Partner at Flatiron Partners since June 1996. Mr. Wilson has served as a member of the board of directors of Etsy, Inc., an e-
commerce website, since June 2007 and has served as the Chairman of the board of directors of Etsy since October 2014. Mr. Wilson also currently serves on the boards of directors
of several privately held companies. Mr. Wilson holds a S.B. in Mechanical Engineering from the Massachusetts Institute of Technology and an M.B.A from the Wharton School at the
University of Pennsylvania. We believe Mr. Wilson is qualified to serve as a member of our board of directors because of his extensive experience in the venture capital industry, his
knowledge of technology companies, and his deep understanding of our business and operations as one of our early investors.
AppointmentofOfficers
Our executive officers are appointed by, and serve at the discretion of, our board of directors. There are no family relationships among any of our executive officers or directors.
BoardofDirectorsComposition
Our board of directors currently consists of seven members with two vacancies. Pursuant to our amended and restated certificate of incorporation, as in effect prior to the
effectiveness of the registration statement of which this prospectus forms a part, and amended and restated voting agreement, Mses. Haun and Kramer and Messrs. Armstrong,
Andreessen, Ehrsam, Rajaram, and Wilson have been designated to serve as members of our board of directors. Pursuant to our amended and restated voting agreement (i) the
seats occupied by Messrs. Armstrong and Ehrsam are elected by the holders of a majority of our Class A common stock and Class B common stock, voting exclusively and as a
separate series, as the designees of the holders of our Class A common stock and Class B common stock and the holders our FF convertible preferred stock who provide services to
us as officers; (ii) the seat occupied by Mr. Wilson is elected by the holders of a majority of our Series A convertible preferred stock, voting exclusively and as a separate series, as the
designee of the holders of a majority of our Series A convertible preferred stock held by Union Square Ventures 2012 Fund, L.P.; (iii) the seat occupied by Mr. Rajaram is elected by
the holders of a majority of our Series C convertible preferred stock, voting exclusively and as a separate series, as the designee of the holders of a majority of our Series C
convertible preferred stock held by DFJ Growth 2013, L.P.; and (iv) the seats occupied by Mses. Haun and Kramer, and Mr. Andreessen, and the two vacant seats, are elected by the
holders of a majority of our outstanding capital stock, excluding the Series E convertible preferred stock, voting together as a single class on an as-converted basis, with Ms. Haun as
the designee of her fellow directors, Ms. Kramer as the designee of Mr. Armstrong, and Mr. Andreessen, and the two directors who fill the currently vacant seats, as the designees of
the nominating and corporate governance committee.
The provisions of our amended and restated certificate of incorporation and the amended and restated voting agreement by which the directors are currently elected will terminate
shortly following the effectiveness of the registration statement of which this prospectus forms a part and there will be no contractual obligations regarding the election of our directors.
Each of our current directors will continue to serve until the election and qualification of his or her successor, or his or her earlier death, resignation, or removal.
158
ClassifiedBoardofDirectors
In accordance with our restated certificate of incorporation that will be effective shortly following the effectiveness of the registration statement of which this prospectus forms a
part, our board of directors will initially be divided into three classes with staggered three-year terms. Upon expiration of the term of a class of directors, directors for that class will be
elected for three-year terms at the annual meeting of stockholders in the year in which that term expires. As a result, only one class of directors will be elected at each annual meeting
of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. Each director’s term will continue until the election and qualification of his
or her successor, or his or her earlier death, resignation, or removal. Our directors will initially be divided among the three classes as follows:
• Class I directors, whose initial term will expire at the annual meeting of stockholders to be held in 2022, will consist of Frederick Ernest Ehrsam III and Fred Wilson;
• Class II directors, whose initial term will expire at the annual meeting of stockholders to be held in 2023, will consist of Kathryn Haun, Kelly A. Kramer, and Gokul Rajaram;
and
• Class III directors, whose initial term will expire at the annual meeting of stockholders to be held in 2024, will consist of Marc L. Andreessen and Brian Armstrong.
On the date on which our board of directors certifies that Mr. Armstrong and his affiliated entities hold a majority of the voting power of all the then-outstanding shares of our
capital stock (any such date referred to as a staggered board end date), we will no longer have a classified board of directors, and all directors will be elected for annual terms,
provided, however, that each director initially elected for a three-year term will serve the remainder of the term to which he or she was elected. If, following any staggered board end
date, Mr. Armstrong and his affiliated entities cease to hold a majority of the voting power of all the then-outstanding shares of our capital stock, our board of directors will revert to
being divided into three classes with staggered three-year terms as described above, until the subsequent staggered board end date. For additional information regarding the structure
of our board of directors, you should refer to our restated certificate of incorporation that will be effective shortly following the effectiveness of the registration statement and which is
included as an exhibit to the registration statement of which this prospectus forms a part.
Our restated certificate of incorporation and restated bylaws that will be effective shortly following the effectiveness of the registration statement of which this prospectus forms a
part, provide that only our board of directors may fill vacancies on our board. Further, our restated certificate of incorporation will provide that during periods in which our board of
directors is classified, any vacancy filled by our board of directors must be approved by the affirmative vote of all the directors then in office.
The classification of our board of directors may have the effect of delaying or preventing changes in our control or management. See the section titled “Description of Capital Stock
—Restated Certificate of Incorporation and Restated Bylaws Provisions” for additional information.
DirectorIndependence
Our Class A common stock will be listed on the Nasdaq Global Select Market. Under the rules of Nasdaq, independent directors must comprise a majority of a listed company’s
board of directors within a specified period of such company’s listing of its shares. In addition, rules require that, subject to specified exceptions, each member of a listed company’s
audit, compensation, and nominating and corporate governance committees be independent. Under Nasdaq rules, a director will only qualify as an “independent director” if, in the
opinion of that company’s board of directors, that person does not have a
159
relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act. In order to be considered independent for purposes of Rule
10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board
committee: (i) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or (ii) be an affiliated person of the
listed company or any of its subsidiaries. We intend to satisfy the audit committee independence requirements of Rule 10A-3 as of the effectiveness of the registration statement of
which this prospectus forms a part.
Our board of directors has undertaken a review of the independence of each director and considered whether each director has a material relationship with us that could
compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. As a result of this review, our board of directors determined that Mses. Haun
and Kramer and Messrs. Andreessen, Ehrsam, Rajaram, and Wilson are “independent directors” as defined under the applicable rules and regulations of the SEC and the listing
requirements and rules of Nasdaq. In making these determinations, our board of directors reviewed and discussed information provided by the directors and us with regard to each
director’s business and personal activities and current and prior relationships as they may relate to us and our management, including the beneficial ownership of our capital stock by
each non-employee director and the transactions involving them described in the section titled “Certain Relationships and Related-Party Transactions.”
CommitteesoftheBoardofDirectors
Our board of directors has established an audit and compliance committee, a compensation committee, and a nominating and corporate governance committee, each of which will
have the composition and responsibilities described below. Members serve on these committees until their resignation or until otherwise determined by our board of directors. Each
committee will operate under a written charter approved by our board of directors that satisfies the applicable rules of the SEC and the listing standards of Nasdaq. Copies of each
committee’s charter will be posted on the Investor Relations section of our website.
Audit and compliance committee
Our audit and compliance committee is comprised of Ms. Kramer and Messrs. Ehrsam and Wilson. Ms. Kramer is the chairperson of our audit and compliance committee. Ms.
Kramer and Messrs. Ehrsam and Wilson each meet the requirements for independence under the current Nasdaq listing standards and SEC rules and regulations. In addition, our
board of directors has determined that Ms. Kramer is an “audit committee financial expert” as defined in Item 407(d) of Regulation S-K promulgated under the Securities Act. This
designation does not impose on her any duties, obligations, or liabilities that are greater than are generally imposed on members of our audit and compliance committee and our board
of directors. Each member of our audit and compliance committee is financially literate. Our audit and compliance committee is directly responsible for, among other things:
• selecting a firm to serve as the independent registered public accounting firm to audit our consolidated financial statements;
• ensuring the independence of the independent registered public accounting firm;
• discussing the scope and results of the audit with the independent registered public accounting firm and reviewing, with management and that firm, our interim and year-end
operating results;
• establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters;
160
• considering the adequacy of our internal controls and internal audit function;
• inquiring about significant risks, reviewing our policies for risk assessment and risk management, including cybersecurity risks, and assessing the steps management has
taken to control these risks;
• reviewing and overseeing our policies related to compliance risks;
• reviewing related party transactions that are material or otherwise implicate disclosure requirements; and
• approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm.
Compensation committee
Our compensation committee is comprised of Ms. Haun and Messrs. Rajaram and Wilson. Mr. Wilson is the chairperson of our compensation committee. The composition of our
compensation committee meets the requirements for independence under the current Nasdaq listing standards and SEC rules and regulations. Each member of this committee is a
non-employee director, as defined in Rule 16b-3 promulgated under the Exchange Act. Our compensation committee is responsible for, among other things:
• reviewing and approving, or recommending that our board of directors approve, the compensation and the terms of any compensatory agreements of our executive officers;
• reviewing and recommending to our board of directors the compensation of our directors;
• administering our stock and equity incentive plans;
• reviewing and approving, or making recommendations to our board of directors with respect to, incentive compensation and equity plans; and
• establishing our overall compensation philosophy.
Nominating and corporate governance committee
Our nominating and corporate governance committee is comprised of Ms. Haun and Mr. Wilson. Ms. Haun is the chairperson of our nominating and corporate governance
committee. The composition of our nominating and corporate governance committee meets the requirements for independence under the current Nasdaq listing standards and SEC
rules and regulations. Our nominating and corporate governance committee is responsible for, among other things:
• identifying and recommending candidates for membership on our board of directors;
• recommending directors to serve on board committees;
• reviewing and recommending our corporate governance guidelines and policies;
• reviewing succession plans for senior management positions, including the chief executive officer;
• reviewing proposed waivers of the code of business conduct and ethics for directors, executive officers, and employees (with waivers for directors or executive officers to be
approved by the board of directors);
• evaluating, and overseeing the process of evaluating, the performance of our board of directors and individual directors; and
161
• advising our board of directors on corporate governance matters.
Board’sRoleinRiskOversight
Our board of directors is primarily responsible for overseeing our risk management processes. Our board of directors, as a whole, determines our appropriate level of risk,
assesses the specific risks that we face, and reviews management’s strategies for adequately mitigating and managing the identified risks. Although our board of directors administers
this risk management oversight function, the committees of our board of directors support our board of directors in discharging its oversight duties and address risks inherent in their
respective areas. The audit and compliance committee reviews our major financial risk exposures and the steps management has taken to monitor and control such exposures,
including our procedures and related policies with respect to risk assessment and risk management. Our audit and compliance committee also reviews matters relating to compliance,
cybersecurity, and security and reports to our board of directors regarding such matters. The compensation committee reviews risks and exposures associated with compensation
plans and programs. We believe this division of responsibilities is an effective approach for addressing the risks we face and that our board leadership structure supports this
approach.
BoardDiversity
Each year, our nominating and corporate governance committee will review, with the board of directors, the appropriate characteristics, skills, and experience required for the
board of directors as a whole and its individual members. In evaluating the suitability of individual candidates, our nominating and corporate governance committee will consider
factors including, without limitation, an individual’s character, integrity, judgment, potential conflicts of interest, other commitments, and diversity. While we have no formal policy
regarding board diversity for our board of directors as a whole nor for each individual member, the nominating and corporate governance committee does consider such factors as
gender, race, ethnicity and experience, area of expertise, as well as other individual attributes that contribute to the total diversity of viewpoints and experience represented on the
board of directors.
CodeofBusinessConductandEthics
In connection with this offering, our board of directors will adopt a code of business conduct and ethics that applies to all of our employees, officers, and directors. The full text of
our code of business conduct and ethics will be posted on the Investor Relations section of our website. The reference to our website address in this prospectus does not include or
incorporate by reference the information on our website into this prospectus. We intend to disclose future amendments to certain provisions of our code of business conduct and
ethics, or waivers of these provisions, on our website or in public filings.
CompensationCommitteeInterlocksandInsiderParticipation
None of the members of our compensation committee is or has been an officer or employee of our company. None of our executive officers currently serves, or during the year
ended December 31, 2020 served, as a member of the board of directors, or as a member of the compensation or similar committee, of any entity that has one or more executive
officers serving on our board of directors or compensation committee.
Non-EmployeeDirectorCompensation
The table below provides information regarding the total compensation of the non-employee members of our board of directors who served on our board of directors during the
year ended December 31, 2020. All compensation that we paid to Mr. Armstrong, our only employee director, is set forth in the table below in “Executive Compensation—2020
Summary Compensation Table.” Other than as set forth in the table and described more fully below, during the year ended December 31, 2020, we did not pay any fees to,
162
make any equity awards or non-equity awards to, or pay any other compensation to the non-employee members of our board of directors.
Name StockAwards Total
Marc L. Andreessen $ — $ —
Christopher V. Dodds* — —
Frederick Ernest Ehrsam III — —
Kathryn Haun 5,962,140 5,962,140
Kelly Kramer 637,093 637,093
Gokul Rajaram 637,093 637,093
Barry Schuler** — —
Fred Wilson — —
__________________
* Mr. Dodds resigned from our board of directors in December 2020.
** Mr. Schuler resigned from our board of directors in August 2020.
(1) The amounts reported represent the grant date fair value of the stock awards granted to our non-employee directors during fiscal 2020 as computed in accordance with FASB Accounting Standards Codification
Topic 718. The assumptions used in calculating the grant date fair value of the stock awards reported in the Stock Awards column are set forth in note 14 to our consolidated financial statements included
elsewhere in this prospectus. Note that the amounts reported in this column reflect the accounting cost for these stock awards and do not correspond to the actual economic value that may be received by our
non-employee directors from the stock awards.
(2) The following table sets forth information on the aggregate number of shares of our common stock underlying outstanding stock options and stock awards held by our non-employee directors as of December 31,
2020 and the aggregate number of unvested shares of our common stock underlying outstanding stock options and stock awards held by our non-employee directors as of December 31, 2020:
OptionAwards StockAwards
Name
NumberofSharesUnderlying
StockOptionsGrantedinthe
YearEndedDecember31,2020
NumberofSharesUnderlying
StockOptionsHeldasof
December31,2020
NumberofShares
UnderlyingUnvestedStock
OptionsHeldasofDecember
31,2020
NumberofSharesorUnits
GrantedintheYearEnded
December31,2020
NumberofSharesorUnits
ofStockThatHaveNot
VestedasofDecember31,
2020
Marc L. Andreessen — — — — —
Christopher V. Dodds — 33,750 — — —
Frederick Ernest Ehrsam III — — — — —
Kathryn Haun — 235,742 31,112 181,000 181,000
Kelly Kramer — — — 19,341 19,341
Gokul Rajaram — — — 19,341 19,341
Barry Schuler — — — — —
Fred Wilson — — — — —
________________
(1) The stock option for 33,750 shares of our Class B common stock is fully vested.
(2) The stock option for 266,854 shares of our Class B common stock vests monthly at the rate of 1/48th of the shares of our Class B common stock underlying the stock option following the May 17, 2017 vesting
commencement date, in each case subject to continued service. The stock option is early exercisable.
(3) The stock award for 181,000 shares of our Class A common settled in full on January 21, 2021.
(4) The stock award for 19,341 shares of our Class A common stock settles at the rate of one half of the shares of our Class A common stock underlying the stock award on the one year anniversary of the February
20, 2021 vesting commencement date and one eighth of the shares of our Class A common stock underlying the stock award on a quarterly basis thereafter.
(5) The stock award for 19,341 shares of our Class A common stock settles at the rate of one half of the shares of our Class A common stock underlying the stock award on the one year anniversary of the August
20, 2020 vesting commencement date and one eighth of the shares of our Class A common stock underlying the stock award on a quarterly basis thereafter.
In January 2021, we granted Ms. Haun a stock award for 19,341 shares of our Class A common stock as compensation for Ms. Haun’s continued service as a member of our
board of directors. The stock award is subject to the terms of the 2019 Plan and vests quarterly over two years at the rate of one eighth
(1)(2)
(1)
(2) (3)
(4)
(5)
163
of the shares of our Class A common stock underlying the stock award following the February 20, 2021 vesting commencement date, in each case subject to Ms. Haun’s continued
service.
Before this offering, we did not have a formal policy to provide any cash or equity compensation to our non-employee directors for their service on our board of directors or
committees of our board of directors. In connection with this offering, in February 2021, our board of directors approved the following non-employee director compensation program:
Non-Employee Director Equity Compensation
Following this offering, each non-employee director will be entitled to receive RSUs under our 2021 Plan.
Initial Award RSU Grant. Following the completion of this offering, each non-employee director appointed to our board of directors following this offering will be granted RSUs, or
the Initial Award RSUs, on the date of his or her appointment to our board of directors having an aggregate value of $350,000 (with such amount pro-rated based on the number of
days between the date of such non-employee director’s appointment and (i) the date of our first annual meeting of stockholders following the date of grant or (ii) to the extent that we
have not determined the date of the next annual meeting of stockholders on or before the date of grant, then the one-year anniversary of the most recently completed annual meeting
of our stockholders (or in the case of a non-employee director appointed to our board of directors prior to our 2022 annual meeting of stockholders, the one-year anniversary of the
effectiveness of the registration statement of which this prospectus forms a part)). The Initial Award RSUs will vest in equal quarterly installments over a period of three years from the
grant date, so long as the non-employee director continues to provide services to us through each such date. The Initial Award RSUs will fully vest upon the consummation of a
corporate transaction (as defined in the 2021 Plan).
If an individual is appointed as a non-employee director at an annual meeting of stockholders, he or she will be granted an Initial Award RSU in lieu of the Annual RSU Grant, as
described below.
Annual RSU Grant. On May 15, 2021 and thereafter on the date of each annual meeting of stockholders following the completion of this offering, each non-employee director who
is serving on our board of directors and will continue to serve on our board of directors following, May 15, 2021 or the date of such annual meeting will automatically be granted RSUs,
or the Annual RSUs, under our 2021 Plan having an aggregate value of $300,000. The Annual RSUs will vest in four equal quarterly installments from the date of grant, except that
the final installment will vest on the earlier of (i) the date of the next annual meeting of stockholders and (ii) the date that is one year following the Annual RSU grant date, in each case
so long as the non-employee director continues to provide services to us through such date. In addition, the Annual RSUs will fully vest upon the consummation of a corporate
transaction (as defined in the 2021 Plan).
Additional Annual RSU Grants. Following the completion of this offering, each non-employee director also will automatically be granted RSUs, or Additional Annual RSUs, under
our 2021 Plan having an aggregate value of the dollar amount set forth below, determined based on roles served as follows:
• General Board Service: $30,000
• Audit and Compliance Committee Chair: $35,000
• Audit and Compliance Committee Member: $20,000
• Compensation Committee Chair: $25,000
• Compensation Committee Member: $15,000
• Nominating and Corporate Governance Committee Chair: $25,000
164
• Nominating and Corporate Governance Committee Member: $15,000
Each Additional Annual RSU will vest in four equal quarterly installments from the date of grant, except that the final installment will vest on the earlier of (i) the date of the next
annual meeting of our stockholders and (ii) the date that is one year following the Additional Annual RSU Grant Date, in each case, so long as the non-employee director continues to
provide services to us through each such date. In addition, the Additional Annual RSUs will fully vest upon the consummation of a corporate transaction.
Employee directors will receive no cash compensation and no additional compensation for their service as a director.
Non-Employee Director Compensation Limits. No non-employee director may receive equity awards under our 2021 Plan with an aggregate grant date fair value (determined as
set forth in the 2021 Plan) that, when combined with cash compensation received for service as a non-employee director, exceeds $1,000,000 in a calendar year.
165
EXECUTIVECOMPENSATION
We ceased to be an emerging growth company on December 31, 2020. However we will continue to be treated as an emerging growth company for certain purposes and as such
we have opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies,” as such term is defined in the rules promulgated under the
Securities Act. This section provides an overview of the compensation awarded to, earned by, or paid to each individual who served as our principal executive officer during the year
ending December 31, 2020, and our next two most highly compensated executive officers in respect of their service to our company during the year ending December 31, 2020. We
refer to these individuals as our named executive officers. The compensation information disclosed herein for our three named executive officers is disclosed in accordance with SEC
requirements; such disclosure does not include the compensation for our other executive officers. Our named executive officers for the year ending December 31, 2020 who appear in
the 2020 Summary Compensation Table are:
• Brian Armstrong, Chief Executive Officer;
• Surojit Chatterjee, Chief Product Officer; and
• Paul Grewal, Chief Legal Officer.
2020SummaryCompensationTable
The amounts below represent the compensation awarded to or earned by or paid to our named executive officers for the year ended December 31, 2020:
NameandPrincipalPosition FiscalYear
Salary
($)
Bonus
($)
StockAwards
($)
OptionAwards
($)
AllOtherCompensation
($)
Total
($)
Brian Armstrong
Chief Executive Officer 2020
1,000,000
— —
56,670,000
1,802,256 59,472,256
Surojit Chatterjee
Chief Product Officer 2020 616,435 300,000 — 14,950,463 — 15,866,898
Paul Grewal
Chief Legal Officer 2020 209,519 100,000 7,601,630 10,106,430 — 18,017,579
__________________
(1) Messrs. Armstrong, Chatterjee, and Grewal may each elect to receive their salary, or a portion thereof, in the form of a crypto asset.
(2) The amounts reported reflect signing bonuses received by each of Messrs. Chatterjee and Grewal pursuant to their offer letters in connection with their commencement of employment. These payments are
described in greater detail in the section titled “—Executive Employment Agreements” below.
(3) The amounts reported represent the grant date fair value of the stock options and stock awards granted to our named executive officers under our 2019 Plan during 2020 as computed in accordance with FASB
Accounting Standards Codification Topic 718. The assumptions used in calculating the grant date fair value of the stock options and stock awards reported in the Option Awards and Stock Awards columns are
set forth in note 14 to our consolidated financial statements included elsewhere in this prospectus. Note that the amounts reported in this column reflect the accounting cost for these stock options and do not
correspond to the actual economic value that may be received by our named executive officers from the stock options.
(4) The amount reported represents (i) $17,165 in reimbursed legal fees incurred in connection with the negotiation of certain employment matters related to Mr. Armstrong, and (ii) $1,785,091 in costs related to
personal security measures for Mr. Armstrong. We view personal security expenses for Mr. Armstrong as reasonable business expenses due to a bona fide business-oriented security concern and not the receipt
of taxable personal benefits.
(5) Messrs. Chatterjee and Grewal joined us as our Chief Product Officer and Chief Legal Officer in February 2020 and August 2020, respectively. The amounts reported in this column reflect each of Messrs.
Chatterjee and Grewal’s salaries for the portion of their service during 2020.
EquityCompensation
From time to time, we have granted equity awards in the form of stock options to our named executive officers, which are generally subject to vesting based on each of our named
executive officer’s
(1) (2) (3) (3)
(4)
(5)
(5)
166
continued service with us. Each of our named executive officers currently holds outstanding stock options to purchase shares of our Class A common stock and Class B common
stock that were granted under our 2013 Plan or 2019 Plan, as set forth in the “—Outstanding Equity Awards at Year-End Table” below.
ExecutiveEmploymentArrangements
We have entered into an offer letter with Brian Armstrong and amended and restated offer letters with Surojit Chatterjee and Paul Grewal in February 2021. The foregoing offer
letters set forth the terms and conditions of employment for our named executive officers, including continued payment of such executive’s annual base salary, subject to periodic
review. The offer letters have no specific term and provide for at-will employment. We do not currently provide annual cash bonuses to our named executive officers.
Pursuant to Mr. Chatterjee’s amended and restated offer letter, he will continue to be eligible to receive any unpaid portion of the $1,000,000 signing advance set forth in his offer
letter, dated December 6, 2019, less any amounts paid prior to the date of Mr. Chatterjee’s amended and restated offer letter.
Pursuant to Mr. Grewal’s amended and restated offer letter, in the event that his employment with us is terminated (but not due to downsizing or layoff) within twelve months of the
first day of his employment start date, he agrees to repay the $100,000 signing bonus set forth in his offer letter, dated June 24, 2020, pro-rated with respect to the amount of time he
has been employed by us.
PotentialPaymentsuponTerminationandChangeofControl
Each of our officers, including our named executive officers, has also entered into a participation agreement pursuant to which he or she has become a beneficiary of our Change
of Control and Severance Policy, or the COC Policy. Pursuant to the COC Policy and their respective participation agreements, in the event that the named executive officer is
terminated without “cause” or resigns for “good reason” within three months before or 12 months following a “change of control” of the company (as such terms are defined in the COC
Policy), he or she will be entitled to: (i) an amount equal to twelve months of his or her base salary at the rate in effect immediately prior to such termination, payable in a cash lump-
sum, and (ii) to the extent the named executive officer timely elects to receive continued coverage under our group-healthcare plans, we will continue to pay the employer portion of
the participant’s premium payments for such continued coverage for a period ending on the earlier of (x) 12 months following the termination date and (y) the date that the named
executive officer becomes eligible for coverage under another employer’s plans. In addition, each of the named executive officer’s outstanding equity awards will become vested and
exercisable, as applicable, with respect to 100% of the underlying shares, with any performance criteria deemed achieved at the greater of 100% of target or actual projected
performance. All such severance payments and benefits are subject to each named executive officer’s execution of a general release of claims against us.
Additionally, in the event that our named executive officers are terminated without “cause” or resign for “good reason” outside of the period three months before or 12 months after
a “change of control” (as such terms are defined in the COC Policy), each of our named executive officers will be entitled to (i) an amount equal to six months of his or her base salary
at the rate in effect immediately prior to such termination, payable in a cash lump-sum and (ii) to the extent the named executive officer timely elects to receive continued coverage
under our group-healthcare plans, we will continue to pay the employer portion of the participant’s premium payments for such continued coverage for a period ending on the earlier of
(x) six months following the termination date and (y) the date that the named executive officer becomes eligible for coverage under another employer’s plans. All such severance
payments and benefits are subject to each named executive officer’s execution of a general release of claims against us.
167
OutstandingEquityAwardsatYear-EndTable
The following table sets forth information regarding outstanding equity awards held by our named executive officers as of December 31, 2020. For additional information regarding
incentive plan awards, please refer to “—Current and Prior Equity Plans” below.
OptionAwards StockAwards
Name
GrantDate
VestingCommencement
Date
NumberofSecurities
UnderlyingUnexercised
OptionsExercisable
(#)
NumberofSecurities
UnderlyingUnexercised
OptionsUnexercisable
(#)
EquityIncentivePlan
Awards:Numberof
SecuritiesUnderlying
UnexercisedUnearned
Options
(#)
OptionExercise
Price
($)
OptionExpiration
Date
NumberofShares
orUnitsofStock
ThatHaveNot
Vested
(#)
MarketValueof
SharesorUnits
ofStockThat
HaveNotVested
($)
Brian Armstrong 10/31/2019
8/11/2020
6/3/2019
—
2,753,924
—
—
—
—
9,293,911
18.71
23.46
10/30/2029
8/10/2030
—
—
—
—
Surojit Chatterjee 2/5/2020 2/3/2020 2,002,036 — — 18.71 2/4/2030 — —
Paul Grewal 9/21/2020
11/23/2020
12/29/2020
8/31/2020
8/31/2020
11/20/2020
653,726
261,605
—
—
—
—
—
—
—
26.26
28.71
—
9/20/2030
11/22/2030
—
—
—
230,772
—
—
7,601,630
__________________
(1) All of the outstanding stock option and stock awards were granted under the 2019 Plan and are for shares of Class A common stock.
(2) There was no public market for our Class A common stock as of December 31, 2020. The fair market value of our Class A common stock as of December 31, 2020, as determined by an independent valuation,
was $32.94 per share.
(3) Vests monthly at the rate of 1/48th of the shares of our Class A common stock underlying the stock option following the vesting commencement date, in each case subject to continued service.
(4) Subject to milestone vesting: (a) 34% of the shares of our Class A common stock underlying the stock option vest upon the Company Stock Price (as defined below) reaching $200 per share and (b) 13.2% of the
total shares underlying the stock option vest for each $40 increase in the Company Stock Price thereafter up to a maximum of $400, subject to certain adjustments and, in each case, subject to continued service
as our Chief Executive Officer. For purposes of this stock option, “Company Stock Price” shall mean the volume weighted average price of our Class A common stock as reported on The Nasdaq Global Select
Market for 60 consecutive trading days at any time during the term of the option.
(5) Vests with respect to 1/4th of the shares of our Class A common stock underlying the stock option on the one-year anniversary of the vesting commencement date and the remaining 3/4th of the shares
underlying the option vest in equal monthly installments over three years, in each case subject to continued service.
(6) Settles with respect to 1/4th of the shares of our Class A common stock underlying the stock award on the one-year anniversary of the vesting commencement date and the remaining 3/4th of the shares
underlying the award settle in equal quarterly installments over three years, in each case subject to continued service.
2020CEOPerformanceAward
In August 2020, the board of directors, with participation by every independent member of the board, granted the 2020 CEO Performance Award to Mr. Armstrong. We believe the
2020 CEO Performance award serves to align Mr. Armstrong’s interests with those of our stockholders by creating a strong and visible link between Mr. Armstrong’s incentives and
the company’s long-term performance.
The 2020 CEO Performance Award is comprised of a 10-year term stock option to purchase 9,293,911 shares of our Class A common stock, which was equivalent to 3.8% of the
issued and outstanding shares of our capital stock at the time of grant. The award has an exercise price of $23.46 per share, which the board of directors determined was equal to the
fair market value of our Class A common stock on the date of grant. The stock option is earned upon the achievement of performance conditions based on the Class A common stock
price targets set forth in the table below during the term of the stock option at any time following the effectiveness of this registration statement, based on the volume weighted
average price of our shares of Class A common stock as reported on the Nasdaq Global Select Market at or above the price target for 60 consecutive trading days at any time during
the term of the award, and upon certification by the compensation committee of the achievement of the stock price targets. Vesting may occur sequentially or concurrently. Except
under limited circumstances, Mr.
(1) (1)
(2)
(3)
(4)
(5)
(5)
(5)
(6)
168
Armstrong must continue to lead the company as our CEO, at the time each stock price target milestone is met in order for the corresponding tranche to vest.
We believe the performance conditions associated with the 2020 CEO Performance Award are extremely rigorous and appropriately align Mr. Armstrong’s incentives with the
interests of our stockholders. The award only begins vesting after approximately 750% stock price growth from the exercise price, and would not fully vest until approximately 1,600%
stock price growth.
ClassACommonStockPriceTarget($) PercentageofTotalOptionVested(%) RelativeSharePriceGrowth(%)
$200 34.0% ~750%
$240 13.2% ~925%
$280 13.2% ~1,000%
$320 13.2% ~1,265%
$360 13.2% ~1,435%
$400 13.2% ~1,600%
In the event of an acquisition (as defined in the stock option award agreement governing the 2020 CEO Performance Award) of the company, the stock price target milestones will
instead be based on the consideration received per share by holders of our Class A common stock in connection with the closing of the acquisition, without giving effect to any
contingent payments, effective immediately prior to the effective time of the acquisition transaction. The stock option award agreement governing the 2020 CEO Performance Award
supersedes any benefits Mr. Armstrong may otherwise be entitled to under the COC Policy with respect to the 2020 CEO Performance Award.
In the event of a termination by us without “cause,” due to Mr. Armstrong’s resignation for “good reason” or due to Mr. Armstrong’s death or “disability” (each as defined in the
stock option award agreement governing the 2020 CEO Performance Award) or in the event that we and Mr. Armstrong agree that he will serve as an employee and in the capacity of
an executive chairman (and not as CEO), a specified percentage of the unvested shares subject to the 2020 CEO Performance Award will remain outstanding and eligible to vest in
accordance with the stock price target milestones with such specified percentage dependent on the length of service between the grant date of the 2020 CEO Performance Award and
Mr. Armstrong’s service as the CEO of the company. In the event of a termination outside of these circumstances, all unvested shares at the time of the termination will be forfeited.
To the extent vested and exercisable, shares subject to the 2020 CEO Performance Award may be exercised by Mr. Armstrong until the earlier of seven years following his
termination, the expiration date of the 2020 CEO Performance Award, or an acquisition of the company.
Mr. Armstrong must hold any shares that he acquires pursuant to the 2020 CEO Performance Award for one year following the date on which such shares became vested or, if
earlier, upon an acquisition of the company, except to satisfy certain tax withholding obligations, or the 10-year term of the stock option.
The compensation committee does not anticipate making additional equity awards to Mr. Armstrong, although it reserves the authority to do so should it determine doing so would
be in the best interest of the company’s stockholders.
EmployeeBenefitPlans
We believe that our ability to grant equity-based awards is a valuable compensation tool that enables us to attract, retain, and motivate our employees, consultants, and directors
by aligning their financial interests with those of our stockholders. The principal features of our equity incentive plans are summarized below. Our compensation committee, or our
board of directors in place of the compensation committee, has authority to administer these plans. These summaries are qualified in their entirety by reference to the actual text of the
plans, which are filed as exhibits to the registration statement of which this prospectus forms a part.
169
CurrentandPriorEquityPlans
2013 stock plan
Our 2013 Stock Plan, or the 2013 Plan, was initially adopted by the board of directors of our subsidiary, Coinbase, Inc., and approved by stockholders in April 2013. The 2013
Plan was subsequently assumed by Coinbase Global, Inc. in connection with our restructuring in April 2014 whereby Coinbase, Inc. became a subsidiary of Coinbase Global, Inc., and
has been amended and restated from time to time. The 2013 Plan was terminated and succeeded by our 2019 Plan (described below) in July 2019. No awards were granted following
the termination of the 2013 Plan and awards outstanding as of such date continue to be subject to the terms and conditions of the 2013 Plan and their applicable award agreements
until such awards are exercised or until they terminate or expire by their terms.
Outstanding awards under the 2013 plan. As of December 31, 2020, (i) options to purchase 3,550,279 Class A shares of our common stock remained outstanding, with a
weighted-average exercise price of $17.38 per share and (ii) options to purchase 22,442,017 Class B shares of our common stock remained outstanding, with a weighted-average
exercise price of $3.34 per share. As of December 31, 2020, the foregoing included 65,903 shares of our Class B common stock and 5,090 shares of our Class A common stock
subject to repurchase pursuant to the early-exercise of stock options granted under the 2013 Plan.
2019 equity incentive plan
Our 2019 Equity Incentive Plan, or the 2019 Plan, was initially adopted by our board of directors and approved by our stockholders in July 2019, as a successor to our 2013 Plan.
We expect to terminate the 2019 Plan and will cease granting awards thereunder upon the effective date of our 2021 Equity Incentive Plan (described below), which is the date
immediately prior to the effective date of the registration statement of which this prospectus forms a part. Any outstanding awards will continue to be subject to the terms of the 2019
Plan and their applicable award agreements until such awards are exercised or until they terminate or expire by their terms.
Outstanding awards under the 2019 plan. As of December 31, 2020, we had 43,666,758 shares of our Class A common stock reserved for issuance pursuant to grants under our
2019 Plan of which 2,193,489 shares remained available for grant. As of December 31, 2020, options to purchase 37,230,658 shares of our Class A common stock remained
outstanding, with a weighted-average exercise price of $21.54 per share, and we had 3,765,760 shares of our Class A common stock outstanding subject to RSUs under our 2019
Plan. As of December 31, 2020, we had 192,768 shares of our Class A common stock outstanding following the early exercise of options granted under our 2019 Plan and that are
subject to repurchase.
Option terms. Options granted under the 2013 Plan and 2019 Plan, collectively the Prior Plans, include both (i) incentive stock options, intended to qualify for tax treatment under
Section 422 of the Internal Revenue Code of 1986, as amended, or the Code, which may be granted only to employees and (ii) nonqualified stock options, which may be granted to
our employees, directors, and consultants. Pursuant to the Prior Plans, options must be granted with a per share exercise price at least equal to the fair market value of each
underlying share as of the date of grant and the per share exercise price of incentive stock options granted to any individual who holds, directly or by attribution, more than ten percent
of the total combined voting power of all classes of our capital stock as of the date of grant must be at least 110% the fair market value of each underlying share as of the date of
grant.
Options granted under the Prior Plans generally vest subject to continued service. The administrator may provide for options to be exercised only as they vest or to be immediately
exercisable, with any shares issued on exercise being subject to our right of repurchase that lapses as the shares vest. In the event of a participant’s termination of service, an option
is generally exercisable, to the extent vested, for a period of 12 months in the case of termination due to the participant’s death or disability, or such longer or shorter period as the
administrator may provide, but in any event no later than the expiration date of
170
the stock option. Stock options generally terminate upon a participant’s termination of employment for cause. The maximum permitted term of options granted under our Prior Plans is
ten years from the date of grant, except that the maximum permitted term of incentive stock options granted to an individual who owns more than ten percent of the total combined
voting power of all classes of our capital stock as of the date of grant is five years.
Change of control. In the event that we are subject to a merger or other combination constituting a change of control as defined in each of the Prior Plans, outstanding awards
may be (i) continued by the company, if we are the surviving corporation; (ii) assumed by the surviving corporation or its parent; (iii) substituted by the surviving corporation or its
parent; (iv) the cancellation of such awards and a payment to the participants equal to the excess of the fair market value of the shares subject to such awards (as determined under
the respective plan), over the exercise price or purchase price for the shares subject to such awards, in cash, cash equivalents, or securities of the successor entity, or (v) cancelled
without payment of any consideration. Awards need not be treated in an identical manner and may be accelerated in full or in part in the discretion of the administrator.
Adjustments. In the event of a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or other change in our capital structure
affecting our shares of Class A common stock without consideration, proportional adjustments will, to the extent determined appropriate by the administrator, be made to (i) the
number of shares reserved for issuance under our 2019 Plan, and (ii) the exercise prices, number, and class of shares subject to outstanding awards under the Prior Plans, subject to
any required action by our board or our stockholders and compliance with applicable laws.
Exchange, repricing and buyout of awards. Under the 2019 Plan, the administrator may, at any time with the consent of the respective participants, issue new awards in exchange
for the surrender and cancellation of outstanding awards. Further, under the Prior Plans, the administrator may without stockholder approval (i) offer to exchange outstanding options
for options with a lower exercise price, cash, shares, or other property, or (ii) amend options to decrease the exercise price, subject to the terms of the Prior Plans.
Limited transferability. Unless otherwise determined by the administrator, awards under the Prior Plans generally may not be sold, pledged, assigned, hypothecated, transferred,
or disposed of in any manner other than by will, the laws of descent, and distribution.
2021 equity incentive plan
In February 2021, our board of directors and our stockholders approved our 2021 Equity Incentive Plan, or the 2021 Plan, as a successor to our 2019 Plan that will become
effective on the date immediately prior to the effectiveness of the registration statement of which this prospectus forms a part. The 2021 Plan authorizes the award of both incentive
stock options, which are intended to qualify for tax treatment under Section 422 of the Code, and nonqualified stock options, as well for the award of restricted stock awards, or RSAs,
stock appreciation rights, or SARs, restricted stock units, or RSUs, and performance and stock bonus awards. Pursuant to the 2021 Plan, incentive stock options may be granted only
to our employees. We may grant all other types of awards to our employees, directors, and consultants.
Shares reserved. We have initially reserved 31,047,869 shares of our Class A common stock, plus any reserved shares not issued or subject to outstanding grants under the 2019
Plan on the effective date of the 2021 Plan, for issuance pursuant to awards granted under our 2021 Plan. The number of shares reserved for issuance under our 2021 Plan will
increase automatically on January 1 of each of 2022 through 2031 by the number of shares equal to 5% of the aggregate number of outstanding shares of all classes of our common
stock (on an as-converted to common stock basis) as of the immediately preceding December 31, or a lesser number as may be determined by our compensation committee, or by
our board of directors acting in place of our compensation committee.
171
In addition, the shares set forth below will again be available for issuance pursuant to awards granted under our 2021 Plan:
• shares subject to options or SARs granted under our 2021 Plan that cease to be subject to the option or SAR for any reason other than exercise of the option or SAR;
• shares subject to awards granted under our 2021 Plan that are subsequently forfeited or repurchased by us at the original issue price;
• shares subject to awards granted under our 2021 Plan that otherwise terminate without such shares being issued;
• shares subject to awards granted under our 2021 Plan that are surrendered, cancelled, or exchanged for cash or a different award (or combination thereof);
• shares issuable upon the exercise of options or subject to other awards granted under our Prior Plans that cease to be subject to such options or other awards, by forfeiture or
otherwise, after the effective date of the 2021 Plan;
• shares subject to awards granted under our Prior Plans that are forfeited or repurchased by us at the original price after the effective date of the 2021 Plan; and
• shares subject to awards under our Prior Plans or our 2021 Plan that are used to pay the exercise price of an option or withheld to satisfy the tax withholding obligations
related to any award.
The shares of Class B common stock underlying awards granted under the 2013 Plan that are forfeited, canceled, or otherwise returned to the 2021 Plan pursuant to the
foregoing will be converted to shares of our Class A common stock before becoming available for grant and issuance under the 2021 Plan.
Administration. Our 2021 Plan will be administered by our compensation committee, or by our board of directors acting in place of our compensation committee. Subject to the
terms and conditions of the 2021 Plan, the administrator will have the authority, among other things, to select the persons to whom awards may be granted, construe, and interpret our
2021 Plan as well as to determine the terms of such awards and prescribe, amend, and rescind the rules and regulations relating to the plan or any award granted thereunder. The
2021 Plan provides that the administrator may delegate its authority, including the authority to grant awards, to one or more executive officers to the extent permitted by applicable
law, provided that awards granted to non-employee directors may only be determined by our board of directors.
Options. The 2021 Plan provides for the grant of both incentive stock options intended to qualify under Section 422 of the Code, and nonqualified stock options to purchase shares
of our Class A common stock at a stated exercise price. Incentive stock options may only be granted to employees, including officers and directors who are also employees. The
exercise price of stock options granted under the 2021 Plan must be at least equal to the fair market value of our Class A common stock on the date of grant. Incentive stock options
granted to an individual who holds, directly or by attribution, more than ten percent of the total combined voting power of all classes of our capital stock must have an exercise price of
at least 110% the fair market value of our Class A common stock on the date of grant.
Options may vest based on service or achievement of performance conditions, as determined by the administrator. The administrator may provide for options to be exercised only
as they vest or to be immediately exercisable, with any shares issued on exercise being subject to our right of repurchase that lapses as the shares vest. In the event of a participant’s
termination of service, subject to the terms of a participant’s employment or other agreement with us or any parent, subsidiary or affiliate, as applicable, an option is generally
exercisable, to the extent vested, for a period of three months in the case of
172
termination without cause (except due to a participant’s death or disability) and for a period of 12 months in the case of termination due to the participant’s death or disability, or such
longer or shorter period as the administrator may provide, including as necessary to give effect to any provision in an employment or other agreement with us or any parent, subsidiary
or affiliate, as applicable, but in any event no later than the expiration date of the stock option. Stock options generally terminate upon a participant’s termination of employment for
cause. The maximum term of options granted under our 2021 Plan is ten years from the date of grant, except that the maximum permitted term of incentive stock options granted to an
individual who holds, directly or by attribution, more than ten percent of the total combined voting power of all classes of our capital stock is five years from the date of grant.
Restricted stock awards. An RSA is an offer by us to grant or sell shares of our Class A common stock subject to restrictions, which may lapse based on the satisfaction of service
or achievement of performance conditions. The price, if any, of an RSA will be determined by the administrator. Holders of RSAs, unlike holders of options, will have the right to vote
and any dividends or distributions paid with respect to such shares be subject to the same vesting terms and other restrictions as the RSA and will be accrued and paid when the
vesting terms on such shares lapse. Unless otherwise determined by the administrator, or as provided in the participant’s employment or other agreement with us or any parent,
subsidiary or affiliate, as applicable, vesting will cease on the date the participant no longer provides services to us and unvested shares may be forfeited to or repurchased by us.
Stock appreciation rights. A SAR provides for a payment, in cash or shares of our Class A common stock (up to a specified maximum number of shares, if determined by the
administrator), to the participant based upon the difference between the fair market value of our Class A common stock on the date of exercise and a predetermined exercise price,
multiplied by the number of shares. The exercise price of a SAR must be at least the fair market value of a share of our Class A common stock on the date of grant. SARs may vest
based on service or achievement of performance conditions. No SAR may have a term that is longer than ten years from the date of grant.
Restricted stock units. RSUs represent the right to receive the value of shares of our Class A common stock at a specified date in the future and may be subject to vesting based
on service or achievement of performance conditions. RSUs may be settled in cash, shares of our common stock or a combination of both as soon as practicable following vesting or
on a later date subject to the terms of the 2021 Plan. No RSU may have a term that is longer than ten years from the date of grant.
Performance awards. Performance awards granted pursuant to the 2021 Plan may be in the form of a cash bonus, or an award of performance shares or performance units
denominated in shares of our Class A common stock that may be settled in cash, property, or by issuance of those shares, subject to the satisfaction or achievement of specified
performance conditions.
Stock bonus awards. A stock bonus award provides for payment in the form of cash, shares of our Class A common stock or a combination thereof, based on the fair market value
of shares subject to such award as determined by the administrator. The awards may be granted as consideration for services already rendered, or at the discretion of the
administrator, may be subject to vesting restrictions based on continued service or performance conditions.
Dividend equivalents rights. Dividend equivalent rights may be granted at the discretion of the administrator and represent the right to receive the value of dividends, if any, paid
by us in respect of the number of shares of our Class A common stock underlying an award. Dividend equivalent rights will be subject to the same vesting or performance conditions
as the underlying award and will be paid only when the underlying award becomes vested or may be deemed to have been reinvested by the company. Dividend equivalent rights, if
any, will be credited to participants in the form of additional whole shares.
Change of control. Our 2021 Plan provides that, in the event of a corporate transaction that constitutes a change of control of our company under the terms of the plan,
outstanding awards will be subject to the agreement evidencing the change of control, which need not treat all outstanding awards in
173
an identical manner, and may include one or more of the following: (i) the continuation of the outstanding awards; (ii) the assumption of the outstanding awards by the surviving
corporation or its parent; (iii) the substitution by the surviving corporation or its parent of new options or equity awards for the outstanding awards; (iv) the full or partial acceleration of
exercisability or vesting or lapse of the company’s right to repurchase or other terms of forfeiture and accelerated expiration of the award; or (v) the settlement of the full value of the
outstanding awards (whether or not then vested or exercisable) in cash, cash equivalents, or securities of the successor entity with a fair market value equal to the required amount,
as determined in accordance with the 2021 Plan, which payments may be deferred until the date or dates the award would have become exercisable or vested. Notwithstanding the
foregoing, upon a change of control the vesting of all awards granted to our non-employee directors will accelerate and such awards will become exercisable, to the extent applicable,
and vested in full immediately prior to the consummation of the change of control.
Adjustment. In the event of a change in the number of outstanding shares of our Class A common stock without consideration by reason of a stock dividend, extraordinary
dividend or distribution, recapitalization, stock split, reverse stock split, subdivision, combination, consolidation reclassification, spin-off or similar change in our capital structure,
proportional adjustments will be made to (i) the number and class of shares reserved for issuance under our 2021 Plan; (ii) the exercise prices, number, and class of shares subject to
outstanding options or SARs; (iii) the number and class of shares subject to other outstanding awards; and (iv) the maximum number and class of shares that may be issued as
incentive stock options, subject to any required action by the board or our stockholders and compliance with applicable laws.
Exchange, repricing and buyout of awards. The administrator may, without prior stockholder approval, (i) reduce the exercise price of outstanding options or SARs without the
consent of any participant and (ii) pay cash or issue new awards in exchange for the surrender and cancellation of any, or all, outstanding awards, subject to the consent of any
affected participant to the extent required by the terms of the 2021 Plan.
Director compensation limits. No non-employee director may receive awards under our 2021 Plan with a grant date value that when combined with cash compensation received
for his or her service as a director, exceed $1,000,000 in a calendar year.
Clawback; transferability. All awards will be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by our board of directors or
required by law during the term of service of the participant, to the extent set forth in such policy or applicable agreement. Except in limited circumstances, awards granted under our
2021 Plan may generally not be transferred in any manner other than by will or by the laws of descent and distribution.
Sub-plans. Subject to the terms of the 2021 Plan, the plan administrator may establish a sub-plan under the 2021 Plan and/or modify the terms of awards granted to participants
outside of the United States to comply with any laws or regulations applicable to any such jurisdiction.
Amendment and termination. Our board of directors or compensation committee may amend our 2021 Plan at any time, subject to stockholder approval as may be required. Our
2021 Plan will terminate ten years from the date our board of directors adopts the plan, unless it is terminated earlier by our board of directors. No termination or amendment of the
2021 Plan may adversely affect any then-outstanding award without the consent of the affected participant, except as is necessary to comply with applicable laws or as otherwise
provided by the terms of the 2021 Plan.
2021 employee stock purchase plan
In February 2021, our board of directors and our stockholders approved our 2021 Employee Stock Purchase Plan, or ESPP, that will become effective upon the date the
registration statement of which this prospectus forms a part becomes effective to enable eligible employees to purchase shares of our common stock with accumulated payroll
deductions. Our ESPP is intended to qualify under Section 423
174
of the Code, provided that the administrator may adopt sub-plans under the ESPP designed to be outside of the scope of Section 423 for participants who are non-US residents.
We have initially reserved 5,174,644 shares of our Class A common stock for issuance and sale under the ESPP. The number of shares reserved for issuance and sale under our
ESPP will increase automatically on January 1 of each of 2022 through 2031 by the number of shares equal to 1% of the aggregate number of outstanding shares of all classes of our
common stock (on an as-converted to common stock basis) as of the immediately preceding December 31, or a lesser number as may be determined by our compensation
committee, or by our board of directors acting in place of our compensation committee. Subject to stock splits, recapitalizations, or similar events, no more than 52,000,000 shares of
our Class A common stock may be issued over the term of the ESPP.
Administration. Our ESPP will be administered by our compensation committee, or by our board of directors acting in place of our compensation committee, subject to the terms
and conditions of the ESPP. Among other things, the administrator will have the authority to determine eligibility for participation in the ESPP, designate separate offerings under the
plan, and construe, interpret, and apply the terms of the plan.
Eligibility. Employees eligible to participate in any offering pursuant to the ESPP generally include any employee that is employed by us or certain of our designated subsidiaries at
the beginning of the offering period. However, the administrator may exclude employees who do not meet eligibility requirements that our compensation committee may choose to
impose (within the limits permitted by the Code), are customarily employed for 20 hours or less per week, are customarily employed for five months or less in a calendar year, or
certain highly-compensated employees as determined in accordance with applicable tax laws. In addition, any employee who owns (or is deemed to own because of attribution rules)
5% or more of the total combined voting power or value of all classes of our capital stock, or the capital stock of one of our qualifying subsidiaries, or who will own such amount
because of participation in the ESPP, will not be eligible to participate in the ESPP. The administrator may impose additional restrictions on eligibility from time to time.
Offerings. Under our ESPP, eligible employees will be offered the option to purchase shares of our Class A common stock at a discount over a series of offering periods through
accumulated payroll deductions over the period. Each offering period may itself consist of one or more purchase periods. No offering period may be longer than 27 months. The initial
offering period will commence on the date of this offering and will end on April 30, 2023, with purchases on October 31, 2021, April 30, 2022, October 31, 2022, and April 30, 2023. A
new offering period will begin on May 1, 2021 and each November 1 and May 1 thereafter. The purchase price for shares purchased under the ESPP during any given purchase
period will be 85% of the lesser of the fair market value of our common stock on (i) the first trading day of the applicable offering period or (ii) the last trading day of the purchase
period.
No participant may purchase more than 5,000 shares of our Class A common stock during any one purchase period, and may not subscribe for more than $25,000 in fair market
value of shares of our common stock (determined as of the date the offering period commences) in any calendar year in which the offering is in effect. The administrator in its
discretion, may set a lower maximum number of shares which may be purchased.
Adjustments upon recapitalization. If the number of outstanding shares of our common stock is changed by stock dividend, recapitalization, stock split, reverse stock split,
subdivision, combination, reclassification, or similar change in our capital structure without consideration, then the administrator will proportionately adjust the number and class of
common stock that is available under the ESPP, the purchase price, and number of shares any participant has elected to purchase as well as the maximum number of shares which
may be purchased by participants.
Change of control. If we experience a change of control transaction as determined under the terms of the ESPP, any offering period then in effect will be shortened and terminated
on a final purchase date
175
established by the administrator. The final purchase date will occur on or prior to the effective date of change of control transaction, and our ESPP will terminate on the closing of the
change of control.
Transferability. Participants may generally not assign, transfer, pledge, or otherwise dispose of payroll deductions credited to his or her account, or any rights with regard to an
election to purchase shares pursuant to the ESPP other than by will or the laws of descent or distribution.
Amendment; termination. The board or compensation committee may amend, suspend, or terminate the ESPP at any time without stockholder consent, except as to the extent
such amendment would increase the number of shares available for issuance under the ESPP, change the class or designation of employees eligible for participation in the plan or
otherwise as required by law. If the ESPP is terminated, the administrator may elect to terminate all outstanding offering periods immediately, upon next purchase date (which be
sooner that originally scheduled) or upon the last day of such offering period. If any offering period is terminated prior to its scheduled completion, all amounts credited to participants
which have not been used to purchase shares will be returned to participants as soon as administratively practicable. Unless earlier terminated, the ESPP will terminated upon the
earlier to occur of the issuance of all shares of common stock reserved for issuance under the ESPP, or the 10th anniversary of the effective date.
Welfare and other benefits
We provide health, dental, vision, life, and disability insurance benefits to our named executive officers, on the same terms and conditions as provided to all other eligible U.S.
employees.
We also sponsor a broad-based 401(k) plan intended to provide eligible U.S. employees with an opportunity to defer eligible compensation up to certain annual limits. As a tax-
qualified retirement plan, contributions (if any) made by us are deductible by us when made, and contributions and earnings on those amounts are generally not taxable to the
employees until withdrawn or distributed from the 401(k) plan. Our named executive officers are eligible to participate in our employee benefit plans, including our 401(k) plan, on the
same basis as our other employees.
LimitationsonLiabilityandIndemnificationMatters
Our restated certificate of incorporation that will become effective shortly following the effectiveness of the registration statement of which this prospectus forms a part contains
provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by the DGCL.
Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for:
• any breach of the director’s duty of loyalty to us or our stockholders;
• any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
• unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or
• any transaction from which the director derived an improper personal benefit.
Our restated certificate of incorporation that will become effective shortly following the effectiveness of the registration statement of which this prospectus forms a part will require
us to indemnify our directors and officers to the maximum extent not prohibited by the DGCL and allow us to indemnify other employees and agents as set forth in the DGCL. Subject
to certain limitations, our restated bylaws also require us to advance expenses incurred by our directors and officers for the defense of any action for which indemnification is required
or permitted.
176
We have entered, and intend to continue to enter, into separate indemnification agreements with our directors, officers, and certain of our other employees, in addition to the
indemnification provided for in our restated certificate of incorporation and restated bylaws. These agreements, among other things, require us to indemnify our directors, officers, and
key employees for certain expenses, including attorneys’ fees, judgments, penalties, fines, and settlement amounts actually incurred by these individuals in any action or proceeding
arising out of their service to us or any of our subsidiaries or any other company or enterprise to which these individuals provide services at our request. Subject to certain limitations,
our indemnification agreements also require us to advance expenses incurred by our directors, officers, and key employees for the defense of any action for which indemnification is
required or permitted. From time to time we have indemnified and may in the future indemnify our directors and officers pursuant to these indemnification agreements in connection
legal or regulatory proceedings.
We believe that provisions of our restated certificate of incorporation, restated bylaws, and indemnification agreements are necessary to attract and retain qualified directors,
officers, and key employees. We also maintain directors’ and officers’ liability insurance.
The limitation of liability and indemnification provisions in our restated certificate of incorporation and restated bylaws may discourage stockholders from bringing a lawsuit against
our directors and officers for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if
successful, might benefit us and other stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage
awards against directors and officers as required by these indemnification provisions.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, executive officers, or persons controlling us, we have been informed that, in
the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
177
CERTAINRELATIONSHIPSANDRELATEDPARTYTRANSACTIONS
In addition to the compensation arrangements discussed in the sections titled “Management” and “Executive Compensation,” the following is a description of each transaction
since January 1, 2018 and each currently proposed transaction in which:
• we have been or are to be a participant;
• the amount involved exceeded or will exceed $120,000; and
• any of our directors, executive officers, or holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of
these individuals, had or will have a direct or indirect material interest.
EquityFinancings
Series E convertible preferred stock financing
From October 2018 through December 2018, we sold an aggregate of 8,831,952 shares of our Series E convertible preferred stock at a purchase price of $36.1922 per share, for
an aggregate purchase price of $319.6 million. Each share of Series E convertible preferred stock will convert automatically into one share of our Class A common stock upon the
effectiveness of the registration statement of which this prospectus forms a part.
The following table summarizes the Series E convertible preferred stock purchased by entities affiliated with certain of our directors, and holders of more than 5% of our capital
stock and their affiliated entities:
Stockholder
SharesofSeriesE
ConvertiblePreferredStock TotalPurchasePrice
Entities affiliated with Andreessen Horowitz 27,630 $ 999,990
__________________
(1) Andreessen Horowitz and its affiliates beneficially own more than 5% of our outstanding capital stock. Marc L. Andreessen and Kathryn Haun, members of our board of directors, are both general partners at
Andreessen Horowitz.
StockTransfers
2018 transfers
In December 2018, Brian Armstrong and Frederick Ernest Ehrsam III, members of our board of directors, and with respect to Mr. Armstrong, our Chief Executive Officer, each sold
an aggregate of 226,218 shares of our Class B common stock at a purchase price of $32.57 per share to certain accredited investors, for an aggregate purchase price of $7.4 million
each, which shares were automatically converted into an equivalent number of shares of our Class A common stock upon completion of such sale.
2019 transfers
In September 2019, an entity affiliated with Andreessen Horowitz, a holder of more than 5% of our outstanding capital stock and where Marc L. Andreessen and Kathryn Haun,
members of our board of directors, are general partners, purchased an aggregate of 100,000 shares of our outstanding convertible preferred stock from an existing stockholder, at a
purchase price of $22.00 per share, for an aggregate purchase price of $2.2 million, which shares were converted into an equivalent number of shares of our Class A common stock
upon the completion of such purchase.
In October 2019, entities affiliated with Ribbit Capital, a holder of more than 5% of our capital stock, sold, at a purchase price of $23.00 per share, (i) an aggregate of 1,864,094
shares of our convertible
(1)
178
preferred stock to entities affiliated with Andreessen Horowitz, a holder of more than 5% of our capital stock and where Mr. Andreessen and Ms. Haun, members of our board of
directors, are general partners, for an aggregate purchase price of $42.9 million and (ii) an aggregate of 93,205 shares of our convertible preferred stock to an unrelated accredited
investor for an aggregate purchase price of $2.1 million, in each case, which shares were converted into an equivalent number of shares of our Class A common stock upon the
completion of such purchase.
In October 2019, entities affiliated with Union Square Ventures, a holder of more than 5% of our outstanding capital stock and where Fred Wilson, a member of our board of
directors, is a partner, sold, at a purchase price of $23.00 per share, (i) to entities affiliated with Andreessen Horowitz, a holder of more than 5% of our capital stock and where Mr.
Andreessen and Ms. Haun, members of our board of directors, are general partners, an aggregate of 2,483,731 shares of our convertible preferred stock, for an aggregate purchase
price of $57.1 million, and (ii) to an unrelated accredited investor, an aggregate of 124,186 shares of our convertible preferred stock, for an aggregate purchase price of $2.9 million, in
each case, which shares were converted into an equivalent number of shares of our Class A common stock upon the completion of such purchase.
In November 2019, Paradigm Fund L.P., a holder of more than 5% of our outstanding Class A common stock and where Mr. Ehrsam, a member of our board of directors, is a
managing partner, purchased, at a purchase price of $23.00 per share, an aggregate of (i) 745,119 shares of our convertible preferred stock from entities affiliated with Union Square
Ventures, a holder of more than 5% of our capital stock and where Mr. Wilson, a member of our board of directors, is a partner, for an aggregate purchase price of $17.1 million and
(ii) 559,228 shares of our convertible preferred stock from an entity affiliated with Ribbit Capital, a holder of more than 5% of our capital stock, for an aggregate purchase price of
$12.9 million, in each case, which shares were converted into an equivalent number of shares of our Class A common stock upon the completion of such purchase.
2020 transfers
In August 2020, entities affiliated with Union Square Ventures, a holder of more than 5% of our outstanding capital stock and where Mr. Wilson, a member of our board of
directors, is a partner, sold, at a purchase price of $28.83 per share, an aggregate of 1,040,582 shares of our convertible preferred stock to Paradigm Fund L.P., a holder of more than
5% of our capital stock and where Mr. Ehrsam, a member of our board of directors, is a managing partner, for an aggregate purchase price of $30.0 million, which shares were
converted into an equivalent number of shares of our Class A common stock upon the completion of such purchase.
In September 2020, entities affiliated with Union Square Ventures, a holder of more than 5% of our outstanding capital stock and where Mr. Wilson, a member of our board of
directors, is a partner, sold, at a purchase price of $28.83 per share, an aggregate of 1,040,582 shares of our convertible preferred stock to entity affiliated with Andreessen Horowitz,
a holder of more than 5% of our capital stock and where Mr. Andreessen and Ms. Haun, members of our board of directors, are general partners, for an aggregate purchase price of
$30.0 million, which shares were converted into an equivalent number of shares of our Class A common stock upon the completion of such purchase.
Investors’RightsAgreement
In October 2018, we entered into our amended and restated investors’ rights agreement, or IRA, with certain holders of our convertible preferred stock, including Tiger Global
Private Investment Partners XI, L.P. and entities affiliated with Andreessen Horowitz, Union Square Ventures, and Ribbit Capital, each of which is a holder of more than 5% of our
capital stock. Mr. Andreessen and Ms. Haun, members of our board of directors, are affiliated with Andreessen Horowitz. Mr. Wilson, a member of our board of directors, is affiliated
with Union Square Ventures. These stockholders are entitled to rights with respect to the registration of their shares following the effectiveness of the registration statement of which
this
179
prospectus forms a part. For a description of these registration rights, see the section titled “Description of Capital Stock—Registration Rights.”
CoinbaseVentures
From time to time, we invest in companies identified by Coinbase Ventures, our internal investment division, and certain of those investments are into companies in which entities
affiliated with our directors or holders of more than 5% of our capital stock have also invested. Below is a list of our investments with an amount involved that exceeded $120,000 in
companies in which entities affiliated with our directors or holders of more than 5% of our capital stock hold a 10% or greater equity interest.
Compound investment
In April 2018, we invested an aggregate of $200,000 in Compound Labs, Inc.. Entities affiliated with Andreessen Horowitz, a holder of more than 5% of our capital stock and
where Mr. Andreessen and Ms. Haun, members of our board of directors, are general partners, are investors in Compound Labs, Inc.
StarCard investment
In August 2018, we invested an aggregate of $200,000 in StarCard, Inc. Entities affiliated with Andreessen Horowitz, a holder of more than 5% of our capital stock and where Mr.
Andreessen and Ms. Haun, members of our board of directors, are general partners, are investors in StarCard, Inc.
Amber Group investment
In January 2020, we invested an aggregate of $150,000 in Amber Global Limited. Paradigm Fund L.P., a holder of more than 5% of our outstanding Class A common stock and
where Mr. Ehrsam, a member of our board of directors, is a managing partner, is an investor in Amber Global Limited.
Arweave investment
In February 2020, we invested an aggregate of $300,000 in Minimum Spanning Technologies Limited. Entities affiliated Union Square Ventures, a holder of more than 5% of our
capital stock and where Mr. Wilson, a member of our board of directors, is a general partner and entities affiliated with Andreessen Horowitz, a holder of more than 5% of our capital
stock and where Mr. Andreessen and Ms. Haun, members of our board of directors, are general partner, are investors in Minimum Spanning Technologies Limited.
IndemnificationAgreements
We have entered into, and plan on entering into, indemnification agreements with each of our current and future directors and executive officers. The indemnification agreements,
our restated certificate of incorporation, and our restated bylaws, which will become effective shortly following the effectiveness of the registration statement of which this prospectus
forms a part, will require us to indemnify our directors to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our restated bylaws also require us to advance
expenses incurred by our directors and officers. For more information regarding these arrangements, see the section titled “Executive Compensation—Limitations on Liability and
Indemnification Matters.”
OtherTransactions
In March 2018, we entered into a series of agreements to acquire Earn Holdings, LLC. In connection with such acquisition, as prior equity holders of Earn, entities affiliated with
Andreessen Horowitz, a holder
180
of more than 5% of our capital stock and where Mr. Andreessen and Ms. Haun, members of our board of directors, are general partners, were entitled to receive up to $6.7 million in
cash.
In May 2020, we entered into a series of agreements to acquire Tagomi Holdings Inc. In connection with such acquisition, as a prior equity holder of Tagomi, Paradigm Fund L.P.,
a holder of more than 5% of our outstanding Class A common stock and where Mr. Ehrsam, a member of our board of directors, is a managing partner, was entitled to receive up to
264,527 shares of our Class A common stock.
Certain of our executive officers, directors, and holders of more than 5% of our capital stock, and immediate family members of, or persons sharing households with, such
individuals, have accounts on our platform and use our products and services in the ordinary course. Similar to our other customers, these individuals and entities pay us transaction
and other fees related to such use.
Review,Approval,orRatificationofTransactionswithRelatedParties
In January 2019, we adopted written policies for the review and approval of transactions with related persons, consisting of a director conflicts and investment policy, administered
by our audit and compliance committee, and our employee conflicts and investment policy, administered by our internal legal department. In addition, our practice has been to have all
related party transactions reviewed and approved by a majority of the disinterested members of our board of directors, including the transactions described above. In connection with
this offering, we intend to amend our existing policies in order to comply with applicable rules and regulations of the SEC and the listing requirements and rules of the Nasdaq Global
Select Market.
181
PRINCIPALANDREGISTEREDSTOCKHOLDERS
The following table sets forth certain information with respect to the beneficial ownership of our Class A common stock and Class B common stock as of January 31, 2021, by:
• each of our named executive officers;
• each of our directors;
• all of our directors and executive officers as a group;
• each stockholder known by us to be the beneficial owner of more than 5% of our outstanding shares of Class A common stock or Class B common stock; and
• the number of shares of Class A common stock and Class B common stock held by the registered stockholders and registered as Class A common stock for resale by means
of this prospectus.
The registered stockholders include (i) our affiliates and certain other stockholders with “restricted securities” (as defined in Rule 144 under the Securities Act) and their pledgees,
donees, transferees, assignees, or other successors-in-interest who, because of their status as affiliates pursuant to Rule 144 or because they acquired their shares of Class A
common stock or Class B common stock from an affiliate or from us within the prior 12 months, would be unable to sell their securities pursuant to Rule 144 until we have been subject
to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act for a period of at least 90 days, and (ii) our non-executive officer service providers and their pledgees,
donees, transferees, assignees, or other successors-in-interest who acquired shares of Class A common stock or Class B common stock from us within the prior 12 months under
Rule 701 and hold “restricted securities” (as defined in Rule 144 under the Securities Act). The registered stockholders and their pledgees, donees, transferees, assignees, or other
successors-in-interest may elect to sell their shares of Class A common stock covered by this prospectus, as and to the extent they may determine. Such sales, if any, will be made
through brokerage transactions on the Nasdaq Global Select Market at prevailing market prices. As such, we will have no input if and when any registered stockholder may elect to
sell their shares of common stock or the prices at which any such sales may occur. Prior to any sales of shares of Class A common stock, a registered stockholder who holds Class B
common stock must convert their shares of Class B common stock into shares of Class A common stock. See the section titled “Plan of Distribution.”
Information concerning the registered stockholders may change from time to time and any changed information will be set forth in supplements to this prospectus, if and when
necessary. Because the registered stockholders who hold Class B common stock may convert their shares of Class B common stock into Class A common stock at any time and the
registered stockholders may sell all, some, or none of the shares of Class A common stock covered by this prospectus, we cannot determine the number of such shares of Class A
common stock that will be sold by the registered stockholders, or the amount or percentage of shares of common stock that will be held by the registered stockholders, either as Class
A common stock or Class B common stock, upon consummation of any particular sale. In addition, the registered stockholders listed in the table below may have sold, transferred, or
otherwise disposed of, or may sell, transfer, or otherwise dispose of, at any time and from time to time, shares of Class A common stock or Class B common stock in transactions
exempt from the registration requirements of the Securities Act, after the date on which they provided the information set forth in the table below. The registered stockholders have
not, nor have they within the past three years had, any position, office, or other material relationship with us, other than as disclosed in this prospectus. See the sections titled
“Management” and “Certain Relationships and Related Party Transactions” for further information regarding the registered stockholders.
After the listing of our Class A common stock on the Nasdaq Global Select Market, certain of the registered stockholders are entitled to registration rights with respect to their
shares of Class A common
182
stock or Class B common stock as described in the section titled “Description of Capital Stock—Registration Rights.”
We intend to use our reasonable efforts to keep the registration statement of which this prospectus forms a part effective for a period of 90 days after the effectiveness of the
registration statement. As a result, we have registered shares of Class A common stock underlying shares of Class B common stock currently held by registered stockholders, as well
as by our affiliates, that can vest and settle while the registration statement of which this prospectus forms a part is effective.
We are not party to any arrangement with any registered stockholder or any broker-dealer with respect to sales of the shares of Class A common stock by the registered
stockholders. However, we have engaged financial advisors with respect to certain other matters relating to the listing of our Class A common stock on the Nasdaq Global Select
Market. For more information, see the section titled “Plan of Distribution.”
We have determined beneficial ownership in accordance with the rules of the SEC. Unless otherwise indicated below, to our knowledge, based on information furnished to us, the
persons and entities named in the table have sole voting and investment power with respect to all shares that they beneficially own, subject to applicable community property laws.
Shares of our Class A common stock and Class B common stock subject to stock options and RSUs that are currently exercisable or subject to settlement or exercisable or subject to
settlement within 60 days of January 31, 2021 are deemed to be outstanding and to be beneficially owned by the person holding the options or RSUs for the purpose of computing the
percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
We have based our calculation of the percentage ownership of our common stock before this offering on 22,463,455 shares of our Class A common stock and 168,867,898
shares of our Class B common stock outstanding as of January 31, 2021, which includes 104,046,301 shares of our Class B common stock resulting from the conversion of an
equivalent number of outstanding shares of our Series FF, Series A, Series B, Series C, and Series D convertible preferred stock and 8,831,952 shares of our Class A common stock
resulting from the conversion of an equivalent number of outstanding shares of our Series E convertible preferred stock upon the effectiveness of the registration statement of which
this prospectus forms a part, as if this conversion had occurred as of January 31, 2021.
183
SharesBeneficiallyOwnedPriortotheEffectivenessoftheRegistrationStatement
PercentofTotalVoting
Power%
SharesofClassACommon
StockRegistered
ClassA ClassB
Number % Number %
NamedExecutiveOfficersandDirectors:
Brian Armstrong 2,753,924 10.9 36,851,833 21.8 21.7
Surojit Chatterjee 2,002,036 8.2 — — *
Paul Grewal 915,331 3.9 — — *
Marc Andreessen 5,516,037 24.6 23,961,498 14.2 14.3
Frederick Ernest Ehrsam III 2,570,459 11.4 15,114,503 9.0 9.0
Kathryn Haun 181,000 * 286,854 * *
Kelly Kramer — — — — —
Gokul Rajaram — — — — —
Fred Wilson — — 13,902,324 8.2 8.2
All executive officers and directors as a group (11 persons) 15,998,205 53.0 91,947,012 54.0 54.0
Other5%Stockholders:
Entities affiliated with Andreessen Horowitz 5,516,037 24.6 23,961,498 14.2 14.3
Entities affiliated with Paradigm 2,570,459 11.4 — — *
Entities affiliated with Ribbit Capital — — 11,995,949 7.1 7.1
Tiger Global Private Investment Partners XI, L.P. 2,624,880 11.7 — — *
Entities affiliated with Union Square Ventures — — 13,902,324 8.2 8.2
OtherRegisteredStockholders:
Non-Executive Officer and Non-Director Service Providers
All Other Registered Stockholders
__________________
* Represents beneficial ownership of less than 1% of our outstanding shares of common stock.
(1) Represents (i) 2,753,924 shares underlying options to purchase Class A common stock that are exercisable within 60 days of January 31, 2021; (ii) 25,959,129 shares of Class B common stock held by The
Brian Armstrong Living Trust; (iii) 2,215,422 shares of Class B common stock held by the Brian Armstrong 2018 Grantor Retained Annuity Trust; (iv) 7,726,792 shares of Class B common stock held by the Brian
Armstrong 2020 Grantor Retained Annuity Trust; and (v) 950,490 shares of Class B common stock held by The Ehrsam 2014 Irrevocable Trust, of which Mr. Armstrong is trustee.
(2) Represents 2,002,036 shares underlying options to purchase Class A common stock that are exercisable within 60 days of January 31, 2021.
(3) Represents 915,331 shares underlying options to purchase Class A common stock that are exercisable within 60 days of January 31, 2021.
(4) Represents (i) 5,516,037 shares of Class A common stock and (ii) 23,961,498 shares of Class B common stock held by entities affiliated with Andreessen Horowitz, as reflected in footnote 9 below. Mr.
Andreessen, a member of our board of directors, is a general partner of Andreessen Horowitz, and therefore, may be deemed to share voting and investment power with regard to the shares held directly by
Andreessen Horowitz. The address for Mr. Andreessen is c/o Andreessen Horowitz, 2865 Sand Hill Road, Suite 101, Menlo Park, CA 94025.
(5) Represents (i) 8,425,831 shares of Class B common stock held by The Frederick Ernest Ehrsam III Living Trust; (ii) 2,997,461 shares of Class B common stock held by The Frederick Ernest Ehrsam III 2020
Grantor Retained Annuity Trust; (iii) 601,637 shares of Class B common stock held by the Brian Armstrong Legacy Trust, of which Mr. Ehrsam is trustee; (iv) 3,089,574 shares of Class B common stock held by
The Armstrong 2014 Irrevocable Trust, of which Mr. Ehrsam is trustee, and (v) 2,570,459 shares of Class A common stock held by Paradigm Fund L.P., as reflected in footnote 10 below. Mr. Ehrsam, a member
of our board of directors, is a managing member of Paradigm Fund L.P., and, therefore, may be deemed to have voting and investment power with regard to the shares held directly by Paradigm Fund L.P.
(6) Represents (i) (A) 181,000 shares of Class A common stock and (B) 19,000 shares of Class B common stock held by EZT Trust; (ii) 150,000 shares of Class B common stock held by Gheradesca Annuity Trust;
and (iii) 117,854 shares of Class B common stock held by Gheradesca LLC, of which 12,445 shares are unvested and subject to repurchase by us.
(7) Represents 13,902,324 shares of Class B common stock held by entities affiliated with Union Square Ventures, as reflected in footnote 13 below. Mr. Wilson, a member of our board of directors, is a general
partner of Union Square Ventures, and therefore, may be deemed to share voting and investment power with regard to the shares held directly by Union Square Ventures. The address for Mr. Wilson is c/o Union
Square Ventures, 915 Broadway, 19th Floor, New York, NY 10010.
(8) Represents (i) 8,272,840 shares of Class A common stock; (ii) 90,436,463 shares of Class B common stock; (iii) 7,702,340 shares underlying options to purchase shares of Class A common stock that are
exercisable within 60 days of January 31, 2021; (iv) 1,510,549 shares underlying options to purchase shares of Class B common stock that are exercisable within 60
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
184
days of January 31, 2021; and (v) 23,025 shares of Class A common stock subject to RSUs that are settleable within 60 days of January 31, 2021.
(9) Represents (i) 27,630 shares of Class A common stock and 21,714,684 shares of Class B common stock held by Andreessen Horowitz Fund III, L.P. for itself and as nominee for Andreessen Horowitz Fund III-A,
L.P., Andreessen Horowitz Fund III-B, L.P., and Andreessen Horowitz Fund III-Q, L.P., which are collectively referred to as the “Andreessen Horowitz Fund III Entities”; (ii) 4,618,842 shares of Class A common
stock held by Andreessen Horowitz LSV Fund I, L.P., for itself and as nominee for Andreessen Horowitz LSV Fund I-B, L.P. and Andreessen Horowitz LSV Fund I-Q, L.P., which are collectively referred to as the
“Andreessen Horowitz LSV Entities”; (iii) 1,817,334 shares of Class B common stock held by AH Parallel Fund III, L.P. for itself and as nominee for AH Parallel Fund III-A, L.P., AH Parallel Fund III-B, L.P., and
AH Parallel Fund III-Q, L.P., which are collectively referred to as the “AH Parallel Fund III Entities”; (iv) 429,480 shares of Class B common stock held by a16z Seed-III, L.L.C., which is referred to as “a16z Seed”;
and (v) 869,565 shares of Class A common stock held by CNK Fund I, L.P. for itself and as nominee for CNK Fund I-B, L.P. and CNK Fund I-Q., L.P, which are collectively referred to as the “CNK Entities”. AH
Equity Partners III, L.L.C., (“AH Equity Partners III”), the general partner of the Andreessen Horowitz Fund III Entities, has sole voting and dispositive power with regard to the shares held by the Andreessen
Horowitz Fund III Entities. AH Equity Partners LSV I, L.L.C., (“AH Equity Partners LSV”), the general partner of the Andreessen Horowitz LSV Entities, has sole voting and dispositive power with regard to the
shares held by the Andreessen Horowitz LSV Entities. AH Equity Partners III (Parallel), L.L.C., (“AH Equity Partners III (Parallel)”), the general partner of the AH Parallel Fund III Entities, has sole voting and
dispositive power with regard to the shares held by the AH Parallel Fund III Entities. The shares held directly by a16z Seed are indirectly held by the Andreessen Horowitz Fund III Entities and the members of
a16z Seed. AH Equity Partners III, the general partner of the Andreessen Horowitz Fund III Entities, has sole voting and dispositive power with regard to the shares held by a16z Seed. CNK Equity Partners I,
L.L.C., (“CNK Equity Partners”), the general partner of the CNK Fund Entities, has sole voting and dispositive power with regard to the shared held by the CNK Fund Entities. Marc Andreessen and Ben Horowitz
are the managing members of each of AH Equity Partners III, AH Equity Partners LSV, AH Equity Partners III (Parallel), and CNK Equity Partners. The address for each of these entities is 2865 Sand Hill Road,
Suite 101, Menlo Park, CA 94025.
(10) Represents 2,570,459 shares of Class A common stock held by Paradigm Fund L.P. Paradigm Fund GP LLC, the general partner of Paradigm Fund L.P. has sole voting and investment power with regard to the
shares held by Paradigm Fund L.P. The Frederick Ernest Ehrsam III Living Trust and Matt Huang are the managing members of Paradigm Fund GP LLC. Mr. Ehrsam is the trustee of The Frederick Ernest
Ehrsam III Living Trust. The address for this entity is c/o Maples Corporate Services Limited, Ugland House, PO Box 309, George Town, Grand Cayman E9 KY1-1104.
(11) Represents (i) 1,020,672 shares of Class B common stock held by CB-D Ribbit Opportunity I, LLC; (ii) 10,089,161 shares of Class B common stock held by Ribbit Capital, L.P.; (iii) 560,610 shares of Class B
common stock held by CB Ribbit Holdings, LLC; and (iv) 325,506 shares of Class B common stock held by CB Ribbit Opportunity I, LLC. The address for this entity is 364 University Avenue, Palo Alto, CA 9430.
(12) Represents 2,624,880 shares of Class A common stock held by Tiger Global Private Investment Partners XI, L.P, an affiliate of Tiger Global Management, LLC. The address for this entity is c/o Tiger Global
Management, LLC, 9 West 57th Street, 35th Floor, New York, NY 10019.
(13) Represents (i) 11,626,100 shares of Class B common stock held by Union Square Ventures 2012 Fund, L.P., or USV 2012 Fund; (ii) 449,762 shares of Class B common stock held by USV Investors 2012 Fund,
L.P., or USV Investors 2012 Fund; (iii) 1,738,007 shares of Class B common stock held by USV Opportunity 2014, LP, or USV Opportunity 2014 Fund, and (iv) 88,455 shares of Class B common stock held by
USV Opportunity Investors 2014, LP., or USV Opportunity Investors 2014 Fund. Union Square 2012 GP, L.L.C., or Union Square 2012, is the general partner of USV 2012 Fund and USV Investors 2012 Fund,
and has sole voting and investment power with regard to the shares held by USV 2012 Fund and USV Investors 2012 Fund. USV Opportunity 2014 GP, LLC, or USV Opportunity 2014, is the general partner of
USV Opportunity 2014 Fund and USV Opportunity Investors 2014 Fund, and has sole voting and investment power with regard to the shares held by USV Opportunity 2014 Fund and USV Opportunity Investors
2014 Fund. We refer to Union Square 2012 and USV Opportunity 2014 and affiliated entities as Union Square Ventures. Fred Wilson, Brad Burnham, Albert Wenger, John Buttrick, and Andy Weissman are
partners at Union Square Ventures and, therefore, may be deemed to have shared voting and investment power with regard to the shares held directly by Union Square Ventures. The address for each of these
entities is 915 Broadway, 19th Floor, New York, NY 10010.
185
DESCRIPTIONOFCAPITALSTOCK
The following description summarizes the most important terms of our capital stock, as they will be in effect shortly following the effectiveness of the registration statement of
which this prospectus forms a part. We adopted a restated certificate of incorporation and restated bylaws that will become effective upon the completion of this offering, and this
description summarizes provisions included in these documents. Because it is only a summary, it does not contain all the information that may be important to you. For a complete
description, you should refer to our restated certificate of incorporation and restated bylaws, which are included as exhibits to the registration statement of which this prospectus forms
a part, and to the applicable provisions of Delaware law.
Shortly following the effectiveness of the registration statement of which this prospectus forms a part, our authorized capital stock will consist of 10,000,000,000 shares of our
Class A common stock, $0.00001 par value per share, 500,000,000 shares of our Class B common stock, $0.00001 par value per share, 500,000,000 shares of undesignated
common stock, $0.00001 par value per share, and 500,000,000 shares of undesignated preferred stock, $0.00001 par value per share.
Assuming the conversion of our Series FF, Series A, Series B, Series C, and Series D convertible preferred stock into 104,046,301 shares of our Class B common stock and our
Series E convertible preferred stock into 8,831,952 shares of our Class A common stock, which will occur in connection with the effectiveness of the registration statement of which
this prospectus forms a part, as of December 31, 2020, there were outstanding:
• 21,035,491 shares of our Class A common stock, held by approximately 430 stockholders of record;
• 164,950,620 shares of our Class B common stock outstanding, held by approximately 430 stockholders of record;
• 40,813,340 shares of our Class A common stock issuable upon exercise of outstanding stock options, with a weighted-average exercise price of $21.17 per share;
• 32,403 shares of our Class A common stock issuable upon exercise of outstanding stock options assumed in connection with our acquisition of Tagomi Holdings Inc., with a
weighted-average exercise price of $5.31 per share;
• 22,442,017 shares of our Class B common stock issuable upon exercise of outstanding stock options, with a weighted-average exercise price of $3.34 per share;
• 3,765,760 RSUs covering shares of our Class A common stock that are issuable upon satisfaction of service-based vesting condition;
• 407,928 shares of our Class B common stock issuable upon exercise of a warrant, with an exercise price of $1.01 per share;
• 4,201 shares of our Class A common stock issuable upon exercise of a warrant assumed in connection with our acquisition of Tagomi Holdings Inc., with an exercise price of
$5.26 per share; and
• 2,295,766 shares of Class A common stock reserved for the potential issuance pursuant to warrants to purchase shares of our Class A common stock at an exercise price of
$0.00001 that may be approved by our board of directors from time to time, of which, as of December 31, 2020, our board of directors has approved the issuance of a warrant
exercisable for an aggregate of 229,577 shares of our Class A common stock at an exercise price of $0.00001 per share.
186
ClassACommonStockandClassBCommonStock
Dividend rights
Subject to preferences that may apply to any shares of our convertible preferred stock or any new series of common stock outstanding at the time, the holders of our Class A
common stock and Class B common stock are entitled to receive dividends out of funds legally available if our board of directors, in its discretion, determines to issue dividends and
then only at the times and in the amounts that our board of directors may determine. Shares of Class A common stock and Class B common stock will be treated equally, identically
and ratably, on a per share basis, with respect to dividends that may be declared by our board of directors. See the section titled “Dividend Policy.”
Voting rights
Holders of our Class A common stock are entitled to one vote per share, and holders of our Class B common stock are entitled to twenty votes per share, on all matters submitted
to a vote of stockholders. Following the effectiveness of the registration statement of which this prospectus forms a part, the holders of our outstanding Class B common stock will
hold % of the voting power of our outstanding capital stock, with our directors, executive officers, and 5% stockholders and their respective affiliates holding %
of the voting power in the aggregate. The holders of our Class A common stock and Class B common stock will generally vote together as a single class on all matters (including the
election of directors) submitted to a vote of our stockholders, unless otherwise required by Delaware law or our restated certificate of incorporation. Our restated certificate of
incorporation will provide that the affirmative vote of the holders of at least 66-2/3% of the voting power of all of the then-outstanding shares of Class B common stock, voting
separately and as a single class, will be required for any proposal to amend or repeal, or adopt any provision inconsistent with, any provision in the restated certificate of incorporation
relating to the voting, conversion, or other rights, powers, preferences, privileges, or restrictions of the Class B common stock. Delaware law could require either holders of our Class
A common stock or Class B common stock to vote separately as a single class in the following circumstances:
• if we were to seek to amend our restated certificate of incorporation to increase or decrease the par value of a class of our capital stock, then that class would be required to
vote separately to approve the proposed amendment; and
• if we were to seek to amend our restated certificate of incorporation in a manner that alters or changes the powers, preferences, or special rights of a class of our capital stock
in a manner that affected its holders adversely, then that class would be required to vote separately to approve the proposed amendment.
Our restated certificate of incorporation will not provide for cumulative voting for the election of directors. Our restated certificate of incorporation initially establishes a classified
board of directors, to be divided in three classes with staggered three-year terms. Only one class of directors will be elected at each annual meeting of our stockholders, with the other
classes continuing for the remainder for their respective three-year terms. Our board of directors will remain classified until the date on which the company certifies that Mr. Armstrong
and his affiliated entities hold a majority of the voting power of all the then-outstanding shares of our capital stock entitled to vote (such date the staggered board end date and such
periods of control, the founder control periods). Following each staggered board end date, all directors will be elected for annual terms as described in our restated certificate of
incorporation that will be effective shortly following the effectiveness of this registration statement. If, following any staggered board end date, Mr. Armstrong and his affiliated entities
cease to hold a majority of the voting power of all the then-outstanding shares of our capital stock, our board of directors will revert to being divided in three classes with staggered
three-year terms as described above until the subsequent staggered board end date. For additional information regarding the structure of our board of directors, please refer to our
restated certificate of incorporation that will be effective shortly following the effectiveness of the
187
registration statement and which is included as an exhibit to the registration statement of which this prospectus forms a part.
Conversion
Each outstanding share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. In addition, each share of Class B
common stock will convert automatically into one share of Class A common stock upon any transfer, whether or not for value, which occurs after the effectiveness of the registration
statement of which this prospectus forms a part, except for certain permitted transfers, including certain transfers to family members, trusts solely for the benefit of the stockholder or
their family members, affiliates under common control with the stockholder, and partnerships, corporations, foundations, individual retirement accounts, and other entities exclusively
owned by the stockholder or their family members, in each case as fully described in our restated certificate of incorporation. Once converted into Class A common stock, the Class B
common stock will not be reissued.
All the outstanding shares of Class B common stock will convert automatically into shares of Class A common stock upon the earliest to occur of (i) the date fixed by the board of
directors that is no less than 61 days and no more than 180 days following the first time after the date of effectiveness of the registration statement of which this prospectus forms a
part that the aggregate number of shares of Class B common stock held by Brian Armstrong and his affiliates is less than 25% of the aggregate number of shares of Class B common
stock held by Mr. Armstrong and his affiliates on the date of effectiveness of the registration statement of which this prospectus forms a part; (ii) the date and time specified by
affirmative vote of the holders of at least 66-2/3% of the outstanding shares of Class B common stock, voting as a single class, and the affirmative vote of at least 66-2/3% of the then
serving members of our board of directors, which must include the affirmative vote of Mr. Armstrong, if either (A) Mr. Armstrong is serving on our board of directors and has not been
terminated for cause or resigned except for good reason (as each term is defined in our restated certificate of incorporation) from his position as our Chief Executive Officer or (B) Mr.
Armstrong has not been removed for cause or resigned from the position of Chairman of the board of directors; and (iii) the death or disability (as defined in our and restated certificate
of incorporation) of Mr. Armstrong, provided, that, in the case of (iii), the date of such automatic conversion may be delayed, but not for more than six months, to a date approved by a
majority of the independent directors (as defined in our and restated certificate of incorporation) then in office.
No preemptive or similar rights
Our Class A common stock and Class B common stock are not entitled to preemptive rights and are not subject to conversion (except as noted above), redemption, or sinking
fund provisions.
Right to receive liquidation distributions
If we become subject to a liquidation, dissolution, or winding-up, the assets legally available for distribution to our stockholders would be distributed ratably among the holders of
our Class A common stock and Class B common stock and any participating preferred stock or new series of common stock outstanding at that time, subject to prior satisfaction of all
outstanding debt and liabilities and the preferential rights of and the payment of liquidation preferences, if any, on any outstanding shares of preferred stock or new series of common
stock.
Fully paid and non-assessable
All of the outstanding shares of our Class A common stock and Class B common stock are fully paid and non-assessable.
“Blank check” common stock
188
Shortly following the effectiveness of the registration statement of which this prospectus forms a part, our board of directors will be authorized, subject to limitations prescribed by
Delaware law, to issue common stock in one or more series, to establish from time to time the number of shares to be included in each series and to fix the form, designation, powers,
preferences, and rights of the shares of each series and any of its qualifications, limitations, or restrictions, in each case without further vote or action by our stockholders. Our board
of directors may use the “blank check” common stock to issue common stock, or rights or options thereto, in the form of blockchain-based tokens. Our board of directors may
authorize the issuance of such common stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our Class A common stock
and our Class B common stock. The issuance of such common stock, or any rights or options thereto, while providing flexibility to us in connection with various corporation purposes,
could, among other things, adversely affect the market price of our Class A common stock and the voting and other rights of the holders of our Class A common stock and Class B
common stock. However, the authorization of any “blank check” common stock or preferred stock entitling the holder of such shares to the right to more than one vote per share must
be approved by the majority of the directors then in office, including Mr. Armstrong for so long as Mr. Armstrong is then serving as a member of our board of directors and the shares
of our Class B common stock have not yet been automatically converted into shares of Class A common stock.
PreferredStock
Each currently outstanding share of our Series FF, Series A, Series B, Series C, and Series D convertible preferred stock will automatically be converted into one share of Class B
common stock and each currently outstanding share of Series E convertible preferred stock will automatically be converted into one share of Class A common stock effective, in each
case, upon the effectiveness of the registration statement of which this prospectus forms a part. Following such date, no shares of convertible preferred stock will be outstanding.
Shortly following the effectiveness of the registration statement of which this prospectus forms a part, our board of directors will be authorized, subject to limitations prescribed by
Delaware law, to issue preferred stock in one or more series, to establish from time to time the number of shares to be included in each series and to fix the designation, powers,
preferences, and rights of the shares of each series and any of its qualifications, limitations, or restrictions, in each case without further vote or action by our stockholders. Our board
of directors can also increase or decrease the number of shares of any series of preferred stock, but not below the number of shares of that series then outstanding, without any
further vote or action by our stockholders. Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting
power or other rights of the holders of our common stock. Notwithstanding the foregoing, the authorization of any “blank check” preferred stock entitling the holder of such shares to
the right to more than one vote per share must be approved by the majority of the directors then in office, including Mr. Armstrong for so long as Mr. Armstrong is then serving as a
member of our board of directors and the shares of our Class B common stock have not yet been automatically converted into shares of Class A common stock. The issuance of
preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring, or
preventing a change of control of our company and might adversely affect the market price of our Class A common stock and the voting and other rights of the holders of our Class A
common stock and Class B common stock. We have no current plan to issue any shares of preferred stock.
StockOptions
As of December 31, 2020, we had outstanding options to purchase an aggregate of 3,550,279 shares of our Class A common stock, with a weighted-average exercise price of
$17.38 per share, and an aggregate of 22,442,017 shares of our Class B common stock, with a weighted-average exercise price of $3.34 per share, all granted pursuant to our 2013
Plan, an aggregate of 37,230,658 shares of our Class A common stock, with a weighted-average exercise price of $21.54 per share, granted pursuant to our 2019 Plan. In addition, as
of December 31, 2020, we assumed and converted from options to purchase shares
189
of Tagomi Holdings Inc. common stock an aggregate of 32,403 shares of our Class A common stock issuable upon the exercise of options, with a weighted-average exercise price of
$5.31 per share. Since December 31, 2020, we have not granted any additional options to purchase shares of our Class A common stock or Class B common stock. In February
2021, we assumed and converted from options to purchase shares of Bison Trails Co. common stock an aggregate of 470,128 shares of our Class A common stock issuable upon the
exercise of options, with a weighted-average exercise price of $3.45 per share, upon completion of our acquisition of Bison Trails Co.
RestrictedStockUnits
As of December 31, 2020, we had an aggregate of 3,765,760 shares of our Class A common stock outstanding subject to RSUs, pursuant to our 2019 Plan. Since December 31,
2020, we have granted an aggregate of 1,607,982 shares of our Class A common stock, subject to RSUs, pursuant to our 2019 Plan.
Warrants
As of December 31, 2020, we had outstanding a warrant exercisable for 407,928 shares of our Class B common stock at an exercise price of $1.01, which expires in June 2024.
The warrant has a cashless exercise provision pursuant to which the holder, in lieu of paying the exercise price in cash, can surrender the warrant and receive a net number of shares
based on the fair market value of such shares at the time of exercise, after deducting the aggregate exercise price. As of December 31, 2020, we also had outstanding a warrant,
assumed in connection with our acquisition of Tagomi Holdings, Inc., exercisable for 4,201 shares of our Class A common stock at an exercise price of $5.26 per share, which expires
in July 2030. In April 2020, our board of directors approved the reservation of up to 2,295,766 shares of Class A common stock that we may issue in the future pursuant to warrants to
purchase shares of our Class A common stock in connection with our philanthropic endeavors. As of December 31, 2020, our board of directors had approved the issuance of a
warrant exercisable for an aggregate of 229,577 shares of our Class A common stock at an exercise price of $0.00001 per share. Our board of directors will annually consider whether
to issue additional warrants for the remaining 2,066,189 shares of Class A common stock reserved for such issuance to fulfill our intent under the Pledge 1% campaign.
RegistrationRights
Our IRA provides that certain holders of our Class A common stock and Class B common stock will be entitled to rights with respect to the registration of their shares under the
Securities Act, as set forth below. The registration of shares of our Class A common stock or Class B common stock by the exercise of registration rights described below would
enable the holders to sell these shares without restriction under the Securities Act when the applicable registration statement was declared effective. We will pay the registration
expenses (other than underwriting discounts and selling commissions) of the holders of the shares registered pursuant to the demand, piggyback, and Form S-3, registrations
described below, including the reasonable fees of one counsel for the selling holders, not to exceed $25,000. In an underwritten offering, the underwriters have the right, subject to
specified conditions, to limit the number of shares such holders may include.
The registration rights set forth in the IRA will expire five years following the effectiveness of the registration statement of which this prospectus forms a part, or, with respect to
any particular stockholder, when such stockholder is able to sell all of its shares without registration pursuant to Rule 144 of the Securities Act during any three-month period.
Demand registration rights
After the effectiveness of the registration statement of which this prospectus forms a part, as of December 31, 2020 the holders of approximately 109,385,725 shares of our Class
A common stock and Class B common stock will be entitled to certain demand registration rights. At any time beginning 180 days after the effectiveness of the registration statement
of which this prospectus forms a part, the
190
holders of at least 20% of these shares then outstanding can request that we register the offer and sale of their shares. We are obligated to effect only two such registrations. If we
determine that it would be materially detrimental to us and our stockholders to effect such a demand registration, we have the right to defer such registration, not more than once in
any 12-month period, for a period of up to 30 days. Additionally, we will not be required to effect a demand registration during the period beginning 60 days prior to our good faith
estimate of the date of the filing of and ending on a date 180 days following the effectiveness of a registration statement relating to our common stock. Such request for registration
must cover securities the aggregate offering price of which is at least $10.0 million.
Piggyback registration rights
After the effectiveness of the registration statement of which this prospectus forms a part, if we propose to register the offer and sale of our common stock under the Securities
Act, in connection with the public offering of such common stock, as of December 31, 2020 the holders of up to approximately 109,385,725 shares of our Class A common stock and
Class B common stock will be entitled to certain “piggyback” registration rights allowing the holders to include their shares in such registration, subject to certain marketing and other
limitations. As a result, whenever we propose to file a registration statement under the Securities Act, other than with respect to (i) a registration related solely to a company equity
plan, (ii) a registration relating to a corporate reorganization or transaction under Rule 145 of the Securities Act, (iii) a registration on any form that does not include substantially the
same information as would be required to be included in a registration statement covering the public offering of our common stock, or (iv) a registration in which the only common
stock being registered is common stock issuable upon the conversion of debt securities that are also being registered, the holders of these shares are entitled to notice of the
registration and have the right, subject to certain limitations, to include their shares in the registration.
S-3 registration rights
After the effectiveness of the registration statement of which this prospectus forms a part, as of December 31, 2020 the holders of up to approximately 109,385,725 shares of our
Class A common stock and Class B common stock will be entitled to certain Form S-3 registration rights. The holders of at least 10% of these shares then outstanding may make a
written request that we register the offer and sale of their shares on a registration statement on Form S-3 if we are eligible to file a registration statement on Form S-3 so long as the
request covers at least that number of shares with an anticipated offering price, net of underwriting discounts and commissions, of at least $5.0 million. These stockholders may make
an unlimited number of requests for registration on Form S-3; however, we will not be required to effect a registration on Form S-3 if we have effected two such registrations within the
12-month period preceding the date of the request. If we determine that it would be seriously detrimental to us and our stockholders to effect such a registration, we have the right to
defer such registration, not more than once in any 12-month period, for a period of up to 30 days. Additionally, we will not be required to effect a registration on Form S-3 during the
period beginning 30 days prior to our good faith estimate of the date of the filing of and ending on a date 90 days following the effectiveness of a registration statement relating to our
common stock.
Anti-TakeoverProvisions
The provisions of Delaware law, our restated certificate of incorporation, and our restated bylaws, as we expect they will be in effect shortly following the effectiveness of the
registration statement of which this prospectus forms a part, which are summarized below, may have the effect of delaying, deferring, or discouraging another person from acquiring
control of our company. They are also designed, in part, to encourage persons seeking to acquire control of us to negotiate first with our board of directors. We believe that the
benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the disadvantages of discouraging a proposal to acquire us
because negotiation of these proposals could result in an improvement of their terms.
191
DelawareLaw
We are subject to the provisions of Section 203 of the DGCL, regulating corporate takeovers. In general, DGCL Section 203 prohibits a publicly held Delaware corporation from
engaging in a “business combination” with an “interested stockholder” for a period of three years following the date on which the person became an interested stockholder unless:
• prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder
becoming an interested stockholder;
• the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining
the voting stock outstanding, but not the outstanding voting stock owned by the interested stockholder, (i) shares owned by persons who are directors and also officers and (ii)
shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer; or
• at or subsequent to the date of the transaction, the business combination is approved by the board of directors of the corporation and authorized at an annual or special
meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.
Generally, a “business combination” includes a merger, asset or stock sale, or other transaction or series of transactions together resulting in a financial benefit to the interested
stockholder. An “interested stockholder” is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status,
did own 15% or more of a corporation’s outstanding voting stock. We expect the existence of this provision to have an anti-takeover effect with respect to transactions our board of
directors does not approve in advance. We also anticipate that DGCL Section 203 may also discourage attempts that might result in a premium over the market price for the shares of
common stock held by stockholders.
RestatedCertificateofIncorporationandRestatedBylawProvisions
Our restated certificate of incorporation and our restated bylaws will include a number of provisions that could deter hostile takeovers or delay or prevent changes in control of our
board of directors or management team, including the following:
• Dual class stock structure.As described above in the subsection titled “—Class A Common Stock and Class B Common Stock—Voting Rights,” our restated certificate of
incorporation will provide for a dual-class common stock structure pursuant to which holders of our Class B common stock, including our current investors, executives, and
employees, will have the ability to control the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our
outstanding Class A common stock and Class B common stock, including the election of directors and significant corporate transactions, such as a merger or other sale of our
company or its assets.
• Board of directors vacancies. Our restated certificate of incorporation and restated bylaws will authorize only our board of directors to fill vacant directorships, including
newly created seats, and will further provide that, during the times in which our board of directors is classified, any director filling such a vacancy, including a newly created
seat, must be approved by the affirmative vote of all of the directors then in office. In addition, the number of directors constituting our board of directors will be permitted to be
set only by a resolution adopted by a majority vote of our entire board of directors. These provisions would prevent a stockholder from increasing the size of our board of
directors and then gaining control of our board of directors by
192
filling the resulting vacancies with its own nominees. This will make it more difficult to change the composition of our board of directors and promote continuity of management.
• Director Nominees. Our restated bylaws will provide that during the times in which our board of directors is classified, any director nomination made pursuant to our notice of
meeting or by or at the direction of our board of directors or a committee thereof, must be approved by the affirmative vote of all of the directors then in office.This provision
would make it difficult to gain control of our board of directors as any single existing director would have the ability to veto a nominee put forth by the other members of our
board of directors or by a committee thereof.
• Classified board. Our restated certificate of incorporation and restated bylaws will provide that our board of directors is initially classified into three classes of directors. Upon
the occurrence of certain future conditions related to Mr. Armstrong’s ownership of our capital stock, our board of directors may alternate between classified and declassified
structures. A third party may be discouraged from making a tender offer or otherwise attempting to obtain control of us as it is more difficult and time consuming for
stockholders to replace a majority of the directors on a classified board of directors. See the sections titled “—Class A Common Stock and Class B Common Stock—Voting
Rights” and “Management—Classified Board of Directors.”
• Requirements for amendments of our restated certificate of incorporation. Our restated certificate of incorporation will provide that the affirmative vote of holders of at
least 66-2/3% of the voting power of all of the then-outstanding shares of voting stock will be required to amend or repeal certain provisions of our restated certificate of
incorporation, including provisions relating to the classified board, the size of the board, removal of directors, special meetings, actions by written consent, and designation of
our preferred stock, or, if any proposed amendment or repeal of such a provision has been approved by two-thirds of our then-serving directors, with the affirmative vote of
holders of a majority of the voting power of all then outstanding shares of voting stock. Notwithstanding the foregoing, our restated certificate of incorporation will further
provide that prior to the time at which all outstanding shares of Class B common stock automatically convert into shares of Class A common stock, holders of our Class B
common stock will vote separately and as a single class on any proposal to amend or repeal, or adopt any provision inconsistent with, any provision in the restated certificate
of incorporation relating to the voting, conversion, or other rights, powers, preferences, privileges, or restrictions of the Class B common stock.
• Requirements for amendments of our restated bylaws. Our restated certificate of incorporation will provide that our board of directors will have the power to adopt, amend,
or repeal our restated bylaws, provided, however, that during the times in which our board of directors is classified, any proposed adoption, amendment, or repeal will must be
approved by the affirmative vote of all of the directors then in office. Our restated certificate of incorporation will also provide our stockholders with the power to adopt, amend,
or repeal our restated bylaws with the affirmative vote of holders of at least 66-2/3% of the voting power of all of the then outstanding shares of voting stock, or, if any
proposed adoption, amendment, or repeal of any provision has been approved by two-thirds of our then-serving directors, with the affirmative vote of the holders of a majority
of the voting power of all the then-outstanding shares of voting stock. Notwithstanding the foregoing, during founder control periods, the affirmative vote of holders of only a
majority of the voting power of all of the then-outstanding shares of voting stock will be required for our stockholders to adopt, amend, or repeal our restated bylaws.
• Stockholder action; Special meeting of stockholders. Our restated certificate of incorporation will provide that, during the times in which our board of directors is classified,
our stockholders may not take action by written consent, but may only take action at annual or special meetings of our stockholders. As a result, holders of our capital stock
would not be able to amend our restated bylaws or remove directors without holding a meeting of our stockholders called in accordance with our restated bylaws. Our restated
bylaws will further provide that special meetings of our
193
stockholders may be called only by a majority of our board of directors or our Chief Executive Officer, thus prohibiting a stockholder from calling a special meeting. These
provisions might delay the ability of our stockholders to force consideration of a proposal or for stockholders controlling a majority of our capital stock to take any action,
including the removal of directors. During founder control periods, our restated certificate of incorporation will provide that our stockholders will be permitted to take action by
written consent.
• Advance notice requirements for stockholder proposals and director nominations. Our restated bylaws will provide advance notice procedures for stockholders seeking
to bring business before our annual meeting of stockholders or to nominate candidates for election as directors at our annual meeting of stockholders. Our restated bylaws will
also specify certain requirements regarding the form and content of a stockholder’s notice. During periods in which our stockholders are not permitted to act by written
consent, these provisions might preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our
annual meeting of stockholders if the proper procedures are not followed. We expect that these provisions may also discourage or deter a potential acquirer from conducting a
solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.
• No cumulative voting. The DGCL provides that stockholders are not entitled to cumulate votes in the election of directors unless a corporation’s certificate of incorporation
provides otherwise. Our restated certificate of incorporation will not provide for cumulative voting.
• Removal of directors. Our restated certificate of incorporation will provide that stockholders may remove directors only for cause and with the affirmative vote of holders of at
least 66 2/3% of the voting power of all of the then-outstanding shares of voting stock. However, during founder control periods, stockholders will be able to remove directors
with or without cause by the affirmative vote of a majority of the then-outstanding shares of voting stock.
• Issuance of undesignated preferred stock and common stock. Our restated certificate of incorporation will provide that our board of directors has the authority, without
further action by the stockholders, to issue up to 500,000,000 shares of undesignated preferred stock and 500,000,000 shares of undesignated common stock with rights and
preferences, including voting rights, designated from time to time by our board of directors. The existence of authorized but unissued shares of preferred stock and common
stock would enable our board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest, or other
means.
• Exclusive forum. Our restated certificate of incorporation will provide that, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware will be the
exclusive forum for any derivative action or proceeding brought on our behalf; any action asserting a claim that is based upon a breach of fiduciary duty; any action asserting a
claim against us or any current or former director, officer, stockholder, employee or agent of ours, arising pursuant to the DGCL, our restated certificate of incorporation or our
restated bylaws; any action asserting a claim against us that is governed by the internal affairs doctrine. Our restated bylaws will also provide that the federal district courts of
the United States will, to the fullest extent permitted by law, be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, or
the Federal Forum Provision, unless we consent in writing to the selection of an alternative forum. While there can be no assurance that federal or state courts will follow the
holding of the Delaware Supreme Court which recently found that such provisions are facially valid under Delaware law or determine that the Federal Forum Provision should
be enforced in a particular case, application of the Federal Forum Provision means that suits brought by our stockholders to enforce any duty or liability created by the
Securities Act must be brought in federal court and cannot be brought in state court. Neither the exclusive forum provision nor the Federal Forum Provision applies to suits
brought to enforce any duty or liability created by the
194
Exchange Act. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all claims brought to enforce any duty or liability created by the Exchange Act or the
rules and regulations thereunder. Accordingly, actions by our stockholders to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder
also must be brought in federal court. Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the regulations promulgated
thereunder. Any person or entity purchasing or otherwise acquiring or holding any interest in any of our securities shall be deemed to have notice of and consented to our
exclusive forum provisions, including the Federal Forum Provision. These provisions may limit a stockholder’s ability to bring a claim in a judicial forum of their choosing for
disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees.
Listing
We have applied to list our Class A common stock on the Nasdaq Global Select Market under the symbol “COIN.”
TransferAgentandRegistrar
On the closing of this offering, the transfer agent and registrar for our Class A common stock and Class B common stock will be Computershare Trust Company, N.A.. The
transfer agent and registrar’s address is 250 Royall Street, Canton, Massachusetts 02021, and its telephone number is (800) 962-4284.
195
SHARESELIGIBLEFORFUTURESALE
Prior to the listing of our Class A common stock on the Nasdaq Global Select Market, there has been no public market for our shares of Class A common stock, and we cannot
predict the effect, if any, that market sales of shares of our Class A common stock or the availability of shares of our Class A common stock for sale will have on the price of our Class
A common stock prevailing from time to time. Sales or distributions of substantial amounts of our Class A common stock in the public market following our listing on the Nasdaq Global
Select Market, or the perception that such sales or distributions could occur, could adversely affect the public price of our Class A common stock and may make it more difficult for you
to sell your Class A common stock at a time and price that you deem appropriate. We will have no input if and when any registered stockholder may elect to sell its shares of Class A
common stock or the prices at which any such sales may occur. Future sales of our Class A common stock, including shares issued upon the exercise of outstanding stock options, in
the public market, or the availability of such shares for sale in the public market, could adversely affect market prices prevailing from time to time.
Upon the effectiveness of the registration statement of which this prospectus forms a part, based on the number of shares of our capital stock outstanding as of December 31,
2020, we had a total of 21,035,491 shares of our Class A common stock and 164,950,620 shares of our Class B common stock outstanding, assuming the automatic conversion of all
outstanding shares of our Series FF, Series A, Series B, Series C, and Series D convertible preferred stock into 104,046,301 shares of our Class B common stock and our Series E
convertible preferred stock into 8,831,952 shares of our Class A common stock upon the effectiveness of the registration statement of which this prospectus forms a part.
Shares of our Class A common stock and Class B common stock will be deemed “restricted securities” (as defined in Rule 144 under the Securities Act). Restricted securities may
be sold in the public market only if they are registered or if they qualify for an exemption from registration under Rule 144 or Rule 701 under the Securities Act, which rules are
summarized below. Following the effectiveness of the registration statement of which this prospectus forms a part, shares of our Class A common stock may be sold either by the
registered stockholders pursuant to this prospectus or by our other existing stockholders in accordance with Rule 144 of the Securities Act.
As further described below, until we have been a reporting company for at least 90 days, only non-affiliates who have beneficially owned their shares of common stock for a period
of at least one year will be able to sell their shares of Class A common stock under Rule 144, which is expected to include approximately shares of common stock
immediately after our registration.
Rule144
In general, under Rule 144, as currently in effect, once we have been subject to the public company reporting requirements of Section 13 or Section 15(d) of the Exchange Act for
at least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has
beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell those shares without
complying with the manner of sale, volume limitation, or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has
beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then that person would be entitled to
sell those shares without complying with any of the requirements of Rule 144.
In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell, within any three-month period, a number of
shares of Class A common stock that does not exceed the greater of:
• 1% of the number of shares of our Class A common stock then outstanding; or
196
• the average weekly trading volume of our Class A common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale.
Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the
availability of current public information about us.
Rule701
Rule 701 generally allows a stockholder who purchased shares of our capital stock pursuant to a written compensatory plan or contract and who is not deemed to have been an
affiliate of our company during the immediately preceding 90 days to sell these shares in reliance upon Rule 144, but without being required to comply with the public information,
holding period, volume limitation, or notice provisions of Rule 144. Rule 701 also permits affiliates of our company to sell their Rule 701 shares under Rule 144 without complying with
the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required by that rule to wait until 90 days after the date of this prospectus before selling
those shares pursuant to Rule 701.
RegistrationRights
Pursuant to the IRA, we have granted demand, Form S-3, and piggyback registration rights to certain of our stockholders to sell our Class A common stock or Class B common
stock. Registration of the sale of these shares under the Securities Act would result in these shares becoming freely tradable without restriction under the Securities Act immediately
upon the effectiveness of the registration, except for shares purchased by affiliates. See the section titled “Description of Capital Stock—Registration Rights” for additional information.
RegistrationStatementsonFormS-8
In connection with this offering, we intend to file one or more registration statements on Form S-8 under the Securities Act covering all of the shares of our Class A common stock
and Class B common stock subject to outstanding stock options and the shares of our Class A common stock reserved for issuance under our equity incentive plans. We expect to file
these registration statements as soon as permitted under the Securities Act. However, the shares registered on Form S-8 may be subject to the volume limitations and the manner of
sale, notice, and public information requirements of Rule 144.
197
SALEPRICEHISTORYOFOURCAPITALSTOCK
We have applied to list our Class A common stock on the Nasdaq Global Select Market. Prior to the initial listing, no public market existed for our Class A common stock.
However, our Class A common stock and Class B common stock has a history of trading in private transactions. The table below shows the high and low sales prices for our Class A
common stock and Class B common stock in private transactions by our stockholders, for the indicated periods, as well as the volume weighted average price per share, based on
information available to us. This information may have little or no relation to broader market demand for our Class A common stock and thus the opening public price and subsequent
public price of our Class A common stock on the Nasdaq Global Select Market. As a result, you should not place undue reliance on these historical private sales prices as they may
differ materially from the opening public price and subsequent public price of our Class A common stock on the Nasdaq Global Select Market. See the section titled “Risk Factors—
Risks Related to Ownership of Our Class A Common Stock—The price of our Class A common stock may have little or no relationship to the historical sales prices of our capital stock
in private transactions.”
PerShareSalePrice
NumberofSharesSold
inthePeriod
VolumeWeighted
AveragePrice
(VWAP)
NumberofShares
Outstanding(PeriodEnd)High Low
Annual
Year Ended December 31, 2020 $ 28.83 $ 28.83 2,081,164 $ 28.83
185,986,111
Quarterly
Year Ended December 31, 2020
First Quarter
$ — $ — —
$ —
182,011,368
Second Quarter
$ — $ — —
$ —
182,061,183
Third Quarter
$ 28.83 $ 28.83 2,081,164 $ 28.83 184,400,468
Fourth Quarter
$ — $ — — $ —
185,986,111
Year Ended December 31, 2021
First Quarter
Monthly
Year Ended December 31, 2020
June $ — $ — —
$ —
182,061,183
July $ — $ — —
$ —
183,473,190
August $ 28.83 $ 28.83 1,040,582
$ 28.83 184,290,914
September $ 28.83 $ 28.83 1,040,582
$ 28.83 184,400,468
October $ — $ —
—
$ —
184,535,784
November $ — $ —
—
$ —
184,714,977
December $ — $ — — $ —
185,986,111
Year Ended December 31, 2021
January
February
198
CERTAINMATERIALU.S.FEDERALINCOMETAXCONSEQUENCESTONON-U.S.HOLDERSOFOURCOMMONSTOCK
The following summary describes the material U.S. federal income tax consequences of the ownership and disposition of our Class A common stock acquired pursuant to in this
offering. This discussion does not describe all of the tax considerations that may be relevant to a particular holder's acquisition, ownership or disposition of the Class A common stock
such as the potential application of the alternative minimum tax or Medicare contribution tax on net investment income. In addition, this discussion does not deal with state or local
taxes, U.S. federal gift, and estate tax laws, except to the limited extent provided below, or any non-U.S. tax consequences that may be relevant to holders of our Class A common
stock in light of their particular circumstances.
Special rules different from those described below may apply to certain holders that are subject to special treatment under the Code, such as:
• insurance companies, banks, and other financial institutions;
• tax-exempt organizations (including private foundations) and tax-qualified retirement plans;
• foreign governments and international organizations;
• broker-dealers and traders in securities;
• U.S. expatriates and certain former citizens or long-term residents of the United States;
• persons required for U.S. federal income tax purposes to conform the timing of income accruals to their financial statements under Section 451(b) of the Code;
• persons that own, or are deemed to own, more than five percent of our capital stock;
• “controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax;
• persons who acquire our Class A common stock through the exercise of an option or otherwise as compensation;
• persons that hold our Class A common stock as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security,” or integrated investment or other risk reduction
strategy;
• persons who do not hold our Class A common stock as a capital asset within the meaning of Section 1221 of the Code (generally, for investment purposes); and
• partnerships and other pass-through entities, and investors in such pass-through entities (regardless of their places of organization or formation).
Such holders are urged to consult their own tax advisors to determine the U.S. federal, state, local, and other tax consequences that may be relevant to them.
Furthermore, the discussion below is based upon the provisions of the Code, and Treasury regulations, rulings, and judicial decisions thereunder as of the date hereof, and such
authorities may be repealed, revoked, or modified, possibly retroactively, and are subject to differing interpretations which could result in U.S. federal income tax consequences
different from those discussed below. We have not requested a ruling from the Internal Revenue Service, or IRS, with respect to the statements made and the conclusions reached in
the following summary, and there can be no assurance that the IRS will agree with such statements and conclusions or will not take a contrary position regarding the tax
consequences described herein, or that any such contrary position would not be sustained by a court.
199
PERSONS CONSIDERING THE PURCHASE OF OUR CLASS A COMMON STOCK SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL
INCOME TAX CONSEQUENCES OF ACQUIRING, OWNING, AND DISPOSING OF OUR CLASS A COMMON STOCK IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL
AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION, INCLUDING ANY STATE, LOCAL, OR NON-U.S. TAX CONSEQUENCES OR
ANY U.S. FEDERAL NON-INCOME TAX CONSEQUENCES, AND THE POSSIBLE APPLICATION OF TAX TREATIES.
If an entity or arrangement that is treated as a partnership for U.S. federal income tax purposes holds our Class A common stock, the U.S. federal income tax treatment of a
partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership that holds our Class A common stock is urged to consult
its own tax advisor with regard to the U.S. federal income tax consequences of the ownership of the Class A common stock.
For purposes of this section, a “U.S. Holder” means a beneficial owner of our Class A common stock (other than an entity treated as a partnership for U.S. federal income tax
purposes) that is, for U.S. federal income tax purposes:
• a citizen or resident of the United States;
• a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any political subdivision thereof; or
• an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.
An individual non-U.S. citizen may, in some cases, be deemed to be a resident alien (as opposed to a nonresident alien) by virtue of being present in the United States for at least
31 days in the calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year. Generally, for this purpose, all the days present
in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year, are counted.
Resident aliens are generally subject to U.S. federal income tax as if they were U.S. citizens. Individuals who are uncertain of their status as resident or nonresident aliens for U.S.
federal income tax purposes are urged to consult their own tax advisors regarding the U.S. federal income tax consequences of the ownership or disposition of our Class A common
stock.
A “Non-U.S. Holder” means a beneficial owner of our Class A common stock (other than an entity treated as a partnership for U.S. federal income tax purposes) that is not a U.S.
Holder.
Distributions on the Class A common stock
We do not expect to make any distributions on our Class A common stock in the foreseeable future. If we do make distributions on our Class A common stock, however, such
distributions made to a Non-U.S. Holder of our Class A common stock will constitute dividends for U.S. tax purposes to the extent paid out of our current or accumulated earnings and
profits (as determined under U.S. federal income tax principles). Distributions in excess of our current and accumulated earnings and profits will constitute a return of capital that is
applied against and reduces, but not below zero, a Non-U.S. Holder’s adjusted tax basis in our Class A common stock. Any remaining excess will be treated as gain realized on the
sale or exchange of our Class A common stock as described below under “—Gain on Disposition of Our Class A Common Stock.”
Any distribution on our Class A common stock that is treated as a dividend paid to a Non-U.S. Holder that is not effectively connected with the holder’s conduct of a trade or
business in the United States will generally be subject to withholding tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty between the United
States and the Non-U.S. Holder’s country of residence.
200
To obtain a reduced rate of withholding under a treaty, a Non-U.S. Holder generally will be required to provide the applicable withholding agent with a properly executed IRS Form W-
8BEN, IRS Form W-8BEN-E, or other appropriate form, certifying the Non-U.S. Holder’s entitlement to benefits under that treaty. Such form must be provided prior to the payment of
dividends and must be updated periodically. If a Non-U.S. Holder holds stock through a financial institution or other agent acting on the holder’s behalf, the holder will be required to
provide appropriate documentation to such agent. The holder’s agent will then be required to provide certification to the applicable withholding agent, either directly or through other
intermediaries. Non-U.S. Holders who are eligible for a reduced rate of U.S. withholding tax under an income tax treaty, should consult with their own tax advisor to determine if they
are able to obtain a refund or credit of any excess amounts withheld by timely filing an appropriate claim for a refund with the IRS.
We and the applicable withholding agents generally are not required to withhold tax on dividends paid to a Non-U.S. Holder that are effectively connected with the holder’s
conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment that the holder maintains in
the United States) if a properly executed IRS Form W-8ECI, stating that the dividends are so connected, is furnished us (or to the applicable withholding agent). In general, such
effectively connected dividends will be subject to U.S. federal income tax on a net income basis at the regular graduated rates applicable to U.S. persons. A corporate Non-U.S.
Holder receiving effectively connected dividends may also be subject to an additional “branch profits tax,” which is imposed, under certain circumstances, at a rate of 30% (or such
lower rate as may be specified by an applicable treaty) on the corporate Non-U.S. Holder’s effectively connected earnings and profits, subject to certain adjustments.
See also the section below titled “—Foreign Accounts” for additional withholding rules that may apply to dividends paid to certain foreign financial institutions or non-financial
foreign entities.
Gain on disposition of our Class A common stock
Subject to the discussions below under the sections titled “—Backup Withholding and Information Reporting,” a Non-U.S. Holder generally will not be subject to U.S. federal
income or withholding tax with respect to gain realized on a sale or other disposition of our Class A common stock unless (i) the gain is effectively connected with a trade or business
of the holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment that the holder maintains in the United States), (ii)
the Non-U.S. Holder is a nonresident alien individual and is present in the United States for 183 or more days in the taxable year of the disposition and certain other conditions are
met, or (iii) we are or have been a “United States real property holding corporation” within the meaning of Code Section 897(c)(2) at any time within the shorter of the five-year period
preceding such disposition or the holder’s holding period in the Class A common stock.
Non-U.S. Holders described in (i) above, will be required to pay tax on the net gain derived from the sale at the regular graduated U.S. federal income tax rates applicable to U.S.
persons. Corporate Non-U.S. Holders described in (i) above may also be subject to the additional branch profits tax at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty. Individual Non-U.S. Holders described in (ii) above, will be required to pay a flat 30% tax on the gain derived from the sale, which gain may be offset by
U.S. source capital losses (even though such holder is not considered a resident of the United States), provided such holder has timely filed U.S. federal income tax returns with
respect to such losses. With respect to (iii) above, in general, we would be a United States real property holding corporation if United States real property interests (as defined in the
Code and the Treasury Regulations) comprised (by fair market value) at least half of our assets. We believe that we are not, and do not anticipate becoming, a United States real
property holding corporation. However, there can be no assurance that we will not become a United States real property holding corporation in the future. Even if we are treated as a
United States real property holding corporation, gain realized by a Non-U.S. Holder on a disposition of our Class A common stock will not be subject to U.S. federal income tax so long
as the Non-U.S. Holder is a “qualified foreign pension fund” as defined in Section 897(l)(2) of the Code or an entity all of the interests of which are held by qualified foreign pension
funds, or (i) the Non-U.S. Holder
201
owned, directly, indirectly, or constructively, no more than five percent of our Class A common stock at all times within the shorter of (a) the five-year period preceding the disposition
or (b) the holder’s holding period and (ii) our Class A common stock is regularly traded on an established securities market. There can be no assurance that our Class A common
stock will qualify as regularly traded on an established securities market.
U.S. federal estate tax
The estates of nonresident alien individuals generally are subject to U.S. federal estate tax on property with a U.S. situs. Because we are a U.S. corporation, our Class A common
stock will be U.S. situs property and, therefore, will be included in the taxable estate of a nonresident alien decedent, unless an applicable estate tax treaty between the United States
and the decedent’s country of residence provides otherwise. The terms “resident” and “nonresident” are defined differently for U.S. federal estate tax purposes than for U.S. federal
income tax purposes. Investors are urged to consult their own tax advisors regarding the U.S. federal estate tax consequences of the ownership or disposition of our Class A common
stock.
Backup withholding and information reporting
Generally, we or certain financial middlemen must report information to the IRS with respect to any distributions we pay on our Class A common stock, including the amount of
any such distributions, the name and address of the recipient, and the amount, if any, of tax withheld, regardless of whether such distributions constitute dividends or whether any tax
was actually withheld. A similar report is sent to the holder to whom any such dividends are paid. Pursuant to tax treaties or certain other agreements, the IRS may make its reports
available to tax authorities in the recipient’s country of residence.
Dividends paid by us (or our paying agents) to a Non-U.S. Holder may also be subject to U.S. backup withholding. U.S. backup withholding generally will not apply to a Non-U.S.
Holder who provides a properly executed IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, or otherwise establishes an exemption, provided that the applicable withholding
agent does not have actual knowledge or reason to know the holder is a U.S. person.
Under current U.S. federal income tax law, U.S. information reporting and backup withholding requirements generally will apply to the proceeds of a disposition of our Class A
common stock effected by or through a U.S. office of any broker, U.S. or non-U.S., unless the Non-U.S. Holder provides a properly executed IRS Form W-8BEN or IRS Form W-
8BEN-E, as applicable, or otherwise meets documentary evidence requirements for establishing non-U.S. person status or otherwise establishes an exemption. Generally, U.S.
information reporting and backup withholding requirements will not apply to a payment of disposition proceeds to a Non-U.S. Holder where the transaction is effected outside the
United States through a non-U.S. office of a non-U.S. broker. Information reporting and backup withholding requirements may, however, apply to a payment of disposition proceeds if
the broker has actual knowledge, or reason to know, that the holder is, in fact, a U.S. person. For information reporting purposes only, certain U.S. related brokers may be treated in a
manner similar to U.S. brokers.
Backup withholding is not an additional tax. Rather, the U.S. federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If
backup withholding results in an overpayment of taxes, a refund or credit may generally be obtained from the IRS, provided that the required information is furnished to the IRS in a
timely manner.
Foreign accounts
In addition, U.S. federal withholding taxes may apply under the Foreign Account Tax Compliance Act, or FATCA, on certain types of payments, including dividends on our Class A
common stock, made to non-U.S. financial institutions and certain other non-U.S. entities. Specifically, a 30% withholding tax may be imposed on dividends on our Class A common
stock paid to a “foreign financial institution” or a “non-financial foreign entity” (each as defined in the Code), unless (i) the foreign financial institution agrees to
202
undertake certain diligence and reporting obligations, (ii) the non-financial foreign entity either certifies it does not have any “substantial United States owners” (as defined in the Code)
or furnishes identifying information regarding each substantial United States owner, or (iii) the foreign financial institution or non-financial foreign entity otherwise qualifies for an
exemption from these rules. The 30% federal withholding tax described in this paragraph cannot be reduced under an income tax treaty with the United States. If the payee is a
foreign financial institution and is subject to the diligence and reporting requirements in (i) above, it must enter into an agreement with the U.S. Department of the Treasury requiring,
among other things, that it undertake to identify accounts held by certain “specified United States persons” or “United States-owned foreign entities” (each as defined in the Code),
annually report certain information about such accounts, and withhold 30% on certain payments to non-compliant foreign financial institutions and certain other account holders. Under
the applicable Treasury Regulations and administrative guidance, withholding under FATCA generally applies to payments of dividends on our Class A common stock, and also would
generally apply to payments of gross proceeds from the sale or other disposition of such stock. Under proposed U.S. Treasury Regulations, this withholding tax will not apply to the
gross proceeds from any sale or disposition of our Class A common stock. Withholding agents may, but are not required to, rely on the proposed Treasury Regulations until final
Treasury Regulations are issued. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be
subject to different rules.
Prospective investors should consult their tax advisors regarding the potential application of withholding under FATCA to their investment in our Class A common stock.
EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF PURCHASING, HOLDING, AND DISPOSING
OF OUR CLASS A COMMON STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAW, AS WELL AS TAX CONSEQUENCES ARISING
UNDER ANY STATE, LOCAL, NON-U.S. OR U.S. FEDERAL NON-INCOME TAX LAWS SUCH AS ESTATE AND GIFT TAX.
203
PLANOFDISTRIBUTION
The registered stockholders and their pledgees, donees, transferees, assignees, or other successors-in-interest may sell their shares of Class A common stock covered hereby
pursuant to brokerage transactions on the Nasdaq Global Select Market or any other public exchange or registered alternative trading system at prevailing market prices at any time
after the shares of Class A common stock are listed for trading thereon.
We are not party to any arrangement with any registered stockholder or any broker-dealer with respect to sales of shares of Class A common stock by the registered stockholders,
except we will engage financial advisors with respect to certain other matters relating to our listing, as further described below. As such, we do not anticipate receiving any notice as to
if and when any registered stockholder may elect to sell their shares of Class A common stock or the prices at which any such sales may occur, and there can be no assurance that
any registered stockholders will sell any or all of the shares of Class A common stock covered by this prospectus.
We will not receive any proceeds from the sale of shares of Class A common stock by the registered stockholders. We expect to recognize certain non-recurring costs as part of
our transition to a publicly-traded company, consisting of professional fees and other expenses. As part of our direct listing, these fees will be expensed in the period incurred and not
deducted from net proceeds to the issuer as they would be in an initial public offering.
We have engaged Goldman Sachs & Co. LLC, or Goldman Sachs, J.P. Morgan Securities LLC, or J.P. Morgan, Allen & Company, or Allen & Co., and Citigroup Global Markets
Inc., or Citigroup, as our financial advisors to advise and assist us with respect to certain matters relating to our listing. These matters include assisting us in defining our objectives
with respect to the filing of the registration statement of which this prospectus forms a part, our preparation of the registration statement of which this prospectus forms a part, our
preparation of investor communications and presentations in connection with investor education, and being available to consult with Nasdaq, including on the day that our shares of
Class A common stock are initially listed on the Nasdaq Global Select Market.
In addition, Goldman Sachs will determine when our shares of Class A common stock are ready to trade and to approve proceeding with the opening of trading at the Current
Reference Price (as defined below). However, the financial advisors have not been engaged to participate in investor meetings or to otherwise facilitate or coordinate price discovery
activities or sales of our Class A common stock in consultation with us, except as described herein.
On the day that our shares of Class A common stock are initially listed on the Nasdaq Global Select Market, Nasdaq will begin accepting, but not executing, pre-opening buy and
sell orders and will begin to continuously generate the indicative Current Reference Price on the basis of such accepted orders. During a 10-minute “Display Only” period, market
participants may enter quotes and orders in Class A common stock in Nasdaq’s systems and such information is disseminated, along with other indicative imbalance information, to
Goldman Sachs and other market participants (including the other financial advisors) by Nasdaq on its NOII and BookViewer tools. Following the “Display Only” period, a “Pre-Launch”
period begins, during which Goldman Sachs, in its capacity as our designated financial advisor to perform the functions under Nasdaq Rule 4120(c)(8), must notify Nasdaq that our
shares are “ready to trade.” Once Goldman Sachs has notified Nasdaq that our shares of Class A common stock are ready to trade, Nasdaq will calculate the Current Reference Price
(as defined below) for our shares of Class A common stock, in accordance with Nasdaq’s rules. If Goldman Sachs then approves proceeding at the Current Reference Price, Nasdaq
will conduct price validation checks in accordance with Nasdaq rules. As part of conducting its price validation checks, Nasdaq may consult with Goldman Sachs and other market
participants (including the other financial advisors). Upon completion of such price validation checks the applicable orders that have been entered will then be executed at such price
and regular trading of our shares of Class A common stock on the Nasdaq Global Select Market will commence.
204
Under Nasdaq’s rules, the “Current Reference Price” means: (i) the single price at which the maximum number of orders to buy or sell our shares of Class A common stock can be
matched; (ii) if more than one price exists under clause (i), then the price that minimizes the number of our shares of Class A common stock for which orders cannot be matched; (iii) if
more than one price exists under clause (ii), then the entered price (i.e. the specified price entered in an order by a customer to buy or sell) at which our shares of Class A common
stock will remain unmatched (i.e. will not be bought or sold); and (iv) if more than one price exists under clause (iii), a price determined by Nasdaq after consultation with Goldman
Sachs, J.P. Morgan, Allen & Co., and Citigroup in their capacity as financial advisors. Goldman Sachs, J.P. Morgan, Allen & Co., and Citigroup will exercise any consultation rights
only to the extent that they may do so consistent with the anti-manipulation provisions of the federal securities laws, including Regulation M (to the extent applicable), or applicable
relief granted thereunder. In determining the Current Reference Price, Nasdaq’s algorithms will match orders that have been entered into and accepted by Nasdaq’s system. This
occurs with respect to a potential Current Reference Price when orders to buy shares of Class A common stock at an entered bid price that is greater than or equal to such potential
Current Reference Price are matched with orders to sell a like number of shares of Class A common stock at an entered asking price that is less than or equal to such potential
Current Reference Price.
To illustrate, as a hypothetical example of the calculation of the Current Reference Price, if Nasdaq’s algorithms matched all accepted orders as described above, and two limit
orders remained — a limit order to buy 500 shares of Class A common stock at an entered bid price of $10.01 per share and a limit order to sell 200 shares of Class A common stock
at an entered asking price of $10.00 per share — the Current Reference Price would be determined as follows:
• Under clause (i), if the Current Reference Price is $10.00, then the maximum number of additional shares that can be matched is 200. If the Current Reference Price is
$10.01, then the maximum number of additional shares that can be matched is also 200, which means that the same maximum number of additional shares would be
matched at the price of either $10.00 or $10.01.
• Because more than one price under clause (i) exists, under clause (ii), the Current Reference Price would be the price that minimizes the imbalance between orders to buy or
sell (i.e. minimizes the number of shares that would remain unmatched at such price). Selecting either $10.00 or $10.01 as the Current Reference Price would create the
same imbalance in the limit orders that cannot be matched, because at either price 300 shares would not be matched.
• Because more than one price under clause (ii) exists, then under clause (iii), the Current Reference Price would be the entered price at which orders for shares of common
stock at such entered price will remain unmatched. In such case, choosing $10.01 would cause 300 shares of the 500 share limit order with the entered price of $10.01 to
remain unmatched, compared to choosing $10.00, where all 200 shares of the limit order with the entered price of $10.00 would be matched, and no shares at such entered
price remain unmatched. Thus, Nasdaq would select $10.01 as the Current Reference Price because orders for shares at such entered price will remain unmatched.
The above example (including the prices) is provided solely by way of illustration.
Goldman Sachs, as the designated financial advisor under Nasdaq Rule 4120(c)(8), will determine when our shares of Class A common stock are ready to trade and approve
proceeding at the Current Reference Price primarily based on consideration of volume, timing, and price. In particular, Goldman Sachs will determine, based primarily on pre-opening
buy and sell orders, when a reasonable amount of volume will cross on the opening trade such that sufficient price discovery has been made to open trading at the Current Reference
Price. If Goldman Sachs does not approve proceeding at the Current Reference Price (for example, due to the absence of adequate pre-opening buy and sell interest), Goldman
Sachs will request that Nasdaq delay the open until such a time that sufficient price discovery has been made to ensure a reasonable amount of volume crosses on the opening trade.
205
Similar to a Nasdaq-listed underwritten initial public offering, in connection with the listing of our shares of Class A common stock, the financial advisors and buyers and sellers (or
their brokers) who have subscribed will have access to the Nasdaq Stock Market’s Order Imbalance Indicator (sometimes referred to as the Net Order Imbalance Indicator), a widely
available, subscription-based data feed, prior to submitting buy or sell orders. Nasdaq’s electronic trading platform simulates auctions every second to calculate a Current Reference
Price, the number of shares that can be paired off the Current Reference Price, the number of shares that would remain unexecuted at the Current Reference Price and whether a
buy-side or sell-side imbalance exists, or whether there is no imbalance, in order to disseminate that information continuously to buyers and sellers via the Order Imbalance Indicator
data feed.
However, because this is not an underwritten initial public offering, there will be no “book building” process (i.e., an organized process pursuant to which buy and sell interest is
coordinated in advance to some prescribed level – the “book”). Moreover, prior to the opening trade, there will not be a price at which underwriters initially sold shares of our Class A
common stock to the public as there would be in an underwritten initial public offering. This lack of an initial public offering price could impact the range of buy and sell orders collected
by the Nasdaq Global Select Market from various broker-dealers. Consequently, the public price of our shares of Class A common stock may be more volatile than in an underwritten
initial public offering and could, upon listing on the Nasdaq Global Select Market, decline significantly and rapidly. See the section titled “Risk Factors—Risks Related to Ownership of
Our Class A Common Stock—The price of our Class A common stock may be volatile, and could, upon listing on the Nasdaq Global Select Market, decline significantly and rapidly.
Market volatility may affect the value of an investment in our Class A common stock and could subject us to litigation.” and “Risk Factors—Risks Related to Ownership of Our Class A
Common Stock—The price of our Class A common stock may have little or no relationship to the historical sales prices of our capital stock in private transactions.”
In addition, in order to list on the Nasdaq Global Select Market, we are also required to have at least three registered and active market makers. We understand that Goldman
Sachs, J.P. Morgan, and Citigroup intend (but are not obligated) to act as registered and active market makers, although any such market-making, if commenced, may be
discontinued at any time. Further, our financial advisors may assist interested registered stockholders with the establishment of brokerage accounts.
In addition to sales made pursuant to this prospectus, the shares of Class A common stock covered by this prospectus may be sold by the registered stockholders in individually
negotiated transactions exempt from the registration requirements of the Securities Act. Under the securities laws of some states, shares of Class A common stock may be sold in
such states only through registered or licensed brokers or dealers.
The registered stockholders may from time to time transfer, pledge, assign, or grant a security interest in some or all the shares of Class A common stock owned by it and, if it
defaults in the performance of its secured obligations, the transferees, pledgees, assignees, or secured parties may offer and sell the shares of Class A common stock from time to
time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of the registered
stockholders to include the transferee, pledgee, assignee, or other successors in interest as registered stockholders under this prospectus. The registered stockholders also may
transfer the shares in other circumstances, in which case the transferees, pledgees, or other successors in interest will be the registered beneficial owners for purposes of this
prospectus.
If any of the registered stockholders utilize a broker-dealer in the sale of the shares of Class A common stock being offered by this prospectus, such broker-dealer may receive
commissions in the form of discounts, concessions, or commissions from such registered stockholder or commissions from purchasers of the shares of Class A common stock for
whom they may act as agent or to whom they may sell as principal.
206
LEGALMATTERS
Fenwick & West LLP, San Francisco, California, which has acted as our counsel in connection with this offering, will pass upon the validity of the shares of our Class A common
stock registered by this prospectus. As of the date of this prospectus, individuals and entities associated with Fenwick & West LLP beneficially own an aggregate of less than 0.01% of
our capital stock, which will convert to Class B common stock in connection with this offering. Latham & Watkins LLP, New York, New York, is legal advisor to the financial advisors.
CHANGEINACCOUNTANTS
On April 29, 2020, we changed our independent registered public accounting firm from Grant Thornton LLP to Deloitte & Touche LLP. The decision to change our independent
registered public accounting firms was approved by the audit committee of our board of directors.
The report of Grant Thornton LLP on our consolidated balance sheet as of December 31, 2019 and the consolidated statements of operations, comprehensive income (loss),
changes in convertible preferred stock and stockholders’ equity, and cash flows for the year then ended, did not contain an adverse opinion or disclaimer of opinion, and were not
qualified or modified as to uncertainties, audit scope or accounting principles. We had no disagreements with Grant Thornton LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to its satisfaction, would have caused Grant Thornton LLP to make reference in
connection with its opinion to the subject matter of the disagreement during the two fiscal years prior to its dismissal and the subsequent interim period through April 29, 2020. During
the two most recent fiscal years preceding our dismissal of Grant Thornton LLP, and the subsequent interim period through April 29, 2020, there were no “reportable events” as such
term is defined in Item 304(a)(1)(v) of Regulation S-K.
We have provided Grant Thornton LLP with a copy of the foregoing disclosures and have requested that Grant Thornton LLP furnish us with a letter addressed to the SEC stating
whether it agrees with the statements made by us as set forth above. A copy of Grant Thornton LLP’s letter, dated October 9, 2020, is filed as Exhibit 16.1 to this Registration
Statement on Form S-1.
During the two years ended December 31, 2019 and through the period ended April 29, 2020, neither we, nor anyone acting on our behalf, consulted with Deloitte & Touche LLP
on matters that involved the application of accounting principles to a specified transaction, either completed or proposed, the type of audit opinion that might be rendered on our
financial statements, or any other matter that was the subject of a disagreement as that term is used in Item 304 (a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of
Regulation S-K or a reportable event as that term is used in Item 304(a)(1)(v) and the related instructions to Item 304 of Regulation S-K.
EXPERTS
Deloitte&ToucheLLP
The consolidated financial statements of Coinbase Global, Inc. and subsidiaries as of December 31, 2020 and for the year ended December 31, 2020, included in this prospectus
and elsewhere in the registration statement have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report. Such financial
statements have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
GrantThorntonLLP
The audited consolidated financial statements of Coinbase Global, Inc. and subsidiaries as of December 31, 2019, and for the year ended December 31, 2019, included in this
prospectus and elsewhere in the registration statement have been so included in reliance upon the report of Grant
207
Thornton LLP, our independent registered public accountants and upon the authority of said firm as experts in accounting and auditing.
ADDITIONALINFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of our Class A common stock covered by this prospectus.
This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits filed therewith. For
further information about us and our Class A common stock, we refer you to the registration statement and the exhibits filed therewith. Statements contained in this prospectus
regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and in each instance, we refer you to
the copy of such contract or other document filed as an exhibit to the registration statement. The SEC maintains a website that contains reports, proxy, and information statements,
and other information regarding registrants that file electronically with the SEC. The address of the website is www.sec.gov.
Immediately upon the effectiveness of the registration statement of which this prospectus forms a part, we will become subject to the information and reporting requirements of the
Exchange Act and, in accordance with this law, will file periodic reports, proxy statements, and other information with the SEC. These periodic reports, proxy statements, and other
information will be available for inspection and copying at the website of the SEC referred to above. We also maintain a website at www.coinbase.com. Upon the effectiveness of the
registration statement of which this prospectus forms a part, you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or
furnished to, the SEC. The inclusion of our website address in this prospectus is an inactive textual reference only. The information contained in or accessible through our website is
not part of this prospectus or the registration statement of which this prospectus forms a part, and investors should not rely on such information in making a decision to purchase
shares of our Class A common stock.
208
INDEXTOCONSOLIDATEDFINANCIALSTATEMENTS
Page
Report of Independent Registered Public Accounting Firm F-2
Consolidated Balance Sheets F-4
Consolidated Statements of Operations F-5
Consolidated Statements of Comprehensive Income (Loss) F-6
Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' Equity F-7
Consolidated Statements of Cash Flows F-8
Notes to Consolidated Financial Statements F-10
F-1
REPORTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRM
Board of Directors and Stockholders
Coinbase Global, Inc.
Opiniononthefinancialstatements
We have audited the accompanying consolidated balance sheet of Coinbase Global, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2019,
the related consolidated statements of operations, comprehensive income (loss), changes in convertible preferred stock and stockholders’ equity, and cash flows for the year ended
December 31, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2019, and the results of their operations and their cash flows for the year ended December 31, 2019, in conformity
with accounting principles generally accepted in the United States of America.
Basisforopinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our
audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to
the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that
our audit provides a reasonable basis for our opinion.
/s/ GRANT THORNTON LLP
We have served as the Company’s auditor from 2018 to 2020.
New York, New York
October 9, 2020 (except for Notes 2 and 6, as to which the date is February 25, 2021)
F-2
REPORTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRM
To the stockholders and the Board of Directors of Coinbase Global, Inc.
OpinionontheFinancialStatements
We have audited the accompanying consolidated Balance Sheet of Coinbase Global, Inc. (the "Company") as of December 31, 2020, the related consolidated statements of
Operations, Comprehensive Income, Changes in Convertible Preferred Stock and Stockholders’ Equity and Cash Flows, for the year ended December 31, 2020, and the related notes
(collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2020, and the results of its operations and its cash flows for the year ended December 31, 2020, in conformity with accounting principles generally accepted in the
United States of America.
BasisforOpinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our
audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to
the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that
our audit provides a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
San Francisco, California
February 25, 2021
We have served as the Company's auditor since 2020.
F-3
CoinbaseGlobal,Inc.
ConsolidatedBalanceSheets
(Inthousands,exceptparvaluedata)
December31,
ProFormaDecember31,
2020(unaudited)2020 2019
Assets
Current assets:
Cash and cash equivalents $ 1,061,850 $ 548,945
Restricted cash 30,787 34,122
Customer custodial funds 3,763,392 1,201,350
USDC 48,938 88,429
Accounts receivable, net of allowance 189,471 17,496
Income tax receivable — 74,171
Prepaid expenses and other current assets 39,510 22,433
Total current assets 5,133,948 1,986,946
Crypto assets held 316,094 33,932
Lease right-of-use assets 100,845 123,386
Property and equipment, net 49,250 47,117
Goodwill 77,212 54,696
Intangible assets, net 60,825 70,137
Other non-current assets 117,240 75,555
Total assets $ 5,855,414 $ 2,391,769
Liabilities,ConvertiblePreferredStock,andStockholders’Equity
Current liabilities:
Custodial funds due to customers $ 3,849,468 $ 1,106,815
Accounts payable and accrued expenses 85,111 45,453
Crypto asset borrowings 271,303 —
Lease liabilities, current 25,270 23,775
Other current liabilities 15,703 47,401
Total current liabilities 4,246,855 1,223,444
Lease liabilities, non-current 82,508 106,542
Total liabilities 4,329,363 1,329,986
Commitments and contingencies (Note 19)
Convertible preferred stock, $0.00001 par value; 126,605 shares authorized; 112,878 and 114,959 shares issued
and outstanding at December 31, 2020 and December 31, 2019, respectively; aggregate liquidation preference of
$578,750 and $580,981 at December 31, 2020 and December 31, 2019, respectively; no shares issued and
outstanding, pro forma 562,467 564,697 $ —
Stockholders’ equity
Class A common stock, $0.00001 par value; 267,640 and 259,104 shares authorized at December 31, 2020 and
December 31, 2019, respectively; 12,204 and 7,317 shares issued and outstanding at December 31, 2020 and
December 31, 2019, respectively; 21,035 shares issued and outstanding, pro forma — — —
Class B common stock, $0.00001 par value; 208,414 shares authorized at December 31, 2020 and December
31, 2019; 60,904 and 59,677 shares issued and outstanding at December 31, 2020 and December 31, 2019,
respectively; 164,951 shares issued and outstanding, pro forma — — 1
Additional paid-in capital 231,024 93,820 793,490
Accumulated other comprehensive income (loss) 6,256 (721) 6,256
Retained earnings 726,304 403,987 726,304
Total stockholders’ equity 963,584 497,086 1,526,051
Total liabilities, convertible preferred stock, and stockholders’ equity
$ 5,855,414 $ 2,391,769 $ 5,855,414
The accompanying notes are an integral part of these consolidated financial statements.
F-4
CoinbaseGlobal,Inc.
ConsolidatedStatementsofOperations
(Inthousands,exceptpersharedata)
YearEndedDecember31,
2020 2019
Revenue:
Net revenue $ 1,141,167 $ 482,949
Other revenue 136,314 50,786
Total revenue 1,277,481 533,735
Operating expenses:
Transaction expense 135,514 82,055
Technology and development 271,732 185,044
Sales and marketing 56,782 24,150
General and administrative 279,880 231,929
Restructuring — 10,140
Other operating expense 124,622 46,200
Total operating expenses 868,530 579,518
Operating income (loss) 408,951 (45,783)
Other income, net (248) (367)
Income (loss) before provision for (benefit from) income taxes 409,199 (45,416)
Provision for (benefit from) income taxes 86,882 (15,029)
Net income (loss) $ 322,317 $ (30,387)
Net income (loss) attributable to common stockholders:
Basic
$ 108,256 $ (30,387)
Diluted
$ 127,471 $ (30,387)
Net income (loss) per share attributable to common stockholders:
Basic
$ 1.58 $ (0.50)
Diluted $ 1.40 $ (0.50)
Weighted-average shares of common stock used to compute net income (loss) per share attributable to common stockholders:
Basic
68,671 61,317
Diluted 91,209 61,317
Pro forma net income per share attributable to common stockholders (unaudited):
Basic
$ 1.76
Diluted $ 1.57
Pro forma weighted-average shares of common stock used to compute pro forma net income per share attributable to common
stockholders (unaudited):
Basic
182,945
Diluted
205,575
The accompanying notes are an integral part of these consolidated financial statements.
F-5
CoinbaseGlobal,Inc.
ConsolidatedStatementsofComprehensiveIncome(Loss)
(Inthousands)
YearEndedDecember31,
2020 2019
Net income (loss) $ 322,317 $ (30,387)
Other comprehensive income (loss)
Translation adjustment, net of tax 6,977 (43)
Comprehensive income (loss)
$ 329,294 $ (30,430)
The accompanying notes are an integral part of these consolidated financial statements.
F-6
CoinbaseGlobal,Inc.
ConsolidatedStatementsofChangesinConvertiblePreferredStockandStockholders'Equity
(Inthousands)
ConvertiblePreferredStock
Additional
Paid-InCapital
AccumulatedOther
Comprehensive
Income(Loss)
Retained
Earnings
CommonStock
Shares Amount Shares Amount Total
Balance at January 1, 2020 114,959 $ 564,697 66,994 — $ 93,820 $ (721) $ 403,987 $ 497,086
Issuance of common stock upon exercise of stock
options, net of repurchases — — 2,038 — 16,707 — — $ 16,707
Repurchase of equity awards — — — — (1,930) — — (1,930)
Stock-based compensation expense — — — — 72,643 — — 72,643
Issuance of equity instruments as consideration in
business combination — — 1,304 — 31,349 — — 31,349
Issuance of common stock to settle contingent
consideration — — 691 — 16,205 — — 16,205
Conversion of preferred stock (2,081) (2,230) 2,081 — — 2,230 — — 2,230
Comprehensive income — — — — — 6,977 — 6,977
Net income — — — — — — 322,317 322,317
Balance at December 31, 2020
112,878 $ 562,467 73,108 — $ 231,024 $ 6,256 $ 726,304 $ 963,584
Balance at January 1, 2019 120,929 $ 569,232 59,850 — $ 47,257 $ (678) $ 453,492 $ 500,071
Issuance of Class A common stock — — 154 — 5,000 — — 5,000
Repurchase of equity awards — — (212) — (1,128) — (19,118) (20,246)
Issuance of common stock upon exercise of stock
options, net of repurchases — — 951 — 4,232 — — 4,232
Vesting of restricted stock — — 199 — 1,389 — — 1,389
Stock-based compensation expense — — 82 — 32,535 — — 32,535
Conversion of preferred stock (5,970) (4,535) 5,970 — 4,535 — — 4,535
Comprehensive loss — — — — — (43) — (43)
Net loss — — — — — — (30,387) (30,387)
Balance at December 31, 2019
114,959 $ 564,697 66,994 — $ 93,820 $ (721) $ 403,987 $ 497,086
The accompanying notes are an integral part of these consolidated financial statements.
F-7
CoinbaseGlobal,Inc.
ConsolidatedStatementsofCashFlows
(Inthousands)
YearEndedDecember31,
2020 2019
Cash flows from operating activities
Net income (loss) $ 322,317 $ (30,387)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization 30,962 16,878
Impairment expense 8,355 2,252
Stock-based compensation expense 70,548 31,147
Provision for transaction losses and doubtful accounts (2,966) (4,679)
Loss on disposal of property and equipment 355 9,073
Deferred income taxes 474 (20,903)
Unrealized loss (gain) on foreign exchange 1,057 (3,106)
Non-cash lease expense 25,012 13,323
Loss on investments 150 245
Change in fair value of contingent consideration 3,281 —
Realized (gain) loss on crypto assets (23,682) 5,662
Crypto assets received as revenue (94,158) (11,408)
Crypto asset payments for expenses 40,205 11,622
Fair value adjustment on derivatives 5,254 —
Changes in operating assets and liabilities:
USDC 37,936 35,303
Accounts receivable (157,156) 30,703
Income tax receivable 86,791 (1,912)
Other assets (48,677) (38,594)
Custodial funds due to customers 2,710,522 (130,122)
Accounts payable and accrued expenses 20,837 (788)
Lease liabilities (24,998) (11,025)
Other liabilities (8,349) 16,122
Net cash provided by (used in) operating activities 3,004,070 (80,594)
Cash flows from investing activities
Purchase of property and equipment (9,913) (33,521)
Proceeds from sale of property and equipment — 2,293
Capitalized internal-use software development costs (8,889) (6,950)
Business combination, net of cash acquired 33,615 (5,698)
Purchase of investments (10,329) (7,938)
Asset acquisition — (55,389)
Proceeds from settlement of investments 303 374
Purchase of crypto assets (528,080) (271,266)
Disposal of crypto assets 574,115 272,742
Net cash provided by (used in) investing activities 50,822 (105,353)
Cash flows from financing activities
Issuance of common stock upon exercise of stock options 20,731 4,353
Cash paid to repurchase equity awards (1,930) (20,958)
Net cash provided by (used in) financing activities 18,801 (16,605)
Net increase (decrease) in cash, cash equivalents, and restricted cash 3,073,693 (202,552)
Effect of exchange rates on cash (2,081) (170)
Cash, cash equivalents, and restricted cash, beginning of year 1,784,417 1,987,139
Cash, cash equivalents, and restricted cash, end of year
$ 4,856,029 $ 1,784,417
The accompanying notes are an integral part of these consolidated financial statements.
F-8
CoinbaseGlobal,Inc.
ConsolidatedStatementsofCashFlows
(Inthousands)
YearEndedDecember31,
2020 2019
Cash, cash equivalents, and restricted cash consisted of the following:
Cash and cash equivalents $ 1,061,850 $ 548,945
Restricted cash 30,787 34,122
Customer custodial funds 3,763,392 1,201,350
Total cash, cash equivalents, and restricted cash
$ 4,856,029 $ 1,784,417
Supplemental disclosure of cash flow information
Cash paid during the period for income taxes
$ 62,060 $ 2,165
Operating cash outflows for amounts included in the measurement of operating lease liabilities
$ 40,011 $ 14,356
Supplemental schedule of non-cash investing and financing activities
Unsettled purchases of property and equipment $ — $ 5,522
Right-of-use assets obtained in exchange for operating lease obligations
$ 2,146 $ 110,426
Issuance of common stock
$ — $ 5,000
Purchase of crypto assets and investments with non-cash consideration $ 662 $ 3,399
Crypto assets borrowed
$ 194,696 $ —
Crypto assets borrowed repaid
$ 59,171 $ —
The accompanying notes are an integral part of these consolidated financial statements.
F-9
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
1.NATUREOFOPERATIONS
Coinbase, Inc. was founded in 2012. In April 2014, in connection with a corporate reorganization, Coinbase, Inc. became a wholly-owned subsidiary of Coinbase Global, Inc.
(together with its consolidated subsidiaries, the “Company”).
The Company operates globally and is a leading provider of end-to-end financial infrastructure and technology for the cryptoeconomy. The Company offers retail users the primary
financial account for the cryptoeconomy, institutions a state of the art marketplace with a deep pool of liquidity for transacting in crypto assets, and ecosystem partners technology and
services that enable them to build crypto-based applications and securely accept crypto assets as payment.
In May 2020, the Company became a remote-first company. Accordingly, the Company does not maintain a headquarters.
2.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES
Basisofpresentationandprinciplesofconsolidation
The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) and include the
accounts of the Company and its subsidiaries. The Company’s subsidiaries are entities in which the Company holds, directly or indirectly, more than 50% of the voting rights or where
it exercises control. Certain subsidiaries of the Company have a basis of presentation different from GAAP. For the purposes of the consolidated financial statements, the basis of
presentation of such subsidiaries is converted to GAAP. All intercompany accounts and transactions have been eliminated.
Reclassification
In the year ended December 31, 2020, the Company reclassified certain operating expenses within the consolidated statements of operations. Prior-period amounts were revised
to conform with the current presentation. These changes have no impact on the Company’s previously reported consolidated net income (loss) for prior periods, including total
operating expenses, financial position, or cash flows for the year ended December 31, 2019.
The reclassification primarily relates to a refinement of the Company’s shared expenses allocation methodology to allocate a larger share of such shared expenses among the
departments. The refined methodology primarily allocated expenses out of General and administrative into Technology and development, and Sales and marketing.
The following table presents the impact of the reclassification on the presentation of these operating expenses to the previously reported consolidated statements of operations for
the year ended December 31, 2019:
F-10
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
YearEndedDecember31,2019
AsPreviouslyReported Adjustments Reclassified
Operating expenses:
Transaction expense
$ 82,055 $ — $ 82,055
Technology and development
160,093 24,951 185,044
Sales and marketing
23,268 882 24,150
General and administrative
257,762 (25,833) 231,929
Restructuring
10,140 — 10,140
Other operating expense
46,200 — 46,200
Total operating expenses
$ 579,518 $ — $ 579,518
Useofestimates
The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions in the Company’s consolidated
financial statements and notes thereto.
Significant estimates and assumptions include the determination of the recognition, measurement, and valuation of current and deferred income taxes; the fair value of stock-
based awards issued; the useful lives of intangible assets; the useful lives of property and equipment; the Company’s incremental borrowing rate; the fair value of assets acquired and
liabilities assumed in business combinations; the fair value of contingent consideration given in asset acquisitions; the fair value of derivatives and related hedges; and loss provisions.
Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment
due to COVID-19. To the extent that there are material differences between these estimates and actual results, the Company’s consolidated financial statements will be affected. The
Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the result of which forms the basis for making judgments
about the carrying values of assets and liabilities.
Unauditedproformabalancesheetandproformanetincomepershare
The unaudited pro forma balance sheet as of December 31, 2020 has been prepared assuming the automatic conversion of all outstanding shares of convertible preferred stock
into 112,878,253 shares of common stock immediately following the effectiveness of the Company’s registration on Form S-1 relating to the direct listing of the Company’s common
stock, as though the reclassification had occurred on December 31, 2020.
The unaudited pro forma basic and diluted net income per share attributable to common stockholders is computed to give effect to the automatic conversion of the Company’s
outstanding convertible preferred stock into shares of common stock in connection with becoming a public company. The Company used the if-converted method as though the
conversion had occurred as of the beginning of the period or the original date of issuance, if later.
Foreigncurrencytransactions
The Company’s functional currency is the U.S. dollar. The Company has exposure to foreign currency translation gains and losses arising from the Company’s net investment in
foreign subsidiaries. The revenues, expenses, and financial results of these foreign subsidiaries are recorded in their respective functional currencies. The financial statements of
these subsidiaries are translated into U.S. dollars using a current rate of exchange, with gains or losses, net of tax as applicable, included in accumulated other
F-11
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
comprehensive income/loss (“AOCI”) within the consolidated statements of changes in convertible preferred stock and stockholders’ equity. Cumulative translation adjustments are
released from AOCI and recorded in the statements of operations when the Company disposes or loses control of a consolidated subsidiary. Gains and losses resulting from
remeasurement are recorded in other income, net within the consolidated statements of operations.
Businesscombinations
The results of businesses acquired in a business combination are included in the Company’s consolidated financial statements from the date of the acquisition. Purchase
accounting results in assets and liabilities of an acquired business being recorded at their estimated fair values on the acquisition date. Any excess consideration over the fair value of
assets acquired and liabilities assumed is recognized as goodwill. Acquisition-related costs incurred by the Company are recognized as an expense in general and administrative
expenses within the consolidated statements of operations.
The Company uses its best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. The
Company’s estimates are inherently uncertain and subject to refinement.
During the measurement period, which may be up to one year from the acquisition date, and to the extent that the value was not previously finalized, the Company may record
adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. In addition, uncertain tax positions and
tax-related valuation allowances are initially recorded in connection with a business combination as of the acquisition date. The Company continues to collect information about facts
and circumstance that existed at the date of acquisition and reevaluates these estimates and assumptions quarterly and records any adjustments to the Company’s preliminary
estimates to goodwill, provided that the Company is within the measurement period. Upon the conclusion of the measurement period or final determination of the fair value of assets
acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company’s consolidated statements of operations.
Fairvaluemeasurements
The Company measures certain assets and liabilities at fair value. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to
measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
• Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
• Level 2: Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive
markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
• Level 3: Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.
Cashandcashequivalents
Cash and cash equivalents include cash and interest-bearing highly liquid investments held at financial institutions, cash on hand that are not restricted as to withdrawal or use
with an initial maturity of three months or less, and cash held in accounts at crypto trading venues. Crypto asset and fiat wallet
F-12
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
service trading venues include other crypto asset trading platforms that hold money transmitter licenses, and where the Company holds funds in its accounts with those trading
platforms. Cash and cash equivalents excludes customer legal tender, which is reported separately as customer custodial funds in the accompanying consolidated balance sheets.
Refer to Customer custodial funds and custodial funds due to customers below for further details.
Restrictedcash
The Company has restricted cash deposits at financial institutions related to operational restricted deposits and a standby letter of credit.
Customercustodialfundsandcustodialfundsduetocustomers
Customer custodial funds represent restricted cash and cash equivalents maintained in segregated Company bank accounts that are held for the exclusive benefit of customers.
Custodial funds due to customers represent cash deposits held by customers in their fiat wallets and unsettled deposits and withdrawals. The Company restricts the use of the assets
underlying the customer custodial funds to meet regulatory requirements and classifies the assets as current based on their purpose and availability to fulfill its direct obligation under
custodial funds due to customers.
Certain jurisdictions where the Company operates requires the Company to hold eligible liquid assets, as defined by applicable regulatory requirements and commercial law in
these jurisdictions, equal to at least 100% of the aggregate amount of all custodial funds due to customers. Depending on the jurisdiction, eligible liquid assets can include cash and
cash equivalents, customer custodial funds, and in-transit funds receivable. As of December 31, 2020 and December 31, 2019, the Company’s eligible liquid assets were greater than
the aggregate amount of custodial funds due to customers.
USDC
USD Coin or USDC is accounted for as a financial instrument; one USDC can be redeemed for one U.S. dollar on demand from the issuer.
Accountsreceivableandallowancefordoubtfulaccounts
Accounts receivables are contractual rights to receive cash either on demand or on fixed or determinable dates, and are recognized as an asset on the Company’s balance sheet.
Accounts receivable consists of customer funds receivable, in-transit funds receivable, custodial fee revenue receivable, loans receivable, interest receivable, and other receivables.
Customer funds receivable, including in-transit funds receivable, represent settlements due for crypto assets delivered to customers and from third-party payment processors and
banks for settled customer transactions. Customer funds receivable are typically received within one or two business days of the transaction date. The Company establishes
withdrawal based limits in order to mitigate potential losses by preventing customers from withdrawing the crypto asset to an external blockchain address until the payment settles.
Custodial fee revenue receivable represents the fee earned and receivable by the Company for providing a dedicated secure cold storage solution to customers. The fee is based
on a contractual percentage of the daily value of assets under custody and is collected on a monthly basis. Such custodial fee revenue income is included in the net revenue in the
consolidated statements of operations.
The Company recognizes an allowance for doubtful accounts for receivables that are more than 90 days past due. Accounts receivable deemed uncollectible, which occurs once
they reach 180 days past due and all collection efforts have been exhausted, are charged against the allowance for doubtful accounts when identified. As of December 31, 2020 and
December 31, 2019, the Company recognized
F-13
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
an allowance for doubtful accounts of $2.2 million and $4.3 million, respectively. The decrease in allowance for doubtful accounts was due to write-off of outstanding receivables that
were fully reserved.
Concentrationofcreditrisk
The Company’s cash, cash equivalents, restricted cash, customer custodial funds, and accounts receivable are potentially subject to concentration of credit risk. Cash, cash
equivalents, restricted cash, and customer custodial funds are placed with financial institutions which are of high credit quality. The Company invests cash, cash equivalents, and
customer accounts primarily in highly liquid, highly rated instruments which are uninsured. The Company may also have deposit balances with financial institutions which exceed the
Federal Deposit Insurance Corporation insurance limit of $250,000. The Company also holds cash at crypto trading venues and performs a regular assessment of these crypto trading
venues as part of its risk management process.
The Company held $48.9 million and $88.4 million of USDC as of December 31, 2020 and December 31, 2019, respectively. The underlying U.S. dollars are held by the issuer at
federally insured U.S. depository institutions and in approved investments on behalf of, and for the benefit of, holders of USDC.
As of December 31, 2020 two customers accounted for more than 10% of the Company’s accounts receivable. One customer had fiat of $45.0 million transferred to their platform
account prior to December 31, 2020, but the Company had not yet settled the transaction by collecting payment. The Company had extended $20.5 million of post trade credit to the
second customer as of December 31, 2020. As these customers had transferred or were in the process of transferring funds to their portfolio equal to or in excess of the crypto assets
purchased, the Company did not record an allowance for doubtful accounts. As of December 31, 2019, no customer accounted for more than 10% of the Company’s accounts
receivable.
As of December 31, 2020, the Company had one payment processor and two bank partner accounts representing 7%, 8%, and 7% of accounts receivable, respectively. As of
December 31, 2019, the Company had one payment processor and one bank partner account representing 40% and 18% of accounts receivable, respectively. During the years
ended December 31, 2020 and December 31, 2019, no customer accounted for more than 10% of total revenue.
Cryptoassetsheld
The crypto assets held by the Company, with no qualifying fair value hedge, are accounted for as intangible assets with indefinite useful lives, and are initially measured at cost.
Crypto assets accounted for as intangible assets are not amortized, but assessed for impairment annually, or more frequently, when events or changes in circumstances occur
indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the
quoted price of the crypto asset at the time its fair value is being measured. Impairment expense is reflected in other operating expense in the consolidated statements of operations.
The Company assigns costs to transactions on a first-in, first-out basis.
Crypto assets held as the hedged item in qualifying fair value hedges are initially measured at cost. Subsequent changes in fair value attributable to the hedged risk are adjusted
to the carrying amount of these crypto assets, with changes in fair value recorded in other operating expense in the consolidated statements of operations.
The Company recognizes crypto assets received through airdrops or forks if the crypto asset is expected to generate probable future benefit and if the Company is able to support
the trading, custody, or withdrawal of these assets. The Company records the crypto assets received through airdrops or forks at their cost.
F-14
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
Leases
The Company determines if an arrangement is a lease at inception. Operating leases are included in lease right-of-use (“ROU”) assets and lease liabilities in the consolidated
balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease
payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of future minimum lease payments
over the lease term. Most leases do not provide an implicit rate, so the Company uses its incremental borrowing rate. The operating lease ROU assets also include any lease
payments made before commencement and exclude lease incentives.
The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that those options will be exercised. Lease expense for lease
payments is recognized on a straight-line basis over the lease term. The Company has made the policy election to account for short-term leases by recognizing the lease payments in
profit or loss on a straight-line basis over the lease term and not recognizing these leases on the Company’s consolidated balance sheets. Variable lease payments are recognized in
profit or loss in the period in which the obligation for those payments is incurred. The Company has real estate lease agreements with lease and non-lease components for which the
Company has made the accounting policy election to account for these agreements as a single lease component.
Propertyandequipment
Property and equipment is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the lesser of the estimated useful life of the
asset or the remaining lease term. The estimated useful lives of the Company’s property, equipment, and software are generally as follows:
Propertyandequipment Usefullife
Furniture and fixtures Three to five years
Computer equipment Two to five years
Leasehold improvements Lesser of useful life or remaining lease term
Capitalized software One to three years
Construction-in-progress represents costs incurred on the construction of leasehold improvements that have not been completed or placed in service as of the end of the year,
and accordingly, no depreciation expense has been recorded.
Capitalized software consists of costs incurred during the application development stage of internal-use software. Capitalized costs consist of salaries and compensation costs for
employees, fees paid to third-party consultants who are directly involved in development efforts, and costs incurred for upgrades and enhancements to add functionality of the
software. Other costs that do not meet the capitalization criteria are expensed as incurred.
Long-livedassets,includingROUassets,goodwill,andacquiredintangibleassets
The Company evaluates the recoverability of long-lived assets on an annual basis, or more frequently whenever circumstances indicate a long-lived asset may be impaired. When
indicators of impairment exist, the Company estimates future undiscounted cash flows attributable to such assets. In the event future undiscounted cash flows do not exceed the
carrying amount of the assets, the asset would be considered impaired. The impairment loss is measured based upon the difference between the carrying amount and the fair value of
the assets.
Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. Goodwill is tested for
impairment at the reporting
F-15
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
unit level on an annual basis (October 1 for the Company) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value
of a reporting unit below its carrying value. For the periods presented, the Company had recorded no impairment charges.
Acquired intangible assets with a definite useful life are amortized over their estimated useful lives on a straight-line basis. Each period, the Company evaluates the estimated
remaining useful life of its intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. Intangible assets assessed as
having indefinite lives are not amortized, but are assessed for indicators that the useful life is no longer indefinite or for indicators of impairment each period.
Investments
The Company holds the following categories of investments, which are included in other non-current assets in the consolidated balance sheets.
Equity method investments
The Company holds equity investments in privately held companies. The Company applies the equity method of accounting for investments in other entities when it holds between
20% and 50% of the common stock or in-substance common stock in the entity or when it exercises significant influence over the entity. Under the equity method, the Company’s
share of each entity’s profit or loss is reflected in other income, net in the consolidated statements of operations.
Strategic investments
The Company has strategic investments in equity instruments where the Company (1) holds less than 20% ownership in the entity, and (2) does not exercise significant influence.
These are recorded at cost and adjusted for observable transactions for same or similar investments of the same issuer (referred to as the measurement alternative) or impairment.
Cryptoassetborrowings
The Company borrows crypto assets, including bitcoin and ether, from third parties on an unsecured basis. Such crypto assets borrowed by the Company are reported in crypto
assets held on the Company’s consolidated balance sheets.
The borrowings are accounted for as hybrid instruments, with a liability host contract that contains an embedded derivative based on the changes in the fair value of the underlying
crypto asset. The host contract is not accounted for as a debt instrument because it is not a financial liability, is carried at the fair value of the assets acquired and reported in crypto
asset borrowings in the consolidated balance sheets. The embedded derivative is accounted for at fair value, with changes in fair value recognized in other operating expenses in the
consolidated statements of operations. The embedded derivatives are included in crypto asset borrowings in the consolidated balance sheets.
The term of these borrowings can either be for a fixed term of less than one year or can be open-ended and repayable at the option of the Company or the lender. These
borrowings bear a fee payable by the Company to the lender, which is based on a percentage of the amount borrowed and is denominated in the related crypto asset borrowed. The
borrowing fee is recognized on an accrual basis and is included in other operating expense in the consolidated statements of operations.
Derivative contracts
Derivative contracts derive their value from underlying asset prices, other inputs or a combination of these factors.
F-16
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
As a result of the Company entering into transactions to borrow crypto assets, an embedded derivative is recognized relating to the differences between the fair value of the
amount borrowed, which is recognized on the borrowing effective date, and the fair value of the amount that will ultimately be repaid, based on changes in the spot price of the crypto
asset over the term of the borrowing. This embedded derivative is accounted for as a forward contract to exchange at maturity the fixed amount of the crypto asset to be repaid.
In September 2020, the Company entered into a warrant agreement to purchase 800,000 units of crypto assets from a crypto asset issuer. The warrant is immediately exercisable
but had not been exercised as of December 31, 2020. This warrant is accounted for as a derivative at fair value, with changes in fair value recognized in other operating expenses in
the consolidated statements of operations. The warrant derivative is included in prepaid expenses and other current assets in the consolidated balance sheets.
Derivatives designated as hedges
The Company applies hedge accounting to certain derivatives executed for risk management purposes. To qualify for hedge accounting, a derivative must be highly effective at
reducing the risk associated with the exposure being hedged. The Company uses fair value hedges primarily to hedge the fair value exposure of crypto asset prices. For qualifying fair
value hedges, the changes in the fair value of the derivative and the fair value of the hedged item, the crypto assets, are recognized in current-period earnings in other operating
expense in the consolidated statements of operations. Derivative amounts affecting earnings are recognized in the same line item as the earnings effect of the hedged item.
Revenuerecognition
See note 5, Revenue, for information on the Company’s accounting policies for revenue recognition.
Contractacquisitioncosts
The Company has elected to apply the practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the
asset that would otherwise have been recognized is one year or less.
Transactionexpense
Transaction expense includes costs incurred to operate the Company’s platform, process crypto asset trades, and perform wallet services. These costs include account
verification fees, fees to process transactions on a blockchain network, fees paid to payment processors and other financial institutions for customer transaction activity, and crypto
asset losses due to transaction reversals. Fixed-fee costs are expensed over the term of the contract and transaction-level costs are expensed as incurred.
Technologyanddevelopment
Technology and development includes costs incurred in operating, maintaining, and enhancing the Coinbase platform, including network, website hosting, and infrastructure costs.
Technology and development also includes costs incurred in developing new products and services, personnel related expenses, and the amortization of acquired and internally
developed technology. Personnel related expenses include salaries, bonuses, benefits, and stock-based compensation.
Salesandmarketing
Sales and marketing primarily includes costs related to customer acquisition, advertising and marketing programs, and personnel related expenses. Sales and marketing costs are
expensed as incurred.
F-17
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
Generalandadministrative
General and administrative expenses include costs incurred to support the Company’s business, including legal, finance, compliance, human resources, customer experience and
support operations, executive management, and other administrative services. General and administrative expenses also include personnel related expenses, software subscriptions
for support services, facilities and equipment costs, depreciation, amortization of acquired customer relationship intangible assets, sales and property taxes, gains and losses on
disposal of fixed assets, legal reserves and settlements, and other general overhead.
General and administrative costs are expensed as incurred.
Otheroperatingexpense
Periodically, as an accommodation to customers, the Company may fulfill customer transactions using the Company’s own crypto assets. Other operating expense includes the
cost of the Company’s crypto assets used to fulfill customer accommodation transactions. The Company has custody and control of the crypto assets prior to the sale to the customer
and records revenue at the point in time when the sale to the customer is processed. Accordingly, the Company records the total value of the sale in other revenue and the cost of the
crypto asset in other operating expense.
Other operating expense also includes impairment and realized gains on the sale of crypto assets, realized gains and losses resulting from the settlement of derivative
instruments, and fair value gains and losses related to derivatives and derivatives designated in qualifying fair value hedge accounting relationships.
Stock-basedcompensation
The Company recognizes stock-based compensation expense using a fair-value based method for costs related to all stock-based payments issued under the Company’s equity
incentive plans, including restricted stock, restricted stock units (“RSUs”), and options granted to employees, directors, and non-employees.
The Company estimates the fair value of stock options with only service-based conditions on the date of grant using the Black-Scholes-Merton option-pricing model. The fair value
of the stock option is expensed over the requisite service period which is typically the vesting period and the straight-line method is used for expense attribution.
The model requires management to make a number of assumptions, including the fair value and expected volatility of the Company’s underlying common stock price, expected
life of the option, risk-free interest rate, and expected dividend yield. The fair value of the underlying common stock is determined using the probability weighted expected return
method, with a discounted cash flow model or a market multiples method used for each expected outcome. The expected stock price volatility assumption for the Company’s stock
options are determined by using a weighted average of the historical stock price volatilities of comparable companies from a representative peer group, as sufficient trading history for
the Company’s common stock is not available. The Company uses historical exercise information and contractual terms of options to estimate the expected term. The risk-free interest
rate for periods within the expected life of the option is based on the U.S. Treasury zero coupon bonds with terms consistent with the expected term of the award at the time of grant.
The expected dividend yield assumption is based on the Company’s history and expectation of no dividend payouts.
The fair value of RSUs is estimated based on the fair value of the Company’s common stock on the date of grant. Stock-based compensation expense related to RSUs is
recorded on a straight-line basis over the requisite service period.
F-18
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
The Company has elected to account for forfeitures of awards as they occur, with previously recognized compensation reversed in the period that the awards are forfeited.
Incometaxes
The Company accounts for income taxes using the asset and liability method whereby deferred tax asset and liability account balances are determined based on temporary
differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable
income. A valuation allowance is established when management estimates that it is more likely than not that deferred tax assets will not be realized. Realization of deferred tax assets
is dependent upon future pre-tax earnings, the reversal of temporary differences between book and tax income, and the expected tax rates in future periods.
The Company is required to evaluate the tax positions taken in the course of preparing its tax returns to determine whether tax positions are more likely than not of being
sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the “more-likely-than-not” threshold would be recorded as a tax expense in the current year.
The amount recognized is subject to estimate and management judgment with respect to the likely outcome of each uncertain tax position. The amount that is ultimately sustained for
an individual uncertain tax position or for all uncertain tax positions in the aggregate could differ from the amount that is initially recognized. It is the Company’s practice to recognize
interest and penalties related to income tax matters in income tax expense.
For U.S. Federal tax purposes, crypto asset transactions are treated on the same tax principles as property transactions. The Company recognizes a gain or loss when crypto
assets are exchanged for other property, in the amount of the difference between the fair market value of the property received and the tax basis of the exchanged crypto assets.
Receipts of crypto assets in exchange for goods or services are included in taxable income at the fair market value on the date of receipt.
Netincomepershare
The Company computes net income per share using the two-class method required for participating securities. The two-class method requires income available to common
stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period
had been distributed. The Company’s convertible preferred stock and the restricted common stock granted as consideration in the acquisition of Tagomi Holdings Inc. (“Tagomi”) are
participating securities. These participating securities do not contractually require the holders of such shares to participate in the Company’s losses.
Basic net income per share is computed using the weighted-average number of outstanding shares of common stock during the period. Diluted net income per share is computed
using the weighted-average number of outstanding shares of common stock and, when dilutive, potential shares of common stock outstanding during the period. Potential shares of
common stock consist of incremental shares issuable upon the assumed exercise of stock options and warrants, vesting of RSUs, vesting of restricted common stock, as well as the
shares of convertible preferred stock.
Segmentreporting
Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision
Maker (the “CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s Chief Executive Officer is the Company’s CODM.
The CODM reviews financial information presented on a global consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial
performance. While the Company does have revenue from multiple products and geographies, no measures of profitability by product or geography are available, so discrete financial
information is not available for each such component. As such, the Company has determined that it operates as one operating segment and one reportable segment.
F-19
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
Recentaccountingpronouncements
Recently adopted accounting pronouncements
On August 27, 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2018-13, Fair Value Measurement (Topic 820), Disclosure
Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). The guidance eliminates, adds, and modifies certain disclosure requirements for
fair value measurements. The Company adopted the amendment as of January 1, 2019. Adoption of the guidance did not have a material impact on the Company's consolidated
financial statements and disclosures.
On August 26, 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash
Payments (“ASU 2016-15”). These amendments provide cash flow statement classification guidance for: (1) Debt Prepayment or Debt Extinguishment Costs, (2) Settlement of Zero-
Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing, (3) Contingent
Consideration Payments Made after a Business Combination, (4) Proceeds from the Settlement of Insurance Claims, (5) Proceeds from the Settlement of Corporate-Owned Life
Insurance Policies, including Bank-Owned Life Insurance Policies, (6) Distributions Received from Equity Method Investees, (7) Beneficial Interests in Securitization Transactions, and
(8) Separately Identifiable Cash Flows and Application of the Predominance Principle. The Company adopted the amendment as of January 1, 2019. Adoption of the guidance did not
have a material impact on the Company's consolidated statements of cash flows.
On August 28, 2017, the FASB issued Accounting Standards Update No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging
Activities (“ASU 2017-12”). ASU 2017-12 expands component and fair value hedging, specifies the presentation of the effects of hedging instruments, eliminates the separate
measurement and presentation of hedge ineffectiveness, and updates disclosure requirements related to hedging. The Company adopted the amendment as of January 1, 2020.
Adoption of the guidance did not have a material impact on the Company's consolidated financial statements, as the Company had not yet undertaken any hedging activities at the
date of adoption.
On November 11, 2019, the FASB issued Accounting Standards Update No. 2019-08, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with
Customers (Topic 606): Codification Improvements—Share-Based Consideration Payable to a Customer (“ASU 2019-08”), that simplifies and increases comparability of accounting
for nonemployee share-based payments, specifically those made to customers. The new guidance requires companies to measure and classify (on the balance sheet) share-based
payments to customers by applying the guidance in Topic 718. As a result, the amount recorded as a reduction in revenue would be measured based on the grant-date fair value of
the share-based payment. The Company elected to early adopt the amendment as of January 1, 2019. Adoption of the guidance did not have a material impact on the Company's
consolidated financial statements and disclosures.
Accounting pronouncements pending adoption
Under the Jumpstart Our Business Startups Act (“JOBS Act”), the Company meets the definition of an emerging growth company (“EGC”). The Company has elected to take
advantage of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act. For the year ended December 31,
2020, the Company no longer met the requirements to qualify as an EGC. However, as the Company qualified as an EGC at the time it submitted a draft registration statement, the
Company will continue to be treated as an EGC until the earlier of (1) the date on which we complete this listing and (2) December 31, 2021.
On June 16, 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326),
Measurement of Credit Losses
F-20
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
on Financial Instruments (“ASU 2016-13”), which significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not
measured at fair value through net income. ASU 2016-13 will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For
available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment
model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. The new standard is effective for the Company for its fiscal year beginning
January 1, 2021. The adoption of the standard is not expected to have a material impact on the consolidated financial statements.
On August 29, 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40)—Customer’s
Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”), which aligns the accounting for implementation costs
incurred in a hosting arrangement that is a service contract with the accounting for implementation costs incurred to develop or obtain internal-use software under ASC 350-40, in
order to determine which costs to capitalize and recognize as an asset and which costs to expense. The new standard is effective for the Company for its fiscal year beginning
January 1, 2021 and interim periods within its fiscal year beginning January 1, 2021. The Company intends to apply the standard prospectively. As such, there is not expected to be
an impact on adoption.
On December 18, 2019, the FASB issued Accounting Standards Update No. 2019-12, Income Taxes: Simplifying the Accounting for Income Taxes (“ASU 2019-12”), as part of its
overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of
financial statements. Among other things, the new guidance simplifies intraperiod tax allocation and reduces the complexity in accounting for income taxes with year-to-date losses in
interim periods. The new standard is effective for the Company for its fiscal year beginning January 1, 2021. The adoption of the standard is not expected to have a material impact on
the consolidated financial statements.
3.RESTRUCTURING
In April 2019, management approved the closure of a Chicago office and ceased development of a new matching engine to facilitate high frequency trading. This resulted in a
reduction of the Company’s overall workforce by twenty-six employees. As part of this reduction, the affected employees were given separation pay and fifteen of those employees
had a portion of their stock options accelerated. Stock options that would have vested within sixteen weeks after their termination date were accelerated to vest on their termination
date.
Contracts related to the development of the matching engine were either terminated or redirected for use elsewhere within the Company. Fixed assets that mainly included the
hardware necessary to support the matching engine under development were disposed of.
The restructuring was completed by December 31, 2019. The following restructuring expenses were recognized in restructuring expenses in the consolidated statements of
operations for the year ended December 31, 2019 (in thousands):
CostsIncurred CashPaid Non-cash
Separation pay $ 3,447 $ 3,447 $ —
Contract termination fees 416 416 —
Stock-based compensation 994 — 994
Loss on disposal of fixed assets 5,283 — 5,283
Total
$ 10,140 $ 3,863 $ 6,277
F-21
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
4.ACQUISITIONS
2020 Acquisitions
Tagomi
On July 31, 2020, the Company completed the acquisition of Tagomi, by acquiring all issued and outstanding shares of common stock and stock options of Tagomi. Tagomi is an
institutional brokerage for crypto assets and offers an end to end brokerage solution that caters to sophisticated traders and institutions. Tagomi operates an advanced trading
platform which pools liquidity from multiple venues to offer efficient pricing, algorithmic trading, a suite of prime services (including delayed settlement and borrowing and lending of fiat
currency and crypto assets), and a flexible account hierarchy and operational processes that meet the needs of institutional clients.
The total preliminary consideration transferred in the acquisition was $41.8 million, consisting of the following (in thousands):
Common stock of the Company $ 30,589
Replacement of Tagomi options and warrants 760
Cash 1,906
Settlement of pre-existing receivable 8,537
Total purchase consideration
$ 41,792
The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands):
Cash and cash equivalents $ 13,777
Customer custodial funds 19,837
Crypto assets held 5,687
Accounts receivable, net of allowance 5,795
Prepaid expenses and other current assets 633
Intangible assets 7,350
Goodwill 22,516
Other non-current assets 1,611
Total Assets
$ 77,206
Custodial funds due to customers $ 20,787
Accounts payable and accrued expenses 5,953
Crypto borrowings 8,674
Total Liabilities
$ 35,414
Net assets acquired
$ 41,792
The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill of $22.5 million, which is not
deductible for tax purposes. The goodwill balance is primarily attributed to the market presence, synergies, and the use of purchased technology to develop future products and
technologies.
F-22
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands, except for years
data):
FairValue
UsefulLifeatAcquisition(in
years)
Developed technology $ 6,600 3
Customer relationships 400 5
Licenses 350 Indefinite
The developed technology, customer relationships, and licenses represents the estimated fair value of Tagomi’s trading platform, existing relationships with customers, and
money transmitter licenses held, respectively. Total acquisition costs of $1.1 million were incurred related to the acquisition, which were recognized as an expense and included in
general and administrative expenses in the consolidated statements of operations.
A related party of the Company was a prior equity holder of Tagomi, and as a result of the acquisition, was entitled to receive up to 264,527 shares of the Company’s Class A
common stock.
The impact of this acquisition was considered immaterial to both the current and prior periods of the Company’s consolidated financial statements and pro forma financial
information has not been provided.
2019 Acquisitions
Neutrino
On January 17, 2019, the Company entered into an agreement to purchase all issued and outstanding shares of Neutrino S.r.l. (“Neutrino”), for a total cash purchase price of $6.4
million. Neutrino developed solutions for analyzing crypto asset flows across multiple blockchains, providing actionable insight on the whole cryptoeconomy. The acquisition was
completed on February 15, 2019. The Company renamed the Neutrino services to Coinbase Analytics.
As part of the transaction, the Company also paid cash of $7.4 million into an escrow fund, to be distributed to the former stockholders of Neutrino over a four year period. The
distribution was initially dependent on those former stockholders continuing to be employed with the Company. During March 2019, a decision was made to separate with certain
Neutrino employees. As part of their separation agreement, the full amount held in the escrow fund of $7.4 million was released and included in technology and development in the
consolidated statements of operations.
The following table summarizes the fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands):
Cash and cash equivalents $ 750
Accounts receivable 227
Goodwill 3,908
Intangible assets 2,940
Total assets $ 7,825
Accounts payable and accrued expenses $ 579
Deferred tax liability 820
Total liabilities $ 1,399
Net assets acquired
$ 6,426
The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill of $3.9 million, which is not
deductible for tax purposes. The
F-23
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
goodwill balance is primarily attributed to the market presence, synergies, and the use of purchased technology to develop future products and technologies.
The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands, except for years
data):
FairValue
UsefulLifeatAcquisition(in
years)
Developed technology $ 2,630 3
Customer relationships 280 3
Trade name 30 1
The developed technology, customer relationships, and trade name represents the estimated fair value of Neutrino’s blockchain analytics technology, existing relationships with
Neutrino users, and the Neutrino name, respectively.
The impact of this acquisition was considered immaterial to both the current and prior periods of the Company’s consolidated financial statements and pro forma financial
information has not been provided.
Xapo
On August 2, 2019, the Company closed a transaction with Xapo, Inc. (“Xapo”) to acquire the customer relationships of Xapo’s institutional custody business, which includes high
net worth individuals and institutions. The purchase consideration was comprised of cash and contingent stock consideration, which would be issued to the seller if certain conditions
were met on the anniversary of the transaction. This contingent consideration was accounted for as a liability measured at fair value, with subsequent changes in fair value being
recognized in net income or loss. The total purchase consideration was $68.3 million, comprised of cash of $55.0 million, contingent consideration of $12.9 million, and direct
acquisition costs of $0.4 million.
The purchase consideration was allocated as follows (in thousands, except years data):
Cost
UsefulLifeatAcquisition(in
years)
Customer relationships $ 65,911 6
Non-compete agreement 2,402 5
Total
$ 68,313
6
The impact of this acquisition was considered immaterial to both the current and prior periods of the Company’s consolidated financial statements and pro forma financial
information has not been provided.
In August 2020, the Company settled the contingent consideration liability, which had a carrying value of $16.2 million at the date of settlement, by issuing 690,756 shares of
common stock.
5.REVENUE
Revenue recognition
The Company determines revenue recognition from contracts with customers through the following steps:
• identification of the contract, or contracts, with the customer;
• identification of the performance obligations in the contract;
• determination of the transaction price;
F-24
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
• allocation of the transaction price to the performance obligations in the contract; and
• recognition of the revenue when, or as, the Company satisfies a performance obligation.
Revenue is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration the Company expects to be
entitled to in exchange for those goods or services. The Company primarily generates revenue through transaction fees charged on the platform.
The following table presents revenue of the Company disaggregated by revenue source (in thousands):
YearEndedDecember31,
2020 2019
Net revenue
Transaction revenue
Retail, net $ 1,040,246 $ 432,919
Institutional 55,928 30,086
Total transaction revenue 1,096,174 463,005
Subscription and services revenue
Custodial fee revenue 18,561 3,009
Staking revenue 10,413 188
Earn campaign revenue 7,720 117
Interest income 5,535 14,414
Other subscription and services revenue 2,764 2,216
Total subscription and services revenue 44,993 19,944
Total net revenue
$ 1,141,167 $ 482,949
Other revenue
Crypto asset sales revenue $ 133,688 $ 39,863
Corporate interest income 2,626 10,923
Total other revenue
$ 136,314 $ 50,786
Total revenue
$ 1,277,481 $ 533,735
Transaction revenue
Retail transaction revenue represents transaction fees earned from customers that are primarily individuals, while institutional transaction revenue represents transaction fees
earned from institutional customers, such as hedge funds, family offices, principal trading firms, and financial institutions on the institutional platform.
The Company’s service is comprised of a single performance obligation to provide a crypto asset matching service when customers buy, sell, or convert crypto assets on the
platform. That is, the Company is an agent in transactions between customers and presents revenue for the fees earned on a net basis.
Judgment is required in determining whether the Company is the principal or the agent in transactions between customers. The Company evaluates the presentation of revenue
on a gross or net basis based on whether it controls the crypto asset provided before it is transferred to the customer (gross) or whether it acts as an agent by arranging for other
customers on the platform to provide the crypto asset to the customer (net). The Company does not control the crypto asset being provided before it is transferred to
F-25
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
the buyer, does not have inventory risk related to the crypto asset, and is not responsible for the fulfillment of the crypto asset. The Company also does not set the price for the crypto
asset as the price is a market rate established by the platform. As a result, the Company acts as an agent in facilitating the ability for a customer to purchase crypto assets from
another customer.
The Company considers its performance obligation satisfied, and recognizes revenue, at the point in time the transaction is processed. Contracts with customers are usually open-
ended and can be terminated by either party without a termination penalty. Therefore, contracts are defined at the transaction level and do not extend beyond the service already
provided.
The Company charges a fee at the transaction level. The transaction price, represented by the trading fee, is calculated based on volume and may vary depending on payment
type and the value of the transaction. Crypto asset purchase or sale transactions executed by a customer on the Company’s platform include tiered pricing, based primarily on
transaction volume. The fee rate charged per transaction is adjusted up or down if the volume processed for a specific historical period meets established thresholds. The Company
has concluded that this volume-based pricing approach does not constitute a future material right since the discount is within a range typically offered to a class of customers with
similar volume. The transaction fee is collected from the customer at the time the transaction is executed. In certain instances, the transaction fee can be collected in crypto assets,
with revenue measured based on the amount of crypto assets received and the fair value of the crypto assets at the time of the transaction.
The transaction price includes estimates for reductions in revenue from transaction fee reversals that may not be recovered from customers. Such reversals occur when the
customer disputes a transaction processed on their credit card or their bank account for a variety of reasons and seeks to have the charge reversed after the Company has processed
the transaction. These amounts are estimated based upon the most likely amount of consideration to which the Company will be entitled. All estimates are based on historical
experience and the Company’s best judgment at the time to the extent it is probable that a significant reversal of revenue recognized will not occur. All estimates of variable
consideration are reassessed periodically. The total transaction price is allocated to the single performance obligation. While the Company recognizes transaction fee reversals due to
transaction reversals as a reduction of net revenue, crypto asset losses due to transaction reversals are included in transaction expense.
Custodial fee revenue
The Company provides a dedicated secure cold storage solution to customers and earns a fee, which is based on a contractual percentage of the daily value of assets under
custody. The fee is collected on a monthly basis. These contracts typically have one performance obligation which is provided and satisfied over the term of the contracts as
customers simultaneously receive and consume the benefits of the services. The contract may be terminated by a customer at any time, without incurring a penalty. Customers are
billed on the last day of the month during which services were provided, with the amounts being due within thirty days of receipt of the invoice. Amounts receivable from customers for
custodial fee revenue, net of allowance, were $4.4 million and $1.2 million as of December 31, 2020 and December 31, 2019, respectively. The allowance recognized against these
fees was not material for any of the periods presented.
Staking revenue
The Company participates in networks with proof-of-stake consensus algorithms, through creating or validating blocks on the network. In exchange for participating in the
consensus mechanism of these networks, the Company earns rewards in the form of the native token of the network. Each block creation or validation is a performance obligation.
Revenue is recognized at the point when the block creation or
F-26
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
validation is complete and the rewards are available for transfer. Revenue is measured based on the number of tokens received and the fair value of the token at the date of
recognition.
Interest income and corporate interest income
The Company holds customer custodial funds and cash and cash equivalents at certain third-party banks which earn interest. Interest income is calculated using the interest
method and is not within the scope of Topic 606 – Revenue from Contracts with Customers (“Topic 606”). Interest earned on customer custodial funds is included in interest income
within subscription and services revenue. Interest earned on cash and cash equivalents is included in corporate interest income, within other revenue.
Earn campaign revenue
The Company provides a platform for crypto asset issuers, the customer, to engage with Coinbase retail users and teach them about new crypto assets through the use of
educational tools, videos, and tutorials. In exchange for completing a task, such as watching the video or downloading an application, retail users may be eligible to receive crypto
assets from the crypto asset issuer. The Company is the agent with respect to the delivery of the crypto assets. The Company earns a commission from the crypto asset issuer based
on the amount of crypto assets that are distributed to users.
Other subscription and services revenue
Other subscription and services revenue primarily includes revenue from early stage services being offered by the Company, such as subscription license revenue. Generally,
contracts with customers of early stage products contain one performance obligation, do not have variable consideration, and are satisfied at a point in time or over the period that
services are provided.
Other revenue
Other revenue includes sale of crypto assets and corporate interest income. Periodically, as an accommodation to customers, the Company may fulfill customer transactions using
the Company’s own crypto assets. The Company has custody and control of the crypto assets prior to the sale to the customer and records revenue at the point in time when the sale
to the customer is processed. Accordingly, the Company records the total value of the sale in other revenue and the cost of the crypto assets in other operating expense within the
consolidated statements of operations. The cost of crypto assets used in fulfilling customer transactions was $131.9 million and $38.6 million for the years ended December 31, 2020
and December 31, 2019, respectively.
Related party transactions
Certain of the Company’s directors, executive officers, and principal owners, including immediate family members, are users of the Company’s platform. Fees charged to these
users are on terms no more favorable than terms generally available to an unaffiliated third party under the same or similar circumstances. The Company recognized revenue with
related parties of $3.4 million and $0.7 million for the years ended December 31, 2020 and December 31, 2019, respectively. As of December 31, 2020 and December 31, 2019,
amounts receivable from related parties were $0.6 million and $0.2 million, respectively.
F-27
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
Revenue by geographic location
Revenue disaggregated by geography based on customers’ billing addresses is as follows (in thousands):
YearEndedDecember31,
2020
2019
United States $ 966,153 $ 417,260
Rest of the World 311,328 116,475
Total revenue
$ 1,277,481 $ 533,735
__________________
(1) No other individual country accounted for more than 10% of total revenue
6.ACCOUNTSRECEIVABLE
Accounts receivable, net of allowance consisted of the following (in thousands):
December31,
2020 2019
Customer funds receivable $ 67,926 $ 1,436
In-transit customer receivables 90,571 14,803
Custodial fee revenue receivable 4,636 1,365
Loans receivable 6,790 2,001
Interest and other receivables 21,709 2,175
Allowance for doubtful accounts (2,161) (4,284)
Total accounts receivable, net of allowance
$ 189,471 $ 17,496
__________________
The fair value of collateral held as security exceeded the outstanding loans receivable as at December 31, 2020 and December 31, 2019, so no allowance was recorded.
7.LEASES
The Company has operating leases for corporate offices. The leases have remaining lease terms of one to seven years. The leases contain options to extend or terminate the
lease. However, these were not included in the lease terms, as the Company is not reasonably certain to exercise those options. The Company rents or subleases certain of these
corporate offices to third parties. The Company recognized sublease income of $6.6 million and $2.8 million for the years ended December 31, 2020 and December 31, 2019,
respectively. The remaining terms of these subleases range from two months to four years.
The components of lease cost were as follows (in thousands):
YearEndedDecember31,
2020 2019
Operating lease cost $ 30,231 $ 17,421
Short-term lease cost 358 3,031
Total lease cost
$ 30,589 $ 20,452
Other information related to leases was as follows:
(1)
(1)
(1)
F-28
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
YearEndedDecember31,
2020 2019
Weighted-average remaining lease term (in years) 4.1 5.1
Weighted-average discount rate 4.62 % 4.58 %
The discount rates used in measuring the lease liabilities was based on the Company’s hypothetical incremental borrowing rate, as the rate implicit in the leases were not readily
determinable. As the Company has not taken on any debt, its incremental borrowing rate was estimated based on sovereign yield curves and a risk premium based on yields of debt
with a similar credit rating to the Company’s synthetic credit rating. The Company’s synthetic credit rating was estimated based on the Company’s key financial metrics, including but
not limited to, total assets, total liabilities, annual revenue, and annual income or loss, compared to the same metrics of companies that have issued debt.
Maturities of lease liabilities were as follows (in thousands):
2021 $ 29,559
2022 26,887
2023 27,421
2024 27,171
2025 6,597
Thereafter 792
Total lease payments 118,427
Less imputed interest (10,649)
Total
$ 107,778
430 California office space
In September 2018, the Company entered into an operating lease agreement for new office space in San Francisco, California. The lease commencement dates of floors in the
building were staggered, with the lease of the final floors of the office initially set to commence in November 2020 and expire on April 30, 2025.
In September 2020, the Company renegotiated the terms of the lease which included a partial give back of space for which the lease had not yet commenced. The terms of the
agreement provided that the Company would pay a cancellation fee of $7.9 million and commit to enter into leases at the lessor’s other properties, with a minimum committed spend of
$15.5 million spread over the period from September 2020 to December 31, 2025.
F-29
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
8.PROPERTYANDEQUIPMENT
Property and equipment consisted of the following (in thousands):
December31,
2020 2019
Furniture and fixtures $ 7,161 $ 4,134
Construction in progress 358 7,713
Computers and equipment 2,815 1,946
Leasehold improvements 40,589 32,403
Capitalized software 22,815 11,329
Total cost 73,738 57,525
Accumulated depreciation and amortization (24,488) (10,408)
Total, net
$ 49,250 $ 47,117
Depreciation and amortization expense was $14.3 million, and $7.2 million for the years ended December 31, 2020 and December 31, 2019, respectively. Total additions to
capitalized software was $12.1 million and $9.5 million for the years ended December 31, 2020, and December 31, 2019, respectively.
Long-lived assets, which consist of property and equipment, net and operating lease ROU assets, by geography is as follows (in thousands):
December31,
2020 2019
United States $ 148,199 $ 166,630
Rest of the World
1,896 3,873
Total long-lived assets
$ 150,095 $ 170,503
________________
(1) No other individual country accounted for more than 10% of total long-lived assets
9.GOODWILLANDINTANGIBLEASSETS
Goodwill
The following table reflects the changes in the carrying amount of goodwill (in thousands):
YearEndedDecember31,
2020 2019
Balance, beginning of period $ 54,696 $ 50,766
Additions due to acquisitions 22,516 3,930
Balance, end of period
$ 77,212 $ 54,696
There is no accumulated impairment balance recognized against goodwill at the beginning or end of the periods.
(1)
F-30
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
Intangible assets
Intangible assets consisted of the following (in thousands, except years data):
AsofDecember31,2020 GrossCarryingAmount
Accumulated
Amortization IntangibleAssets,Net
WeightedAverage
RemainingUsefulLife(in
years)
Amortizing intangible assets
Acquired developed technology $ 20,708 $ (13,024) $ 7,684 2.09
Customer relationships 66,591 (15,771) 50,820 4.58
Trade name 30 (30) — —
Non-compete agreement 2,402 (681) 1,721 3.58
Indefinite life intangible assets
Domain name 250 — 250 N/A
Licenses 350 — 350 N/A
Crypto assets held 316,094 — 316,094 N/A
Total
$ 406,425 $ (29,506) $ 376,919
AsofDecember31,2019 GrossCarryingAmount
Accumulated
Amortization IntangibleAssets,Net
WeightedAverage
RemainingUsefulLife(in
years)
Amortizing intangible assets
Acquired developed technology $ 14,108 $ (7,959) $ 6,149 1.56
User base 400 (400) — —
Customer relationships 66,191 (4,659) 61,532 5.58
Trade name 30 (26) 4 0.12
Non-compete agreement 2,402 (200) 2,202 4.59
Indefinite life intangible assets
Domain name 250 — 250 N/A
Crypto assets held 33,932 — 33,932 N/A
Total
$ 117,313 $ (13,244) $ 104,069
Amortization expense of intangible assets was $16.7 million, and $9.7 million for the years ended December 31, 2020 and December 31, 2019, respectively. The Company
estimates that there is no significant residual value related to its intangible assets. Impairment expense was $8.4 million and $2.3 million during the years ended December 31, 2020
and December 31, 2019, respectively.
The expected future amortization expense for intangible assets as of December 31, 2020 is as follows (in thousands):
2021 $ 15,737
2022 13,865
2023 12,823
2024 11,346
Thereafter 6,454
Total amortization expense
$ 60,225
F-31
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
10.PREPAIDEXPENSESANDOTHERASSETS
Prepaid expenses and other current assets and other non-current assets consisted of the following (in thousands):
December31,
2020 2019
Prepaid expenses and other current assets
Prepaid expenses $ 36,218 $ 21,438
Other 3,292 995
Total prepaid expenses and other current assets
$ 39,510 $ 22,433
Other non-current assets
Equity method investments $ 2,000 $ 2,000
Strategic investments 26,146 15,599
Deferred tax assets 20,807 29,274
Deposits 68,287 28,682
Total other non-current assets
$ 117,240 $ 75,555
Equity method investments
The Company acquired a 50% interest in Centre Consortium LLC during August 2019. The Company has significant influence over the entity, but does not have power or control.
The Company’s share of earnings and losses are included in other operating expense in the consolidated statements of operations. The investment did not have material earnings or
losses nor was it impaired during the periods presented.
Strategic investments
The Company invests in various companies and technologies through Coinbase Ventures, the Company’s venture capital arm. The components of other investments accounted
for under the measurement alternative included in the table above are presented below (in thousands):
YearEndedDecember31,
2020 2019
Carrying amount, beginning of period $ 15,599 $ 10,130
Net additions 9,687 5,715
Upward adjustments 1,307 254
Impairments and downward adjustments (447) (500)
Carrying amount, end of period
$ 26,146 $ 15,599
Upward adjustments and impairments and downward adjustments from remeasurement of investments are included in other income, net in the consolidated statements of
operations. As of December 31, 2020, cumulative upward adjustments and impairments and downward adjustments were $1.6 million and $0.5 million, respectively. The net
unrealized loss on strategic investments for the year ended December 31, 2020 was $0.3 million.
F-32
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
11.ACCOUNTSPAYABLEANDACCRUEDEXPENSES
Accounts payable and accrued expenses consisted of the following (in thousands):
December31,
2020 2019
Accounts payable $ 12,031 $ 5,940
Accrued expenses 33,987 26,724
Accrued payroll and payroll related 23,403 8,931
Income taxes payable 5,805 2,726
Other payables 9,885 1,132
Total accounts payable and accrued expenses
$ 85,111 $ 45,453
12.DERIVATIVES
Notional amount of derivative contracts
The following table summarizes the notional amount of derivative contracts outstanding as of December 31, 2020, in native units:
Crypto asset borrowings with embedded derivatives
9,305 BTC
3,000 ETH
1,500,000 XRP
Warrant to purchase crypto assets
800,000 UNI
The following table summarizes information on derivative assets and liabilities that are reflected in the Company’s consolidated balance sheets as of December 31, 2020, by
accounting designation (in thousands):
Grossderivativeassets Grossderivativeliabilities
Notdesignatedas
hedges Designatedashedges Totalderivativeassets Netderivativeassets
Notdesignatedas
hedges Designatedashedges
Totalderivative
liabilities Netderivativeliabilities
Crypto borrowings with embedded
derivatives $ — $ — $ — $ — $ 12,696 $ 114,395 $ 127,091 $ 127,091
Warrant to purchase crypto assets 2,575 — 2,575 2,575 — — — —
Total fair value of derivative assets and
liabilities
$ 2,575 $ — $ 2,575 $ 2,575 $ 12,696 $ 114,395 $ 127,091 $ 127,091
Fair value hedge gains and losses
The Company includes gains (losses) on the hedging derivative and the hedged item in other operating expenses within the consolidated statements of operations. The following
table presents derivative instruments used in fair value hedge accounting relationships, as well as pre-tax gains (losses) recorded on such derivatives and the related hedged items for
the year ended December 31, 2020 (in thousands):
Gains(losses)recordedinincome
Derivatives Hedgeditems Incomestatementimpact
Crypto borrowings with embedded derivatives $ (114,395) $ 113,102 $ (1,293)
F-33
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
As of December 31, 2020, the following amounts were recorded in the consolidated balance sheets related to certain cumulative fair value hedge basis adjustments that are
expected to reverse through the consolidated statements of operations in future periods as an adjustment to other operating expense (in thousands):
Cumulativeamountoffairvaluehedgingadjustmentsincludedinthecarryingamount
ofhedgeditems
Carryingamountofthe
hedgeditems
Activehedging
relationships
Discontinuedhedging
relationships Total
Assets $ 247,735 $ 113,102 $ — $ 113,102
Liabilities
— — — —
Crypto asset borrowings
The carrying value of the outstanding host contract as of December 31, 2020 was $144.2 million and the fair value of the embedded derivative liabilities as of December 31, 2020
was $127.1 million. The fee on these borrowings ranged from 1.7% to 10%. During the year ended December 31, 2020, the Company paid $1.6 million of borrowing fees in crypto
assets. The Company had no crypto borrowings as of December 31, 2019.
13.FAIRVALUEMEASUREMENTS
The following table sets forth by level, within the fair value hierarchy, the Company’s assets and liabilities measured and recorded at fair value on a recurring basis (in thousands):
December31,2020 December31,2019
Level1 Level2 Level3 Total Level1 Level2 Level3 Total
Assets
Cash and cash equivalents $ 212,818 $ — $ — $ 212,818 $ 418,604 $ — $ — $ 418,604
Customer custodial funds 1,171,274 — — 1,171,274 669,581 — — 669,581
Crypto assets held — 247,735 — 247,735 — — — —
Derivative asset — — 2,575 2,575 — — — —
Total assets
$ 1,384,092 $ 247,735 $ 2,575 $ 1,634,402 $ 1,088,185 $ — $ — $ 1,088,185
Liabilities
Contingent consideration $ — $ — $ — $ —
$ —
$ — 12,924 $ 12,924
Crypto asset borrowings — 127,091 — 127,091 — — — —
Total liabilities
$ — $ 127,091 $ — $ 127,091 $ — $ — $ 12,924 $ 12,924
__________________
(1) Excludes corporate cash of $849.0 million and $130.3 million held in deposit at financial institutions and crypto asset trading venues and not measured and recorded at fair value as of December 31, 2020 and
December 31, 2019, respectively.
(2) Excludes customer custodial funds of $2,592.1 million and $531.8 million held in deposit at financial institutions and not measured and recorded at fair value as of December 31, 2020 and December 31, 2019,
respectively.
(3) Includes crypto assets held that have been designated as hedged items in fair value hedges and excludes crypto assets of $68.4 million and $33.9 million held at cost as of December 31, 2020 and December
31, 2019, respectively.
The Company did not make any transfers between the levels of the fair value hierarchy during the years ended December 31, 2020 and December 31, 2019.
Derivative asset
The following table presents a reconciliation of the derivative asset measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands):
(1)
(2)
(3)
F-34
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
Balance as of January 1, 2020 $ —
Fair value adjustment 2,575
Balance as of December 31, 2020
$ 2,575
The derivative asset balance is included in prepaid expenses and other current assets in the consolidated balance sheets. The derivative asset is solely represented by a warrant
agreement to purchase crypto assets from an asset issuer. Upon exercise of the warrant, the underlying crypto assets are subject to transfer and sale restrictions and vest over four
years. The fair value of the warrant was based on the number of crypto assets to be received upon exercise, the fair value of the crypto asset, and a discount for lack of marketability
due to the underlying restriction on the crypto assets. The discount for lack of marketability was estimated using the Finnerty and Asian put option models. The fair value adjustments
are included in other operating expense in the consolidated statements of operations. The following significant unobservable inputs were used:
December31,2020
Discount rate 7% - 12%
Historical volatility of comparable crypto assets 90% - 125%
Contingent consideration
The following table presents a reconciliation of the contingent consideration measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in
thousands):
Balance as of January 1, 2020 $ 12,924
Fair value adjustment 3,281
Settlement (16,205)
Balance as of December 31, 2020
$ —
The contingent consideration balance is included in other current liabilities in the consolidated balance sheets. The fair value of the contingent consideration given in the
acquisition of the Xapo intangible assets was based on the number of shares of Class A common stock that were expected to be issued and the fair value of the common stock of the
Company. The fair value adjustments are included in general and administrative expense in the consolidated statements of operations. The following significant unobservable inputs
were used:
December31,2019
Discount rate 17.5 %
Long-term growth rate 3.0 %
Revenue growth rate 3% - 61%
The contingent consideration was settled on August 27, 2020, with the Company issuing 690,756 shares of Class A common stock.
Assets and liabilities measured and recorded at fair value on a non-recurring basis
The Company’s non-financial assets, such as goodwill, intangible assets, property and equipment, and crypto assets held but not designated in hedging relationships are adjusted
to fair value when an impairment charge is recognized. Such fair value measurements are based predominately on Level 3 inputs. Fair value of crypto assets held are predominantly
based on Level 2 inputs.
F-35
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
Financial assets and liabilities not measured and recorded at fair value
The Company’s financial instruments, including cash, restricted cash, certain customer custodial funds, USDC, and custodial funds due to customers are classified as Level 1 and
carried at amortized cost, which approximates their fair value.
14.CONVERTIBLEPREFERREDSTOCK
A summary of the Company’s authorized, issued, and outstanding shares of convertible preferred stock was as follows (in thousands, except per share data):
AsofDecember31,2020
SharesAuthorized
SharesIssuedand
Outstanding
OriginalIssuePriceper
Share
Liquidation
Preference CarryingValue
FF Preferred 5,739 5,739 $ — $ — $ 11
Series A 30,929 27,349 0.19721 5,394 4,946
Series B 25,416 21,831 1.00676 21,978 19,228
Series C 32,542 31,656 2.76488 87,525 83,146
Series D 17,471 17,471 8.25390 144,205 135,738
Series E 14,508 8,832 36.19220 319,648 319,398
126,605 112,878 $ 578,750 $ 562,467
AsofDecember31,2019
SharesAuthorized
SharesIssuedand
Outstanding
OriginalIssuePriceper
Share
Liquidation
Preference CarryingValue
FF Preferred 5,739 5,739 $ — $ — $ 11
Series A 30,929 28,312 0.19721 5,584 5,136
Series B 25,416 22,429 1.00676 22,580 19,829
Series C 32,542 32,176 2.76488 88,964 84,585
Series D 17,471 17,471 8.25390 144,205 135,738
Series E 14,508 8,832 36.19220 319,648 319,398
126,605 114,959 $ 580,981 $ 564,697
Since inception, the Company has incurred share issuance costs totaling approximately $0.8 million, which has been applied to reduce total proceeds.
The change in the number of outstanding shares of convertible preferred stock per class was as follows (in thousands):
SeriesFF SeriesA SeriesB SeriesC SeriesD SeriesE
Balance at January 1, 2019 5,739 30,929 25,416 32,542 17,471 8,832
Conversion to Class A common stock — (2,617) (2,987) (366) — —
Balance at December 31, 2019
5,739 28,312 22,429 32,176 17,471 8,832
Conversion to Class A common stock — (963) (598) (520) — —
Balance at December 31, 2020
5,739
—
27,349
—
21,831
—
31,656
—
17,471
—
8,832
During the years ended December 31, 2020 and December 31, 2019, there were sales of convertible preferred stock between shareholders. Pursuant to the terms of the
convertible preferred stock, those
F-36
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
preferred shares converted to Class A common stock. The Company did not sell any shares or receive any proceeds from the transactions.
The holders of FF Preferred and Series A, Series B, Series C, Series D, and Series E convertible preferred stock have certain rights, preferences and privileges as follows:
Voting rights
The holders of FF Preferred and Series A, Series B, Series C, Series D, and Series E convertible preferred stock are subject to the Company’s amended and restated voting
agreement and are entitled to the number of votes equal to the voting power of the number of shares of common stock into which their shares of convertible preferred stock can be
directly converted with FF Preferred and Series A, Series B, Series C, and Series D convertible preferred stock converting into Class B common stock entitled to ten votes per share
and Series E convertible preferred stock converting into Class A common stock entitled to one vote per share. The holders of Series A convertible preferred stock have a right to elect
one member of the Board of Directors and holders of Series C convertible preferred stock have a right to elect one member of the Board of Directors.
Dividends
The holders of Series A, Series B, Series C, Series D, and Series E convertible preferred stock, prior and in preference to holders of FF Preferred, Class A common stock, or
Class B common stock, are entitled to receive dividends on a pari passu basis at the rate of 6% of the respective original issue price per annum on each outstanding share.
The dividends are non-cumulative and are payable when, as and if declared by the Board of Directors. After payment of such dividends to holders of Series A, Series B, Series C,
Series D, and Series E convertible preferred stock, any additional dividends shall be distributed to holders of all classes of stock on a pro rata basis, based on the number of shares of
Class A common stock and Class B common stock held by each holder (assuming conversion of all shares of convertible preferred stock into shares of common stock). As of
December 31, 2020, no dividends have been declared or paid.
Liquidation rights
In the event of any liquidation event of the Company (a voluntary or involuntary liquidation, a merger where the holders of common stock and convertible preferred stock own less
than a majority of the resulting voting power of the surviving entity, or a sale of substantially all the assets of the Company), before any distribution or payment shall be made to the
holders of FF Preferred, Class A common stock, or Class B common stock, the holders of Series A, Series B, Series C, Series D, and Series E convertible preferred stock shall be
entitled to receive out of the assets legally available for distribution, liquidating distributions in the amount of the greater of (a) the original per share purchase prices of $0.19721 for
Series A convertible preferred stock, $1.00676 for Series B convertible preferred stock, $2.76488 for Series C convertible preferred stock, $8.2539 for Series D convertible preferred
stock, and $36.1922 for Series E convertible preferred stock, plus all declared but unpaid dividends or (b) an amount per share as would have been payable had each share of
convertible preferred stock converted into Class A common stock or Class B common stock, as applicable, immediately prior to the liquidation event.
If liquidation proceeds are insufficient to permit payment to the stockholders of convertible preferred stock of their preferential amount, then all liquidation proceeds shall be
distributed with equal priority, on a pro-rata basis, among the holders of the Series A, Series B, Series C, Series D, and Series E convertible preferred stock in proportion to their
liquidation preference. After payment of all preferential amounts required to be paid to the holders of Series A, Series B, Series C, Series D, and Series E convertible preferred stock,
the remaining assets available for distribution shall be distributed among the holders of FF Preferred, the Class A common stock, and Class B common stock on a pro-rata basis,
based on the number of shares held by each holder.
F-37
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
As the shares of convertible preferred stock contain liquidation features that are not solely within the Company’s control, these liquidation features result in the Series FF, Series
A, Series B, Series C, Series D, and Series E convertible preferred stock to be classified as mezzanine equity rather than as a component of stockholders’ equity.
Conversion
Each share of FF Preferred is convertible, at the option of the holder, at any time after the date of issuance according to a conversion ratio, initially $1.00, subject to adjustments
for stock splits, stock dividends, and dilution.
If a share of FF Preferred is purchased by an investor in connection with an equity financing, each such share of stock transferred to the investor shall automatically convert into
shares of a subsequent series of convertible preferred stock. If a transfer of shares is neither made in connection with an equity financing or authorized by a majority of the Board of
Directors, the FF Preferred shall automatically convert into such number of shares of Class B common stock.
In the event the Company at any time after the original issue date of Series A, Series B, Series C, Series D, and Series E convertible preferred stock issues additional shares of
capital stock without consideration or for consideration per share less than the Series A conversion price, Series B conversion price, Series C conversion price, Series D conversion
price, or Series E conversion price, as applicable, then the conversion price of the above mentioned convertible preferred stock will be adjusted (subject to certain customary
exceptions).
Each share of FF Preferred and Series A, Series B, Series C, and Series D convertible preferred stock automatically converts into that number of shares of Class B common stock
and each share of Series E convertible preferred stock automatically converts into that number of shares of Class A common stock determined in accordance with the conversion ratio
on the earlier of (i) the closing of an underwritten public offering of Class A common stock under the Securities Act of 1933, as amended (the “Securities Act”), in which the Company
receives at least $100 million in aggregate net proceeds or (ii) (a) with respect to Series A, Series B, Series C, Series D, and Series E convertible preferred stock, the written request
from the holders of at least a majority of the then outstanding shares of convertible preferred stock, each voting exclusively and as a separate class and voting together as a single
class on an as-converted basis and (b) with respect to FF Preferred, the written request from the holders of at least a majority of the then outstanding shares of FF Preferred, voting
exclusively and as a separate class.
Redemption
No shares of convertible preferred stock are unilaterally redeemable by either the stockholders or the Company. The Company’s Amended and Restated Certificate of
Incorporation provides that upon a liquidation event, the holders of convertible preferred stock shall be entitled to receive the original issue price plus declared but unpaid dividends.
15.COMMONSTOCK
Stock split
In May 2019, the Company effected a stock split, whereby each outstanding share of common stock and convertible preferred stock was split into six shares. The number of
authorized shares were also increased to account for the additional outstanding shares. The strike price and number of options, of awards granted and outstanding under the 2013
Plan (as defined below) at the date of the split, were proportionately adjusted to offset the dilution caused by the stock split. The number of shares and amounts per share reported in
the Company’s consolidated financial statements and notes have been retrospectively updated to reflect the impact of the stock split.
F-38
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
Stock repurchases
On December 14, 2018, the Board of Directors approved a tender offer whereby the Company offered to purchase Class A common stock, Class B common stock and vested and
exercisable stock options (“Tender Offer Stocks”). The Company offered to purchase the Tender Offer Stocks at a price of $32.57 per share. This price was in excess of the fair value
of the common stock. The offer to purchase expired on January 18, 2019. At completion of the tender offer, the Company purchased 1,187,784 Tender Offer Stocks (comprising
212,130 shares of Class A common stock and Class B common stock and 975,654 shares subject to stock options) for a total cash purchase price of $37.9 million.
The purchase consideration was allocated as follows (in thousands):
Compensation expense $ 17,616
APIC 1,128
Retained earnings 19,117
Total purchase consideration
$ 37,861
Common stock
Effective October 1, 2018, the Company implemented a dual class voting structure pursuant to which it authorized the issuance of Class A common stock and Class B common
stock. The Class B common stock has ten votes per share and the Class A common stock has one vote per share. The common stock outstanding prior to the implementation of the
dual class voting structure was reclassified into Class B common stock. Generally, any subsequent sale or transfer of Class B common stock will result in the automatic conversion of
such Class B common stock into Class A common stock (subject to certain customary exceptions). Generally, any subsequent sale or transfer of convertible preferred stock that is
convertible into Class B common stock will result in convertible preferred stock becoming convertible into Class A common stock (subject to certain customary exceptions). The
holders of shares of Class A common stock and Class B common stock, voting as a separate class, have a right to elect two members of the Board of Directors. Furthermore, holders
of Class A common stock and Class B common stock, voting together with holders of convertible preferred stock (other than Series E convertible preferred stock) and Series FF
preferred stock on an as-converted to common stock basis, shall be entitled to fill any remaining vacancies on the Board of Directors.
As of December 31, 2020, the Company is authorized to issue up to 476,053,936 shares of common stock with par value of $0.00001 per share, consisting of 267,640,000 shares
of Class A common stock and 208,413,936 shares of Class B common stock. Holders of the Company’s common stock are entitled to dividends if and when declared by the Board of
Directors.
In June 2014, the Company issued a warrant to a financial institution in connection with a banking agreement to purchase 407,928 shares of Class B common stock at an exercise
price of $1.0068 per share. The warrant is immediately exercisable and expires on June 24, 2024. The warrant was fully expensed at December 31, 2015 and was still outstanding at
December 31, 2020.
F-39
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
The Company has reserved shares of Class A common stock and Class B common stock for issuance for the following purposes (in thousands):
December31,
2020 2019
ClassAcommonstock
Conversion of Series E convertible preferred stock 8,832 8,832
Options issued and outstanding under 2013 Plan 3,550 4,559
Options issued and outstanding under 2019 Plan 37,232 7,745
RSUs issued and outstanding under 2019 Plan 3,766 —
Shares available for future issuance under the 2019 Plan 2,193 9,457
Replacement options issued and outstanding from Tagomi acquisition 32
—
Exercise and conversion of outstanding warrant 4 —
Shares available for future issuance of warrants 2,296 —
Total Class A common stock shares reserved 57,905 30,593
ClassBcommonstock
Conversion of FF Preferred and Series A, B, C, and D convertible preferred stock 104,046 106,127
Options issued and outstanding under 2013 Plan 22,442 25,454
Exercise and conversion of outstanding warrant 408 408
Total Class B common stock shares reserved 126,896 131,989
16.STOCK-BASEDCOMPENSATION
Stock plans
The Company maintains two equity incentive plans: the 2013 Stock Plan (the “2013 Plan”) and the 2019 Equity Incentive Plan (the “2019 Plan” and collectively, the “Plans”). The
2019 Plan serves as the successor to the 2013 Plan. The 2019 Plan became effective on July 17, 2019. Outstanding awards under the 2013 Plan continue to be subject to the terms
and conditions of the 2013 Plan. Effective July 17, 2019, no additional awards will be granted under the 2013 Plan. The 2013 Plan provides for the granting of stock options and
restricted stock, while the 2019 Plan provides for the granting of stock options, restricted stock, restricted stock units, and stock appreciation rights. As of December 31, 2020, only
stock options and restricted stock units (“RSUs”) were issued and outstanding under the Plans.
Stock options
Options granted under the Plans may be either incentive stock options (“ISOs”) or nonqualified stock options (“NSOs”). ISOs may be granted only to Company employees
(including officers and directors who are also employees). NSOs may be granted to Company employees and non-employees.
Options under the Plans may be granted for contractual periods of up to ten years and at prices determined by the Board of Directors, provided, however, that the exercise price of
an ISO and NSO shall not be less than 100% of the estimated fair value of the underlying shares on the date of the grant (110% if granted to a stockholder who owns more than ten
percent of the total combined voting power of all classes of stock of the Company or any parent or subsidiary). Shares of common stock purchased under the Plans are subject to
certain restrictions and repurchase rights, including the right of first refusal by the Company for sale or transfer of new shares to outside parties and other restrictions on transfers and
secondary market transactions.
F-40
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
To date, options granted to new employees of the Company generally vest over four years and vest at a rate of 25% upon the first anniversary of the issuance date and 1/48 per
month thereafter. Refresher options granted to existing employees of the Company generally vest over four years and vest at a rate of 1/48 per month. The Plans allows for a seven
year exercise window post-termination for employees of the Company who have provided at least two years of continuous service to the Company as of their termination date.
Activity of options outstanding under the Plan are as follows (in thousands, except per share and years data):
OptionsOutstanding
WeightedAverage
ExercisePriceper
Share
WeightedAverage
RemainingContractual
Life(Years)
AggregateIntrinsic
Value
Balance at January 1, 2019
36,214 $ 3.90 8.43 $ 501,335
Granted 15,548 18.27
Exercised (1,965) 2.78
Forfeited and cancelled (12,039) 8.64
Balance at December 31, 2019
37,758
8.36 8.03 390,676
Granted
32,201
22.14
Exercised (2,042) 10.10
Forfeited and cancelled (4,661) 14.85
Balance at December 31, 2020 63,256 14.84 8.17 2,527,396
Vested and exercisable at December 31, 2020
25,504 6.41 6.63 1,234,159
Vested and expected to vest at December 31, 2020 53,961
13.36 7.92 2,236,125
During the year ended December 31, 2020, the Company granted stock options to purchase 32,200,586 shares of Class A common stock, with a weighted-average grant date fair
value of $7.85 per share. During the year ended December 31, 2019, the Company granted stock options to purchase 15,548,132 shares of Class A common stock, with a weighted-
average grant date fair value of $7.04 per share.
During the years ended December 31, 2020 and December 31, 2019, the Company recognized $58.9 million and $51.8 million of employee stock-based compensation expense
related to stock options, respectively. A total of $3.0 million and $2.6 million of stock-based compensation was included in capitalized software for the years ended December 31, 2020
and December 31, 2019, respectively.
As of December 31, 2020, there was total unrecognized compensation cost of $259.4 million related to unvested stock options. These costs are expected to be recognized over a
weighted-average period of approximately 4.12 years.
The intrinsic value is calculated as the difference between the exercise price of the underlying stock option award and the estimated fair value of the Company’s common stock.
The aggregate intrinsic value of stock options exercised during the years ended December 31, 2020 and December 31, 2019 was $38.3 million and $30.0 million, respectively.
During the year ended December 31, 2020, 7,936,075 stock options vested with a weighted-average grant date fair value of $5.47 per share. During the year ended December 31,
2019, 8,973,267 stock options vested with a weighted-average grant date fair value of $3.43 per share.
F-41
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
The assumptions used under the Black-Scholes-Merton option pricing model and the weighted average calculated value of the options granted to employees were as follows:
YearEndedDecember31,
2020 2019
Dividend yield 0 % 0 %
Expected volatility 41.1 % 36.8 %
Expected term (in years) 6.0 5.9
Risk-free interest rate 0.6 % 2.0 %
Early exercise of stock options
Stock options granted under the Plans provide employee option holders the right to exercise unvested options of restricted common stock, which is subject to a repurchase right
held by the Company at the original purchase price in the event the optionee’s employment is terminated either voluntarily or involuntarily prior to vesting of the exercised stock. Early
exercises of options are not deemed to be substantive exercises for accounting purposes and accordingly, amounts received for early exercises are recorded as a liability. These
repurchase terms are considered to be a forfeiture provision and do not result in variable accounting. As of December 31, 2020, there were 263,761 shares subject to repurchase
related to stock options early exercised and not yet vested, but that are expected to vest. These amounts are reclassified to common stock and additional paid in capital as the
underlying shares vest. As of December 31, 2020, the Company recorded a liability related to these shares subject to repurchase in the amount of $4.6 million, which is included within
accounts payable and accrued expenses in the accompanying consolidated balance sheets.
CEO performance award
On August 11, 2020, the Company granted its Chief Executive Officer an option award to purchase up to 9,293,911 shares of the Class A common stock of the Company, at an
exercise price of $23.46 per share. Vesting of the award is dependent on both performance-based and market-based conditions being met.
The performance condition is contingent on the Company’s registration statement being declared effective by the Securities and Exchange Commission under the Securities Act.
The occurrence of this event was considered to not be probable until such time that it occurs. The market condition is contingent on the Company’s Class A common stock price
achieving stock price target milestones.
The total grant date fair value of this award was $56.7 million. The Company determined the fair value of the option using a Monte Carlo simulation model (a binomial lattice-based
valuation model). The Monte Carlo simulation model uses multiple input variables to determine the probability of satisfying the market condition requirements. The fair value of the
option is not subject to change based on future market conditions. The fair value of the option will be recognized as compensation expense over the requisite service period, using the
accelerated attribution method, once the performance condition becomes probable of being achieved. Once the performance condition is met, the compensation expense will be
recognized over the requisite service period, regardless of whether, and the extent to which, the market condition is ultimately satisfied.
Restricted stock units
During December 2020, the Company began issuing RSUs. These RSUs vest upon the satisfaction of a service-based condition. In general, the Company’s RSUs vest over a
service period of four years. Once vested, the RSUs are settled by delivery of common stock of the Company.
F-42
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
Activity of RSUs outstanding under the Plan are as follows (in thousands, except per share data):
Numberofshares
Weighted-
Average
Grant
DateFair
ValuePerShare
Balance at January 1, 2020 — —
Granted 3,766 54.80
Vested — —
Forfeited and cancelled — —
Balance at December 31, 2020 3,766 54.80
The Board of Directors granted the RSUs based on the fair value of the Company’s common stock of $32.94 as of November 30, 2020, because the Board of Directors was not
aware of any events, or series of events, which would have clearly resulted in an increase in the fair value. However, due to higher than forecasted revenue during December 2020
and an increase in forecasted revenue utilized in the valuation approaches, the fair value of the Company’s common stock as of December 31, 2020 increased to $54.80, which was
used for financial reporting purposes. The Company determined the use of that valuation to be reasonable, given its close proximity to the grant date.
The Company recognized $10.4 million of stock-based compensation expense related to these RSUs for the year ended December 31, 2020. As of December 31, 2020, there
was total unrecognized compensation cost of $196.0 million related to unvested RSUs. These costs are expected to be recognized over a weighted-average period of approximately
3.67 years.
Included in the total RSUs granted during 2020 was 181,000 RSUs granted to Kathryn Haun, a member of the Company’s Board of Directors and general partner at Andreessen
Horowitz, a related party. The RSUs were granted during December 2020 and will become fully vested on January 1, 2021. There are no other vesting conditions nor are there any
conditions that would result in forfeiture of the award. The Company recognized $9.9 million of stock based compensation expense related to this award during the year ended
December 31, 2020.
Restricted common stock
As part of the acquisition of Tagomi, the Company issued 823,629 shares of restricted common stock on July 31, 2020, with a weighted-average grant date fair value per share of
$23.46. Vesting of this restricted common stock is dependent on a service-based vesting condition that is satisfied over three years. The Company has the right to repurchase shares
at par value for which the vesting condition is not satisfied. As of December 31, 2020, all of the restricted common stock remained outstanding and were unvested. The Company
recognized $3.3 million of stock based compensation expense related to the restricted common stock for the year ended December 31, 2020.
Stock-based compensation expense
Stock based compensation is included in the following components of expenses on the accompanying consolidated statements of operations (in thousands):
YearEndedDecember31,
2020 2019
Technology and development $ 36,869 25,220
Sales and marketing 1,566 970
General and administrative 34,190 24,699
Restructuring — 994
Total
$ 72,625 $ 51,883
F-43
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
17.INCOMETAXES
Income (loss) before benefit from income taxes was attributable to the following regions (in thousands):
YearEndedDecember31,
2020 2019
Domestic $ 396,709 $ (55,383)
Foreign 12,490 9,967
$ 409,199 $ (45,416)
Provision (benefit) from income taxes consisted of the following (in thousands):
YearEndedDecember31,
2020 2019
Current
Federal $ 65,269 $ 2,053
State 18,162 (639)
Foreign 2,977 4,277
Total current 86,408 5,691
Deferred
Federal 1,373 (15,519)
State (514) (5,496)
Foreign (385) 295
Total deferred 474 (20,720)
Total provision for income taxes
$ 86,882 $ (15,029)
F-44
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
The effective income tax rate differs from the statutory federal income tax rate as follows:
YearEndedDecember31,
2020 2019
Provision for income taxes at U.S. statutory rate 21.00 % 21.00 %
State income taxes, net of federal benefit 3.39 10.58
Foreign rate differential (0.24) (3.52)
Non-deductible compensation 0.99 (2.20)
Equity compensation 0.27 2.31
Prior year true-ups (state and federal) (0.11) 1.51
Research and development credits (1.86) 15.63
Foreign tax credit (0.05) 2.75
Subpart F income 0.09 (1.95)
Foreign Derived Intangible Income (FDII) (1.50) —
Global Intangible Low Taxed Income (GILTI) 0.06 (1.15)
Uncertain tax positions 0.46 (8.26)
CARES Act - NOL Carryback (1.20) —
Other (0.07) (3.61)
21.23 % 33.09 %
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts
used for income tax purposes.
Significant components of the Company’s deferred tax assets and liabilities consisted of the following (in thousands):
YearEndedDecember31,
2020 2019
Deferred tax assets
Accruals and reserves $ 1,943 $ 4,658
Net operating loss carryforward 6,322 938
Lease liability 29,845 35,603
Interest carryforward 1,047 799
Tax credits 4,584 13,559
Stock-based compensation 18,726 7,762
Intangibles 4,563 3,063
Book crypto asset impairment 1,275 1,204
Other 1,045 3,023
Gross deferred tax assets 69,350 70,609
Less valuation allowance (5,174) (2,679)
Total deferred tax assets 64,176 67,930
F-45
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
Deferred tax liabilities
State taxes (798) (1,671)
Depreciation and amortization (11,391) (1,436)
Prepaid expenses (3,179) (1,850)
Right of use asset (28,001) (33,699)
Total deferred tax liabilities (43,369) (38,656)
Total net deferred tax assets
$ 20,807 $ 29,274
A valuation allowance of $5.2 million and $2.7 million was recorded against the Company’s net deferred tax asset balance as of December 31, 2020 and December 31, 2019,
respectively. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. On
the basis of this evaluation, only the portion of the deferred tax asset that is more likely than not to be realized was recognized. The valuation allowance included allowances primarily
related to U.S. Federal net operating loss carryforwards from an acquired entity, net operating loss carryforwards in Japan, and capital loss carryforwards in Ireland.
As of December 31, 2020, the Company had California research and development credits of $4.6 million. The California credits carry forward indefinitely. The Company had $24.5
million of U.S. Federal net operating loss carryforwards, of which $5.5 million have a valuation allowance. The U.S. Federal net operating losses carryforward indefinitely. Additionally,
the Company had acquired U.S. State net operating losses of $13.0 million, which have a full valuation allowance. Generally, the State net operating losses have 20 year
carryforwards. The Company also had net operating loss carryforwards in Japan of $3.8 million as of December 31, 2020 which begin expiring in 2027, all of which have a full
valuation allowance.
Activity related to the Company’s unrecognized tax benefits consisted of the following (in thousands):
YearEndedDecember31,
2020 2019
Balance, beginning of year $ 10,344 $ 6,605
Increase related to tax positions taken during a prior year 212 13
Decreases related to tax positions taken during a prior year (882) (77)
Increases related to tax positions taken during the current year 3,133 3,803
Balance, end of year
$ 12,807 $ 10,344
As of December 31, 2020 and December 31, 2019, the Company had $12.8 million and $10.3 million of unrecognized tax benefits, of which $12.3 million and $9.8 million would
reduce income tax expense and the effective tax rate, if recognized. The Company is currently unaware of any uncertain tax positions that could result in significant additional
payments, accruals, or other material deviation in this estimate over the next twelve months. The Company accounts for interest and penalties related to exposures as a component of
income tax expense. The Company had approximately $0.6 million and $0.4 million and $0.3 million and $0.3 million of accrued interest and penalties for the years ended December
31, 2020 and December 31, 2019, respectively.
The Company files U.S. Federal, state, and foreign income tax returns in jurisdictions with varying statutes of limitations. Currently these statutes of limitations are open from 2017
forward for the U.S., 2016 forward for various U.S. states, 2016 forward for the United Kingdom, 2019 forward for Ireland and Italy, and generally 2017 forward for other jurisdictions.
The Company’s tax return is currently under audit by the U.S. Internal Revenue Service (“IRS”) for 2017 and 2018.
F-46
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
18.NETINCOME(LOSS)PERSHARE
The computation of net income (loss) per share is as follows (in thousands, except per share amounts):
YearEndedDecember31,
2020 2019
Basicnetincome(loss)pershare:
Numerator
Net income (loss) $ 322,317 $ (30,387)
Less: Income allocated to participating securities (214,061) —
Net income (loss) attributable to common stockholders, basic $ 108,256 $ (30,387)
Denominator
Weighted-average shares of common stock used to compute net income (loss) per share attributable to common stockholders,
basic
68,671 61,317
Net income (loss) per share attributable to common stockholders, basic
$ 1.58 $ (0.50)
Dilutednetincome(loss)pershare:
Numerator
Net income (loss) $ 322,317 $ (30,387)
Less: Income allocated to participating securities (194,846) —
Net income (loss) attributable to common stockholders - diluted $ 127,471 $ (30,387)
Denominator
Weighted-average shares of common stock used to compute net income (loss) per share attributable to common stockholders,
basic 68,671 61,317
Weighted-average effect of potentially dilutive securities:
Stock options 22,146 —
Warrants 392 —
Weighted-average shares of common stock used to compute net income (loss) per share attributable to common stockholders,
diluted 91,209 61,317
Net income (loss) per share attributable to common stockholders, diluted
$ 1.40 $ (0.50)
The rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock are identical, except with respect to voting. As the liquidation and
dividend rights are identical for Class A and Class B common stock, the undistributed earnings are allocated on a proportionate basis and the resulting income (loss) per share will,
therefore, be the same for both Class A and Class B common stock on an individual or combined basis.
The following potentially dilutive shares were not included in the calculation of diluted shares outstanding as the effect would have been anti-dilutive (in thousands):
YearEndedDecember31,
2020 2019
Employee stock options 12,831 37,758
RSUs 3,766 —
Warrants — 408
Contingent consideration recognized in asset acquisition — 691
Convertible preferred stock — 114,959
Total
16,597 153,816
F-47
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
Unaudited pro forma net income per share
The following table presents the calculation of unaudited pro forma basic and diluted net income per share (in thousands, except per share amounts):
YearEndedDecember31,
2020
Numerator
Net income attributable to common stockholders, basic and diluted $ 322,317
Denominator
Weighted-average shares of common stock used to compute net income per share attributable to common stockholders, basic 68,671
Assumed conversion of convertible preferred stock 114,274
Pro forma weighted-average shares of common stock used to compute pro forma net income per share attributable to common stockholders, basic 182,945
Assumed exercise of stock options 22,146
Assumed exercise of warrants 392
Assumed vesting of RSA 92
Pro forma weighted-average shares of common stock used to compute pro forma net income per share attributable to common stockholders, diluted
205,575
Pro forma net income per share attributable to common stockholders:
Basic
$ 1.76
Diluted
$ 1.57
19.COMMITMENTSANDCONTINGENCIES
Crypto asset wallets
The Company has committed to securely store all crypto assets it holds on behalf of users. As such, the Company may be liable to its users for losses arising from theft or loss of
user private keys. The Company has no reason to believe it will incur any expense associated with such potential liability because (i) it has no known or historical experience of claims
to use as a basis of measurement, (ii) it accounts for and continually verifies the amount of crypto assets within its control, and (iii) it has established security around custodial private
keys to minimize the risk of theft or loss. Since the risk of loss is remote, the Company had not recorded a liability at December 31, 2020 or December 31, 2019.
Indemnifications
In the event any registrable securities are included in a registration statement, the Company’s Amended and Restated Investors’ Rights Agreement entered into with certain of the
Company’s holders of convertible preferred stock provides indemnity to each stockholder, their partners, members, officers, directors, and stockholders, legal counsel, and
accountants; each underwriter, if any; and each person who controls each stockholder or underwriter, against any damages incurred in connection with investigating or defending any
claim or proceeding arising as a result of such registration from which damages may result. The Company will reimburse each such party for any legal and any other expenses
reasonably incurred, provided that the Company will not be liable in any such case to the extent the damages arise out of or are based upon any actions or omissions made in reliance
upon and in conformity with written information furnished by or on behalf of such stockholder or underwriter and stated to be specifically for use therein.
The Company also has indemnity agreements with certain officers and directors of the Company pursuant to which the Company shall indemnify the officer or director against all
expenses, judgments, fines, and amounts paid in settlement reasonably incurred in connection with a third party proceeding, if
F-48
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
the indemnitee acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Company, and in the case of a criminal proceeding, had no
reasonable cause to believe the indemnitee’s conduct was unlawful.
It is not possible to determine the maximum potential exposure under these indemnification agreements: (i) because the Company has had no prior indemnification claims; (ii) due
to the unique facts and circumstances involved in each particular agreement; and (iii) the requirement for a registration of the Company’s securities before any of the indemnification
obligations contemplated in the IRA become effective.
The Company has also provided indemnities or similar commitments on standard commercial terms in the ordinary course of business.
Legal proceedings
The Company is subject to various litigations, regulatory investigations, and other legal proceedings that arise in the ordinary course of its business. The Company is also subject
to regulatory oversight by numerous regulatory and other governmental agencies. The Company reviews its lawsuits, regulatory investigations, and other legal proceedings on an
ongoing basis and provides disclosure and records loss contingencies in accordance with the loss contingencies accounting guidance. In accordance with such guidance, the
Company establishes accruals for such matters when potential losses become probable and can be reasonably estimated. If the Company determines that a loss is reasonably
possible and the loss or range of loss can be estimated, the Company discloses the possible loss in the consolidated financial statements.
In July 2017, the Enforcement Division of the Commodity Futures Trading Commission (“CFTC”) commenced an investigation that has covered topics including an 2017 Ethereum
market event, trades made in 2017 by one of the Company’s then-current employees, the listing of Bitcoin Cash on the Company’s platform, and the design and operation of certain
algorithmic functions related to liquidity management on the Company’s platform. During the course of its investigation, which remains active, the CFTC has issued subpoenas to the
Company and certain of the Company’s directors, executive officers, and former employees, including testimony subpoenas, and other requests for information. In February 2021, the
parties are negotiating a tentative settlement agreement, which is not expected to have a material impact on the consolidated financial statements.
Except for the CFTC matter described above, the Company believes the ultimate resolution of other existing legal and regulatory investigation matters will not have a material
adverse effect on the financial condition, results of operations, or cash flows of the Company. However, in light of the uncertainties inherent in these matters, it is possible that the
ultimate resolution of one or more of these matters may have a material adverse effect on the Company’s results of operations for a particular period, and future changes in
circumstances or additional information could result in additional accruals or resolution in excess of established accruals, which could adversely affect the Company’s results of
operations, potentially materially.
Tax regulation
Current promulgated tax rules related to crypto asset are unclear and require significant judgments to be made in interpretation of the law, including but not limited to the areas of
income tax, information reporting and the withholding of tax at source. Additional guidance may be issued by the IRS, Department of the Treasury, or other governing bodies that may
significantly differ from the Company's interpretation of the law, which could have unforeseen effects on our financial condition and results of operations, and as a result, the related
impact on our financial condition and results of operations is not estimable.
F-49
CoinbaseGlobal,Inc.
NotestoConsolidatedFinancialStatements
20.SUBSEQUENTEVENTS
Management has evaluated subsequent events through February 25, 2021, the date the consolidated financial statements were available for issuance.
Bison Trails acquisition
On January 19, 2021, the Company entered into an agreement to acquire all outstanding shares of common stock and stock options of Bison Trails Co. (“Bison Trails”). Bison
Trails provides infrastructure services on multiple blockchains, allowing customers to stake crypto assets through this infrastructure. The acquisition was completed on February 8,
2021. The impact of this acquisition was considered immaterial to both the current and prior period of the Company’s consolidated financial statements and pro forma financial
information has not been provided. The initial accounting for the business combination was incomplete at the time the financial statements were issued. The fair value of the total
consideration transferred, as well as the acquired assets and liabilities was still being determined. As such, the disclosure of these amounts could not be made.
F-50
Throughandincluding,2021(the25thdayafterthelistingdateofourClassAcommonstock),alldealerseffectingtransactionsinthesesecurities,
whetherornotparticipatinginthisoffering,mayberequiredtodeliveraprospectus.
PARTII
INFORMATIONNOTREQUIREDINPROSPECTUS
ITEM13.OTHEREXPENSESOFISSUANCEANDDISTRIBUTION.
The following table sets forth all expenses to be paid by the registrant in connection with this registration statement and the listing of its Class A common stock. All amounts shown
are estimates except for the Securities and Exchange Commission, or SEC, registration fee and the Nasdaq Global Select Market listing fee.
AmountPaidortobePaid
SEC registration fee
$ 109,100
Nasdaq Global Select Market listing fee *
Printing fees and expenses *
Legal fees and expenses *
Accounting fees and expenses *
Transfer agent and registrar fees and expenses *
Other advisors’ fees *
Miscellaneous expenses *
Total
$ *
__________________
* To be provided by amendment.
ITEM14.INDEMNIFICATIONOFDIRECTORSANDOFFICERS.
Section 145 of the Delaware General Corporation Law, or DGCL, authorizes a court to award, or a corporation’s board of directors to grant, indemnity to directors and officers
under certain circumstances and subject to certain limitations. The terms of Section 145 of the DGCL are sufficiently broad to permit indemnification under certain circumstances for
liabilities, including reimbursement of expenses incurred, arising under the Securities Act of 1933, as amended, or the Securities Act.
As permitted by the DGCL, the registrant’s restated certificate of incorporation that will be in effect following the effectiveness of this registration statement contains provisions that
eliminate the personal liability of its directors for monetary damages for any breach of fiduciary duties as a director, except liability for the following:
• any breach of the director’s duty of loyalty to the registrant or its stockholders;
• acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;
• under Section 174 of the DGCL (regarding unlawful dividends and stock purchases); or
• any transaction from which the director derived an improper personal benefit.
As permitted by the DGCL, the registrant’s restated bylaws that will be in effect following the effectiveness of this registration statement provide that:
• the registrant is required to indemnify its directors and executive officers to the fullest extent permitted by the DGCL, subject to very limited exceptions;
• the registrant may indemnify its other employees and agents as set forth in the DGCL;
II-1
• the registrant is required to advance expenses, as incurred, to its directors and executive officers in connection with a legal proceeding to the fullest extent permitted by the
DGCL, subject to very limited exceptions; and
• the rights conferred in the restated bylaws are not exclusive.
In addition, the registrant has entered into indemnification agreements with each of its current directors and executive officers to provide these directors and executive officers
additional contractual assurances regarding the scope of the indemnification set forth in the registrant’s restated certificate of incorporation and restated bylaws and to provide
additional procedural protections. From time to time the registrant has indemnified and may in the future indemnify its directors and officers pursuant to these indemnification
agreements in connection legal or regulatory proceedings. The indemnification provisions in the registrant’s restated certificate of incorporation and restated bylaws and the
indemnification agreements entered into or to be entered into between the registrant and each of its directors and executive officers may be sufficiently broad to permit indemnification
of the registrant’s directors and executive officers for liabilities arising under the Securities Act.
The registrant has directors’ and officers’ liability insurance for its directors and officers.
Certain of the registrant’s directors are also indemnified by their employers with regard to their service on the registrant’s board of directors.
ITEM15.RECENTSALESOFUNREGISTEREDSECURITIES.
Since February 22, 2018 and through February 22, 2021, the registrant has issued and sold the following securities:
Option,RestrictedStockUnits,andCommonStockIssuances
Since February 22, 2018 and through February 22, 2021, the registrant granted to its employees, consultants, and other service providers options to purchase an aggregate of
8,647,032 shares of Class A common stock under its Amended and Restated 2013 Stock Plan, or 2013 Plan, at exercise prices ranging from $14.9767 to $17.87 per share.
Since February 22, 2018 and through February 22, 2021, the registrant granted to its employees, consultants, and other service providers options to purchase an aggregate of
11,107,446 shares of Class B common stock under the 2013 Plan, at exercise prices ranging from $6.9733 to $7.7450 per share.
Since February 22, 2018 and through February 22, 2021, the registrant granted to its employees, consultants, and other service providers options to purchase an aggregate of
39,949,585 shares of Class A common stock under its 2019 Equity Incentive Plan, or 2019 Plan, at exercise prices ranging from $18.13 to $28.71 per share.
Since February 22, 2018 and through February 22, 2021, the registrant issued and sold to its employees, consultants, and other service providers an aggregate of 913,251 shares
of Class A common stock upon the exercise of stock options under the 2013 Plan, at exercise prices ranging from $14.9767 to $17.87 per share.
Since February 22, 2018 and through February 22, 2021, the registrant issued and sold to its employees, consultants, and other service providers an aggregate of 9,101,581
shares of Class B common stock upon the exercise of stock options under the 2013 Plan, at exercise prices ranging from $0.05 to $7.7450 per share.
Since February 22, 2018 and through February 22, 2021, the registrant issued and sold to its employees, consultants, and other service providers an aggregate of 1,936,950
shares of Class A common stock upon the exercise of stock options under the 2019 Plan, at exercise prices ranging from $18.13 to $26.26 per share.
II-2
Since February 22, 2018 and through February 22 2021, the registrant granted to its employees, consultants, and other service providers an aggregate of 5,938,422 restricted
stock units to be settled in shares of Class A common stock under the 2019 Plan.
In July 2020, the registrant granted options to purchase an aggregate of 32,403 shares of Class A common stock, with a weighted-average exercise price of $5.31 per share, to
certain individuals in connection with the assumption and conversion of options to purchase shares of Tagomi Holdings Inc. common stock upon completion of the registrant’s
acquisition of Tagomi Holdings Inc.
In February 2021, the registrant granted options to purchase an aggregate of 470,128 shares of Class A common stock, with a weighted-average exercise price of $3.45 per
share, to certain individuals in connection with the assumption and conversion of options to purchase shares of Bison Trails Co. common stock upon completion of the registrant’s
acquisition of Bison Trails Co.
PreferredStockIssuances
From October 2018 through December 2018, the registrant sold an aggregate of 8,831,952 shares of its Series E convertible preferred stock to 30 accredited investors at a
purchase price of $36.1922 per share, for an aggregate purchase price of $319.6 million.
OtherIssuances
In April 2018, the registrant issued an aggregate of 240,000 shares of its Class B common stock to an accredited investor in connection with its acquisition of two wholly-owned
subsidiaries of Earn Holdings, LLC.
In December 2018, the registrant sold an aggregate of 653,682 shares of its Class A common stock to 20 accredited investors at a purchase price of $32.5729 per share, for an
aggregate purchase price of $21.3 million.
In May 2019, the registrant sold an aggregate of 153,501 shares of its Class A common stock to an accredited investor at a purchase price of $32.5729 per share, for an
aggregate purchase price of $5.0 million.
In December 2019, the registrant issued an aggregate of 82,890 shares of its Class A common stock to an accredited investor in connection with obtaining a release, waiver, and
license from Omni Projects, Inc.
In July 2020, the registrant issued 2,127,510 shares of its Class A common stock to 75 accredited investors in connection with its acquisition of Tagomi Holdings Inc.
In July 2020, the registrant assumed a warrant exercisable for 4,201 shares of its Class A common stock in connection with its acquisition of Tagomi Holdings Inc., with an
exercise price of $5.26 per share.
In August 2020, the registrant issued 690,756 shares of its Class A common stock to an accredited investor in connection with its acquisition of certain assets from Xapo Holdings
Ltd.
In February 2021, the registrant issued 3,584,228 shares of its Class A common stock to 36 accredited investors in connection with its acquisition of Bison Trails Co.
Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities
Act (or Regulation D or Regulation S promulgated thereunder), or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public
offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of the securities in each of these transactions represented their
intentions to acquire the securities for investment only and not with a
II-3
view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions.
None of the foregoing transactions involved any underwriters, underwriting discounts or commissions or any public offering, and the registrant believes each transaction was
exempt from the registration requirements of the Securities Act as stated above. All recipients of the foregoing transactions either received adequate information about the registrant or
had access, through their relationships with the registrant, to such information. Furthermore, the registrant affixed appropriate legends to the share certificates and instruments issued
in each foregoing transaction setting forth that the securities had not been registered and the applicable restrictions on transfer.
II-4
ITEM16.EXHIBITSANDFINANCIALSTATEMENTSCHEDULES.
(a) Exhibits.
ExhibitNumber DescriptionofDocument
3.1 Amended and Restated Certificate of Incorporation, as currently in effect.
3.2 Certificate of Amendment to Amended and Restated Certificate of Incorporation, as currently in effect.
3.3 Form of Restated Certificate of Incorporation, to be effective shortly following the effectiveness of this registration statement.
3.4 Second Amended and Restated Bylaws, as currently in effect.
3.5 Form of Restated Bylaws, to be effective shortly following the effectiveness of this registration statement.
4.1 Form of Registrant’s Class A common stock certificate.
4.2* Amended and Restated Investors’ Rights Agreement by and between the registrant and certain securityholders, dated , 2021.
4.3 Warrant to Purchase Common Stock by and between the registrant and Silicon Valley Bank, dated June 24, 2014.
4.4 Warrant to Purchase Common Stock by and between the registrant and Silicon Valley Bank, dated July 31, 2020.
5.1* Opinion of Fenwick & West LLP.
10.1 Form of Indemnification Agreement by and between the registrant and each of its directors and executive officers.
10.2 2013 Amended and Restated Stock Plan and forms of award agreements thereunder.
10.3 2019 Equity Incentive Plan, as amended, and forms of award agreements thereunder.
10.4 2021 Equity Incentive Plan and forms of award agreements thereunder.
10.5 2021 Employee Stock Purchase Plan.
10.6 Employment Agreement by and between the registrant and Brian Armstrong, dated February 18, 2021.
10.7 Employment Agreement by and between the registrant and Surojit Chatterjee, dated February 24, 2021.
10.8 Employment Agreement by and between the registrant and Paul Grewal, dated February 11. 2021.
10.9 Change of Control and Severance Policy.
16.1 Letter Regarding Change in Accountants.
21.1 List of Subsidiaries of the Registrant.
23.1* Consent of Fenwick & West LLP (included in Exhibit 5.1).
23.2 Consent of Deloitte & Touche LLP, independent registered public accounting firm.
23.3 Consent of Grant Thornton LLP, independent registered public accounting firm.
24.1 Power of Attorney (included on the signature page to this registration statement).
________________
* To be provided by amendment
(b) Financial Statement Schedules.
All financial statement schedules are omitted because they are not applicable or the information is included in the registrant’s consolidated financial statements or related notes.
II-5
ITEM17.UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
• To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended, or Securities Act.
• To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement.
• To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in
the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, and controlling persons of the registrant pursuant to provisions
described in Item 14 above, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer,
or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in San Francisco, California, on February 25, 2021.
COINBASEGLOBAL,INC.
By: /s/ Brian Armstrong
Brian Armstrong
Chief Executive Officer
POWEROFATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Brian Armstrong and Alesia J. Haas, as his or
her true and lawful attorneys-in-fact, proxies, and agents, each with full power of substitution, for him or her in any and all capacities, to sign any and all amendments to this
registration statement (including post-effective amendments or any abbreviated registration statement and any amendments thereto filed pursuant to Rule 462(b) increasing the
number of securities for which registration is sought), and to file the same, with all exhibits thereto and other documents in connection therewith, with the SEC, granting unto said
attorneys-in-fact, proxies, and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for
all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact, proxies, and agents, or their or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the date indicated.
II-7
Signature Title Date
/s/ Brian Armstrong
Chief Executive Officer and Director
(Principal Executive Officer)
February 25, 2021
Brian Armstrong
/s/ Alesia J. Haas
Chief Financial Officer
(Principal Financial Officer)
February 25, 2021
Alesia J. Haas
/s/ Jennifer N. Jones
Chief Accounting Officer
(Principal Accounting Officer)
February 25, 2021
Jennifer N. Jones
/s/ Marc L. Andreessen
Director February 25, 2021
Marc L. Andreessen
/s/ Frederick Ernest Ehrsam III
Director February 25, 2021
Frederick Ernest Ehrsam III
/s/ Kathryn Haun
Director February 25, 2021
Kathryn Haun
/s/ Kelly Kramer
Director February 25, 2021
Kelly Kramer
/s/ Gokul Rajaram
Director February 25, 2021
Gokul Rajaram
/s/ Fred Wilson
Director February 25, 2021
Fred Wilson
II-8
Exhibit 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
COINBASE GLOBAL, INC.
(Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware)
Coinbase Global, Inc., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware
(the “General Corporation Law”),
DOES HEREBY CERTIFY:
1. That the name of this corporation is Coinbase Global, Inc., and that this corporation was originally incorporated pursuant to the General Corporation
Law on January 27, 2014 under the name Coinbase Global, Inc.
2. That the Board of Directors duly adopted resolutions proposing to amend and restate the Certificate of Incorporation of this corporation, declaring
said amendment and restatement to be advisable and in the best interests of this corporation and its stockholders, and authorizing the appropriate officers of this
corporation to solicit the consent of the stockholders therefor, which resolution setting forth the proposed amendment and restatement is as follows:
RESOLVED, that the Amended and Restated Certificate of Incorporation of this corporation be amended and restated in its entirety to read as follows:
FIRST: The name of this corporation is Coinbase Global, Inc. (the “Corporation”).
SECOND: The address of the Corporation's registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New
Castle, Zip Code 19801. The name of its registered agent at such address is The Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law.
FOURTH: The total number of shares of all classes of stock which the Corporation shall have authority to issue is (i) 267,640,000 shares of Class A
Common Stock, $0.00001 par value per share (“Class A Common Stock”), (ii) 208,413,936 shares of Class B Common Stock, $0.00001 par value per share
(“Class B Common Stock” and together with the Class A Common Stock, the “Common Stock”), (iii) 5,738,772 shares of FF Preferred Stock, 0.00001 par value
per share (“FF Preferred Stock”) and (iv) 120,866,256 shares of Preferred Stock, $0.00001 par value per share (“Preferred Stock”).
The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of
each class of capital stock of the Corporation.
A. COMMON STOCK.
1. General. The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights, powers
and preferences of the holders of the Preferred Stock set forth herein. Except as otherwise required by applicable law or as expressly set forth herein, each share of
Class A Common Stock shall have the same rights and powers as, rank equally to (including as to dividends and distributions, and upon any liquidation, dissolution
or winding up of the Corporation), share ratably with and be identical in all respects and in all matters to, each share of Class B Common Stock.
2. Voting. Except as otherwise provided herein or required by applicable law, each holder of shares of Class B Common Stock shall be entitled
to ten (10) votes for each share of Class B Common Stock held of record by such holder and each holder of Class A Common Stock shall be entitled to one (1) vote
for each share of Class A Common Stock held of record by such holder. Unless required by applicable law, there shall be no cumulative voting. Except as
expressly provided in Sections 3.2 and 3.9 below or required by applicable law, holders of Class A Common Stock and Class B Common Stock shall (a) vote
together as a single class on all matters (including the election of directors) submitted to a vote of the stockholders of the Corporation and (b) be entitled to notice
of any stockholders’ meeting in accordance with the Bylaws of the Corporation. The number of authorized shares of Class A Common Stock and/or Class B
Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by (in addition to any vote of the holders of one or
more series of Preferred Stock that may be required by the terms of the Certificate of Incorporation) the affirmative vote of the holders of shares of capital stock of
the Corporation representing a majority of the votes represented by all outstanding shares of capital stock of the Corporation entitled to vote, irrespective of the
provisions of Section 242(b)(2) of the General Corporation Law.
3. Conversion of Class B Common Stock.
3.1 Right to Convert. At any time, any holder of shares of Class B Common Stock, at the option of such holder, may convert any share of Class
B Common Stock held by such holder at any time after the date of issuance of such share, at the office of the Corporation or any transfer agent for such stock, into
one (1) share of Class A Common Stock.
3.2 Automatic Class Conversion. Upon the earlier of (i) the date and time specified by (A) the affirmative vote of the holders of Class B
Common Stock representing not less than sixty six and two-thirds percent (66 2/3%) of the voting power of the outstanding shares of Class B Common Stock at the
time of such vote, voting separately as a separate class, and (B) the affirmative vote of not less than sixty six and two-thirds percent (66 2/3%) of the then-serving
members of the Board of Directors of the Corporation (the “Board of Directors”), which must include the affirmative vote of the Founder if (I) the Founder is then
serving as a member of the Board of Directors and (II) the Founder has not been terminated for Cause (as defined below) or resigned (except for Good Reason (as
defined below)) from the position of Chief Executive Officer of the Corporation, or (ii) the death or Disability of the Founder (the earlier such date referred to in
clauses (i) and (ii) of this Section 3.2, the “Class B Mandatory Conversion Time”), each outstanding share of (x) Class B Common Stock shall automatically,
2
without further action by the Corporation or any holder thereof, convert into one (1) share of Class A Common Stock, (y) Preferred Stock shall automatically,
without further action by the Corporation or any holder thereof, become convertible into shares of Class A Common Stock rather than Class B Common Stock,
upon conversion of such share of Preferred Stock pursuant to Article Fourth, Part B, Sections 4 and 5 of this Amended and Restated Certificate of Incorporation
(the “Restated Certificate”), and (z) FF Preferred Stock shall automatically, without further action by the Corporation or any holder thereof, become convertible
into shares of Class A Common Stock rather than Class B Common Stock, upon conversion of such share of FF Preferred Stock pursuant to Article Fourth, Part C,
Section 4 of this Restated Certificate (but excluding any conversion pursuant to Article Fourth, Part C, Section 4.7) (each of the events referred to in clauses (i) and
(ii) of this Section 3.2 are referred to herein as a “Class B Mandatory Conversion Event”).
3.3 Automatic Conversion upon Transfers to Non-Affiliates. Any share of (i) Class B Common Stock shall automatically, without further action
by the Corporation or any holder thereof, be converted into one (1) share of Class A Common Stock, (ii) Preferred Stock (other than Series E Preferred Stock) shall
automatically, without further action by the Corporation or any holder thereof, become convertible into shares of Class A Common Stock rather than Class B
Common Stock, upon conversion of such share of Preferred Stock pursuant to Article Fourth, Part B, Sections 4 and 5 of this Restated Certificate, and (iii) FF
Preferred Stock shall automatically, without further action by the Corporation or any holder thereof, become convertible into shares of Class A Common Stock
rather than Class B Common Stock, upon conversion of such share of FF Preferred Stock pursuant to Article Fourth, Part C, Section 4 of this Restated Certificate
(but excluding any conversion pursuant to Article Fourth, Part C, Section 4.7), in each case, upon the Transfer of such share by a Qualified Stockholder other than
to a Permitted Entity (each such Transfer, a “Converting Transfer”).
3.4 Mechanics of Conversion. Before any holder of Class B Common Stock shall be entitled to voluntarily convert the same into shares of Class
A Common Stock pursuant to Section 3.1, or upon the occurrence of an automatic conversion of the Class B Common Stock pursuant to Section 3.2 or 3.3, as
applicable, such holder shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for such stock,
and shall, in the event of an optional conversion pursuant to Section 3.1, give written notice to the Corporation at such office that such holder elects to convert the
same and shall state therein the name or names in which such holder wishes the certificate or certificates for shares of Class A Common Stock to be issued. The
Corporation shall, as soon as reasonably practicable thereafter, issue and deliver at such office to such holder, or to the nominee or nominees of such holder, a
certificate or certificates for the number of shares of Class A Common Stock to which such holder shall be entitled as aforesaid. In the event of an optional
conversion pursuant to Section 3.1, such conversion shall be deemed to have been made immediately prior to the close of business on the date of surrender of the
shares of Class B Common Stock to be converted, and the person or persons entitled to receive the shares of Class A Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such shares of Class A Common Stock on such date. If the conversion is in connection with the
automatic conversion provisions set forth in Section 3.2 or Section 3.3, such conversion shall be deemed to have been
3
made, in the case of Section 3.2, on the Class B Mandatory Conversion Time or, in the case of Section 3.3, the applicable date of Transfer, and the persons entitled
to receive shares of Class A Common Stock issuable upon such conversion shall be treated for all purposes as the record holders of such shares of Class A
Common Stock as of the applicable date. The Corporation shall provide notice of a Class B Mandatory Conversion Event pursuant to Section 3.2 to record holders
of such shares of Class B Common Stock, Preferred Stock and FF Preferred Stock as soon as practicable following the Class B Mandatory Conversion Event. Such
notice shall be provided by any means then permitted by the Delaware General Corporation Law; provided, however, that no failure to give such notice nor any
defect therein shall affect the validity of the Class B Mandatory Conversion Event. Any shares of Class B Common Stock converted pursuant to the provisions
herein shall be retired and cancelled and may not be reissued as shares of Class B Common Stock.
3.5 Issuance Following the Dual Class Effective Time. After October 1, 2018 (the “Dual Class Effective Time”), no shares of Class B Common
Stock may be issued by the Corporation, except for the issuance (i) of shares of Class B Common Stock issued upon the conversion of shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or FF Preferred Stock pursuant to the provisions herein and (ii) of shares of
Class B Common Stock issued upon the exercise, conversion, exchange or settlement of Options and Convertible Securities outstanding as of immediately prior to
the Dual Class Effective Time.
3.6 Notices. Any notice required or permitted by the provisions of this Part A of Article Fourth to be given to a holder of shares of Common
Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Corporation for such holder, given by the holder to the
Corporation for the purpose of notice or given by electronic communication in compliance with the provisions of the General Corporation Law, and shall be
deemed sent upon such mailing or electronic transmission. If no such address appears or is given, notice shall be deemed given at the place where the principal
executive office of the Corporation is located.
3.7 Redemption. The Common Stock is not redeemable at the option of the holder thereof and the Corporation shall have no obligation to
redeem the Common Stock.
3.8 Reservation. The Corporation shall at all times reserve and keep available, out of its authorized and unissued shares of Class A Common
Stock, solely for the purpose of effecting conversions of shares of Class B Common Stock into Class A Common Stock, such number of duly authorized shares of
Class A Common Stock as shall from time to time be sufficient to effect the conversion of all then outstanding shares of Class B Common Stock. If at any time the
number of authorized and unissued shares of Class A Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Class B
Common Stock, the Corporation shall promptly take such corporate action as may be necessary to increase its authorized but unissued shares of Class A Common
Stock to such number of shares as shall be sufficient for such purpose, including, without limitation, obtaining the requisite stockholder approval of any necessary
amendment to this Restated Certificate.
4
3.9 Protective Provisions. Notwithstanding anything to the contrary herein, the Corporation shall not, whether by merger, consolidation or
otherwise, amend, alter, repeal or waive Part A of this Article Fourth (or adopt any provision inconsistent therewith), without first obtaining the affirmative vote (or
written consent if action by written consent of stockholders is permitted at such time under this Restated Certificate) of the holders of a majority of the then
outstanding shares of Class B Common Stock, voting as a separate class, in addition to any other vote required by applicable law, this Restated Certificate or the
Corporation’s Bylaws.
3.10 Subdivisions, Combinations or Reclassifications. Shares of Class A Common Stock or Class B Common Stock may not be subdivided,
combined or reclassified unless the shares of the other class are concurrently therewith proportionately subdivided, combined or reclassified in a manner that
maintains the same proportionate equity ownership between the holders of the outstanding Class A Common Stock and Class B Common Stock on the record date
for such subdivision, combination or reclassification; provided, however, that shares of one such class may be subdivided, combined or reclassified in a different or
disproportionate manner if such subdivision, combination or reclassification is approved in advance by the affirmative vote of the holders of a majority of the
outstanding shares of Class A Common Stock and Class B Common Stock, each voting separately as a class.
3.11 Definitions.
(i) “Affiliate” means, with respect to a Qualified Stockholder that is an investment fund, any other entity which, directly or indirectly,
controls, is controlled by, or is under common control with such Qualified Stockholder, including, without limitation, any general partner, officer, director or
manager of such entity and any venture capital fund now or hereafter existing that is controlled by one or more general partners or managing members of, is under
common investment management with, shares the same management or advisory company with or is otherwise affiliated with such entity.
(ii) “Cause” means the Founder’s conviction of a felony crime involving dishonesty, breach of trust, or physical harm to any person;
provided that with respect to any conviction by a tribunal outside of the United States, “Cause” shall not exist if the Founder acted on the advice of legal counsel or
in the good faith belief that such action was legal and in the best interests of the Corporation.
(iii) “Charitable Trust” means a trust that is exempt from taxation under Section 501(c)(3) of the United States Internal Revenue Code
of 1986, as amended (or any successor provision thereto) (whether a determination letter with respect to such exemption is issued before, at or after the Dual Class
Effective Time), and further includes any successor entity that is exempt from taxation under Section 501(c)(3) (or any successor provision thereto) upon a
conversion of, or transfer of all or substantially all of the assets of, a Charitable Trust to such successor entity (whether a determination letter with respect to such
successor’s exemption is issued before, at or after the conversion date).
(iv) “Disability” means, with respect to the Founder, the permanent and total disability of the Founder such that the Founder is unable to
engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which
5
can be expected to result in death within 12 months or which has lasted or can be expected to last for a continuous period of not less than 12 months as determined
by a licensed medical practitioner jointly selected by a majority of the then-serving members of the Board of Directors, including the Founder to the extent the
Founder is then serving as a member of the Board of Directors. If the Founder is incapable of selecting a licensed physician, then the Founder’s spouse shall make
the selection on behalf of the Founder, or in the absence or incapacity of the Founder’s spouse, the Founder’s adult children by majority vote shall make the
selection on behalf of the Founder, or in the absence of adult children of such Founder or their inability to act by majority vote, a natural person then acting as the
successor trustee of a revocable living trust which was created by the Founder and which holds more shares of all classes of capital stock of the Corporation than
any other revocable living trust created by the Founder shall make the selection on behalf of the Founder, or in absence of any such successor trustee, the legal
guardian or conservator of the estate of the Founder shall make the selection on behalf of the Founder.
(v) “Family Member” shall mean with respect to any natural person who is a Qualified Stockholder, the spouse or Spousal Equivalent,
parents, grandparents, lineal descendants, siblings and lineal descendants of siblings of such Qualified Stockholder. Lineal descendants shall include adopted
persons, but only so long as such persons are adopted while a minor.
(vi) “Family Trust” shall mean a bona fide trust, estate planning vehicle or similar entity created or established by a Qualified
Stockholder for a Family Member or for estate planning purposes.
(vii) “Founder” means Brian Armstrong.
(viii) “Good Reason” means the occurrence of any of the following events or conditions, without the Founder’s express written consent
(which consent may be denied, withheld or delayed for any reason): (A) a reduction in the Founder’s title from Chief Executive Officer or the material reduction in
Founder’s authority, duties or responsibilities as in effect as of the date hereof, including without limitation the appointment of any other executive to the
Corporation having equal or greater authority, duties or responsibilities than the Founder; a requirement that the Founder report to any person(s) other than the
Board of Directors or a committee thereof; the termination of persons reporting directly to the Founder; or a material reduction in the proportion of the
Corporation’s budget over which the Founder has authority; or (B) any action or inaction that constitutes a material breach by the Corporation of any agreement
between the Corporation and the Founder, which breach is not cured within thirty (30) days after receipt of written notice describing in detail such breach to the
Corporation from the Founder.
(ix) “Qualified Stockholder” shall mean: (A) the registered holder of a share of Class B Common Stock, FF Preferred Stock and/or
Preferred Stock outstanding as of the Dual Class Effective Time; (B) the initial registered holder of any shares of Class B Common Stock that are originally issued
by the Corporation after the Dual Class Effective Time pursuant to the exercise or conversion of Options or Convertible Securities, in each case, that are
outstanding as of the Dual Class Effective Time; (C) each natural person who Transferred shares of or equity awards for Class B Common Stock, Preferred Stock
and/or FF Preferred Stock (including any Option or Convertible Security exercisable or convertible into shares of Class B
6
Common Stock) to a Permitted Entity that is or becomes a Qualified Stockholder pursuant to clauses (A) or (B) of this definition; and (D) any Permitted Entity
receiving Class B Common Stock, FF Preferred Stock or Preferred Stock pursuant to a Transfer of shares of Class B Common Stock, FF Preferred Stock or
Preferred Stock, as applicable, by a Qualified Stockholder.
(x) “Parent” of an entity shall mean any entity that directly or indirectly owns or controls a majority of the voting power of the voting
securities of such entity.
(xi) “Permitted Entity” shall mean with respect to a Qualified Stockholder:
(A) a Permitted Trust, individual retirement account, pension, profit-sharing or stock bonus plan (x) solely for the benefit of
(1) such Qualified Stockholder, (2) one or more Family Members of such Qualified Stockholder, and/or (3) any other Permitted Entity of such Qualified
Stockholder, and (y) over which such Qualified Stockholder exercises Voting Control;
(B) any general partnership, limited partnership, limited liability company, corporation or other entity (x) exclusively owned or
controlled by (1) such Qualified Stockholder, (2) one or more Family Members of such Qualified Stockholder and/or (3) any other Permitted Entity of such
Qualified Stockholder, and (y) over which such Qualified Stockholder exercises Voting Control;
(C) any Affiliate of a Qualified Stockholder that is an investment fund;
(D) any Charitable Trust or charitable foundation created or established by a Qualified Stockholder, (x) which Charitable Trust or
charitable foundation is approved by the Board of Directors or (y) over which such Qualified Stockholder exercises Voting Control;
(E) any Family Trust, (x) which Family Trust is approved by the Board of Directors or (y) over which the Qualified Stockholder
that created or established the Family Trust exercises Voting Control; and
(F) with respect to a Qualified Stockholder that is a Permitted Trust, the natural person that created or established such Permitted
Trust.
(xii) “Permitted Trust” shall mean a bona fide trust, other than a Family Trust or a Charitable Trust, where each trustee is (A) a Qualified
Stockholder, (B) a Family Member of a Qualified Stockholder, (C) a professional in the business of providing trustee services, including private professional
fiduciaries, trust companies and bank trust departments, or (D) solely in the case of any such trust established by a natural person grantor prior to the Dual Class
Effective Time, any other bona fide trustee.
7
(xiii) “Spousal Equivalent” as used herein, a person is deemed to be a “Spousal Equivalent” provided the following circumstances are
true: (A) irrespective of whether or not the relevant person and the Spousal Equivalent are the same sex, they are the sole spousal equivalent of the other for the last
twelve (12) months, (B) they intend to remain so indefinitely, (C) neither are married to anyone else, (D) both are at least eighteen (18) years of age and mentally
competent to consent to contract, (E) they are not related by blood to a degree of closeness that would prohibit legal marriage in the state in which they legally
reside, (F) they are jointly responsible for each other’s common welfare and financial obligations, and (G) they reside together in the same residence for the last
twelve (12) months and intend to do so indefinitely.
(xiv) “Transfer” shall mean any sale, assignment, transfer, conveyance, hypothecation or other transfer or disposition of a share of the
Corporation’s capital stock or any legal or beneficial interest in such share, whether or not for value and whether voluntary or involuntary or by operation of law,
including, without limitation, a transfer of a share of the Corporation’s capital stock to a broker or other nominee (regardless of whether there is a corresponding
change in beneficial ownership), or the transfer of, or entering into a binding agreement with respect to, Voting Control over such share by proxy or otherwise;
provided, however, that the following shall not be considered a “Transfer” within the meaning of this Article Fourth, Part B, Section 3:
(A) the granting of a revocable proxy to officers or directors of the Corporation at the request of the Board of Directors in
connection with actions to be taken at an annual or special meeting of stockholders; or
(B) the pledge of shares of the Corporation’s capital stock by a stockholder that creates a mere security interest in such shares
pursuant to a bona fide loan or indebtedness transaction for so long as such stockholder continues to exercise Voting Control over such pledged shares; provided,
however, that a foreclosure on such shares or other similar action by the pledgee shall constitute a Transfer unless such foreclosure or similar action qualifies as a
Permitted Transfer.
A Transfer shall also be deemed to have occurred with respect to a share of the Corporation’s capital stock beneficially held by (x) an entity that is a Permitted
Entity, if there occurs any act or circumstance that causes such entity to no longer be a Permitted Entity or (y) an entity that is a Qualified Stockholder, if there
occurs a Transfer on a cumulative basis of a majority of the voting power of the voting securities of such entity or any direct or indirect Parent of such entity, other
than a Transfer to parties that are holders of voting securities of any such entity or Parent of such entity as of the Dual Class Effective Time.
(xv) “Voting Control” shall mean, with respect to a share of the Corporation’s capital stock, the power (whether exclusive or shared) to
vote or direct the voting of such share by proxy, voting agreement or otherwise.
8
B. PREFERRED STOCK.
30,929,220 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series A Preferred Stock”, 25,415,778 shares of the
authorized Preferred Stock of the Corporation are hereby designated “Series B Preferred Stock”, 32,542,128 shares of the authorized Preferred Stock of the
Corporation are hereby designated “Series C Preferred Stock”, 17,471,130 shares of the authorized Preferred Stock of the Corporation are hereby designated
“Series D Preferred Stock” and 14,508,000 shares of the authorized but unissued Preferred Stock of the Corporation are hereby designated “Series E Preferred
Stock”, each with the following rights, preferences, powers, privileges and restrictions, qualifications and limitations. Unless otherwise indicated, references to
“sections” or “subsections” in this Part B of this Article Fourth refer to sections and subsections of Part B of this Article Fourth.
1. Dividends. The holders of shares of Preferred Stock shall be entitled to receive dividends, on a pari passu basis, out of any assets legally
available therefor, prior and in preference to any declaration or payment of any dividend (payable other than in Common Stock or other securities and rights
convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock of the Corporation) on the Common Stock and
FF Preferred Stock of the Corporation, at the rate of (i) 6% of the Series A Original Issue Price (as adjusted for stock splits, stock dividends, reclassification and the
like) per annum on each outstanding share of Series A Preferred Stock then held by them, (ii) 6% of the Series B Original Issue Price (as adjusted for stock splits,
stock dividends, reclassification and the like) per annum on each outstanding share of Series B Preferred Stock then held by them, (iii) 6% of the Series C Original
Issue Price (as adjusted for stock splits, stock dividends, reclassification and the like) per annum on each outstanding share of Series C Preferred Stock then held by
them, (iv) 6% of the Series D Original Issue Price (as adjusted for stock splits, stock dividends, reclassification and the like) per annum on each outstanding share
of Series D Preferred Stock then held by them and (v) 6% of the Series E Original Issue Price (as adjusted for stock splits, stock dividends, reclassification and the
like) per annum on each outstanding share of Series E Preferred Stock then held by them; in each case payable when, as and if declared by the Board of Directors,
calculated on the record date for determination of holders entitled to such dividend. Such dividends shall not be cumulative. After payment of such dividends, any
additional dividends shall be distributed among the holders of Preferred Stock, Common Stock and FF Preferred Stock pro rata based on the number of shares of
Common Stock then held by each holder (assuming conversion of all such Preferred Stock into Class A Common Stock), calculated on the record date for
determination of holders entitled to such dividend.
2. Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and Asset Sales.
2.1 Preferential Payments to Holders of Preferred Stock. In the event of any Liquidation Event, the holders of shares of Preferred Stock
then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders before any payment shall be made to
the holders of Common Stock or FF Preferred Stock by reason of their ownership thereof, an amount per share equal to the greater of (i) one (1) times the
applicable Original Issue Price for such series, plus any dividends declared but unpaid
9
thereon, for each share of Preferred Stock then held by them, or (ii) such amount per share as would have been payable had such share of Preferred Stock been
converted into Common Stock pursuant to Section 4 immediately prior to such Liquidation Event, for each share of Preferred Stock then held by them (the amount
payable pursuant to this sentence is hereinafter referred to as the “Series A Liquidation Amount” with respect to the Series A Preferred Stock, the “Series B
Liquidation Amount” with respect to the Series B Preferred Stock, the “Series C Liquidation Amount” with respect to the Series C Preferred Stock, the “Series
D Liquidation Amount” with respect to the Series D Preferred Stock and the “Series E Liquidation Amount” with respect to the Series E Preferred Stock); for
clarity, the determination as to which of (i) or (ii) of the foregoing clause is greater shall be made at the time of the decision to liquidate, dissolve, or wind up, or
upon consummation of a Liquidation Event, assuming any escrowed amounts will be paid out to the stockholders of the Corporation. If upon any such Liquidation
Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Preferred Stock the full amount
to which they shall be entitled under this Subsection 2.1, the holders of shares of Preferred Stock shall share ratably in any distribution of the assets available for
distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts
payable on or with respect to such shares were paid in full. “Series A Original Issue Price” shall mean $0.19721, subject to appropriate adjustment in the event of
any stock dividend, stock split, combination, or other similar recapitalization with respect to the Series A Preferred Stock, “Series B Original Issue Price” shall
mean $1.00676, subject to appropriate adjustment in the event of any stock dividend, stock split, combination, or other similar recapitalization with respect to the
Series B Preferred Stock, “Series C Original Issue Price” shall mean $2.76488, subject to appropriate adjustment in the event of any stock dividend, stock split,
combination, or other similar recapitalization with respect to the Series C Preferred Stock, “Series D Original Issue Price” shall mean $8.2539, subject to
appropriate adjustment in the event of any stock dividend, stock split, combination, or other similar recapitalization with respect to the Series D Preferred Stock and
“Series E Original Issue Price” shall mean $36.1922, subject to appropriate adjustment in the event of any stock dividend, stock split, combination, or other
similar recapitalization with respect to the Series E Preferred Stock.
2.2 Payments to Holders of Common Stock and FF Preferred Stock. In the event of any Liquidation Event, after the payment of all
preferential amounts required to be paid to the holders of shares of Preferred Stock, the remaining assets of the Corporation available for distribution to its
stockholders shall be distributed among the holders of shares of Common Stock and FF Preferred Stock, pro rata based on the number of shares held by each such
holder.
2.3 Liquidation Events.
2.3.1 Definition. Each of the following events shall be considered a “Liquidation Event” unless the holders of a majority of the
outstanding shares of Series B Preferred Stock (such consent, the “Series B Approval”), the holders of a majority of the outstanding shares of Series C Preferred
Stock (such consent, the “Series C Approval”), the holders of a majority of the outstanding shares of Series D Preferred Stock (such consent, the “Series D
Approval”) and the holders of a majority of the outstanding shares of Series E
10
Preferred Stock (such consent, the “Series E Approval”), in each case voting exclusively and as a separate class, elect otherwise by written notice sent to the
Corporation prior to the effective date of any such event:
(a) a merger or consolidation in which
(i) the Corporation is a constituent party or
(ii) direct or indirect subsidiary of the Corporation is a constituent party and either the Corporation or any of its
subsidiaries, including but not limited to Coinbase, Inc. a Delaware corporation or Coinbase UK, Ltd. a private limited company incorporated under the laws of the
United Kingdom (each, a “Key Subsidiary”), issues shares of its capital stock pursuant to such merger or consolidation, except any such merger or consolidation
involving the Corporation or a subsidiary in which the shares of capital stock of the Corporation outstanding immediately prior to such merger or consolidation
continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a
majority, by voting power, of the capital stock of (1) the surviving or resulting corporation or (2) if the surviving or resulting corporation is a wholly-owned
subsidiary of another corporation immediately following such merger or consolidation, the ultimate parent corporation of such surviving or resulting corporation;
(b) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the
Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries taken as a whole, or the sale or
disposition (whether by merger or otherwise) of one or more subsidiaries of the Corporation if substantially all of the assets of the Corporation and its subsidiaries
taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly-owned
subsidiary of the Corporation;
(c) any voluntary or involuntary liquidation, dissolution or winding up of a Key Subsidiary; and
(d) any voluntary or involuntary liquidation, dissolution or winding up of the Corporation.
2.3.2 Effecting a Liquidation Event.
(a) The Corporation shall not have the power to effect a Liquidation Event referred to in Subsection 2.3.1(a)(i) unless the
agreement or plan of merger or consolidation for such transaction (the “Merger Agreement”) provides that the consideration payable to the stockholders of the
Corporation shall be allocated among the holders of capital stock of the Corporation in accordance with Subsections 2.1 and 2.2.
(b) In the event of a Liquidation Event referred to in Subsection 2.3.1(a)(ii), 2.3.1(b) or 2.3.1(c), if the Corporation does not effect
a dissolution of the Corporation under the General Corporation Law within 90 days after such Liquidation Event, then (i) the Corporation shall send a written
notice to each holder of Preferred Stock no later than
11
the 90th day after the Liquidation Event advising such holders of their right (and the requirements to be met to secure such right) pursuant to the terms of the
following clause (ii) to require the redemption of such shares of Preferred Stock, and (ii) if the holders of at least a majority of the then-outstanding shares of
Preferred Stock (voting together as a single class on an as-converted to Common Stock basis) so request in a written instrument delivered to the Corporation not
later than 120 days after such Liquidation Event, the Corporation shall use the consideration received by the Corporation for such Liquidation Event (net of any
retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board of Directors), together with any other assets of
the Corporation available for distribution to its stockholders, all to the extent permitted by Delaware law governing distributions to stockholders (the “Available
Proceeds”), on the 150th day after such Liquidation Event, to redeem all outstanding shares of Preferred Stock at a price per share equal to (i) the Series A
Liquidation Amount, with regard to each share of Series A Preferred Stock then outstanding, (ii) the Series B Liquidation Amount, with regard to each share of
Series B Preferred Stock then outstanding, (iii) the Series C Liquidation Amount, with regard to each share of Series C Preferred Stock then outstanding, (iv) the
Series D Liquidation Amount, with regard to each share of Series D Preferred Stock then outstanding and (v) the Series E Liquidation Amount, with regard to each
share of Series E Preferred Stock then outstanding. Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if the Available
Proceeds are not sufficient to redeem all outstanding shares of Preferred Stock, the Corporation shall ratably redeem each holder's shares of Preferred Stock to the
fullest extent of such Available Proceeds, and shall redeem the remaining shares as soon as it may lawfully do so under Delaware law governing distributions to
stockholders. Prior to the distribution or redemption provided for in this Subsection 2.3.2(b), the Corporation shall not expend or dissipate the consideration
received for such Liquidation Event, except to discharge expenses incurred in connection with such Liquidation Event or in the ordinary course of business.
2.3.3 Amount Deemed Paid or Distributed. The amount deemed paid or distributed to the holders of capital stock of the
Corporation upon any such merger, consolidation, sale, transfer, exclusive license, other disposition or redemption shall be the cash or the value of the property,
rights or securities paid or distributed to such holders by the Corporation or the acquiring person, firm or other entity. The value of such property, rights or
securities shall be determined in good faith by the Board of Directors.
2.3.4 Allocation of Escrow Consideration. In the event of a Liquidation Event pursuant to Subsection 2.3.1(a)(i), if any portion of
the consideration payable to the stockholders of the Corporation is placed into escrow or retained as holdback to be available for satisfaction of indemnification or
similar obligations in connection with such Liquidation Event, and payable only upon certain conditions (the “Escrow Consideration”), the Merger Agreement
shall provide that the Escrow Consideration be included with the consideration to be allocated among the holders of capital stock of the Corporation in accordance
with Subsections 2.1 and 2.2 in connection with such Liquidation Event.
12
3. Voting.
3.1 General. On any matter presented to the stockholders of the Corporation for their action or consideration at any meeting of
stockholders of the Corporation (or by written consent of stockholders in lieu of meeting), (i) each holder of outstanding shares of Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock and/or Series D Preferred Stock shall be entitled to cast the number of votes equal to the voting power of the whole
shares of Class B Common Stock or, in the event the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and/or Series D Preferred Stock
becomes convertible into Class A Common Stock pursuant to the provisions herein, Class A Common Stock, into which the shares of Preferred Stock held by such
holder are convertible as of the record date for determining stockholders entitled to vote on such matter, and (ii) each holder of outstanding shares of Series E
Preferred Stock shall be entitled to cast the number of votes equal to the voting power of the whole shares of Class A Common Stock into which the shares of
Series E Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. Fractional votes
shall not be permitted and any fractional voting rights available on an as-converted basis (after aggregating all shares into which shares of Preferred Stock held by
each holder could be converted) shall be rounded to the nearest whole number (with one-half being rounded upward). Except as provided by applicable law or by
the other provisions herein, holders of Preferred Stock shall (a) vote together with the holders of Common Stock as a single class on all matters (including the
election of directors) submitted to a vote of the stockholders of the Corporation and (b) be entitled to notice of any stockholders’ meeting in accordance with the
Bylaws of the Corporation, with the holders of Preferred Stock voting on as-converted to Common Stock basis.
3.2 Board of Directors.
3.2.1 Election of Directors. The holders of record of the shares of Series A Preferred Stock, voting exclusively and as a separate
series, shall be entitled to elect one (1) director of the Corporation (the “Series A Director”). The holders of record of the shares of Series C Preferred Stock,
voting exclusively and as a separate series, shall be entitled to elect one (1) director of the Corporation (the “Series C Director” and, together with the Series A
Director, the “Preferred Directors”). The holders of record of the shares of Common Stock, voting exclusively and as a separate class, shall be entitled to elect
two (2) directors of the Corporation (the “Common Directors”). The holders of record of the shares of Preferred Stock (other than Series E Preferred Stock),
Common Stock and FF Preferred Stock, voting together as a single class on an as-converted to Common Stock basis (the “Specified Stock”), shall be entitled to
elect directors to fill any remaining vacancies on the Board of Directors (each, an “Additional Director”). Each Additional Director that is also a Committee
Designee (as defined in the Corporation’s Amended and Restated Voting Agreement dated on or about the date hereof, as the same may be amended or restated
from time to time (the “Voting Agreement”)) (each such director, a “Committee Nominated Director”) shall be subject to election annually at a meeting of the
stockholders, or pursuant to a written consent of the stockholders in lieu thereof, and shall hold office until the second Tuesday in November of the applicable year,
or until the earlier of his or her death, resignation or removal. If such annual meeting is not held or such written consent not obtained, or if not all Committee
Nominated
13
Directors are elected at such annual meeting or pursuant to such written consent, or a Committee Nominated Director vacancy otherwise occurs, Committee
Nominated Directors may be elected at any special meeting of the stockholders, or pursuant to a written consent of the stockholders in lieu thereof, held for that
purpose. Any director elected as provided in this Subsection 3.2 may be removed without cause by, and only by, the affirmative vote of the holders of the shares of
the class or series of capital stock entitled to elect such director or directors, given either at a special meeting of such stockholders duly called for that purpose or
pursuant to a written consent of stockholders. If the holders of shares of Series A Preferred Stock, Series C Preferred Stock or Common Stock, as the case may be,
fail to elect a sufficient number of directors to fill all directorships for which they are entitled to elect directors, voting exclusively and as a separate class or series,
as applicable, pursuant to the first three sentences of this Subsection 3.2.1, then any directorship not so filled shall remain vacant until such time as the holders of
the Series A Preferred Stock, Series C Preferred Stock or Common Stock, as the case may be, elect a person to fill such directorship by vote or written consent in
lieu of a meeting; and no such directorship may be filled by stockholders of the Corporation other than by the stockholders of the Corporation that are entitled to
elect a person to fill such directorship, voting exclusively and as a separate class or series, as applicable. If any vacancy in the office of any Committee Nominated
Director exists, such vacancy may be filled (either contingently or otherwise) by the holders of the Specified Stock as specified in this Subsection 3.2.1 or by the
unanimous approval of the non-Committee Nominated Director members of the Board then in office, although less than a quorum, even if such directors or such
sole remaining director were not elected by the holders of the Specified Stock; provided that where such vacancy occurs among the Committee Nominated
Directors, the holders of the Specified Stock may override the Board’s action to fill such vacancy by (i) voting for their own designee to fill such vacancy at a
meeting of the Corporation’s stockholders or (ii) written consent, if the consenting stockholders hold a sufficient number of shares to elect their designee at a
meeting of the stockholders. At any meeting held for the purpose of electing a director, the presence in person or by proxy of the holders of a majority of the
outstanding shares of the class or series entitled to elect such director shall constitute a quorum for the purpose of electing such director. Except as otherwise
provided in this Subsection 3.2.1, a vacancy in any directorship filled by the holders of any class or series shall be filled only by vote or written consent in lieu of a
meeting of the holders of such class or series or by any remaining director or directors elected by the holders of such class or series pursuant to this Subsection
3.2.1.
3.2.2 Voting of Directors. At meetings of the Board of Directors, the directors of the Corporation then in office shall be entitled to
the following votes:
(a) The Common Directors then in office shall be entitled to cast four (4) votes in the aggregate, unless increased up to an
aggregate of seven (7) votes pursuant to Section 3.2.2(e) below (the “Common Director Votes”).
(b) Should one (1) Common Director serve on the Board of Directors, such Common Director shall be entitled to cast all of the
then-applicable Common Director Votes.
14
(c) Should two (2) Common Directors serve on the Board of Directors, (i) if the number of Common Director Votes is equal to
four (4), then each of the then-serving Common Directors shall be entitled to cast two (2) of the Common Director Votes, and (ii) if the number of Common
Director Votes is greater than four (4), then (x) if one of such Common Directors is the CEO Director (as defined in the Voting Agreement), the CEO Director shall
be entitled to cast that number of votes equal to two (2) of Common Director Votes plus the total number of Committee Nominated Directors then serving on the
Board of Directors up to an aggregate of five (5) of the Common Director Votes and the remaining Common Director shall be entitled to cast two (2) of the
Common Director Votes, and (y) if neither of the then-serving Common Directors is the CEO Director, then each of the then-serving Common Directors shall be
entitled to cast half of the then-applicable total Common Director Votes.
(d) Each of the Preferred Directors and any Additional Directors shall be entitled to cast only one (1) vote per director.
(e) For every director seat then-occupied by a Committee Nominated Director, the number of Common Director Votes shall be
increased by one (1) vote, up to a maximum total of seven (7) votes.
(f) Every reference in this Certificate of Incorporation and the Bylaws of the Corporation, in each case as the same may be
amended or restated from time to time, to a majority or other proportion of the directors of the Corporation shall refer to a majority or other proportion of the votes
of the directors. The voting rules set forth in this Subsection 3.2.2 shall apply to any vote taken at any meeting of a committee or sub-committee of the Board of
Directors, such that, at any meeting of a committee or sub-committee of the Board of Directors, each director shall be entitled to cast the number of votes he or she
would be entitled to cast if the vote were being taken at a meeting of the Board of Directors.
3.3 Preferred Stock Protective Provisions. At any time when shares of Preferred Stock are outstanding, the Corporation shall not, either
directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by applicable law
or the Certificate of Incorporation) the written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Preferred Stock (for
the avoidance of doubt, not including any shares of FF Preferred Stock) given in writing or by vote at a meeting, consenting or voting (as the case may be) together
as a single class on an as-converted to Common Stock basis, and any such act or transaction entered into without such consent or vote shall be null and void ab
initio, and of no force or effect:
3.3.1 amend, alter or repeal any provision of the Certificate of Incorporation or Bylaws of the Corporation or authorize the
amendment, alteration or repeal of any provisions of the certificate of incorporation, bylaws, articles of association or similar charter documents of any Key
Subsidiary;
3.3.2 increase the authorized number of shares of Preferred Stock or increase the authorized number of shares of any additional
class or series of capital stock of the Corporation or authorize any increase to the authorized shares of common stock or the
15
creation or issuance of shares of any additional class or series of capital stock of any Key Subsidiary;
3.3.3 create, or authorize the creation of, or issue or obligate itself to issue shares of, any additional class or series of capital stock
unless the same ranks junior to each existing series of Preferred Stock with respect to the distribution of assets on a Liquidation Event, the payment of dividends
and rights of redemption and not senior to any existing series of Preferred Stock with respect to voting;
3.3.4 (i) reclassify, alter or amend any existing security of the Corporation that is pari passu with an existing series of Preferred
Stock in respect of the distribution of assets on a Liquidation Event, the payment of dividends or rights of redemption, if such reclassification, alteration or
amendment would render such other security senior to an existing series of Preferred Stock in respect of any such right, preference or privilege, or (ii) reclassify,
alter or amend any existing security of the Corporation that is junior to an existing series of Preferred Stock in respect of the distribution of assets on a Liquidation
Event, the payment of dividends or rights of redemption, if such reclassification, alteration or amendment would render such other security senior to or pan passu
with an existing series of Preferred Stock in respect of any such right, preference or privilege, provided that this Subsection 3.3.4 shall not apply to the conversion
of FF Preferred Stock into Subsequent Preferred Stock pursuant to Subsection 4.7 of Part C of this Article Fourth;
3.3.5 purchase or redeem (or permit any subsidiary to purchase or redeem) or pay or declare any dividend or make any distribution
on, any shares of capital stock of the Corporation other than (i) redemptions of or dividends or distributions on the Preferred Stock as expressly authorized herein,
(ii) dividends or other distributions payable on the Common Stock solely in the form of additional shares of Common Stock, (iii) repurchases of stock from former
employees, officers, directors, consultants or other persons who performed services for the Corporation or any subsidiary in connection with the cessation of such
employment or service at the lower of the original purchase price or the then-current fair market value thereof, (iv) repurchases of stock in connection with the
exercise of any right of first refusal held by the Corporation, or (v) as otherwise approved by the Board of Directors, including at least one Preferred Director;
3.3.6 create, or hold capital stock in, any subsidiary that is not wholly owned (either directly or through one or more other
subsidiaries) by the Corporation, or sell, transfer or otherwise dispose of any capital stock of any direct or indirect subsidiary of the Corporation, or permit any
direct or indirect subsidiary to sell, lease, transfer, exclusively license or otherwise dispose (in a single transaction or series of related transactions) of all or
substantially all of the assets of such subsidiary;
3.3.7 liquidate, dissolve or wind-up the business and affairs of the Corporation or authorize the liquidation, dissolution and winding
up of the business and affairs of the Key Subsidiary, effect any merger or consolidation or any other Liquidation Event, or consent to any of the foregoing;
16
3.3.8 increase or decrease the authorized number of directors constituting the Board of Directors;
3.3.9 create, or authorize the creation of, or issue, or authorize the issuance of any debt security, or permit any subsidiary to take
any such action with respect to any debt security, if the aggregate indebtedness of the Corporation and its subsidiaries for borrowed money following such action
would exceed $20,000,000, unless approved by the Board of Directors;
3.3.10 increase the number of shares reserved for issuance under the Corporation's equity compensation plans or arrangements; or
3.3.11 enter into a contract or transaction between the Corporation (or any direct or indirect subsidiary of the Corporation) and any
other corporation, partnership, association or other organization in which one or more of the officers or directors of the Corporation is an officer or director of, or
has a financial interest in, such other corporation, partnership, association or other organization, unless approved by the Board of Directors (including a majority of
disinterested directors).
3.4 Series A Preferred Stock Protective Provisions. At any time when at least 6,000,000 shares of Series A Preferred Stock are
outstanding the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, increase or decrease the authorized number of
shares of Series A Preferred Stock or amend, alter or repeal any provision of the Certificate of Incorporation or Bylaws of the Corporation in a manner that
adversely affects the rights and preferences of the Series A Preferred Stock in a manner different than the other series of Preferred Stock without (in addition to any
other vote required by applicable law or the Certificate of Incorporation) the written consent or affirmative vote of the holders of at least a majority of the then
outstanding shares of Series A Preferred Stock, voting exclusively and as a separate series, given in writing or by vote at a meeting, and any such act or transaction
entered into without such consent or vote shall be null and void ab initio, and of no force or effect.
3.5 Series B Preferred Stock Protective Provisions. At any time when at least 6,000,000 shares of Series B Preferred Stock are
outstanding the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition
to any other vote required by applicable law or the Certificate of Incorporation) the approval of the holders of at least two-thirds of the Series B Preferred Stock
given in writing or by vote at a meeting and voting exclusively and as a separate series (the “Series B 2/3rds Approval”), and any such act or transaction entered
into without such consent or vote shall be null and void ab initio, and of no force or effect:
3.5.1 increase or decrease the authorized number of shares of Series B Preferred Stock;
3.5.2 amend, alter or repeal any provision of the Certificate of Incorporation or Bylaws of the Corporation or authorize the
amendment, alteration or repeal of any provisions of the certificate of incorporation, bylaws, articles of association or similar charter
17
documents of any Key Subsidiary, in either case, in a manner that adversely affects the rights and preferences of the Series B Preferred Stock in a manner different
than the other series of Preferred Stock;
3.5.3 waive the treatment of a Liquidation Event pursuant to Subsection 2.3.1;
3.5.4 waive the price-based antidilution provisions applicable to the Series B Preferred Stock in Section 4.4 hereof;
3.5.5 amend the mandatory conversion provisions in Section 5 hereof;
3.5.6 alter or permit any Key Subsidiary's board of directors (or similar governing body) to alter the composition of the board of
directors of such Key Subsidiary, unless approved by the Board of Directors; or
3.5.7 permit any Key Subsidiary or Key Subsidiary's board of directors (or similar governing body) to take any action without the
approval of the Board of Directors.
3.6 Series C Preferred Stock Protective Provisions. At any time when at least 6,000,000 shares of Series C Preferred Stock are
outstanding the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition
to any other vote required by applicable law or the Certificate of Incorporation) Series C Approval, and any such act or transaction entered into without such
consent or vote shall be null and void ab initio, and of no force or effect:
3.6.1 increase or decrease the authorized number of shares of Series C Preferred Stock;
3.6.2 amend, alter or repeal any provision of the Certificate of Incorporation or Bylaws of the Corporation or authorize the
amendment, alteration or repeal of any provisions of the certificate of incorporation, bylaws, articles of association or similar charter documents of any Key
Subsidiary, in either case, in a manner that adversely affects the rights and preferences of the Series C Preferred Stock in a manner different than the other series of
Preferred Stock;
3.6.3 waive the treatment of a Liquidation Event pursuant to Subsection 2.3.1;
3.6.4 waive the price-based antidilution provisions applicable to the Series C Preferred Stock in Section 4.4 hereof;
3.6.5 amend the mandatory conversion provisions in Section 5 hereof;
18
3.6.6 alter or permit any Key Subsidiary's board of directors (or similar governing body) to alter the composition of the board of
directors (or similar governing body) of the Key Subsidiary, unless approved by the Board of Directors; or
3.6.7 permit any Key Subsidiary or such Key Subsidiary's board of directors (or similar governing body) to take any action without
the approval of the Board of Directors.
3.7 Series D Preferred Stock Protective Provisions. At any time when at least 3,750,000 shares of Series D Preferred Stock are
outstanding the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition
to any other vote required by applicable law or the Certificate of Incorporation) Series D Approval, and any such act or transaction entered into without such
consent or vote shall be null and void ab initio, and of no force or effect:
3.7.1 increase or decrease the authorized number of shares of Series D Preferred Stock;
3.7.2 amend, alter or repeal any provision of the Certificate of Incorporation or Bylaws of the Corporation or authorize the
amendment, alteration or repeal of any provisions of the certificate of incorporation, bylaws, articles of association or similar charter documents of any Key
Subsidiary, in either case, in a manner that adversely affects the rights and preferences of the Series D Preferred Stock in a manner different than the other series of
Preferred Stock;
3.7.3 waive the treatment of a Liquidation Event pursuant to Subsection 2.3.1;
3.7.4 waive the price-based antidilution provisions applicable to the Series D Preferred Stock in Section 4.4 hereof;
3.7.5 amend the mandatory conversion provisions in Section 5 hereof;
3.7.6 alter or permit any Key Subsidiary's board of directors (or similar governing body) to alter the composition of the board of
directors (or similar governing body) of the Key Subsidiary, unless approved by the Board of Directors; or
3.7.7 permit any Key Subsidiary or such Key Subsidiary's board of directors (or similar governing body) to take any action without
the approval of the Board of Directors.
3.8 Series E Preferred Stock Protective Provisions. At any time when at least 2,760,000 shares of Series E Preferred Stock are
outstanding the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition
to any other vote required by applicable law or the Certificate of Incorporation) Series E Approval, and any such act or transaction entered into without such
consent or vote shall be null and void ab initio, and of no force or effect:
19
3.8.1 increase or decrease the authorized number of shares of Series E Preferred Stock;
3.8.2 amend, alter or repeal any provision of the Certificate of Incorporation or Bylaws of the Corporation or authorize the
amendment, alteration or repeal of any provisions of the certificate of incorporation, bylaws, articles of association or similar charter documents of any Key
Subsidiary, in either case, in a manner that adversely affects the rights and preferences of the Series E Preferred Stock in a manner different than the other series of
Preferred Stock;
3.8.3 waive the treatment of a Liquidation Event pursuant to Subsection 2.3.1;
3.8.4 waive the price-based antidilution provisions applicable to the Series E Preferred Stock in Section 4.4 hereof; or
3.8.5 amend the mandatory conversion provisions in Section 5 hereof.
4. Optional Conversion. The holders of the Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):
4.1 Right to Convert.
4.1.1 Conversion Ratio. Each share of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by
the holder thereof, into such number of fully paid and nonassessable shares of Class B Common Stock or, as applicable under Article Fourth, Part A, Sections 3.2
and 3.3, Class A Common Stock, as is determined by dividing the Series A Original Issue Price, Series B Original Issue Price, Series C Original Issue Price or
Series D Original Issue Price, as applicable, by the Series A Conversion Price (as defined below), Series B Conversion Price (as defined below), Series C
Conversion Price (as defined below) or Series D Conversion Price (as defined below), as applicable, in effect at the time of conversion. Each share of Series E
Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by
the holder thereof, into such number of fully paid and nonassessable shares of Class A Common Stock, as is determined by dividing the Series E Original Issue
Price by the Series E Conversion Price (as defined below) in effect at the time of conversion. The “Series A Conversion Price” shall initially be equal to the Series
A Original Issue Price, the “Series B Conversion Price” shall initially be equal to the Series B Original Issue Price, the “Series C Conversion Price” shall
initially be equal to the Series C Original Issue Price, the “Series D Conversion Price” shall initially be equal to the Series D Original Issue Price and the “Series
E Conversion Price” shall initially be equal to the Series E Original Issue Price. Such initial Conversion Prices, and the rate at which shares of Preferred Stock
may be converted into shares of Common Stock, shall be subject to adjustment as provided below.
20
4.1.2 Termination of Conversion Rights. In the event of a Liquidation Event, the Conversion Rights shall terminate at the close of
business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Preferred Stock.
4.2 Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of a
share of Common Stock as determined in good faith by the Board of Directors. Whether or not fractional shares would be issuable upon such conversion shall be
determined on the basis of the total number of shares of Preferred Stock the holder is at the time converting into Common Stock and the aggregate number of
shares of Common Stock issuable upon such conversion.
4.3 Mechanics of Conversion.
4.3.1 Notice of Conversion. In order for a holder of Preferred Stock to voluntarily convert shares of Preferred Stock into shares of
Class B Common Stock or Class A Common Stock, as applicable, such holder shall surrender the certificate or certificates for such shares of Preferred Stock (or, if
such registered, holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the
Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such
certificate), at the office of the transfer agent for the Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer
agent), together with written notice that such holder elects to convert all or any number of the shares of the Preferred Stock represented by such certificate or
certificates and, if applicable, any event on which such conversion is contingent. Such notice shall state such holder's name or the names of the nominees in which
such holder wishes the certificate or certificates for shares of Class B Common Stock or Class A Common Stock, as applicable, to be issued. If required by the
Corporation, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the
Corporation, duly executed by the registered holder or his, her or its attorney duly authorized in writing. The close of business on the date of receipt by the transfer
agent (or by the Corporation if the Corporation serves as its own transfer agent) of such certificates (or lost certificate affidavit and agreement) and notice shall be
the time of conversion (the “Conversion Time”), and the shares of Common Stock issuable upon conversion of the shares represented by such certificate shall be
deemed to be outstanding of record as of such date. The Corporation shall, as soon as practicable after the Conversion Time, (i) issue and deliver to such holder of
Preferred Stock, or to his, her or its nominees, a certificate or certificates for the number of full shares of Class B Common Stock or Class A Common Stock, as
applicable, issuable upon such conversion in accordance with the provisions hereof and a certificate for the number (if any) of the shares of Preferred Stock
represented by the surrendered certificate that were not converted into Class B Common Stock or Class A Common Stock, as applicable, (ii) pay in cash such
amount as provided in Subsection 4.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and (iii) pay all declared but
unpaid dividends on the shares of Preferred Stock converted.
21
4.3.2 Reservation of Shares. The Corporation shall at all times when the Preferred Stock shall be outstanding, reserve and keep
available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Preferred Stock, such number of its duly authorized
shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Preferred Stock, the
Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to
the Certificate of Incorporation. Before taking any action which would cause an adjustment reducing the Series A Conversion Price, Series B Conversion Price,
Series C Conversion Price, Series D Conversion Price or Series E Conversion Price below the then par value of the shares of Common Stock issuable upon
conversion of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series E Preferred Stock, as applicable,
the Corporation will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue
fully paid and nonassessable shares of Common Stock at such adjusted Series A Conversion Price, Series B Conversion Price, Series C Conversion Price, Series D
Conversion Price or Series E Conversion Price, as applicable.
4.3.3 Effect of Conversion. All shares of Preferred Stock which shall have been surrendered for conversion as herein provided shall
no longer be deemed to be outstanding and all rights with respect to such shares shall immediately cease and terminate at the Conversion Time, except only the
right of the holders thereof to receive shares of Common Stock in exchange therefor, to receive payment in lieu of any fraction of a share otherwise issuable upon
such conversion as provided in Subsection 4.2 and to receive payment of any dividends declared but unpaid thereon. Any shares of Preferred Stock so converted
shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need
for stockholder action) as may be necessary to reduce the authorized number of shares of Preferred Stock accordingly.
4.3.4 No Further Adjustment. Upon any such conversion, no adjustment to the Series A Conversion Price, Series B Conversion
Price, Series C Conversion Price, Series D Conversion Price or Series E Conversion Price shall be made for any declared but unpaid dividends on the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series E Preferred Stock surrendered for conversion or on the
Common Stock delivered upon conversion.
4.3.5 Taxes. The Corporation shall pay any and all issue and other similar taxes that may be payable in respect of any issuance or
delivery of shares of Common Stock upon conversion of shares of Preferred Stock pursuant to this Section 4. The Corporation shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock in a name other than that in which
the shares of Preferred Stock so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such
issuance
22
has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid.
4.4 Adjustments to Conversion Price for Diluting Issues.
4.4.1 Special Definitions. For purposes of this Article Fourth, the following definitions shall apply:
(a) “Option” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Class B Common Stock or
Class A Common Stock or Convertible Securities.
(b) “Original Issue Date” shall mean the date on which the first share of Series E Preferred Stock was issued.
(c) “Convertible Securities” shall mean any evidences of indebtedness, shares or other securities directly or indirectly
convertible into or exchangeable for Class B Common Stock or Class A Common Stock, but excluding Options.
(d) “Additional Shares of Common Stock” shall mean all shares of Class B Common Stock or Class A Common Stock, as
applicable, issued (or, pursuant to Subsection 4.4.3 below, deemed to be issued) by the Corporation after the Original Issue Date, other than (1) the following
shares of Class B Common Stock or Class A Common Stock, as applicable, and (2) shares of Class B Common Stock or Class A Common Stock, as applicable,
deemed issued pursuant to the following Options and Convertible Securities (clauses (1) and (2), collectively, “Exempted Securities”):
(i) shares of Class B Common Stock or Class A Common Stock or Options issued to employees or directors of, or
consultants or advisors to, the Corporation or any of its subsidiaries pursuant to a plan, agreement or arrangement approved by the Board of Directors;
(ii) shares of Class B Common Stock or Class A Common Stock, Options or Convertible Securities issued to banks,
equipment lessors or other financial institutions, or to real property lessors, pursuant to a debt financing, equipment leasing or real property leasing transaction
approved by the Board of Directors, including at least one Preferred Director;
(iii) shares of Class B Common Stock or Class A Common Stock, Options or Convertible Securities issued pursuant to the
acquisition of another corporation by the Corporation by merger, purchase of substantially all of the assets or other reorganization or to a joint venture agreement,
provided that such issuances are approved by the Board of Directors, including at least one Preferred Director;
(iv) shares of Class B Common Stock or Class A Common Stock, Options or Convertible Securities issued in connection
with sponsored research, collaboration, technology license, development, OEM, marketing or other similar agreements or
23
strategic partnerships approved by the Board of Directors, including at least one Preferred Director;
(v) shares of Class B Common Stock or Class A Common Stock, Options or Convertible Securities issued by reason of a
dividend, stock split, split-up or other distribution on shares of Common Stock that is covered by Subsection 4.5, 4.6, 4.7 or 4.8;
(vi) shares of Class A Common Stock issued or issuable in a Qualified IPO;
(vii) shares of Class B Common Stock or Class A Common Stock, Options or Convertible Securities issued upon
conversion of or as a dividend or distribution on Preferred Stock;
(viii) shares of Class B Common Stock or Class A Common Stock or Convertible Securities actually issued upon the
exercise of Options or shares of Class B Common Stock or Class A Common Stock actually issued upon the conversion or exchange of Convertible Securities, in
each case provided such issuance is pursuant to the terms of such Option or Convertible Security; or
(ix) securities issued or issuable in any other transaction for which exemption from these price-based antidilution
provisions is approved before or after issuance of the securities by the Board of Directors, including at least one Preferred Director, and (A) if the issuance of such
securities would result in an adjustment of the Series C Conversion Price but not the Series B Conversion Price or Series A Conversion Price, the Series C
Approval, (B) if the issuance of such securities would result in an adjustment of the Series D Conversion Price but not the Series C Conversion Price, Series B
Conversion Price or Series A Conversion Price, the Series D Approval and (C) if the issuance of such securities would result in an adjustment of the Series E
Conversion Price but not the Series D Conversion Price, Series C Conversion Price, Series B Conversion Price or Series A Conversion Price, the Series E
Approval.
4.4.2. No Adjustment of Conversion Price. No adjustment in the Series A Conversion Price, Series B Conversion Price, Series C
Conversion Price, Series D Conversion Price or Series E Conversion Price shall be made as the result of the issuance or deemed issuance of Additional Shares of
Common Stock if the Corporation receives Series B 2/3rds Approval, Series C Approval, Series D Approval and Series E Approval agreeing that no such
adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock.
4.4.3. Deemed Issue of Additional Shares of Common Stock.
(a) If the Corporation at any time or from time to time after the Original Issue Date shall issue any Options or Convertible
Securities (excluding Options or Convertible Securities which are themselves Exempted Securities) or shall fix a record date for the determination of holders of any
class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares of Class B Common Stock or Class
24
A Common Stock (as set forth in the instrument, relating thereto, assuming the satisfaction of any conditions to exercisability, convertibility or exchangeability but
without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date.
(b) If the terms of any Option or Convertible Security, the issuance of which resulted in an adjustment to the Series A Conversion
Price, Series B Conversion Price, Series C Conversion Price, Series D Conversion Price or Series E Conversion Price pursuant to the terms of Subsection 4.4.4, are
revised as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding
automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1) any increase or
decrease in the number of shares of Class B Common Stock or Class A Common Stock issuable upon the exercise, conversion and/or exchange of any such Option
or Convertible Security or (2) any increase or decrease in the consideration payable to the Corporation upon such exercise, conversion and/or exchange, then,
effective upon such increase or decrease becoming effective, the Series A Conversion Price, Series B Conversion Price, Series C Conversion Price, Series D
Conversion Price or Series E Conversion Price, as applicable, computed upon the original issue of such Option or Convertible Security (or upon the occurrence of a
record date with respect thereto) shall be readjusted to such Series A Conversion Price, Series B Conversion Price, Series C Conversion Price, Series D Conversion
Price or Series E Conversion Price, as applicable, as would have obtained had such revised terms been in effect upon the original date of issuance of such Option or
Convertible Security. Notwithstanding the foregoing, no readjustment pursuant to this clause (b) shall have the effect of increasing the Series A Conversion Price,
Series B Conversion Price, Series C Conversion Price, Series D Conversion Price or Series E Conversion Price to an amount which exceeds the lower of (i) the
Series A Conversion Price, Series B Conversion Price, Series C Conversion Price, Series D Conversion Price or Series E Conversion Price, as applicable, in effect
immediately prior to the original adjustment made as a result of the issuance of such Option or Convertible Security, or (ii) the Series A Conversion Price, Series B
Conversion Price, Series C Conversion Price, Series D Conversion Price or Series E Conversion Price, as applicable, that would have resulted from any issuances
of Additional Shares of Common Stock (other than deemed issuances of Additional Shares of Common Stock as a result of the issuance of such Option or
Convertible Security) between the original adjustment date and such readjustment date.
(c) If the terms of any Option or Convertible Security (excluding Options or Convertible Securities which are themselves
Exempted Securities), the issuance of which did not result in an adjustment to the Series A Conversion Price, Series B Conversion Price, Series C Conversion
Price, Series D Conversion Price or Series E Conversion Price pursuant to the terms of Subsection 4.4.4 (either because the consideration per share (determined
pursuant to Subsection 4.4.5) of the Additional Shares of Common Stock subject thereto was equal to or greater than the Series A Conversion Price, Series B
Conversion Price,
25
Series C Conversion Price, Series D Conversion Price or Series E Conversion Price, as applicable, then in effect, or because such Option or Convertible Security
was issued before the Original Issue Date), are revised after the Original Issue Date as a result of an amendment to such terms or any other adjustment pursuant to
the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such
Option or Convertible Security) to provide for either (1) any increase in the number of shares of Class B Common Stock or Class A Common Stock issuable upon
the exercise, conversion or exchange of any such Option or Convertible Security or (2) any decrease in the consideration payable to the Corporation upon such
exercise, conversion or exchange, then such Option or Convertible Security, as so amended or adjusted, and the Additional Shares of Common Stock subject
thereto (determined in the manner provided in Subsection 4.4.3(a)) shall be deemed to have been issued effective upon such increase or decrease becoming
effective.
(d) Upon the expiration or termination of any unexercised Option or unconverted or unexchanged Convertible Security (or
portion thereof) which resulted (either upon its original issuance or upon a revision of its terms) in an adjustment to the Series A Conversion Price, Series B
Conversion Price, Series C Conversion Price, Series D Conversion Price or Series E Conversion Price, as applicable, pursuant to the terms of Subsection 4.4.4, the
Series A Conversion Price, Series B Conversion Price, Series C Conversion Price, Series D Conversion Price and Series E Conversion Price shall each be
readjusted to such Series A Conversion Price, Series B Conversion Price, Series C Conversion Price, Series D Conversion Price and Series E Conversion Price as
would have obtained had such Option or Convertible Security (or portion thereof) never been issued.
(e) If the number of shares of Class B Common Stock or Class A Common Stock issuable upon the exercise, conversion and/or
exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, is calculable at
the time such Option or Convertible Security is issued or amended but is subject to adjustment based upon subsequent events, any adjustment to the Series A
Conversion Price, Series B Conversion Price, Series C Conversion Price, Series D Conversion Price or Series E Conversion Price provided for in this Subsection
4.4.3 shall be effected at the time of such issuance or amendment based on such number of shares or amount of consideration without regard to any provisions for
subsequent adjustments (and any subsequent adjustments shall be treated as provided in clauses (b) and (c) of this Subsection 4.4.3). If the number of shares of
Class B Common Stock or Class A Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the
consideration payable to the Corporation upon such exercise, conversion and/or exchange, cannot be calculated at all at the time such Option or Convertible
Security is issued or amended, any adjustment to the Series A Conversion Price, Series B Conversion Price, Series C Conversion Price, Series D Conversion Price
or Series E Conversion Price that would result under the terms of this Subsection 4.4.3 at the time of such issuance or amendment shall instead be effected at the
time such number of shares and/or amount of consideration is first calculable (even if subject to subsequent adjustments), assuming for purposes of calculating
such adjustment to the Series A Conversion Price, Series B Conversion Price, Series C Conversion Price, Series D Conversion
26
Price or Series E Conversion Price that such issuance or amendment took place at the time such calculation can first be made.
4.4.4 Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock. In the event the Corporation shall at
any time after the Original Issue Date issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to
Subsection 4.4.3), without consideration or for a consideration per share less than the Series A Conversion Price, Series B Conversion Price, Series C Conversion
Price, Series D Conversion Price or Series E Conversion Price, as applicable, in effect immediately prior to such issue, then the Series A Conversion Price, Series B
Conversion Price, Series C Conversion Price, Series D Conversion Price or Series E Conversion Price, as applicable, shall be reduced, concurrently with such
issue, to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:
CP2 = CP1* (A + B) ÷ (A + C).
For purposes of the foregoing formula, the following definitions shall apply:
(a) “CP2” shall mean the Series A Conversion Price, Series B Conversion Price, Series C Conversion Price, Series D Conversion
Price or Series E Conversion Price, as applicable, in effect immediately after such issue of Additional Shares of Common Stock
(b) “CP1” shall mean the Series A Conversion Price, Series B Conversion Price, Series C Conversion Price, Series D Conversion
Price or Series E Conversion Price, as applicable, in effect immediately prior to such issue of Additional Shares of Common Stock;
(c) “A” shall mean the number of shares of Class B Common Stock and Class A Common Stock outstanding immediately prior
to such issue of Additional Shares of Common Stock (treating for this purpose as outstanding all shares of Class B Common Stock and Class A Common Stock
issuable upon exercise of Options outstanding immediately prior to such issue or upon conversion or exchange of Convertible Securities (including the Preferred
Stock) outstanding (assuming exercise of any outstanding Options therefor) immediately prior to such issue);
(d) “B” shall mean the number of shares of Class B Common Stock or Class A Common Stock that would have been issued if
such Additional Shares of Common Stock had been issued at a price per share equal to CP1 (determined by dividing the aggregate consideration received by the
Corporation in respect of such issue by CP1); and
(e) “C” shall mean the number of such Additional Shares of Common Stock issued in such transaction.
27
4.4.5 Determination of Consideration. For purposes of this Subsection 4.4, the consideration received by the Corporation for the
issue of any Additional Shares of Common Stock shall be computed as follows:
(a) Cash and Property: Such consideration shall:
(i) insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation, excluding
amounts paid or payable for accrued interest;
(ii) insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue,
as determined in good faith by the Board of Directors; and
(iii) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of
the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (i) and (ii) above, as
determined in good faith by the Board of Directors.
(b) Options and Convertible Securities. The consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Subsection 4.4.3, relating to Options and Convertible Securities, shall be determined by dividing the total
amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate
amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of
such consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by
(i) the maximum number of shares of Class B Common Stock or Class A Common Stock (as set forth in the instruments
relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities
and the conversion or exchange of such Convertible Securities.
4.4.6 Multiple Closing Dates. In the event the Corporation shall issue on more than one date Additional Shares of Common Stock
that are a part of one transaction or a series of related transactions and that would result in an adjustment to the Series A Conversion Price, Series B Conversion
Price, Series C Conversion Price, Series D Conversion Price or Series E Conversion Price pursuant to the terms of Subsection 4.4.4, and such issuance dates occur
within a period of no more than 90 days from the first such issuance to the final such issuance, then, upon the final such issuance, the Series A Conversion Price,
Series B Conversion Price, Series C Conversion Price, Series D Conversion Price or Series E Conversion Price, as applicable, shall be readjusted to give effect to
all such issuances as if they occurred on the date
28
of the first such issuance (and without giving effect to any additional adjustments as a result of any such subsequent issuances within such period).
4.5 Adjustment for Stock Splits and Combinations. If the Corporation shall at any time or from, time to time after the Original Issue Date
effect a subdivision of the outstanding Class B Common Stock and/or Class A Common Stock, the Series A Conversion Price, Series B Conversion Price, Series C
Conversion Price, Series D Conversion Price and Series E Conversion Price in effect immediately before that subdivision shall be proportionately decreased so that
the number of shares of Class B Common Stock or Class A Common Stock issuable on conversion of each share of such series shall be increased in proportion to
such increase in the aggregate number of shares of Common Stock outstanding. If the Corporation shall at any time or from time to time after the Original Issue
Date combine the outstanding shares of Class B Common Stock and/or Class A Common Stock, the Series A Conversion Price, Series B Conversion Price, Series
C Conversion Price, Series D Conversion Price and Series E Conversion Price in effect immediately before the combination shall be proportionately increased so
that the number of shares of Class B Common Stock or Class A Common Stock issuable on conversion of each share of such series shall be decreased in proportion
to such decrease in the aggregate number of shares of Common Stock outstanding. Any adjustment under this subsection shall become effective at the close of
business on the date the subdivision or combination becomes effective.
4.6 Adjustment for Certain Dividends and Distributions. In the event the Corporation at any time or from time to time after the Original
Issue Date shall make or issue, or fix a record date for the determination of holders of Class B Common Stock and/or Class A Common Stock entitled to receive, a
dividend or other distribution payable on the Class B Common Stock and/or Class A Common Stock in additional shares of Class B Common Stock and/or Class A
Common Stock, then and in each such event the Series A Conversion Price, Series B Conversion Price, Series C Conversion Price, Series D Conversion Price and
Series E Conversion Price in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have
been fixed, as of the close of business on such record date, by multiplying the Series A Conversion Price, Series B Conversion Price, Series C Conversion Price,
Series D Conversion Price or Series E Conversion Price, as applicable, then in effect by a fraction:
(1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date, and
(2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to
the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or
distribution. Notwithstanding the foregoing, (a) if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made
on the date fixed therefor, the Series A Conversion Price, Series B Conversion Price, Series C Conversion Price, Series D Conversion Price or Series E Conversion
Price, as applicable, shall be recomputed accordingly as of the close of business on such record date and
29
thereafter the Series A Conversion Price, Series B Conversion Price, Series C Conversion Price, Series D Conversion Price and Series E Conversion Price shall be
adjusted pursuant to this subsection as of the time of actual payment of such dividends or distributions; and (b) that no such adjustment shall be made to the Series
A Conversion Price, Series B Conversion Price, Series C Conversion Price, Series D Conversion Price or Series E Conversion Price, as applicable, if the holders of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series E Preferred Stock, as applicable, simultaneously
receive a dividend or other distribution of shares of Class B Common Stock and/or Class A Common Stock in a number equal to the number of shares of Class B
Common Stock and/or Class A Common Stock as they would have received if all outstanding shares of Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, Series D Preferred Stock or Series E Preferred Stock, as applicable, had been converted into Common Stock on the date of such event.
4.7 Adjustments for Other Dividends and Distributions. In the event the Corporation at any time or from time to time after the Original
Issue Date shall make or issue, or fix a record date for the determination of holders of Class B Common Stock and/or Class A Common Stock entitled to receive, a
dividend or other distribution payable in securities of the Corporation (other than a distribution of shares of (i) Class B Common Stock in respect of outstanding
shares of Class B Common Stock or (ii) Class A Common Stock in respect of outstanding shares of Class A Common Stock) or in other property and the
provisions of Section 1 do not apply to such dividend or distribution, then and in each such event the holders of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock, as applicable, shall receive, simultaneously with the distribution to the holders of
Class B Common Stock and/or Class A Common Stock, as applicable, a dividend or other distribution of such securities or other property in an amount equal to the
amount of such securities or other property as they would have received if all outstanding shares of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock or Series E Preferred Stock, as applicable, had been converted into Common Stock on the date of such event.
4.8 Adjustment for Merger or Reorganization, etc. Subject to the provisions of Subsection 2.3, if there shall occur any reorganization,
recapitalization, reclassification, consolidation or merger involving the Corporation in which the Class B Common Stock and/or Class A Common Stock (but not
the Preferred Stock) is converted into or exchanged for securities, cash or other property (other than a transaction covered by Subsections 4.4, 4.6 or 4.7), then,
following any such reorganization, recapitalization, reclassification, consolidation or merger, each share of Preferred Stock shall thereafter be convertible in lieu of
the Class B Common Stock and/or Class A Common Stock into which it was convertible prior to such event into the kind and amount of securities, cash or other
property which a holder of the number of shares of Class B Common Stock and/or Class A Common Stock of the Corporation issuable upon conversion of one
share of Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive
pursuant to such transaction; and, in such ease, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of
the
30
provisions in this Section 4 with respect to the rights and interests thereafter of the holders of the Preferred Stock, to the end that the provisions set forth in this
Section 4 (including provisions with respect to changes in and other adjustments of the Series A Conversion Price, Series B Conversion Price, Series C Conversion
Price, Series D Conversion Price and Series E Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other
property thereafter deliverable upon the conversion of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or
Series E Preferred Stock.
4.9 Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Series A Conversion Price, Series B
Conversion Price, Series C Conversion Price, Series D Conversion Price or Series E Conversion Price pursuant to this Section 4, the Corporation at its expense
shall, as promptly as reasonably practicable but in any event not later than 10 days thereafter, compute such adjustment or readjustment in accordance with the
terms hereof and furnish to each holder of Preferred Stock a certificate setting forth such adjustment or readjustment (including the kind and amount of securities,
cash or other property into which the Preferred Stock is convertible) and showing in detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, as promptly as reasonably practicable after the written request at any time of any holder of Preferred Stock (but in any event not later than 10
days thereafter), furnish or cause to be furnished to such holder a certificate setting forth (i) the Series A Conversion Price, Series B Conversion Price, Series C
Conversion Price, Series D Conversion Price or Series E Conversion Price, as applicable, then in effect, and (ii) the number of shares of Class B Common Stock or
Class A Common Stock, as applicable, and the amount, if any, of other securities, cash or property which then would be received upon the conversion of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series E Preferred Stock, as applicable.
4.10 Notice of Record Date. In the event:
(a) the Corporation shall take a record of the holders of its Class B Common Stock and/or Class A Common Stock (or other
capital stock or securities at the time issuable upon conversion of the Preferred Stock) for the purpose of entitling or enabling them to receive any dividend or other
distribution, or to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or
(b) of any capital reorganization of the Corporation, any reclassification of the Class B Common Stock and/or Class A Common
Stock of the Corporation; or
(c) any Liquidation Event, then, and in each such case, the Corporation will send or cause to be sent to the holders of the
Preferred Stock a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend,
distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer or Liquidation Event is proposed to take
place, and the time, if any is to be fixed, as of which the holders of record of Class B Common Stock and/or Class A Common Stock (or such other capital stock or
securities
31
at the time issuable upon the conversion of the Preferred Stock) shall be entitled to exchange their shares of Class B Common Stock and/or Class A Common Stock
(or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer or
Liquidation Event, and the amount per share and character of such exchange applicable to the Preferred Stock and the Class B Common Stock and/or Class A
Common Stock. Such notice shall be sent at least 10 days prior to the record date or effective date for the event specified in such notice.
5. Mandatory Conversion.
5.1 Trigger Events. Upon either (a) the closing of the sale of shares of Class A Common Stock to the public, in a firm-commitment
underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least $100,000,000 of
proceeds, before deduction of the underwriting discount and commissions (a “Qualified IPO”), to the Corporation or (b) the date and time, or the occurrence of an
event, specified by vote or written consent of the holders of at least a majority of the then outstanding shares of Preferred Stock, voting together as a single class on
an as-converted to Class A Common Stock basis (the time of such closing or the date and time specified or the time of the event specified in such vote or written
consent is referred to herein as the “Mandatory Conversion Time”), (i) all outstanding shares of Preferred Stock shall automatically be converted into shares of
Class B Common Stock or Class A Common Stock, as applicable, including under Article Fourth, Part A, Sections 3.2 and 3.3, at the then effective conversion rate
and (ii) such shares may not be reissued by the Corporation; provided, however, that the mandatory conversion of the Series B Preferred Stock pursuant to Section
5.1(b) shall additionally require the Series B Approval, the mandatory conversion of the Series C Preferred Stock pursuant to Section 5.1(b) shall additionally
require the Series C Approval, the mandatory conversion of the Series D Preferred Stock pursuant to Section 5.1(b) shall additionally require the Series D Approval
and the mandatory conversion of the Series E Preferred Stock pursuant to Section 5.1(b) shall additionally require the Series E Approval; provided further,
however, that no such Series B Approval shall be required in connection with a Liquidation Event in which the consideration payable to the holders of the Series B
Preferred Stock per share of Series B Preferred Stock held by them, and after giving effect to the mandatory conversion, is at least three times (3x) the Series B
Original Purchase Price, no such Series C Approval shall be required in connection with a Liquidation Event in which the consideration payable to the holders of
the Series C Preferred Stock per share of Series C Preferred Stock held by them, and after giving effect to the mandatory conversion, is at least three times (3x) the
Series C Original Purchase Price, no such Series D Approval shall be required in connection with a Liquidation Event in which the consideration payable to the
holders of the Series D Preferred Stock per share of Series D Preferred Stock held by them, and after giving effect to the mandatory conversion, is at least two
times (2x) the Series D Original Purchase Price and no such Series E Approval shall be required in connection with a Liquidation Event in which the consideration
payable to the holders of the Series E Preferred Stock per share of Series E Preferred Stock held by them, and after giving effect to the mandatory conversion, is at
least one times (1x) the Series E Original Purchase Price.
32
5.2 Procedural Requirements. All holders of record of shares of Preferred Stock shall be sent written notice of the Mandatory Conversion
Time and the place designated for mandatory conversion of all such shares of Preferred Stock pursuant to this Section 5. Such notice need not be sent in advance of
the occurrence of the Mandatory Conversion Time. Upon receipt of such notice, each holder of shares of Preferred Stock shall surrender his, her or its certificate or
certificates for all such shares (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably
acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or
destruction of such certificate) to the Corporation at the place designated in such notice. If so required by the Corporation, certificates surrendered for conversion
shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the, registered holder
or by his, her or its attorney duly authorized in writing. All rights with respect to the Preferred Stock converted pursuant to Subsection 5.1, including the rights, if
any, to receive notices and vote (other than as a holder of Class B Common Stock or Class A Common Stock, as applicable), will terminate at the Mandatory
Conversion Time (notwithstanding the failure of the holder or holders thereof to surrender the certificates at or prior to such time), except only the rights of the
holders thereof, upon surrender of their certificate or certificates (or lost certificate affidavit and agreement) therefor, to receive the items provided for in the next
sentence of this Subsection 5.2. As soon as practicable after the Mandatory Conversion Time and the surrender of the certificate or certificates (or lost certificate
affidavit and agreement) for Preferred Stock, the Corporation shall issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the
number of full shares of Class B Common Stock or Class A Common Stock, as applicable, issuable on such conversion in accordance with the provisions hereof,
together with cash as provided in Subsection 4.2 in lieu of any fraction of a share of Class B Common Stock or Class A Common Stock, as applicable, otherwise
issuable upon such conversion and the payment of any declared but unpaid dividends on the shares of Preferred Stock converted. Such converted Preferred Stock
shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need
for stockholder action) as may be necessary to reduce the authorized number of shares of Preferred Stock accordingly.
6. Redemption. The Preferred Stock shall not be mandatorily redeemable.
7. Redeemed or Otherwise Acquired Shares. Any shares of Preferred Stock that are redeemed or otherwise acquired by the Corporation or any
of its subsidiaries shall be automatically and immediately cancelled and retired and shall not be reissued, sold or transferred. Neither the Corporation nor any of its
subsidiaries may exercise any voting or other rights granted to the holders of Preferred Stock following redemption.
8. Notices. Any notice required or permitted by the provisions of this Article Fourth to be given to a holder of shares of Preferred Stock shall be
mailed, postage prepaid, to the post office address last shown on the records of the Corporation, or given by electronic communication in compliance with the
provisions of the General Corporation Law, and shall be deemed sent upon such mailing or electronic transmission. If no such address appears or is
33
given, notice shall be deemed given at the place where the principal executive office of the Corporation is located.
C. FF PREFERRED.
The powers, rights, preferences, privileges and restrictions granted to and imposed on the FF Preferred Stock are as set forth below in this Part C of this
Article Fourth. Unless otherwise indicated, references to “sections” or “subsections” in this Part C of this Article Fourth refer to sections and subsections of Part C
of this Article Fourth.
1. Dividend Provisions. The holders of shares of FF Preferred Stock shall be entitled to receive, out of any assets legally available therefor,
such dividends (other than payable solely in Common Stock or Common Stock Equivalents, as defined below), when, as and if declared by the Board of Directors,
on a pro rata basis with the holders of Common Stock based on the number of shares of Common Stock held by each (assuming conversion of all such FF Preferred
Stock into Common Stock).
2. Liquidation Provisions. Upon the liquidation, dissolution or winding up of the Corporation, or the occurrence of a Liquidation Event, the
assets of the Corporation shall be distributed as provided in Subsection 2 of Part B of Article Fourth above.
3. Redemption. The FF Preferred Stock is not mandatorily redeemable.
4. Conversion. The holders of shares of FF Preferred Stock shall be entitled to conversion rights as follows:
4.1 Right to Convert to Common Stock. Subject to Subsection 4.3 below, each share of FF Preferred Stock shall be convertible, at the
option of the holder thereof, at any time after the date of issuance of such share, at the office of the Corporation or any transfer agent for such stock, into such
number of fully paid and nonassessable shares of Class B Common Stock or, as applicable under Article Fourth, Part A, Sections 3.2 and 3.3, Class A Common
Stock, as is determined by dividing $1.00 (as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like) by the
Conversion Price applicable to such shares (the conversion rate for FF Preferred Stock into Common Stock is referred to herein as the “FF Preferred Conversion
Rate”), determined as hereafter provided, in effect on (i) the date the certificate is surrendered for conversion or (ii) in the case of uncertificated securities, the date
the notice of conversion is received by the Corporation. Any transfer of shares of FF Preferred Stock that is neither (A) made in connection with an Equity
Financing (as such term is defined in Subsection 4.7 below), nor (B) authorized by the Board of Directors, shall be deemed an election of an option to convert such
shares into Class B Common Stock or, as applicable under Article Fourth, Part A, Sections 3.2 and 3.3, Class A Common Stock, and each such transferred share of
FF Preferred Stock shall automatically convert into such number of fully paid and nonassessable shares of Class B Common Stock or Class A Common Stock, as
applicable, as is determined by dividing $1.00 (as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like) by the
Conversion Price applicable to such share, determined as hereafter provided, effective immediately prior to such transfer. The initial Conversion Price per share of
FF Preferred Stock
34
shall be $1.00 (as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like). Such initial Conversion Price shall be
subject to adjustment as set forth in Subsection 4.4 below.
4.2 Automatic Conversion. Each share of FF Preferred Stock shall automatically be converted into shares of Class B Common Stock or,
as applicable under Article Fourth, Part A, Sections 3.2 and 3.3, Class A Common Stock, at the FF Preferred Conversion Rate then in effect for such share
immediately upon the earlier of (i) except as provided in Subsection 4.3 below, a Qualified IPO or (ii) the date specified by vote or written consent of the holders of
a majority of the then outstanding shares of FF Preferred Stock, voting exclusively and as a separate class.
4.3 Mechanics of Conversion. Before any holder of FF Preferred Stock shall be entitled to convert such FF Preferred Stock into shares of
Common Stock, the holder shall give written notice to the Corporation at its principal corporate office, of the election to convert the same and shall state therein the
name or names in which the shares of Class B Common Stock or Class A Common Stock, as applicable, are to be issued and, in the case of FF Preferred Stock
represented by a certificate, the holder shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent
for such FF Preferred Stock. The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of FF Preferred Stock, or to the
nominee or nominees of such holder, a certificate or certificates or, in the case of uncertificated securities, a notice of issuance, for the number of shares of Class B
Common Stock or Class A Common Stock, as applicable, to which such holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of certificates, or in the case of uncertificated securities, on the date such notice of
conversion is received by the Corporation, and the person or persons entitled to receive the shares of Class B Common Stock or Class A Common Stock, as
applicable, issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Class B Common Stock or Class A
Common Stock, as applicable, as of such date. If the conversion is in connection with a firm commitment underwritten public offering of securities, the conversion
may, at the option of any holder tendering such FF Preferred Stock for conversion, be conditioned upon the closing of the sale of securities pursuant to such
offering, in which event any persons entitled to receive Class B Common Stock or Class A Common Stock, as applicable, upon conversion of such FF Preferred
Stock shall not be deemed to have converted such FF Preferred Stock until immediately prior to the closing of such sale of securities.
4.4 Conversion Price Adjustments of FF Preferred Stock for Splits and Combinations. The Conversion Price of the FF Preferred Stock
shall be subject to adjustment from time to time as follows:
4.4.1 Stock Splits and Dividends. In the event the Corporation should at any time after the filing date of this Certificate fix a record
date for the effectuation of a split or subdivision of the outstanding shares of Class B Common Stock and/or Class A Common Stock or the determination of
holders of Class B Common Stock and/or Class A Common Stock entitled to receive a dividend or other distribution payable in additional shares of Class B
35
Common Stock and/or Class A Common Stock or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly,
additional shares of Class B Common Stock and/or Class A Common Stock (hereinafter referred to as “Common Stock Equivalents”) without payment of any
consideration by such holder for the additional shares of Class B Common Stock and/or Class A Common Stock or the Common Stock Equivalents (including the
additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of such record date (or the date of such dividend distribution, split or
subdivision if no record date is fixed), the Conversion Price of the FF Preferred Stock shall be appropriately decreased so that the number of shares of Class B
Common Stock or Class A Common Stock, as applicable, issuable on conversion of each share of such FF Preferred Stock shall be increased in proportion to such
increase of the aggregate number of shares of Class B Common Stock and Class A Common Stock outstanding and those issuable with respect to such Common
Stock Equivalents with the number of shares issuable with respect to Common Stock Equivalents determined from time to time in the manner provided for deemed
issuances in Subsection 4.4.2 below.
4.4.2 Deemed Issuances of Common Stock. The following provisions shall apply for purposes of this Subsection 4.4.
(a) The aggregate maximum number of shares of Class B Common Stock and/or Class A Common Stock deliverable upon
conversion, exchange or exercise (assuming the satisfaction of any conditions to convertibility, exchangeability or exercisability, including, without limitation, the
passage of time, but without taking into account potential antidilution adjustments) of any Common Stock Equivalents and subsequent conversion, exchange or
exercise thereof shall be deemed to have been issued at the time such securities were issued or such Common Stock Equivalents were issued.
(b) In the event of any change in the number of shares of Class B Common Stock and/or Class A Common Stock deliverable or in
the consideration payable to the Corporation upon conversion, exchange or exercise of any Common Stock Equivalents, other than a change resulting from the
antidilution provisions thereof, the Conversion Price of the FF Preferred Stock, to the extent in any way affected by or computed using such Common Stock
Equivalents, shall be recomputed to reflect such change, but no further adjustment shall be made for the actual issuance of Class B Common Stock and/or Class A
Common Stock or any payment of such consideration upon the conversion, exchange or exercise of such Common Stock Equivalents.
(c) Upon the termination or expiration of the convertibility, exchangeability or exercisability of any Common Stock Equivalents,
the Conversion Price of the FF Preferred Stock, to the extent in any way affected by or computed using such Common Stock Equivalents, shall be recomputed to
reflect the issuance of only the number of shares of Class B Common Stock and/or Class A Common Stock (and Common Stock Equivalents that remain
convertible, exchangeable or exercisable) actually issued upon the conversion, exchange or exercise of such Common Stock Equivalents.
4.4.3 Reverse Stock Splits. If the number of shares of Class B Common Stock and/or Class A Common Stock outstanding at any
time after the filing date of this Certificate is decreased by a combination of the outstanding shares of Class B Common
36
Stock and/or Class A Common Stock, then, following the record date of such combination, the Conversion Price for the FF Preferred Stock shall be appropriately
increased so that the number of shares of Class B Common Stock or Class A Common Stock, as applicable, issuable on conversion of each share of such FF
Preferred Stock shall be decreased in proportion to such decrease in outstanding shares.
4.5 No Fractional Shares and Notices as to Adjustments.
4.5.1 No fractional shares shall be issued upon the conversion of any share or shares of FF Preferred Stock, and the number of
shares of Common Stock to be issued shall be rounded down to the nearest whole share. The number of shares issuable upon such conversion shall be determined
on the basis of the total number of shares of FF Preferred Stock the holder is at the time converting into Common Stock and the number of shares of Common
Stock issuable upon such aggregate conversion. If the conversion would result in any fractional share, the Corporation shall, in lieu of issuing any such fractional
share, pay the holder thereof an amount in cash equal to the fair market value of such fractional share on the date of conversion, as determined in good faith by the
Board of Directors.
4.5.2 Upon the occurrence of each adjustment or readjustment of the Conversion Price of FF Preferred Stock pursuant to this
Subsection 4, the Corporation, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish
to each holder of such FF Preferred Stock a notice setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any time of any holder of such FF Preferred Stock, furnish or cause to be furnished to such
holder a notice setting forth (A) such adjustment and readjustment, (B) the Conversion Price for the FF Preferred Stock at the time in effect and (C) the, number of
shares of Class B Common Stock or Class A Common Stock, as applicable, and the amount, if any, of other property which at the time would be received upon the
conversion of a share of FF Preferred Stock.
4.6 Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of FF Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of FF Preferred Stock; and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of FF Preferred Stock, in addition to such other
remedies as shall be available to the holder of such FF Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without
limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to this Certificate.
4.7 Right to Convert to Preferred Stock. If a share of FF Preferred Stock is purchased by an investor in connection with an Equity
Financing (as defined below), then immediately upon the closing of such purchase, each such share of FF Preferred Stock transferred to the investor shall
automatically convert, at the Conversion Ratio (as defined
37
below), into shares of a subsequent series of preferred stock of the Corporation sold by the Corporation in such Equity Financing (“Subsequent Preferred Stock”)
(an “FF Preferred Sale”), provided that the aggregate Liquidation Preference (as defined below) of the Subsequent Preferred Stock issued upon conversion of (i)
the FF Preferred sold in such FF Preferred Sale and (ii) the FF Preferred sold in any other FF Preferred Sales does not exceed twenty percent (20%) of the
aggregate Liquidation Preference of all shares of Preferred Stock outstanding immediately following such FF Preferred Sale (including the outstanding shares of
Subsequent Preferred Stock issued upon conversion of the FF Preferred sold in such FF Preferred Sale). As used in this paragraph, “Liquidation Preference” shall
mean the preferential payments to holders of Preferred Stock in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or
Liquidation Event pursuant to Subsection 2.1 of Part B of Article Fourth, “Conversion Ratio” shall mean, for each Equity Financing, one divided by the number of
shares into which a share of Subsequent Preferred Stock issued in such Equity Financing is convertible into Common Stock of the Corporation, and “Equity
Financing” shall mean an equity financing of the Corporation in which the Corporation signs a purchase agreement and sells and issues Subsequent Preferred Stock
of the Corporation. By way of example only, in the event that one share of Subsequent Preferred Stock issued in the Equity Financing is convertible into two
shares of Common Stock, the Conversion Ratio shall be one-half (1/2) and each share of FF Preferred Stock would convert into one-half of a share of such
Subsequent Preferred Stock.
4.8 Notices. Any notice required by the provisions of this Subsection 4 to be given to the holders of shares of FF Preferred Stock shall be
deemed given if deposited in the U.S. mail, postage prepaid, and addressed to each holder of record at his address appearing on the books of the Corporation. If no
such address appears or is given, notice shall be deemed given at the place where the principal executive office of the Corporation is located.
5. Voting Rights and Powers. Except as expressly provided by this Certificate or as provided by law, the holders of FF Preferred Stock shall be
entitled to the same voting rights as the holders of the Class B Common Stock or, in the event the FF Preferred Stock becomes convertible into Class A Common
Stock under Article Fourth, Part A, Sections 3.2 and 3.3, Class A Common Stock, and to notice of any stockholders’ meeting in accordance with the Bylaws of the
Corporation, and the holders of Common Stock and the holders of FF Preferred Stock shall vote together as a single class on all matters. Each holder of FF
Preferred Stock shall be entitled to the same number of votes as a share of Class B Common Stock or Class A Common Stock, as applicable, for each share of
Class B Common Stock or Class A Common Stock, as applicable, into which the shares of FF Preferred Stock held by such holder are convertible as of the record
date for determining stockholders entitled to vote on such matter. Fractional votes shall not, however, be permitted and any fractional voting rights available on an
as-converted basis (after aggregating all shares into which shares of FF Preferred Stock held by each holder could be converted) shall be rounded to the nearest
whole number (with one-half being rounded upward). The number of authorized shares of FF Preferred Stock may be increased or decreased (but not below the
number of shares thereof then outstanding) by the affirmative vote of the holders of shares of stock of the Corporation representing a majority of the votes
represented by all outstanding shares of stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the Delaware General
Corporation Law.
38
6. Status of Converted Stock. In the event any shares of FF Preferred Stock shall be converted pursuant to Subsection 4 above, the shares so
converted shall be cancelled and shall not be issuable by the Corporation. This Certificate shall be appropriately amended to effect the corresponding reduction in
the Corporation's authorized capital stock.
FIFTH: Subject to any additional vote required by the Certificate of Incorporation or Bylaws, in furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to make, repeal, alter, amend and rescind any or all of the Bylaws of the Corporation.
SIXTH: Subject to any additional vote required by the Certificate of Incorporation, the number of directors of the Corporation shall be determined in the
manner set forth in the Bylaws of the Corporation.
SEVENTH: Elections of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide.
EIGHTH: Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws of the Corporation may provide. The books of the
Corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws
of the Corporation.
NINTH: To the fullest extent permitted by law, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director. If the General Corporation Law or any other law of the State of Delaware is amended after approval
by the stockholders of this Article Ninth to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director
of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law as so amended.
Any repeal or modification of the foregoing provisions of this Article Ninth by the stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of, or increase the liability of any director of the Corporation with respect to any acts or omissions of
such director occurring prior to, such repeal or modification.
TENTH: To the fullest extent permitted by applicable law, the Corporation is authorized to provide indemnification of (and advancement of expenses to)
directors, officers and agents of the Corporation (and any other persons to which General Corporation Law permits the Corporation to provide indemnification)
through Bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise, in excess of the
indemnification and advancement otherwise permitted by Section 145 of the General Corporation Law.
Any amendment, repeal or modification of the foregoing provisions of this Article Tenth shall not adversely affect any right or protection of any director,
officer or other agent of the Corporation existing at the time of such amendment, repeal or modification.
39
ELEVENTH: The Corporation renounces, to the fullest extent permitted by law, any interest or expectancy of the Corporation in, or in being offered an
opportunity to participate in, any Excluded Opportunity. An “Excluded Opportunity” is any matter, transaction or interest that is presented to, or acquired, created
or developed by, or which otherwise comes into the possession of, (i) any director of the Corporation who is not an employee of the Corporation or any of its
subsidiaries, or (ii) any holder of Preferred Stock or any partner, member, director, stockholder, employee or agent of any such holder, other than someone who is
an employee of the Corporation or any of its subsidiaries (collectively, “Covered Persons”), unless such matter, transaction or interest is presented to, or acquired,
created or developed by, or otherwise comes into the possession of, a Covered Person expressly and solely in such Covered Person's capacity as a director of the
Corporation.
TWELFTH: For purposes of Section 500 of the California Corporations Code (to the extent applicable), in connection with any repurchase of shares of
Common Stock permitted under this Certificate of Incorporation from employees, officers, directors or consultants of the Corporation in connection with a
termination of employment or services pursuant to agreements or arrangements approved by the Board of Directors (in addition to any other consent required under
this Certificate of Incorporation), such repurchase may be made without regard to any “preferential dividends arrears amount” or “preferential rights amount” (as
those terms are defined in Section 500 of the California Corporations Code). Accordingly, for purposes of making any calculation under California Corporations
Code Section 500 in connection with such repurchase, the amount of any “preferential dividends arrears amount” or “preferential rights amount” (as those terms
are defined therein) shall be deemed to be zero.
THIRTEENTH: Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery in the State of Delaware shall
be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of the
Corporation, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or
the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation, its directors, officers or employees arising pursuant to any provision of
the Delaware General Corporation Law or the Corporation’s certificate of incorporation or bylaws or (iv) any action asserting a claim against the Corporation, its
directors, officers or employees governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim as to which the Court of
Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to
the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum
other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction. If any provision or provisions of this Article
Thirteenth shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest
extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article
Thirteenth (including, without limitation, each portion of any sentence of this Article Thirteenth containing any such provision held to be invalid, illegal or
unenforceable that is not itself held to be invalid,
40
illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.
* * *
3. That this Amended and Restated Certificate of Incorporation, which restates and integrates and further amends the provisions of this Corporation's
Certificate of Incorporation, has been duly adopted in accordance with Sections 141, 228, 242 and 245 of the General Corporation Law.
41
IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation has been executed by a duly authorized officer of this corporation on
this 9th day of December 2020.
By: /s/ Brian Armstrong
Brian Armstrong, Chief Executive Officer
42
Exhibit 3.2
CERTIFICATE OF AMENDMENT OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
COINBASE GLOBAL, INC.
Coinbase Global, Inc., a Delaware corporation (the “Company”), does hereby certify that the following amendment to the Company’s Amended and Restated
Certificate of Incorporation (the “Certificate”), has been duly adopted in accordance with the provisions of Section 242 of the Delaware General Corporation Law, with the
approval of such amendment by the corporation’s stockholders having been given by written consent without a meeting in accordance with Section 228 of the Delaware
General Corporation Law:
1. The first sentence of Article Fourth of the Certificate is hereby amended and restated in its entirety to read as follows:
“FOURTH: The total number of shares of all classes of stock which the Corporation shall have authority to issue is (i) 282,000,000 shares of Class A
Common Stock, $0.00001 par value per share (“Class A Common Stock”), (ii) 208,413,936 shares of Class B Common Stock, $0.00001 par value per share
(“Class B Common Stock” and together with the Class A Common Stock, the “Common Stock”), (iii) 5,738,772 shares of FF Preferred Stock, $0.00001 par
value per share (“FF Preferred Stock”) and (iv) 120,866,256 shares of Preferred Stock, $0.00001 par value per share (“Preferred Stock”).”
* * *
IN WITNESS WHEREOF, said corporation has caused this Certificate of Amendment to be signed by its duly authorized officer this 8th day of February, 2021 and
the foregoing facts stated herein are true and correct.
COINBASE GLOBAL, INC.
By:
/s/ Brian Armstrong
Name: Brian Armstrong
Title: Chief Executive Officer
Exhibit 3.3
COINBASEGLOBAL,INC.
RESTATEDCERTIFICATEOFINCORPORATION
Coinbase Global, Inc., a Delaware corporation, hereby certifies as follows:
1. The name of this corporation is Coinbase Global, Inc. The date of the filing of its original Certificate of Incorporation with the Secretary of State
was January 27, 2014.
2. The Restated Certificate of Incorporation of this corporation attached hereto as Exhibit A, which is incorporated herein by this reference, and
which restates, integrates and further amends the provisions of the Certificate of Incorporation of this corporation, as previously amended and/or restated, has
been duly adopted by this corporation’s Board of Directors and by the stockholders in accordance with Sections 242 and 245 of the General Corporation Law
of the State of Delaware, with the approval of this corporation’s stockholders having been given by written consent without a meeting in accordance with
Section 228 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, this corporation has caused this Restated Certificate of Incorporation to be signed by its duly authorized officer and the
foregoing facts stated herein are true and correct.
Dated: [●], 2021 Coinbase Global, Inc.
By:
Name:
Brian Armstrong
Title: Chief Executive Officer
EXHIBITA
COINBASEGLOBAL,INC.
RESTATEDCERTIFICATEOFINCORPORATION
ARTICLEI:NAME
The name of this corporation is Coinbase Global, Inc. (the “Corporation”).
ARTICLEII:AGENTFORSERVICEOFPROCESS
The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New
Castle, Zip Code 19801, and the name of the registered agent of the Corporation in the State of Delaware at such address is The Corporation Trust Company.
ARTICLEIII:PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law
of the State of Delaware (the “General Corporation Law”).
ARTICLEIV:AUTHORIZEDSTOCK
1. TotalAuthorized.
1.1 The total number of shares of all classes of stock that the Corporation has authority to issue is 11,500,000,000 shares, consisting of four
classes: 10,000,000,000 shares of Class A Common Stock, $0.00001 par value per share (“Class A Common Stock”); 500,000,000 shares of Class B
Common Stock, $0.00001 par value per share (“Class B Common Stock”); 500,000,000 shares of Common Stock, $0.00001 par value per share (the
“Common Stock”); and 500,000,000 shares of Preferred Stock, $0.00001 par value per share (the “Preferred Stock”).
1.2 The number of authorized shares of Class A Common Stock or Class B Common Stock may be increased or decreased (but not below
the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of
the capital stock of the Corporation entitled to vote thereon, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law, and no vote of
the holders of the Class A Common Stock or Class B Common Stock voting separately as a class shall be required therefor.
2. CommonStockandPreferredStock.
2.1 The Corporation’s Board of Directors (“Board of Directors”) is authorized, subject to any limitations prescribed by the law of the State of
Delaware, by resolution or resolutions adopted from time to time, to provide for the issuance of shares of
Common Stock or Preferred Stock in one or more series, and, by filing a certificate of designation pursuant to the applicable law of the State of Delaware
(“Certificate of Designation”), to establish from time to time the number of shares to be included in each such series, to fix the designation, powers (including
voting powers), preferences and relative, participating, optional or other special rights (and the qualifications, limitations or restrictions thereof) of the shares of
each such series and, except where otherwise provided in the applicable Certificate of Designation, to increase (but not above the total number of authorized
shares of the Common Stock or Preferred Stock, as applicable) or decrease (but not below the number of shares of such series then outstanding) the number
of shares of any such series. Notwithstanding the first sentence of this Section 2.1 of Article IV, during the period commencing immediately following a
Staggered Board Start Date and ending upon the next Staggered Board End Date (each as defined below), any filing of a Certificate of Designation providing
for the authorization of shares of Common Stock or Preferred Stock entitling the holder of such shares to the right to more than one (1) vote per share must be
approved by a majority of the directors then in office, which must include the affirmative vote of the Founder (as defined below) as a member of the Board of
Directors if (x) the Founder is then serving as a member of the Board of Directors and (y) no Automatic Conversion (as defined below) has occurred. The
number of authorized shares of Common Stock or Preferred Stock may be increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of the voting power of all the then-outstanding shares of capital stock of the Corporation
entitled to vote thereon, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law, unless a separate vote of the holders of one or
more series is required pursuant to the terms of any Certificate of Designation.
2.2 Except as otherwise expressly provided in any Certificate of Designation designating any series of Common Stock or Preferred Stock
pursuant to the foregoing provisions of this Article IV, (i) any new series of Common Stock or Preferred Stock may be designated, fixed and determined as
provided herein by the Board of Directors without approval of the holders of the Class A Common Stock or Class B Common Stock or the holders of Common
Stock or Preferred Stock, or any series thereof, and (ii) any such new series may have powers, preferences and rights, including, without limitation, voting
powers, dividend rights, liquidation rights, redemption rights and conversion rights, senior to, junior to or pari passu with the rights of the Class A Common
Stock, Class B Common Stock, any series of the Common Stock or Preferred Stock, or any future class or series of capital stock of the Corporation.
3. RightsofClassACommonStockandClassBCommonStock.
3.1 EqualStatus.Except as otherwise provided in this Restated Certificate of Incorporation or required by applicable law, shares of Class A
Common Stock and Class B Common Stock shall have the same rights and powers, rank equally (including as to dividends and distributions, and upon any
liquidation, dissolution or winding up of the Corporation), share ratably and be identical in all respects and as to all matters.
3.2 VotingRights.Except as otherwise expressly provided by this Restated Certificate of Incorporation or as required by law, the holders of
shares of Class A Common Stock and Class B Common Stock shall (a) at all times vote together as a single class on all matters (including the election of
directors) submitted to a vote of the stockholders of the Corporation, (b) be entitled to notice of any stockholders’ meeting in accordance with the Bylaws of the
Corporation (as the same may be amended and/or restated from time to time, the
3
“Bylaws”) and (c) be entitled to vote upon such matters and in such manner as may be provided by applicable law; provided, however, that, except as
otherwise required by law, holders of shares of Class A Common Stock and Class B Common Stock shall not be entitled to vote on any amendment to this
Restated Certificate of Incorporation (including any Certificate of Designation relating to any series of Common Stock or Preferred Stock) that relates solely to
the terms of one or more outstanding series of Common Stock or Preferred Stock if the holders of such affected series are entitled, either separately or
together as a class with the holders of one or more other such series, to vote thereon pursuant to this Restated Certificate of Incorporation (including any
Certificate of Designation relating to any series of Common Stock or Preferred Stock). Except as otherwise expressly provided herein or required by
applicable law, each holder of Class A Common Stock shall have the right to one (1) vote per share of Class A Common Stock held of record by such holder
and each holder of Class B Common Stock shall have the right to twenty (20) votes per share of Class B Common Stock held of record by such holder.
3.3 DividendsandDistributionRights.Shares of Class A Common Stock and Class B Common Stock shall be treated equally, identically
and ratably, on a per share basis, with respect to any dividends or distributions as may be declared and paid from time to time by the Board of Directors out of
any assets of the Corporation legally available therefor; provided, however, that in the event a dividend is paid in the form of shares of Class A Common Stock
or Class B Common Stock (or rights to acquire such shares), then holders of Class A Common Stock shall receive shares of Class A Common Stock (or rights
to acquire such shares, as the case may be) and holders of Class B Common Stock shall receive shares of Class B Common Stock (or rights to acquire such
shares, as the case may be), with holders of shares of Class A Common Stock and Class B Common Stock receiving, on a per share basis, an identical
number of shares of Class A Common Stock or Class B Common Stock, as applicable. Notwithstanding the foregoing, the Board of Directors may pay or
make a disparate dividend or distribution per share of Class A Common Stock or Class B Common Stock (whether in the amount of such dividend or
distribution payable per share, the form in which such dividend or distribution is payable, the timing of the payment, or otherwise) if (i) such disparate dividend
or distribution is approved in advance by the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of Class A
Common Stock and Class B Common Stock, each voting separately as a class or (ii) such disparate dividend or distribution is paid in the form of securities (or
the right to receive securities) of another entity, and (a) the holders of Class A Common Stock receive securities entitling the holder thereof to cast one vote
per security (or the right to receive such securities, as applicable) and (b) the holders of Class B Common Stock shall receive securities entitling the holder
thereof to cast twenty votes per security (or the right to receive such securities, as applicable). The terms of any securities distributed to stockholders pursuant
to the preceding clause (ii) shall be substantially identical, other than with respect to voting rights.
3.4 Subdivisions, Combinations or Reclassifications. Shares of Class A Common Stock or Class B Common Stock may not be
subdivided, combined or reclassified unless the shares of the other class are concurrently therewith proportionately subdivided, combined or reclassified in a
manner that maintains the same proportionate equity ownership between the holders of the outstanding Class A Common Stock and Class B Common Stock
on the record date for such subdivision, combination or reclassification; provided, however, that shares of one such class may be subdivided, combined or
reclassified in a different or disproportionate manner if such subdivision, combination or reclassification is approved in
4
advance by the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of Class A Common Stock and Class B
Common Stock, each voting separately as a class.
3.5 Liquidation,DissolutionorWindingUp. Subject to the preferential or other rights of any holders of Common Stock or Preferred Stock
then outstanding, upon the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, holders of Class A Common Stock and
Class B Common Stock will be entitled to receive ratably, on a per share basis, all assets of the Corporation available for distribution to its stockholders
unless disparate or different treatment of the shares of each such class with respect to distributions upon any such liquidation, dissolution or winding up is
approved in advance by the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of Class A Common Stock
and Class B Common Stock, each voting separately as a class.
3.6 MergerorConsolidation. In the case of any distribution or payment made or other consideration paid in respect, or upon conversion or
exchange, of the shares of Class A Common Stock or Class B Common Stock upon the merger or consolidation of the Corporation with or into any other
entity, or in the case of any other transaction having an effect on stockholders substantially similar to that resulting from a merger or consolidation, such
distribution or payment shall be made, or other consideration shall be paid, ratably on a per share basis among the holders of the Class A Common Stock and
Class B Common Stock as a single class; provided, however, that shares of one such class may receive different or disproportionate distributions, payments,
or other consideration in connection with such merger, consolidation or other transaction if (i) the only difference in the per share distribution, payment, or
other consideration to the holders of the Class A Common Stock and Class B Common Stock is that any securities that a holder of a share of Class B
Common Stock receives as part of such merger, consolidation or other transaction upon conversion or in exchange for such holder’s Class B Common Stock
shall have twenty times the voting power of any securities that a holder of a share of Class A Common Stock receives as part of such merger, consolidation or
other transaction upon conversion or in exchange for such holder’s Class A Common Stock, or (ii) such merger, consolidation or other transaction is approved
by the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of Class A Common Stock and Class B Common
Stock, each voting separately as a class.
3.7 DeterminationsbytheBoardofDirectors. In case of an ambiguity in the application of any provision set forth in this Section 3 of this
Article IV or in the meaning of any term or definition set forth in this Section 3 of this Article IV, the Board of Directors, or a committee thereof, shall have the
power to determine, in its sole discretion, the application of any such provision or any such term or definition with respect to any situation based on the facts
believed in good faith by it. A determination of the Board of Directors (or a committee thereof, as applicable) in accordance with the preceding sentence shall
be conclusive and binding on the stockholders of the Corporation. Such determination shall be evidenced in a writing adopted by the Board of Directors (or a
committee thereof, as applicable), and such writing shall be made available for inspection by any holder of capital stock of the Corporation at the principal
executive offices of the Corporation.
5
ARTICLEV:CLASSBCOMMONSTOCKCONVERSION
1. OptionalConversion.Each share of Class B Common Stock shall be convertible into one (1) fully paid and nonassessable share of Class A
Common Stock at the option of the holder thereof at any time upon written notice to the Corporation. Before any holder of Class B Common Stock shall be
entitled to convert any of such holder’s shares of such Class B Common Stock into shares of Class A Common Stock, such holder shall deliver an instruction,
duly signed and authenticated in accordance with any procedures set forth in the Bylaws or any policies of the Corporation then in effect (which will be
available upon request therefor made to the Secretary), at the principal corporate office of the Corporation or of any transfer agent for the Class B Common
Stock, and shall give written notice to the Corporation at its principal corporate office of such holder’s election to convert the same and shall state therein the
name or names in which the shares of Class A Common Stock issuable on conversion thereof are to be registered on the books of the Corporation. The
Corporation shall, as soon as practicable thereafter, register on the Corporation’s books ownership of the number of shares of Class A Common Stock to
which such record holder of Class B Common Stock, or to which the nominee or nominees of such record holder, shall be entitled as aforesaid. Such
conversion shall be deemed to have occurred immediately prior to the close of business on the date such notice of the election to convert is received by the
Corporation, and the person or persons entitled to receive the shares of Class A Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Class A Common Stock as of such date.
2. Automatic Conversion. Each share of Class B Common Stock shall automatically, without further action by the Corporation or the holder
thereof, be converted into one (1) fully paid and nonassessable share of Class A Common Stock immediately prior to the close of business on the earliest of
(i) the date fixed by the Board of Directors that is no less than 61 days and no more than 180 days following the first time after 11:59 p.m. Eastern Time on the
Effective Date that (A) the aggregate number of shares of Class B Common Stock held (in street name or as a holder of record) by Founder and his Permitted
Entities, Permitted Foundations, Permitted IRAs and Permitted Transferees is less than (B) 25% of the aggregate number of shares of Class B Common
Stock held (in street name or as a holder of record) by Founder and his Permitted Entities, Permitted Foundations, Permitted IRAs and Permitted Transferees
at 11:59 p.m. Eastern Time on the Effective Date, (ii) the date and time specified by (A) the affirmative vote of the holders of Class B Common Stock
representing not less than two-thirds (2/3) of the voting power of all of the then-outstanding shares of Class B Common Stock, voting separately as a single
class, and (B) the affirmative vote of not less than two-thirds (2/3) of the then-serving members of the Board of Directors, which must include the affirmative
vote of the Founder as a member of the Board of Directors if either (x) the Founder is then serving as a member of the Board of Directors and the Founder
has not been terminated for Cause (as defined below) or resigned (except for Good Reason) (as defined below) from the position of Chief Executive Officer of
the Corporation or (y) the Founder has not been removed for Cause or resigned from the position of Chairperson of the Board of Directors or (iii) the date of
the Founder’s death or Disability (as defined below), provided, that, in the case of (iii), the date of such automatic conversion may be delayed, but not for a
total period of longer than six (6) months, to a date approved by a majority of the Independent Directors then in office (each of the events referred to in (i)-(iii)
are referred to herein as an “Automatic Conversion”). The Corporation shall provide notice of the Automatic Conversion of shares of Class B Common Stock
pursuant to this Section 2 of Article V to record holders of such shares of Class B
6
Common Stock as soon as practicable following the Automatic Conversion. Such notice shall be provided by any means then permitted by the General
Corporation Law; provided, however, that no failure to give such notice nor any defect therein shall affect the validity of the Automatic Conversion. Upon and
after the Automatic Conversion, the person registered on the Corporation’s books as the record holder of the shares of Class B Common Stock so converted
immediately prior to the Automatic Conversion shall be registered on the Corporation’s books as the record holder of the shares of Class A Common Stock
issued upon Automatic Conversion of such shares of Class B Common Stock, without further action on the part of the record holder thereof. Immediately upon
the effectiveness of the Automatic Conversion, the rights of the holders of shares of Class B Common Stock as such shall cease, and the holders shall be
treated for all purposes as having become the record holder or holders of such shares of Class A Common Stock into which such shares of Class B Common
Stock were converted.
3. ConversiononTransfer.Each share of Class B Common Stock shall automatically, without further action by the Corporation or the holder
thereof, be converted into one (1) fully paid and nonassessable share of Class A Common Stock, upon the occurrence of a Transfer (as defined below), other
than a Permitted Transfer (as defined below), of such share of Class B Common Stock.
4. PoliciesandProcedures. The Corporation may, from time to time, establish such policies and procedures, not in violation of applicable law or
this Restated Certificate of Incorporation or the Bylaws, relating to the conversion of shares of the Class B Common Stock into shares of Class A Common
Stock as it may deem necessary or advisable. If the Corporation has reason to believe that a Transfer that is not a Permitted Transfer has occurred, the
Corporation may request that the purported transferor furnish affidavits or other evidence to the Corporation as it reasonably deems necessary to determine
whether a Transfer that is not a Permitted Transfer has occurred, and if such transferor does not within ten (10) days after the date of such request furnish
sufficient (as determined by the Board of Directors or a committee thereof) evidence to the Corporation (in the manner provided in the request) to enable the
Corporation to determine that no such Transfer has occurred, any such shares of Class B Common Stock, to the extent not previously converted, shall be
automatically converted into shares of Class A Common Stock on a one-to-one basis, and such conversion shall thereupon be registered on the books and
records of the Corporation. In connection with any action of stockholders taken at a meeting, the stock ledger of the Corporation shall be presumptive
evidence as to who are the stockholders entitled to vote in person or by proxy at any meeting of stockholders and the classes of shares held by each such
stockholder and the number of shares of each class held by such stockholder.
5. Definitions.
(a) “Cause” shall mean the Founder’s conviction of a felony crime involving dishonesty, breach of trust, or physical harm to any person;
provided that with respect to any conviction by a tribunal outside of the United States, “Cause” shall not exist if the Founder acted on the advice of legal
counsel or in the good faith belief that such action was legal and in the best interests of the Corporation.
(b) “Convertible Security” shall mean any evidences of indebtedness, shares of Common Stock or Preferred Stock or other securities
(other than shares of Class B
7
Common Stock) convertible into or exchangeable for Class B Common Stock, either directly or indirectly.
(c) “Disability” shall mean, with respect to the Founder, the permanent and total disability of the Founder such that the Founder is unable to
engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death
within 12 months or which has lasted or can be expected to last for a continuous period of not less than 12 months as determined by a licensed medical
practitioner jointly selected by a majority of the then-serving members of the Board of Directors, including the Founder to the extent the Founder is then
serving as a member of the Board of Directors. If the Founder is incapable of selecting a licensed physician, then the Founder’s spouse shall make the
selection on behalf of the Founder, or in the absence or incapacity of the Founder’s spouse, the Founder’s adult children by majority vote shall make the
selection on behalf of the Founder, or in the absence of adult children of such Founder or their inability to act by majority vote, a natural person then acting as
the successor trustee of a revocable living trust which was created by the Founder and which holds shares of all classes of capital stock of the Corporation
having more voting power than any other revocable living trust created by the Founder shall make the selection on behalf of the Founder, or in absence of any
such successor trustee, the legal guardian or conservator of the estate of the Founder shall make the selection on behalf of the Founder.
(d) “Family Member” shall mean with respect to any natural person who is a Qualified Stockholder, the spouse, domestic partner, parents,
grandparents, lineal descendants, siblings and lineal descendants of siblings of such Qualified Stockholder. Lineal descendants shall include adopted
persons, but only so long as they are adopted while a minor.
(e) “Founder” shall mean Brian Armstrong.
(f) “Good Reason” shall mean the occurrence of any of the following events or conditions, without the Founder’s express written consent
(which consent may be denied, withheld or delayed for any reason): (A) a reduction in the Founder’s title from Chief Executive Officer or the material reduction
in Founder’s authority, duties or responsibilities as in effect as of the date hereof, including without limitation the appointment of any other executive to the
Corporation having equal or greater authority, duties or responsibilities than the Founder; a requirement that the Founder report to any person(s) other than
the Board of Directors or a committee thereof; the termination of persons reporting directly to the Founder by resolution of the Board, in which the Founder did
not consent to such resolution; or a material reduction in the proportion of the Corporation’s budget over which the Founder has authority; or (B) any action or
inaction that constitutes a material breach by the Corporation of any agreement between the Corporation and the Founder, which breach is not cured within
thirty (30) days after receipt of written notice describing in detail such breach to the Corporation from the Founder.
(g) “Effective Date” shall mean the date on which the Securities and Exchange Commission (the “Commission”) declares effective the
Corporation’s registration statement on Form S-1 (No. 333-[●]).
(h) “Independent Directors” shall mean the members of the Board of Directors designated as independent directors in accordance with the
requirements of any
8
national stock exchange under which the Corporation’s equity securities are listed for trading that are generally applicable to companies with common equity
securities listed thereon.
(i) “Option” shall mean rights, options, restricted stock units or warrants to subscribe for, purchase or otherwise acquire Class B Common
Stock or Convertible Securities (as defined above).
(j) “Parent” of an entity shall mean any entity that directly or indirectly owns or controls a majority of the voting power of the voting
securities of such entity or is otherwise entitled to elect a majority of the members of the board of directors, or entitled to appoint or act as the governing body,
of such entity.
(k) “Permitted Entity” shall mean with respect to a Qualified Stockholder: (a) a Permitted Trust solely for the benefit of (without taking into
account provisions commonly referred to as “common disaster,” “remote contingent disposition” or “ultimate contingent disposition” provisions or similar
provisions, unless and until such provisions actually become operative to the current benefit of the beneficiaries designated therein) (1) such Qualified
Stockholder, (2) one or more Family Members of such Qualified Stockholder, (3) one or more Permitted Foundations of such Qualified Stockholder, and/or (4)
any other Permitted Entity of such Qualified Stockholder; or (b) any general partnership, limited partnership, limited liability company, corporation or other
entity exclusively owned by (1) such Qualified Stockholder, (2) one or more Family Members of such Qualified Stockholder, or (3) any other Permitted Entity of
such Qualified Stockholder.
(l) “Permitted Foundation” shall mean with respect to a Qualified Stockholder: a trust or private non-operating organization that is tax-
exempt under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), so long as such Qualified Stockholder has dispositive power
and Voting Control with respect to the shares of Class B Common Stock held by such trust or organization and the Transfer to such trust does not involve any
payment of cash, securities, property or other consideration (other than an interest in such trust or organization) to such Qualified Stockholder.
(m) “Permitted IRA” shall mean an Individual Retirement Account, as defined in Section 408(a) of the Code, or a pension, profit sharing,
stock bonus or other type of plan or trust of which a Qualified Stockholder is a participant or beneficiary and which satisfies the requirements for qualification
under Section 401 of the Code; provided that in each case such Qualified Stockholder has sole dispositive power and exclusive Voting Control with respect to
the shares of Class B Common Stock held in such account, plan or trust.
(n) “Permitted Transfer” shall mean, and be restricted to, any Transfer of a share of Class B Common Stock:
(i) by a Qualified Stockholder to (A) one or more Family Members of such Qualified Stockholder, (B) any Permitted Entity of such
Qualified Stockholder, (C) any Permitted Foundation of such Qualified Stockholder, or (D) any Permitted IRA of such Qualified Stockholder; or
(ii) by a Permitted Entity, Permitted Foundation or Permitted IRA of a Qualified Stockholder to (A) such Qualified Stockholder or one
or more Family Members of such Qualified Stockholder, or (B) any other Permitted Entity of such Qualified Stockholder.
9
(o) “Permitted Transferee” shall mean a transferee of shares of Class B Common Stock received in a Permitted Transfer.
(p) “Permitted Trust” shall mean a bona fide trust where each trustee is (i) a Qualified Stockholder, (ii) a Family Member of such Qualified
Stockholder, or (iii) a professional in the business of providing trustee services, including private professional fiduciaries, trust companies and bank trust
departments.
(q) “Qualified Stockholder” shall mean: (a) the record holder of a share of Class B Common Stock as of the Effective Date; (b) the initial
record holder of any shares of Class B Common Stock that are originally issued by the Corporation after the Effective Date pursuant to the exercise or
exchange or conversion of any Option or Convertible Security that, in each case, was outstanding as of the Effective Date; (c) each natural person who, prior
to the Effective Date, Transferred shares of Class B Common Stock of the Corporation to a Permitted Entity, Permitted Foundation or Permitted IRA that is or
becomes a Qualified Stockholder; (d) each natural person who Transferred shares of, or equity awards for, Class B Common Stock (including any Option
exercisable or Convertible Security exchangeable for or convertible into shares of Class B Common Stock) to a Permitted Entity, Permitted Foundation or
Permitted IRA that is or becomes a Qualified Stockholder; and (e) a Permitted Transferee.
(r) “Transfer” of a share of Class B Common Stock shall mean any direct or indirect sale, assignment, transfer, conveyance, hypothecation
or other transfer or disposition of such share or any legal or beneficial interest in such share, whether or not for value and whether voluntary or involuntary or
by operation of law, including, without limitation, a transfer of a share of Class B Common Stock to a broker or other nominee (regardless of whether there is a
corresponding change in beneficial ownership), which transfer, to the fullest extent permitted by law, may be initiated by the Corporation to a Corporation-
sponsored brokerage account pursuant to an opt-in or opt-out notice provided by the Corporation to the holders of Class B Common Stock in connection with
the initial listing of the Corporation’s equity securities on any national stock exchange, or the transfer of, or entering into a binding agreement with respect to,
Voting Control over such share by proxy or otherwise; provided, however, that the following shall not be considered a “Transfer” within the meaning of this
Section 5 of Article V:
(i) the granting of a revocable proxy to officers or directors of the Corporation at the request of the Board of Directors in connection
with actions to be taken at an annual or special meeting of stockholders;
(ii) entering into a voting trust, agreement or arrangement (with or without granting a proxy) solely with stockholders who are holders
of Class B Common Stock that (A) is disclosed either in a Schedule 13D filed with the Commission or in writing to the Secretary of the Corporation, (B) either
has a term not exceeding one (1) year or is terminable by the holder of the shares subject thereto at any time and (C) does not involve any payment of cash,
securities, property or other consideration to the holder of the shares subject thereto other than the mutual promise to vote shares in a designated manner;
(iii) entering into a voting trust, agreement or arrangement (with or without granting a proxy) pursuant to a written agreement to which
the Corporation is a party;
10
(iv) the pledge of shares of Class B Common Stock by a stockholder that creates a mere security interest in such shares pursuant to
a bona fide loan or indebtedness transaction for so long as such stockholder continues to exercise Voting Control over such pledged shares; provided,
however, that a foreclosure on such shares or other similar action by the pledgee (including the exercise of any proxy authority granted pursuant to such
pledge) shall constitute a Transfer unless such foreclosure or similar action qualifies as a Permitted Transfer;
(v) the fact that, as of the Effective Date or at any time after the Effective Date, the spouse of any holder of Class B Common Stock
possesses or obtains an interest in such holder’s shares of Class B Common Stock arising solely by reason of the application of the community property laws
of any jurisdiction, so long as no other event or circumstance shall exist or have occurred that constitutes a Transfer of such shares of Class B Common
Stock; provided that any transfer of shares by any holder of shares of Class B Common Stock to such holder’s spouse, including a transfer in connection with
a divorce proceeding, domestic relations order or similar legal requirement, shall constitute a “Transfer” of such shares of Class B Common Stock unless
otherwise exempt from the definition of Transfer;
(vi) entering into a trading plan pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), with a broker or other nominee; provided, however, that a sale of such shares of Class B Common Stock pursuant to such plan shall constitute a
“Transfer” at the time of such sale;
(vii) any redemption, purchase or acquisition by the Corporation of a share of Class B Common Stock and any subsequent
reissuance by the Corporation of such share; or
(viii) in connection with a merger or consolidation of the Corporation with or into any other entity, or in the case of any other
transaction having an effect on stockholders substantially similar to that resulting from a merger or consolidation, that has been approved by the Board of
Directors, the entering into a support, voting, tender or similar agreement or arrangement (in each case, with or without the grant of a proxy) that has also
been approved by the Board of Directors.
A Transfer shall also be deemed to have occurred with respect to a share of Class B Common Stock beneficially held by (i) an entity that is a Permitted Entity,
Permitted Foundation or Permitted IRA, if there occurs any act or circumstance that causes such entity to no longer be a Permitted Entity (including on
account of operation of provisions commonly referred to as “common disaster,” “remote contingent disposition” or “ultimate contingent disposition” provisions
or similar provisions to the current benefit of beneficiaries designated therein, unless, for the avoidance of doubt, such beneficiaries are solely (1) the Qualified
Stockholder of such Permitted Entity, (2) one or more Family Members of the Qualified Stockholder of such Permitted Entity, (3) one or more Permitted
Foundations of the Qualified Stockholder of such Permitted Entity, and/or (4) any other Permitted Entity of the Qualified Stockholder of such Permitted Entity),
Permitted Foundation or Permitted IRA or (ii) an entity that is a Qualified Stockholder, if, in either case, there occurs a Transfer on a cumulative basis, from
and after the Effective Date, of a majority of the voting power of the voting securities or securities that otherwise entitle a party to elect a majority of the
members of the board of directors or governing body, of such entity or any direct or indirect Parent of such entity, other than a Transfer to parties
11
that are, as of the Effective Date, holders of voting securities of any such entity or Parent of such entity.
(s) “Voting Control” shall mean, with respect to a share of Class B Common Stock, the power (whether exclusive or shared) to vote or
direct the voting of such share by proxy, voting agreement or otherwise.
6. StatusofConvertedStock. In the event any shares of Class B Common Stock are converted into shares of Class A Common Stock pursuant
to this Article V, the shares of Class B Common Stock so converted shall be retired and shall not be reissued by the Corporation.
7. EffectofConversiononPaymentofDividends.Notwithstanding anything to the contrary in Sections 1, 2 or 3 of this Article V, if the date on
which any share of Class B Common Stock is converted into Class A Common Stock pursuant to the provisions of Sections 1, 2 or 3 of this Article V occurs
after the record date for the determination of the holders of Class B Common Stock entitled to receive any dividend or distribution to be paid on the shares of
Class B Common Stock, the holder of such shares of Class B Common Stock as of such record date will be entitled to receive such dividend or distribution on
such payment date; provided, that, notwithstanding any other provision of this Restated Certificate of Incorporation, to the extent that any such dividend or
distribution is payable in shares of Class B Common Stock, such shares of Class B Common Stock shall automatically be converted to Class A Common
Stock, on a one to one basis.
8. Reservation. The Corporation shall at all times reserve and keep available, out of its authorized and unissued shares of Class A Common
Stock, solely for the purpose of effecting conversions of shares of Class B Common Stock into Class A Common Stock, such number of duly authorized
shares of Class A Common Stock as shall from time to time be sufficient to effect the conversion of all then-outstanding shares of Class B Common Stock. If
at any time the number of authorized and unissued shares of Class A Common Stock shall not be sufficient to effect the conversion of all then-outstanding
shares of Class B Common Stock, the Corporation shall promptly take such corporate action as may be necessary to increase its authorized but unissued
shares of Class A Common Stock to such number of shares as shall be sufficient for such purpose, including, without limitation, obtaining the requisite
stockholder approval of any necessary amendment to this Restated Certificate of Incorporation. All shares of Class A Common Stock which are so issuable
shall, when issued, be duly and validly issued, fully paid and non-assessable shares. The Corporation shall take all such action as may be necessary to
ensure that all such shares of Class A Common Stock may be so issued without violation of any applicable law or regulation.
9. Determinations by the Board of Directors. In case of an ambiguity in the application of any provision set forth in this Article V or in the
meaning of any term or definition set forth in this Article V, the Board of Directors, or a committee thereof, shall have the power to determine, in its sole
discretion, the application of any such provision or any such term or definition with respect to any situation based on the facts believed in good faith by it. A
determination of the Board of Directors (or a committee thereof, as applicable) in accordance with the preceding sentence shall be conclusive and binding on
the stockholders of the Corporation. Such determination shall be evidenced in a writing adopted by the Board of Directors (or a committee thereof, as
applicable), and such writing shall be made available for
12
inspection by any holder of capital stock of the Corporation at the principal executive offices of the Corporation.
ARTICLEVI:AMENDMENTOFBYLAWS
The Board of Directors shall have the power to adopt, amend or repeal the Bylaws. Any adoption, amendment or repeal of the Bylaws by the Board of
Directors shall require the approval of a majority of the Whole Board; provided, however, that during the period commencing immediately following a
Staggered Board Start Date and ending upon the next Staggered Board End Date, the affirmative vote of all the directors then in office shall be required for
the Board to amend or adopt a provision inconsistent with Section 1.12.1(a) or Section 1.12.3 of Article I of the Bylaws. For purposes of this Restated
Certificate of Incorporation, the term “Whole Board” shall mean the total number of authorized directors whether or not there exist any vacancies in previously
authorized directorships. The stockholders shall also have power to adopt, amend or repeal the Bylaws; provided, however, that, notwithstanding any other
provision of this Restated Certificate of Incorporation or any provision of law that might otherwise permit a lesser or no vote, but in addition to any vote of the
holders of any class or series of stock of the Corporation required by applicable law or by this Restated Certificate of Incorporation, the affirmative vote of the
holders of at least two-thirds (2/3) of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote thereon,
voting together as a single class, shall be required for the stockholders to adopt, amend or repeal any provision of the Bylaws, provided, further, that, in the
case of any proposed adoption, amendment or repeal of any provisions of the Bylaws that is approved by at least two-thirds (2/3) of the Whole Board and
submitted to the stockholders for adoption thereby, then only the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding
shares of the capital stock of the Corporation entitled to vote thereon, voting together as a single class, shall be required to adopt, amend or repeal any such
provision of the Bylaws. Notwithstanding the foregoing, but in addition to any vote of the holders of any class or series of stock of the Corporation required by
applicable law or by this Restated Certificate of Incorporation, during the period commencing immediately following a Staggered Board End Date and ending
upon the next Staggered Board Start Date contemplated by clause (ii) of the definition thereof (if any), the stockholders shall have the power to adopt, amend
or repeal any provision of the Bylaws pursuant to the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of
the capital stock of the Corporation entitled to vote thereon, voting together as a single class.
ARTICLEVII:MATTERSRELATINGTOTHEBOARDOFDIRECTORS
1. DirectorPowers.Except as otherwise provided by the General Corporation Law or this Restated Certificate of Incorporation, the business and
affairs of the Corporation shall be managed by or under the direction of the Board of Directors.
2. Terms;Removal;NumberofDirectors;VacanciesandNewlyCreatedDirectorships.
2.1 Effective upon each Staggered Board Start Date, the Board of Directors shall be divided into three classes, designated as Class I, Class
II and Class III, respectively. The terms of office of the directors serving in the inaugural classes of Class I, Class II and Class III, respectively, shall expire at
the first, second and third annual meetings of stockholders,
13
respectively, held after such effectiveness, and their successors shall be elected for a term expiring at the third annual meeting following their election, subject
to the other provisions of this Article VII. In connection with any Staggered Board Start Date, the Board of Directors is authorized to assign directors already in
office to one of the three classes, with such assignment effective at such time as the division of the Board of Directors into classes becomes effective pursuant
to this paragraph.
2.2 Effective upon a Staggered Board End Date, the division of the directors into three classes shall terminate, provided that directors
elected to three-year terms before such termination shall serve the remainder of the terms to which they were elected. Directors elected at an annual meeting
of stockholders held after a Staggered Board End Date and before a subsequent Staggered Board Start Date shall be elected at such meeting for a term
expiring at the next annual meeting of stockholders following their election.
2.3 Except in the event of a removal with or without cause, as applicable, in no event shall the term of any director be shortened by the
occurrence of a Staggered Board Start Date or a Staggered Board End Date. For the avoidance of doubt, each of a Staggered Board Start Date and a
Staggered Board End Date may occur more than once.
2.4 “Staggered Board End Date” shall mean the close of business on the first date, after a Staggered Board Start Date, that the
Corporation certifies upon the direction of the Board of Directors acting in good faith that the Founder and his Permitted Entities, Permitted Foundations,
Permitted IRAs and Permitted Transferees hold directly or indirectly (in street name and as holders of record) a majority of the voting power of all of the then-
outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors.
2.5 “Staggered Board Start Date” shall mean each of (i) the effectiveness of the filing of the Restated Certificate of Incorporation first
inserting this sentence and (ii) following any Staggered Board End Date, the close of business on the twentieth (20th) business day after the Corporation
certifies upon the direction of the Board of Directors acting in good faith that the Founder and his Permitted Entities, Permitted Foundations, Permitted IRAs
and Permitted Transferees cease to hold directly or indirectly (in street name and as holders of record) a majority of the voting power of all of the then-
outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors.
2.6 Each director shall hold office until the annual meeting at which such director’s term expires and until such director’s successor is duly
elected and qualified, or until such director’s earlier death, resignation, disqualification or removal. Any director may resign at any time upon notice to the
Corporation given in writing or by any electronic transmission.
2.7 Directors may be removed only for cause and only by the affirmative vote of the holders of at least two-thirds (2/3) of the voting power of
all of the then-outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class;
provided that directors may be removed with or without cause by the affirmative vote of the holders of a majority of the voting power of all of the then-
outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting as a single class, during the period
commencing immediately after a Staggered Board End Date and ending upon the next Staggered Board Start Date (if any).
14
2.8 The total number of directors constituting the Whole Board shall be fixed from time to time exclusively by resolution adopted by a
majority of the Whole Board. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any director.
2.9 Any vacancy occurring in the Board of Directors for any cause, and any newly created directorship resulting from any increase in the
authorized number of directors, shall be filled only by the affirmative vote of a majority of the directors then in office, even if less than a quorum, or by a sole
remaining director, and shall not be filled by the stockholders. Any director elected in accordance with the preceding sentence shall hold office for a term
expiring at the annual meeting of stockholders at which the term of office of the class to which the director has been assigned expires and until such director’s
successor shall have been duly elected and qualified, or until such director’s earlier death, resignation, disqualification or removal. Notwithstanding the first
sentence of this Section 2.9 of this Article VII, during the period commencing immediately following a Staggered Board Start Date and ending upon the next
Staggered Board End Date, a vacancy occurring in the Board of Directors for any cause, and any newly created directorship resulting from any increase in the
authorized number of directors must be approved by the affirmative vote of all of the directors then in office and shall not be filled by the stockholders.
2.10 The foregoing provisions of this Section 2 of Article VII shall not apply to any directorship elected separately by one or more classes or
series of Common Stock or Preferred Stock hereinafter designated pursuant to Article IV, Section 2.1 unless the terms of such designation so provide.
2.11 In case of an ambiguity in the application of any provision set forth in this Section 2 of Article VII or in the meaning of any term or
definition set forth in this Section 2 of Article VII (including any such term used in any other provision of this Restated Certificate of Incorporation), the Board of
Directors, or a committee thereof, shall have the power, in its sole discretion, to determine the application of any such provision or any such term or definition
with respect to any situation based on the facts believed in good faith by it. A determination of the Board of Directors (or a committee thereof, as applicable) in
accordance with the preceding sentence shall be conclusive and binding on the stockholders of the Corporation. Such determination shall be evidenced in a
writing adopted by the Board of Directors (or a committee thereof, as applicable), and such writing shall be made available for inspection by any holder of
capital stock of the Corporation at the principal executive offices of the Corporation.
3. VotebyBallot.Election of directors need not be by written ballot unless the Bylaws shall so provide.
ARTICLEVIII:DIRECTORLIABILITY
1. LimitationofLiability.To the fullest extent permitted by law, no director of the Corporation shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director. Without limiting the effect of the preceding sentence, if the General Corporation
Law is hereafter amended to authorize the further elimination or limitation of the liability of a director, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the General Corporation Law, as so amended.
15
2. Change in Rights. Neither any amendment nor repeal of this Article VIII, nor the adoption of any provision of this Restated Certificate of
Incorporation inconsistent with this Article VIII, shall eliminate, reduce or otherwise adversely affect any limitation on the personal liability of a director of the
Corporation existing at the time of such amendment, repeal or adoption of such an inconsistent provision.
ARTICLEIX:MATTERSRELATINGTOSTOCKHOLDERS
1. NoActionbyWrittenConsentofStockholders.Subject to the rights of any series of Common Stock or Preferred Stock then outstanding, no
action shall be taken by the stockholders of the Corporation except at a duly called annual or special meeting of stockholders and no action shall be taken by
the stockholders of the Corporation by written consent in lieu of a meeting. Notwithstanding the foregoing, during the period commencing immediately after a
Staggered Board End Date and ending upon the next Staggered Board Start Date contemplated by clause (ii) of the definition thereof (if any), any action
required or permitted to be taken at any meeting of the stockholders of the Corporation, may be taken without a meeting if holders of a majority of the voting
power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote thereon, voting together as a single class, consent thereto in
writing or by electronic transmission.
2. Special Meeting of Stockholders. Special meetings of the stockholders of the Corporation may be called only by the Chairperson of the
Board, the Chief Executive Officer or the Board of Directors acting pursuant to a resolution adopted by a majority of the Whole Board, and may not be called
by the stockholders or any other person or persons.
3. AdvanceNoticeofStockholderNominationsandBusinessTransactedatSpecialMeetings.Advance notice of stockholder nominations
for the election of directors of the Corporation and of business to be brought by stockholders before any meeting of stockholders of the Corporation shall be
given in the manner provided in the Bylaws. Business transacted at special meetings of stockholders shall be limited to the purpose or purposes stated in the
notice of meeting.
ARTICLEX:SEVERABILITY
If any provision of this Restated Certificate of Incorporation shall be held to be invalid, illegal, or unenforceable, then such provision shall nonetheless
be enforced to the maximum extent possible consistent with such holding and the remaining provisions of this Restated Certificate of Incorporation (including
without limitation, all portions of any section of this Restated Certificate of Incorporation containing any such provision held to be invalid, illegal, or
unenforceable, which is not invalid, illegal, or unenforceable) shall remain in full force and effect.
ARTICLEXI:AMENDMENTOFRESTATEDCERTIFICATEOFINCORPORATION
1. General. The Corporation reserves the right to amend or repeal any provision contained in this Restated Certificate of Incorporation in the
manner prescribed by the laws of the State of Delaware and all rights conferred upon stockholders are granted subject to this reservation; provided, however,
that, notwithstanding any provision of this Restated Certificate of Incorporation (including any Certificate of Designation) or any provision of law that might
otherwise permit a lesser vote or no vote (but subject to Section 2 of Article IV hereof), but in addition to any vote of the holders of any class or series of the
stock of the Corporation required
16
by law or by this Restated Certificate of Incorporation (including any Certificate of Designation), and subject to Sections 1 and 2.1 of Article IV, the affirmative
vote of the holders of at least two-thirds (2/3) of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote
thereon, voting together as a single class, shall be required to amend or repeal, or adopt any provision inconsistent with, this Section 1 of this Article XI,
Sections 1.2 and 2 of Article IV, or Article V, Article VI, Article VII, Article VIII, Article IX, Article X or Article XII (the “Specified Provisions”); provided, further,
that if two-thirds (2/3) of the Whole Board has approved such amendment or repeal of, or any provision inconsistent with, the Specified Provisions, then only
the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote
thereon, voting together as a single class (in addition to any other vote of the holders of any class or series of stock of the Corporation required by law or by
this Restated Certificate of Incorporation, including any Certificate of Designation), shall be required to amend or repeal, or adopt any provision inconsistent
with, the Specified Provisions. Notwithstanding the foregoing, prior to the Automatic Conversion, and in addition to any other vote required pursuant to this
Article XI, the Corporation shall not amend or repeal, or adopt any provision inconsistent with, any provision of this Restated Certificate of Incorporation
relating to the voting, conversion or other rights, powers, preferences, privileges or restrictions of the Class B Common Stock, without the affirmative vote of
the holders of at least two-thirds (2/3) of the voting power of all of the then-outstanding shares of Class B Common Stock, voting separately as a single class.
2. Changestoor Inconsistent withSection 3 ofArticleIV.Notwithstanding any other provision of this Restated Certificate of Incorporation
(including any Certificate of Designation) or any provision of law that might otherwise permit a lesser vote or no vote, but in addition to any vote of the holders
of any class or series of the stock of the Corporation required by law or by this Restated Certificate of Incorporation (including any Certificate of Designation),
the affirmative vote of the holders of Class A Common Stock representing at least seventy-five percent (75%) of the voting power of all of the then-outstanding
shares of Class A Common Stock, voting separately as a single class, and the affirmative vote of the holders of Class B Common Stock representing at least
seventy-five percent (75%) of the voting power of all of the then-outstanding shares of Class B Common Stock, voting as a separate class, shall be required to
amend or repeal, or to adopt any provision inconsistent with, Section 3 of Article IV or this Section 2 of this Article XI.
ARTICLEXII:CHOICEOFFORUM;ExclusiveForum
Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of
Chancery does not have jurisdiction, the federal district court for the District of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive
forum for: (a) any derivative action or proceeding brought on behalf of the Corporation; (b) any action asserting a claim that is based upon a breach of a
fiduciary duty owed by, or other wrongdoing by, any current or former director, officer, stockholder, employee or agent of the Corporation to the Corporation or
the Corporation’s stockholders; (c) any action asserting a claim against the Corporation or any current or former director, officer, stockholder, employee or
agent of the Corporation arising pursuant to any provision of the General Corporation Law, this Restated Certificate of Incorporation or the Bylaws or as to
which the General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware; (d) any action to interpret, apply, enforce or
determine the validity of this Restated Certificate of Incorporation or the Bylaws; (e) any action
17
asserting a claim against the Corporation governed by the internal affairs doctrine; or (f) any action asserting an “internal corporate claim” as that term is
defined in Section 115 of the General Corporation Law. Unless the Corporation consents in writing to the selection of an alternative forum, the federal district
courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities
Act of 1933, as amended, or any successor thereto or, to the fullest extent permitted by law, under the Exchange Act, or any successor thereto. Any person or
entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Corporation shall be deemed to have notice of and to have
consented to the provisions of this Article XII. Failure to enforce the foregoing provisions of this Article XII would cause the Corporation irreparable harm, and
the Corporation shall be entitled to equitable relief, including injunctive relief and specific performance, to enforce the foregoing provisions.
18
Exhibit 3.4
SECOND AMENDED AND RESTATED BYLAWS
OF
COINBASE GLOBAL, INC.
ARTICLE I CORPORATE OFFICES 1
1.1 Offices 1
ARTICLE II MEETINGS OF STOCKHOLDERS 1
2.1 Place Of Meetings 1
2.2 Annual Meeting 1
2.3 Special Meeting 1
2.4 Notice Of Stockholders’ Meetings 2
2.5 Manner Of Giving Notice; Affidavit Of Notice 2
2.6 Quorum 2
2.7 Adjourned Meeting; Notice 2
2.8 Organization; Conduct of Business 3
2.9 Voting 3
2.10 Waiver Of Notice 3
2.11 Stockholder Action By Written Consent Without A Meeting 3
2.12 Record Date For Stockholder Notice; Voting; Giving Consents 4
2.13 Proxies 5
ARTICLE III DIRECTORS 5
3.1 Powers 5
3.2 Number Of Directors 6
3.3 Election, Qualification And Term Of Office Of Directors 6
3.4 Resignation And Vacancies 6
3.5 Place Of Meetings; Meetings By Telephone 7
3.6 Regular Meetings 7
3.7 Special Meetings; Notice 7
3.8 Quorum 8
3.9 Waiver Of Notice 8
3.10 Board Action By Written Consent Without A Meeting 8
3.11 Fees And Compensation Of Directors 9
3.12 Approval Of Loans To Officers 9
3.13 Removal Of Directors 9
3.14 Chairman Of The Board Of Directors 9
ARTICLE IV COMMITTEES 10
4.1 Committees Of Directors 10
4.2 Committee Minutes 10
4.3 Meetings And Action Of Committees 10
ARTICLE V OFFICERS 11
5.1 Officers 11
5.2 Appointment Of Officers 11
5.3 Subordinate Officers 11
5.4 Removal And Resignation Of Officers 11
5.5 Vacancies In Offices 11
5.6 Chief Executive Officer 12
5.7 President 12
5.8 Vice Presidents 12
5.9 Secretary 12
5.10 Chief Financial Officer 13
5.11 Treasurer 13
5.12 Representation Of Shares Of Other Corporations 14
5.13 Authority And Duties Of Officers 14
ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS 14
6.1 Indemnification Of Directors And Officers 14
6.2 Indemnification Of Others 14
6.3 Payment Of Expenses In Advance 15
6.4 Indemnity Not Exclusive 15
6.5 Insurance 15
6.6 Conflicts 15
ARTICLE VII RECORDS AND REPORTS 16
7.1 Maintenance And Inspection Of Records 16
7.2 Inspection By Directors 16
ARTICLE VIII GENERAL MATTERS 17
8.1 Checks 17
8.2 Execution Of Corporate Contracts And Instruments 17
8.3 Stock Certificates and Notices; Uncertificated Stock; Partly Paid Shares 17
8.4 Special Designation On Certificates and Notices of Uncertificated Stock 18
8.5 Lost Certificates 18
8.6 Construction; Definitions 18
8.7 Dividends 18
8.8 Fiscal Year 19
8.9 Transfer Restrictions 19
8.10 Transfer Of Stock 20
8.11 Stock Transfer Agreements 20
8.12 Stockholders of Record 20
8.13 Facsimile or Electronic Signature 20
ARTICLE IX AMENDMENTS 20
SECOND AMENDED AND RESTATED BYLAWS
OF
COINBASE GLOBAL, INC.
ARTICLE I
CORPORATE OFFICES
1.1 Offices
In addition to the corporation’s registered office set forth in the Certificate of Incorporation, the Board of Directors may at any time establish other
offices at any place or places where the corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 Place Of Meetings
Meetings of stockholders shall be held at any place, within or outside the state of Delaware, designated by the Board of Directors. In the absence of
any such designation, stockholders’ meetings shall be held at the registered office of the corporation.
2.2 Annual Meeting
The annual meeting of stockholders shall be held on such date, time and place, either within or without the state of Delaware, as may be designated
by resolution of the Board of Directors each year. At the meeting, directors shall be elected and any other proper business may be transacted.
2.3 Special Meeting
A special meeting of the stockholders may be called at any time by the Board of Directors, the chairman of the board, the chief executive officer, the
president or by one or more stockholders holding shares in the aggregate entitled to cast not less than 10% of the votes at that meeting.
If a special meeting is called by any person or persons other than the Board of Directors, the chairman of the board, the chief executive officer or the
president, the request shall be in writing, specifying the time of such meeting and the general nature of the business proposed to be transacted, and shall be
delivered personally or sent by registered mail or by email, fax, telegraphic or other facsimile or electronic transmission to the chairman of the board, the chief
executive officer, the president or the secretary of the corporation. No business may be transacted at such special meeting otherwise than specified in such notice.
The officer receiving the request shall cause notice to be promptly given to the stockholders entitled to vote, in accordance with the provisions of Sections 2.4 and
2.5 of this Article II, that a meeting will be held at the time requested by the person or persons calling the meeting, not less than 35 nor more than 60 days after the
receipt of the request. If the notice is not given within 20 days after the
receipt of the request, the person or persons requesting the meeting may give the notice. Nothing contained in this paragraph of this Section 2.3 shall be construed
as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the Board of Directors may be held.
2.4 Notice Of Stockholders’ Meetings
All notices of meetings with stockholders shall be in writing and shall be sent or otherwise given in accordance with Section 2.5 of these Second
Amended and Restated Bylaws not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting. The
notice shall specify the place (if any), date and hour of the meeting, and in the case of a special meeting, the purpose or purposes for which the meeting is called.
2.5 Manner Of Giving Notice; Affidavit Of Notice
Written notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. Without limiting the manner by which notice otherwise may be given effectively to
stockholders, any notice to stockholders may be given by electronic mail or other electronic transmission, in the manner provided in Section 232 of the Delaware
General Corporation Law. An affidavit of the secretary or an assistant secretary or of the transfer agent of the corporation that the notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated therein.
2.6 Quorum
The holders of a majority of the shares of stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation.
If, however, such quorum is not present or represented at any meeting of the stockholders, then either (a) the chairman of the meeting or (b) holders of a majority of
the shares of stock entitled to vote who are present, in person or by proxy, shall have power to adjourn the meeting to another place (if any), date or time.
2.7 Adjourned Meeting; Notice
When a meeting is adjourned to another place (if any), date or time, unless these Second Amended and Restated Bylaws otherwise require, notice
need not be given of the adjourned meeting if the time and place (if any), thereof and the means of remote communications (if any) by which stockholders and
proxyholders may be deemed to be present and vote at such adjourned meeting, are announced at the meeting at which the adjournment is taken. At the adjourned
meeting the corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than 30 days, or if after
the adjournment a new record date is fixed for the adjourned meeting, notice of the place (if any), date and time of the adjourned meeting and the means of remote
communications (if any) by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
2.8 Organization; Conduct of Business
Such person as the Board of Directors may have designated or, in the absence of such a person, the chief executive officer, or in his or her absence,
the president or, in his or her absence, such person as may be chosen by the holders of a majority of the shares entitled to vote who are present, in person or by
proxy, shall call to order any meeting of the stockholders and act as chairman of the meeting. In the absence of the secretary of the corporation, the secretary of the
meeting shall be such person as the chairman of the meeting appoints.
The chairman of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including the manner of voting
and the conduct of business. The date and time of opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be
announced at the meeting.
2.9 Voting
The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.12 of these
Second Amended and Restated Bylaws, subject to the provisions of Sections 217 and 218 of the General Corporation Law of Delaware (relating to voting rights of
fiduciaries, pledgors and joint owners of stock and to voting trusts and other voting agreements).
Except as may be otherwise provided in the certificate of incorporation, each stockholder shall be entitled to one vote for each share of capital stock
held by such stockholder. All elections shall be determined by a plurality of the votes cast, and except as otherwise required by law, all other matters shall be
determined by a majority of the votes cast affirmatively or negatively.
2.10 Waiver Of Notice
Whenever notice is required to be given under any provision of the General Corporation Law of Delaware or of the certificate of incorporation or
these Second Amended and Restated Bylaws, a written waiver thereof, signed by the person entitled to notice, or waiver by electronic mail or other electronic
transmission by such person, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the stockholders need be specified in any written waiver of notice, or any waiver of notice by electronic transmission, unless so required by the
certificate of incorporation or these Second Amended and Restated Bylaws.
2.11 Stockholder Action By Written Consent Without A Meeting
Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the
corporation, or any action that may be taken at any annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice, and without a vote if a consent in writing, setting forth the action so taken, is (a) signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were
present and voted, and (b) delivered to the corporation in accordance with Section 228(a) of the Delaware General Corporation Law.
Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the
corporate action referred to therein unless, within 60 days of the date the earliest dated consent is delivered to the corporation, a written consent or consents signed
by a sufficient number of holders to take action are delivered to the corporation in the manner prescribed in this Section. A telegram, cablegram, electronic mail or
other electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder, or by a person or persons authorized to act for a
stockholder or proxyholder, shall be deemed to be written, signed and dated for purposes of this Section to the extent permitted by law. Any such consent shall be
delivered in accordance with Section 228(d)(1) of the Delaware General Corporation Law.
Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all
purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire
original writing.
Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders
who have not consented in writing (including by electronic mail or other electronic transmission as permitted by law). If the action which is consented to is such as
would have required the filing of a certificate under any section of the General Corporation Law of Delaware if such action had been voted on by stockholders at a
meeting thereof, then the certificate filed under such section shall state, in lieu of any statement required by such section concerning any vote of stockholders, that
written notice and written consent have been given as provided in Section 228 of the General Corporation Law of Delaware.
2.12 Record Date For Stockholder Notice; Voting; Giving Consents
In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the
Board of Directors may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days
prior to any other action.
If the Board of Directors does not so fix a record date:
(a) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is
held.
(b) The record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the
Board of Directors is necessary, shall be the day on which the first written consent (including consent by electronic mail or other electronic transmission as
permitted by law) is delivered to the corporation.
(c) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting,
if such adjournment is for 30 days or less; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
2.13 Proxies
Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for such stockholder by an instrument in writing or by an electronic transmission permitted by law filed with the
secretary of the corporation, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A proxy
shall be deemed signed if the stockholder’s name is placed on the proxy (whether by manual signature, typewriting, facsimile, electronic or telegraphic
transmission or otherwise) by the stockholder or the stockholder’s attorney-in-fact. The revocability of a proxy that states on its face that it is irrevocable shall be
governed by the provisions of Section 212(e) of the General Corporation Law of Delaware.
ARTICLE III
DIRECTORS
3.1 Powers
Subject to the provisions of the General Corporation Law of Delaware and any limitations in the certificate of incorporation or these Second
Amended and Restated Bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the
corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board of Directors.
3.2 Number Of Directors
Upon the adoption of these Second Amended and Restated Bylaws, the number of directors constituting the entire Board of Directors shall be six
(6). Thereafter, this number may be changed by a resolution of the Board of Directors or of the stockholders, subject to Section 3.4 of these Second Amended and
Restated Bylaws. No reduction of the authorized number of directors shall have the effect of removing any director before such director’s term of office expires.
3.3 Election, Qualification And Term Of Office Of Directors
Except as provided in Section 3.4 of these Second Amended and Restated Bylaws, and unless otherwise provided in the certificate of incorporation,
directors shall be elected at each annual meeting of stockholders to hold office until the next annual meeting. Directors need not be stockholders unless so required
by the certificate of incorporation or these Second Amended and Restated Bylaws, wherein other qualifications for directors may be prescribed. Each director,
including a director elected to fill a vacancy, shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal.
Unless otherwise specified in the certificate of incorporation, elections of directors need not be by written ballot.
3.4 Resignation And Vacancies
Any director may resign at any time upon written notice to the attention of the Secretary of the corporation. Notwithstanding the provisions of
Section 223(a)(1) and 223(a)(2) of the Delaware General Corporation Law, any vacancy, including newly created directorships resulting from any increase in the
authorized number of directors or amendment of the certificate of incorporation, and vacancies created by removal or resignation of a director, may be filled by a
majority of the directors then in office (including any directors that have tendered a resignation effective at a future date), though less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless
sooner displaced; provided, however, that where such vacancy occurs among the directors elected by the holders of a class or series of stock, the holders of shares
of such class or series may override the Board of Directors’ action to fill such vacancy by (i) voting for their own designee to fill such vacancy at a meeting of the
Corporation’s stockholders or (ii) written consent, if the consenting stockholders hold a sufficient number of shares to elect their designee at a meeting of the
stockholders.
If at any time, by reason of death or resignation or other cause, the corporation should have no directors in office, then any officer or any stockholder
or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may
call a special meeting of stockholders in accordance with the provisions of the certificate of incorporation or these Second Amended and Restated Bylaws, or may
apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole board
(as constituted immediately prior to any such increase), then the Court of Chancery may, upon application of any stockholder or stockholders holding at least 10%
of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies
or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of
Section 211 of the General Corporation Law of Delaware as far as applicable.
3.5 Place Of Meetings; Meetings By Telephone
The Board of Directors of the corporation may hold meetings, both regular and special, either within or outside the state of Delaware.
Unless otherwise restricted by the certificate of incorporation or these Second Amended and Restated Bylaws, members of the Board of Directors,
or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference
telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting
shall constitute presence in person at the meeting.
3.6 Regular Meetings
Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by
the board.
3.7 Special Meetings; Notice
Special meetings of the Board of Directors for any purpose or purposes may be called at any time by the chairman of the board, the chief executive
officer, the president, the secretary, one or more directors who are entitled to cast at least two (2) votes at meetings of the Board of Directors, or any two directors.
Notice of the time and place of special meetings shall be delivered personally or by telephone to each director or sent by first-class mail, facsimile,
electronic transmission, or telegram, charges prepaid, addressed to each director at that director’s address as it is shown on the records of the corporation. If the
notice is mailed, it shall be deposited in the United States mail at least 4 days before the time of the holding of the meeting. If the notice is delivered personally or
by facsimile, electronic transmission, telephone or telegram, it shall be delivered at least 24 hours before the time of the holding of the meeting. Any oral notice
given personally or by telephone may be communicated either to the director or to a person at the office of the director who the person giving the notice has reason
to believe will promptly communicate it to the director. The notice need not specify the purpose of the meeting. The notice need not specify the place of the
meeting, if the meeting is to be held at the principal executive office of the corporation. Unless otherwise indicated in the notice thereof, any and all business may
be transacted at a special meeting.
3.8 Quorum
At all meetings of the Board of Directors, a majority of the total number of directors then in office shall constitute a quorum for the transaction of
business; provided, however, that a quorum shall not be less than the presence of directors who (i) constitute one third (1/3) of the total authorized number of
directors and (ii) are entitled to cast greater than one half (1/2) of the total number of votes entitled to be cast by directors then serving on the Board of Directors
(without vacancies or unfilled directorships). The act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically provided by the General Corporation Law of Delaware or by the Certificate of Incorporation or these Second
Amended and Restated Bylaws. All references to a majority or other proportion of the directors herein shall refer to a majority or other proportion of the votes of
the directors, taking into account any special, or multiple voting privileges of such directors, in each case as may be provided in the Company’s then-effective
Certificate of Incorporation. If a quorum is not present at any meeting of the Board of Directors, then the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a quorum is present.
A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is
approved by at least a majority of the required quorum for that meeting.
3.9 Waiver Of Notice
Whenever notice is required to be given under any provision of the General Corporation Law of Delaware or of the certificate of incorporation or
these Second Amended and Restated Bylaws, a written waiver thereof, signed by the person entitled to notice, or waiver by electronic mail or other electronic
transmission by such person, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the directors, or members of a committee of directors, need be specified in any written waiver of notice unless so required by the certificate of
incorporation or these Second Amended and Restated Bylaws.
3.10 Board Action By Written Consent Without A Meeting
Unless otherwise restricted by the certificate of incorporation or these Second Amended and Restated Bylaws, any action required or permitted to be
taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the board or committee, as the case
may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of
proceedings of the board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes
are maintained in electronic form.
Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all
purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire
original writing.
3.11 Fees And Compensation Of Directors
Unless otherwise restricted by the certificate of incorporation or these Second Amended and Restated Bylaws, the Board of Directors shall have the
authority to fix the compensation of directors. No such compensation shall preclude any director from serving the corporation in any other capacity and receiving
compensation therefor.
3.12 Approval Of Loans To Officers
The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its
subsidiary, including any officer or employee who is a director of the corporation or its subsidiary, whenever, in the judgment of the directors, such loan, guaranty
or assistance may reasonably be expected to benefit the corporation. The loan, guaranty or other assistance may be with or without interest and may be unsecured,
or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in this
section shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute.
3.13 Removal Of Directors
Unless otherwise restricted by statute, by the certificate of incorporation or by these Second Amended and Restated Bylaws, any director or the
entire Board of Directors may be removed, with or without cause, by, and only by, the affirmative vote of the holders of the shares of the class or series of stock
entitled to elect such director or directors, given either at a special meeting of such stockholders duly called for that purpose or pursuant to a written consent of
stockholders, and any vacancy thereby created may be filled by the holders of that class or series of stock represented at the meeting or pursuant to written consent;
provided, however, that if the stockholders of the corporation are entitled to cumulative voting, if less than the entire Board of Directors is to be removed, no
director may be removed without cause if the votes cast against his removal would be sufficient to elect him if then cumulatively voted at an election of the entire
Board of Directors.
No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director’s term of
office.
3.14 Chairman Of The Board Of Directors
The corporation may also have, at the discretion of the Board of Directors, a chairman of the Board of Directors who shall not be considered an
officer of the corporation.
ARTICLE IV
COMMITTEES
4.1 Committees Of Directors
The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The
Board may designate 1 or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting,
whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, or in these Second
Amended and Restated Bylaws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of
the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or
authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the
General Corporate Law of Delaware to be submitted to stockholders for approval or (ii) adopting, amending or repealing any Bylaw of the corporation.
4.2 Committee Minutes
Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required.
4.3 Meetings And Action Of Committees
Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of Section 3.5 (place of meetings
and meetings by telephone), Section 3.6 (regular meetings), Section 3.7 (special meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of notice), and
Section 3.10 (action without a meeting) of these Second Amended and Restated Bylaws, with such changes in the context of such provisions as are necessary to
substitute the committee and its members for the Board of Directors and its members; provided, however, that the time of regular meetings of committees may be
determined either by resolution of the Board of Directors or by resolution of the committee, that special meetings of committees may also be called by resolution of
the Board of Directors and that notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings
of the committee. The Board of Directors may adopt rules for the government of any committee not inconsistent with the provisions of these Second Amended and
Restated Bylaws.
ARTICLE V
OFFICERS
5.1 Officers
The officers of the corporation shall be a president and a secretary. The corporation may also have, at the discretion of the Board of Directors, a
chief executive officer, a chief financial officer, a treasurer, one or more vice presidents, one or more assistant secretaries, one or more assistant treasurers, and any
such other officers as may be appointed in accordance with the provisions of Section 5.3 of these Second Amended and Restated Bylaws. Any number of offices
may be held by the same person.
5.2 Appointment Of Officers
The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Sections 5.3 or 5.5 of these Second
Amended and Restated Bylaws, shall be appointed by the Board of Directors, subject to the rights (if any) of an officer under any contract of employment.
5.3 Subordinate Officers
The Board of Directors may appoint, or empower the chief executive officer or the president to appoint, such other officers and agents as the
business of the corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these
Second Amended and Restated Bylaws or as the Board of Directors may from time to time determine.
5.4 Removal And Resignation Of Officers
Subject to the rights (if any) of an officer under any contract of employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the Board of Directors at any regular or special meeting of the board or, except in the case of an officer chosen by the Board of
Directors, by any officer upon whom the power of removal is conferred by the Board of Directors.
Any officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that
notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it
effective. Any resignation is without prejudice to the rights (if any) of the corporation under any contract to which the officer is a party.
5.5 Vacancies In Offices
Any vacancy occurring in any office of the corporation shall be filled by the Board of Directors.
5.6 Chief Executive Officer
Subject to such supervisory powers (if any) as may be given by the Board of Directors to the chairman of the board (if any), the chief executive
officer of the corporation (if such an officer is appointed) shall, subject to the control of the Board of Directors, have general supervision, direction, and control of
the business and the officers of the corporation and shall have the general powers and duties of management usually vested in the office of chief executive officer
of a corporation and shall have such other powers and duties as may be prescribed by the Board of Directors or these Second Amended and Restated Bylaws.
The person serving as chief executive officer shall also be the acting president of the corporation whenever no other person is then serving in such
capacity.
5.7 President
Subject to such supervisory powers (if any) as may be given by the Board of Directors to the chairman of the board (if any) or the chief executive
officer, the president shall have general supervision, direction, and control of the business and other officers of the corporation. He or she shall have the general
powers and duties of management usually vested in the office of president of a corporation and such other powers and duties as may be prescribed by the Board of
Directors or these Second Amended and Restated Bylaws.
The person serving as president shall also be the acting chief executive officer, secretary or treasurer of the corporation, as applicable, whenever no
other person is then serving in such capacity.
5.8 Vice Presidents
In the absence or disability of the chief executive officer and president, the vice presidents (if any) in order of their rank as fixed by the Board of
Directors or, if not ranked, a vice president designated by the Board of Directors, shall perform all the duties of the president and when so acting shall have all the
powers of, and be subject to all the restrictions upon, the president. The vice presidents shall have such other powers and perform such other duties as from time to
time may be prescribed for them respectively by the Board of Directors, these Second Amended and Restated Bylaws, the president or the chairman of the board.
5.9 Secretary
The secretary shall keep or cause to be kept, at the principal executive office of the corporation or such other place as the Board of Directors may
direct, a book of minutes of all meetings and actions of directors, committees of directors, and stockholders. The minutes shall show the time and place of each
meeting, the names of those present at directors’ meetings or committee meetings, the number of shares present or represented at stockholders’ meetings, and the
proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal executive office of the corporation or at the office of the corporation’s transfer agent or
registrar, as determined by resolution of the Board of Directors, a share register, or a duplicate share register, showing the
names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates (if any) evidencing such shares,
and the number and date of cancellation of every certificate (if any) surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the Board of Directors required to be given by law or
by these Second Amended and Restated Bylaws. He or she shall have such other powers and perform such other duties as may be prescribed by the Board of
Directors or by these Second Amended and Restated Bylaws.
5.10 Chief Financial Officer
The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings
and shares. The books of account shall at all reasonable times be open to inspection by any member of the Board of Directors.
The chief financial officer shall render to the chief executive officer, the president, or the Board of Directors, upon request, an account of all his or
her transactions as chief financial officer and of the financial condition of the corporation. He or she shall have the general powers and duties usually vested in the
office of chief financial officer of a corporation and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or
these Second Amended and Restated Bylaws.
The person serving as the chief financial officer shall also be the acting treasurer of the corporation whenever no other person is then serving in such
capacity. Subject to such supervisory powers (if any) as may be given by the Board of Directors to another officer of the corporation, the chief financial officer
shall supervise and direct the responsibilities of the treasurer whenever someone other than the chief financial officer is serving as treasurer of the corporation.
5.11 Treasurer
The treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records with respect to all bank accounts,
deposit accounts, cash management accounts and other investment accounts of the corporation. The books of account shall at all reasonable times be open to
inspection by any member of the Board of Directors.
The treasurer shall deposit, or cause to be deposited, all moneys and other valuables in the name and to the credit of the corporation with such
depositories as may be designated by the Board of Directors. He or she shall disburse the funds of the corporation as may be ordered by the Board of Directors and
shall render to the chief financial officer, the chief executive officer, the president or the Board of Directors, upon request, an account of all his or her transactions
as treasurer. He or she shall have the general powers and duties usually vested in the office of treasurer of a corporation and shall have such other powers and
perform such other duties as may be prescribed by the Board of Directors or these Second Amended and Restated Bylaws.
The person serving as the treasurer shall also be the acting chief financial officer of the corporation whenever no other person is then serving in such
capacity.
5.12 Representation Of Shares Of Other Corporations
The chairman of the board, the chief executive officer, the president, any vice president, the chief financial officer, the secretary or assistant
secretary of this corporation, or any other person authorized by the Board of Directors or the chief executive officer or the president or a vice president, is
authorized to vote, represent, and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in
the name of this corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or
power of attorney duly executed by the person having such authority.
5.13 Authority And Duties Of Officers
In addition to the foregoing authority and duties, all officers of the corporation shall respectively have such authority and perform such duties in the
management of the business of the corporation as may be designated from time to time by the Board of Directors or the stockholders.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS
6.1 Indemnification Of Directors And Officers
The corporation shall, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware, indemnify each of its
directors and officers against expenses (including attorneys’ fees), judgments, fines, settlements and other amounts actually and reasonably incurred in connection
with any proceeding, arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Section 6.1, a “director” or “officer”
of the corporation includes any person (a) who is or was a director or officer of the corporation, (b) who is or was serving at the request of the corporation as a
director or officer of another corporation, partnership, joint venture, trust or other enterprise, or (c) who was a director or officer of a corporation which was a
predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.
6.2 Indemnification Of Others
The corporation shall have the power, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware, to
indemnify each of its employees and agents (other than directors and officers) against expenses (including attorneys’ fees), judgments, fines, settlements and other
amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the corporation.
For purposes of this Section 6.2, an “employee” or “agent” of the corporation (other than a director or officer) includes any person (a) who is or was an employee
or agent of the
corporation, (b) who is or was serving at the request of the corporation as an employee or agent of another corporation, partnership, joint venture, trust or other
enterprise, or (c) who was an employee or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of
such predecessor corporation.
6.3 Payment Of Expenses In Advance
Expenses incurred in defending any action or proceeding for which indemnification is required pursuant to Section 6.1 or for which indemnification
is permitted pursuant to Section 6.2 following authorization thereof by the Board of Directors shall be paid by the corporation in advance of the final disposition of
such action or proceeding upon receipt of an undertaking by or on behalf of the indemnified party to repay such amount if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal that the indemnified party is not entitled to be indemnified as authorized in this Article VI.
6.4 Indemnity Not Exclusive
The indemnification provided by this Article VI shall not be deemed exclusive of any other rights to which those seeking indemnification may be
entitled under any Bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another
capacity while holding such office, to the extent that such additional rights to indemnification are authorized in the certificate of incorporation
6.5 Insurance
The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether
or not the corporation would have the power to indemnify him or her against such liability under the provisions of the General Corporation Law of Delaware.
6.6 Conflicts
No indemnification or advance shall be made under this Article VI, except where such indemnification or advance is mandated by law or the order,
judgment or decree of any court of competent jurisdiction, in any circumstance where it appears:
(a) That it would be inconsistent with a provision of the certificate of incorporation, these Second Amended and Restated Bylaws, a resolution
of the stockholders or an agreement in effect at the time of the accrual of the alleged cause of the action asserted in the proceeding in which the expenses were
incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or
(b) That it would be inconsistent with any condition expressly imposed by a court in approving a settlement.
ARTICLE VII
RECORDS AND REPORTS
7.1 Maintenance And Inspection Of Records
The corporation shall, either at its principal executive offices or at such place or places as designated by the Board of Directors, keep a record of its
stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these Second Amended and Restated Bylaws
as amended to date, accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the corporation’s stock ledger, a list of its stockholders, and its other books and records and to
make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person’s interest as a stockholder. In every instance where an
attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing
that authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office
in Delaware or at its principal place of business.
A complete list of stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order for each class of stock and showing
the address of each such stockholder and the number of shares registered in each such stockholder’s name, shall be open to the examination of any such stockholder
for a period of at least 10 days prior to the meeting in the manner provided by law. The stock list shall also be open to the examination of any stockholder during
the whole time of the meeting as provided by law. This list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the
number of shares held by each of them.
7.2 Inspection By Directors
Any director shall have the right to examine the corporation’s stock ledger, a list of its stockholders, and its other books and records for a purpose
reasonably related to his or her position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is
entitled to the inspection sought. The Court may summarily order the corporation to permit the director to inspect any and all books and records, the stock ledger,
and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection,
or award such other and further relief as the Court may deem just and proper.
ARTICLE VIII
GENERAL MATTERS
8.1 Checks
From time to time, the Board of Directors shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders
for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.2 Execution Of Corporate Contracts And Instruments
The Board of Directors, except as otherwise provided in these Second Amended and Restated Bylaws, may authorize any officer or officers, or
agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation; such authority may be general or confined to
specific instances. Unless so authorized or ratified by the Board of Directors or within the agency power of an officer, no officer, agent or employee shall have any
power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.
8.3 Stock Certificates and Notices; Uncertificated Stock; Partly Paid Shares
The shares of the corporation may be certificated or uncertificated, as provided under Delaware law, and shall be entered in the books of the
corporation and recorded as they are issued. Any or all of the signatures on any certificate may be a facsimile or electronic signature. In case any officer, transfer
agent or registrar who has signed or whose facsimile or electronic signature has been placed upon a certificate has ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he or she were such officer, transfer agent or registrar at the
date of issue.
Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the record owner thereof a written notice
that shall set forth the name of the corporation, that the corporation is organized under the laws of Delaware, the name of the stockholder, the number and class
(and the designation of the series, if any) of the shares, and any restrictions on the transfer or registration of such shares of stock imposed by the corporation’s
certificate of incorporation, these Second Amended and Restated Bylaws, any agreement among stockholders or any agreement between stockholders and the
corporation.
The corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate (if any) issued to represent any such partly paid shares, or upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the
declaration of any dividend on fully paid shares, the corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the
percentage of the consideration actually paid thereon.
8.4 Special Designation On Certificates and Notices of Issuance
If the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or
series of stock or the notice of issuance to the record owner of uncertificated stock; provided, however, that, except as otherwise provided in Section 202 of the
General Corporation Law of Delaware, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock or the notice of issuance to the record owner of uncertificated stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
8.5 Lost Certificates
Except as provided in this Section 8.5, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and cancelled at the same time. The corporation may issue a new certificate of stock or notice of uncertificated stock in the place of
any certificate previously issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed
certificate, or the owner’s legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of
the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.
8.6 Construction; Definitions
Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these Second Amended and Restated Bylaws. Without limiting the generality of this provision, the singular number includes the plural,
the plural number includes the singular, and the term “person” includes both a corporation and a natural person.
8.7 Dividends
The directors of the corporation, subject to any restrictions contained in (a) the General Corporation Law of Delaware or (b) the certificate of
incorporation, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property, or in shares of the corporation’s
capital stock.
The directors of the corporation may set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the
corporation, and meeting contingencies.
8.8 Fiscal Year
The fiscal year of the corporation shall be fixed by resolution of the Board of Directors and may be changed by the Board of Directors.
8.9 Transfer Restrictions
Notwithstanding anything to the contrary, except as expressly permitted in this Section 8.9, a stockholder shall not Transfer (as such term is defined
below) any shares of the corporation’s stock (or any rights of or interests in such shares) to any person unless such Transfer is approved by the Board of Directors
prior to such Transfer, which approval may be granted or withheld in the Board of Directors’ sole and absolute discretion. “Transfer” shall mean, with respect to
any security, the direct or indirect assignment, sale, transfer, tender, pledge, hypothecation, or the grant, creation or suffrage of a lien or encumbrance in or upon, or
the gift, placement in trust, or the Constructive Sale (as such term is defined below) or other disposition of such security (including transfer by testamentary or
intestate succession, merger or otherwise by operation of law) or any right, title or interest therein (including, but not limited to, any right or power to vote to which
the holder thereof may be entitled, whether such right or power is granted by proxy or otherwise), or the record or beneficial ownership thereof, the offer to make
such a sale, transfer, Constructive Sale or other disposition, and each agreement, arrangement or understanding, whether or not in writing, to effect any of the
foregoing. “Constructive Sale” shall mean, with respect to any security, a short sale with respect to such security, entering into or acquiring an offsetting derivative
contract with respect to such security, entering into or acquiring a futures or forward contract to deliver such security, or entering into any other hedging or other
derivative transaction that has the effect of materially changing the economic benefits and risks of ownership. Any purported Transfer of any shares of the
corporation’s stock effected in violation of this Section 8.9 shall be null and void and shall have no force or effect and the corporation shall not register any such
purported Transfer.
Any stockholder seeking the approval of the Board of Directors of a Transfer of some or all of its shares shall give written notice thereof to the
Secretary of the corporation that shall include: (a) the name of the stockholder; (b) the proposed transferee; (c) the number of shares of the Transfer of which
approval is thereby requested; and (d) the purchase price (if any) of the shares proposed for Transfer. The corporation may require the stockholder to supplement its
notice with such additional information as the corporation may request.
Certificates representing, and in the case of uncertificated securities, notices of issuance with respect to, shares of stock of the corporation shall have
impressed on, printed on, written on or otherwise affixed to them the following legend:
(a) THE TRANSFER OF SECURITIES REFERENCED HEREIN IS SUBJECT TO RESTRICTIONS REQUIRING APPROVAL OF THE COMPANY PURSUANT TO AND IN
ACCORDANCE WITH THE COMPANY’S BYLAWS, COPIES OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF
BUSINESS. THE COMPANY SHALL NOT REGISTER OR OTHERWISE RECOGNIZE OR GIVE EFFECT TO ANY PURPORTED TRANSFER OF SHARES OF STOCK THAT DOES NOT
COMPLY WITH THE COMPANY’S BYLAWS.
The corporation shall take all such actions as are practicable to cause the certificates representing, and notices of issuance with respect to, shares that
are subject to the restrictions on transfer set forth in this Section to contain the foregoing legend.
The foregoing transfer restrictions set forth in this Section 8.9 shall not apply to any sale of shares of the corporation’s Founders Preferred Stock to
the extent such sale is made in accordance with the provisions set forth in the certificate of incorporation in the manner necessary to cause such shares to convert
into shares of the Subsequent Preferred Stock (as defined in the certificate of incorporation).
8.10 Transfer Of Stock
Upon receipt by the corporation or the transfer agent of the corporation of proper transfer instructions from the record holder of uncertificated shares
or upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate or, in the case of uncertificated securities, a notice of
issuance of shares, to the person entitled thereto, cancel the old certificate (if any) and record the transaction in its books.
8.11 Stock Transfer Agreements
The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of
the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by
the General Corporation Law of Delaware.
8.12 Stockholders of Record
The corporation shall be entitled to recognize the exclusive right of a person recorded on its books as the owner of shares to receive dividends and to
vote as such owner, shall be entitled to hold liable for calls and assessments the person recorded on its books as the owner of shares, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of Delaware.
8.13 Facsimile or Electronic Signature
In addition to the provisions for use of facsimile or electronic signatures elsewhere specifically authorized in these Second Amended and Restated
Bylaws, facsimile or electronic signatures of any stockholder, director or officer of the corporation may be used whenever and as authorized by the Board of
Directors or a committee thereof.
ARTICLE IX
AMENDMENTS
The Second Amended and Restated Bylaws of the corporation may be adopted, amended or repealed by the stockholders entitled to vote; provided,
however, that the corporation
may, in its certificate of incorporation, confer the power to adopt, amend or repeal Second Amended and Restated Bylaws upon the directors. The fact that such
power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal Second Amended and
Restated Bylaws.
CERTIFICATE OF ADOPTION OF
SECOND AMENDED AND RESTATED BYLAWS OF
COINBASE GLOBAL, INC.
The undersigned hereby certifies that the undersigned is the duly elected, qualified, and acting Secretary of Coinbase Global, Inc., a Delaware corporation, and that
the foregoing Second Amended and Restated Bylaws were adopted as the Bylaws of the corporation by the Board of Directors of the Company on February 12,
2016, and by the stockholders of the Company on February 24, 2016.
Executed on February 24, 2016
/s/ Brian Armstrong
Brian Armstrong, Secretary
Exhibit 3.5
COINBASEGLOBAL,INC.
(a Delaware corporation)
RESTATEDBYLAWS
As Adopted [l], 2021 and
As Effective [●], 2021
COINBASEGLOBAL,INC.
(a Delaware corporation)
RESTATEDBYLAWS
TableofContents
Page
ARTICLE I. STOCKHOLDERS 1
Section 1.1: Annual Meetings 1
Section 1.2: Special Meetings 1
Section 1.3: Notice of Meetings 1
Section 1.4: Adjournments 1
Section 1.5: Quorum 2
Section 1.6: Organization 2
Section 1.7: Voting; Proxies 2
Section 1.8: Fixing Date for Determination of Stockholders of Record 3
Section 1.9: List of Stockholders Entitled to Vote 3
Section 1.10: Inspectors of Elections 4
Section 1.11: Conduct of Meetings 5
Section 1.12: Notice of Stockholder Business; Nominations 5
Section 1.13: Delivery to the Corporation 14
ARTICLE II. BOARD OF DIRECTORS 14
Section 2.1: Number; Qualifications 14
Section 2.2: Election; Resignation; Removal; Vacancies 14
Section 2.3: Regular Meetings 14
Section 2.4: Special Meetings 14
Section 2.5: Remote Meetings Permitted 15
Section 2.6: Quorum; Vote Required for Action 15
Section 2.7: Organization 15
Section 2.8: Unanimous Action by Directors in Lieu of a Meeting 15
Section 2.9: Powers 15
Section 2.10: Compensation of Directors 15
Section 2.11: Confidentiality 15
Section 2.12: Emergency Bylaws 15
Section 2.13: Chairperson of the Board 16
Section 2.14: Lead Independent Director 16
ARTICLE III. COMMITTEES 16
Section 3.1: Committees 16
i
Section 3.2: Committee Rules 16
ARTICLE IV. OFFICERS 16
Section 4.1: Generally 17
Section 4.2: Chief Executive Officer 17
Section 4.3: President 17
Section 4.4: Chief Operating Officer 18
Section 4.5: Chief Financial Officer 18
Section 4.6: Treasurer 18
Section 4.7: Vice President 18
Section 4.8: Secretary 18
Section 4.9: Delegation of Authority 18
Section 4.10: Removal 18
ARTICLE V. STOCK 18
Section 5.1: Certificates; Uncertificated Shares 18
Section 5.2: Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates or Uncertificated Shares 19
Section 5.3: Other Regulations 19
ARTICLE VI. INDEMNIFICATION 19
Section 6.1: Indemnification of Officers and Directors 19
Section 6.2: Advance of Expenses 19
Section 6.3: Non-Exclusivity of Rights 19
Section 6.4: Indemnification Contracts 19
Section 6.5: Right of Indemnitee to Bring Suit 19
Section 6.6: Successful Defense 21
Section 6.7: Nature of Rights 21
Section 6.8: Insurance 21
ARTICLE VII. NOTICES 21
Section 7.1: Notice 22
Section 7.2: Waiver of Notice 22
ARTICLE VIII. INTERESTED DIRECTORS 22
Section 8.1: Interested Directors 22
Section 8.2: Quorum 23
ARTICLE IX. MISCELLANEOUS 23
Section 9.1: Fiscal Year 23
Section 9.2: Seal 23
Section 9.3: Form of Records 23
ii
Section 9.4: Reliance Upon Books and Records 23
Section 9.5: Certificate of Incorporation Governs 23
Section 9.6: Severability 23
Section 9.7: Time Periods 23
ARTICLE X. AMENDMENT 23
iii
COINBASEGLOBAL,INC.
(a Delaware corporation)
RESTATEDBYLAWS
ARTICLEI. STOCKHOLDERS
Section1.1: AnnualMeetings. If required by applicable law, an annual meeting of stockholders shall be held for the election of directors at such
date and time as the Board of Directors (the “Board”) of Coinbase Global, Inc. (the “Corporation”) shall each year fix. The meeting may be held either at a
place, within or without the State of Delaware as permitted by the Delaware General Corporation Law (the “DGCL”), or by means of remote communication as
the Board in its sole discretion may determine. Any proper business may be transacted at the annual meeting.
Section1.2: SpecialMeetings. Special meetings of stockholders for any purpose or purposes shall be called in the manner set forth in the Restated
Certificate of Incorporation of the Corporation (as the same may be amended and/or restated from time to time, the “Certificate of Incorporation”). The
special meeting may be held either at a place, within or without the State of Delaware, or by means of remote communication as the Board in its sole
discretion may determine. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in
the notice of the meeting.
Section1.3: NoticeofMeetings. Notice of all meetings of stockholders shall be given in writing or by electronic transmission in the manner provided
by applicable law (including, without limitation, as set forth in Section 7.1.1 of these Bylaws) stating the date, time and place, if any, of the meeting, the means
of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and the record
date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date for determining the stockholders entitled to
notice of the meeting). In the case of a special meeting, such notice shall also set forth the purpose or purposes for which the meeting is called. Unless
otherwise required by applicable law or the Certificate of Incorporation, notice of any meeting of stockholders shall be given not less than ten (10), nor more
than sixty (60), days before the date of the meeting to each stockholder of record entitled to vote at such meeting as of the record date for determining the
stockholders entitled to notice of the meeting.
Section 1.4: Adjournments. Notwithstanding Section 1.5 of these Bylaws, the chairperson of the meeting shall have the power to adjourn the
meeting to another time, date and place (if any) regardless of whether a quorum is present, at any time and for any reason. Any meeting of stockholders,
annual or special, may be adjourned from time to time, and notice need not be given of any such adjourned meeting if the time, date and place (if any) thereof
and the means of remote communication (if any) by which stockholders and proxy holders may be deemed to be present in person and vote at such
adjourned meeting are announced at the meeting at which the adjournment is taken; provided, however, that if the adjournment is for more than thirty (30)
days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If, after the adjournment, a new record
date for determination of stockholders entitled to vote is fixed for the adjourned meeting, the Board shall fix as the record date for determining stockholders
entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote at the adjourned
meeting, and shall give notice of the adjourned meeting to each stockholder of record
1
as of the record date so fixed for notice of such adjourned meeting. At the adjourned meeting, the Corporation may transact any business that might have
been transacted at the original meeting. To the fullest extent permitted by law, if a quorum is present at the original meeting, it shall also be deemed present at
the adjourned meeting. To the fullest extent permitted by law, the Board may postpone, reschedule or cancel at any time and for any reason any previously
scheduled special or annual meeting of stockholders before it (or any adjournment) is to be held, regardless of whether any notice or public disclosure with
respect to any such meeting (or adjournment) has been sent or made pursuant to Section 1.3 hereof or otherwise, in which case notice shall be provided to
the stockholders of the new date, time and place, if any, of the meeting as provided in Section 1.3 above.
Section 1.5: Quorum. Except as otherwise required by applicable law or provided by the Certificate of Incorporation or these Bylaws, at each
meeting of stockholders the holders of a majority of the voting power of the shares of stock issued and outstanding and entitled to vote at the meeting, present
in person or represented by proxy, shall constitute a quorum for the transaction of business; provided, however, that where a separate vote by a class or
classes or series of stock is required by applicable law or the Certificate of Incorporation, the holders of a majority of the voting power of the shares of such
class or classes or series of the stock issued and outstanding and entitled to vote on such matter, present in person or represented by proxy at the meeting,
shall constitute a quorum entitled to take action with respect to the vote on such matter. If a quorum shall fail to attend any meeting, the chairperson of the
meeting or, if directed to be voted on by the chairperson of the meeting, the holders of a majority of the voting power of the shares entitled to vote who are
present in person or represented by proxy at the meeting may adjourn the meeting. Shares of the Corporation’s stock belonging to the Corporation (or to
another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation are held, directly or indirectly, by the
Corporation), shall neither be entitled to vote nor be counted for quorum purposes; provided, however , that the foregoing shall not limit the right of the
Corporation or any other corporation to vote any shares of the Corporation’s stock held by it in a fiduciary capacity and to count such shares for purposes of
determining a quorum. A quorum, once established at a meeting, shall not be broken by the withdrawal of enough votes to leave less than a quorum,
including, to the fullest extent permitted by law, at any adjournment thereof (unless a new record date is fixed for the adjourned meeting).
Section1.6: Organization. Meetings of stockholders shall be presided over by (a) such person as the Board may designate, or (b) in the absence of
such a person, the Chairperson of the Board, or (c) in the absence of such person, the Lead Independent Director, or, (d) in the absence of such person, the
Chief Executive Officer of the Corporation, or (e) in the absence of such person, the President of the Corporation, or (f) in the absence of such person, by a
Vice President. The Secretary of the Corporation shall act as secretary of the meeting, but in such person’s absence the chairperson of the meeting may
appoint any person to act as secretary of the meeting.
Section1.7: Voting;Proxies. Each stockholder of record entitled to vote at a meeting of stockholders may authorize another person or persons to
act for such stockholder by proxy. Such a proxy may be prepared, transmitted and delivered in any manner permitted by applicable law. Except as may be
required in the Certificate of Incorporation, directors shall be elected by a plurality of the votes cast by the holders of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of directors. At all meetings of stockholders at which a quorum is present, unless a
different or minimum vote is required by applicable law, rule or regulation applicable to the Corporation or its securities, the
2
rules or regulations of any stock exchange applicable to the Corporation, the Certificate of Incorporation or these Bylaws, in which case such different or
minimum vote shall be the applicable vote on the matter, every matter other than the election of directors shall be decided by the affirmative vote of the
holders of a majority of the voting power of the shares of stock entitled to vote on such matter that are present in person or represented by proxy at the
meeting and are voted for or against the matter (or if there are two or more classes or series of stock entitled to vote as separate classes, then in the case of
each class or series, the holders of a majority of the voting power of the shares of stock of that class or series present in person or represented by proxy at the
meeting voting for or against such matter).
Section1.8: FixingDateforDeterminationofStockholdersofRecord. In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board, and which record date shall, unless otherwise required by law, not be more than sixty
(60) nor less than ten (10) days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the
stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the
meeting shall be the date for making such determination. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders shall be at 5:00 p.m. Eastern Time on the day next preceding the day on which notice is given, or, if notice is waived,
at 5:00 p.m. Eastern Time on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for
determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of
such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned
meeting.
In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights,
or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix, in
advance, a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the Board and which shall not be more
than sixty (60) days prior to such action. If no such record date is fixed by the Board, then the record date for determining stockholders for any such purpose
shall be at 5:00 p.m. Eastern Time on the day on which the Board adopts the resolution relating thereto.
Section1.9: ListofStockholdersEntitledtoVote. The Corporation shall prepare, at least ten (10) days before every meeting of stockholders, a
complete list of stockholders entitled to vote at the meeting (provided, however, if the record date for determining the stockholders entitled to vote is less than
ten (10) days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth (10th) day before the meeting date), arranged
in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Nothing herein shall
require the Corporation to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, for a period of at least ten (10) days prior to the meeting, (a) on a reasonably accessible electronic
network as permitted by applicable law (provided that the information required to gain access to the list is provided with the notice of the meeting), or (b)
during ordinary business
3
hours, at the principal place of business of the Corporation. If the meeting is held at a location where stockholders may attend in person, a list of stockholders
entitled to vote at the meeting shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be examined by
any stockholder who is present at the meeting. If the meeting is held solely by means of remote communication, then the list shall be open to the examination
of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access the list shall be
provided with the notice of the meeting. Except as otherwise provided by law, the stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the list of stockholders required by this Section 1.9 or to vote in person or by proxy at any meeting of stockholders.
Section1.10: InspectorsofElections
1.10.1: Applicability. Unless otherwise required by the Certificate of Incorporation or by applicable law, the following provisions of this Section 1.10 shall
apply only if and when the Corporation has a class of voting stock that is: (a) listed on a national securities exchange; (b) authorized for quotation on an
interdealer quotation system of a registered national securities association; or (c) held of record by more than two thousand (2,000) stockholders. In all other
cases, observance of the provisions of this Section 1.10 shall be optional, and at the discretion of the Board.
1.10.2: Appointment. The Corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors of election to act at the meeting
and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders, the chairperson of the meeting shall appoint one or more inspectors to act at the meeting.
1.10.3: Inspector’s Oath. Each inspector of election, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute
the duties of inspector with strict impartiality and according to the best of such inspector’s ability.
1.10.4: Duties of Inspectors. At a meeting of stockholders, the inspectors of election shall (a) ascertain the number of shares outstanding and the voting
power of each share, (b) determine the shares represented at a meeting and the validity of proxies and ballots, (c) count all votes and ballots, (d) determine
and retain for a reasonable period of time a record of the disposition of any challenges made to any determination by the inspectors, and (e) certify their
determination of the number of shares represented at the meeting, and their count of all votes and ballots. The inspectors may appoint or retain other persons
or entities to assist the inspectors in the performance of the duties of the inspectors.
1.10.5: Opening and Closing of Polls. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will
vote at a meeting shall be announced at the meeting. No ballot, proxies or votes, nor any revocations thereof or changes thereto, shall be accepted by the
inspectors after the closing of the polls unless the Court of Chancery upon application by a stockholder shall determine otherwise.
1.10.6: Determinations. In determining the validity and counting of proxies and ballots, the inspectors shall be limited to an examination of the proxies,
any envelopes submitted with those proxies, any information provided in connection with proxies pursuant to Section 211(a)(2)b.(i) of the DGCL, or in
accordance with Sections 211(e) or 212(c)(2) of the DGCL,
4
ballots and the regular books and records of the Corporation, except that the inspectors may consider other reliable information for the limited purpose of
reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a
proxy is authorized by the record owner to cast or more votes than the stockholder holds of record. If the inspectors consider other reliable information for the
limited purpose permitted herein, the inspectors at the time they make their certification of their determinations pursuant to this Section 1.10 shall specify the
precise information considered by them, including the person or persons from whom they obtained the information, when the information was obtained, the
means by which the information was obtained and the basis for the inspectors’ belief that such information is accurate and reliable.
Section1.11: ConductofMeetings.The Board may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as
it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board, the chairperson of any meeting of
stockholders shall have the right and authority to convene and (for any reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and
procedures and to do all such acts as, in the judgment of such chairperson, are appropriate for the proper conduct of the meeting. Such rules, regulations or
procedures, whether adopted by the Board or prescribed by the chairperson of the meeting, may include, without limitation, the following: (i) the establishment
of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations
on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other
persons as the chairperson of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; (v)
limitations on the time (if any) allotted to questions or comments by participants; (vi) restricting the use of audio/video recording devices and cell phones; and
(vii) complying with any state and local laws and regulations concerning safety and security. The chairperson of any meeting of stockholders, in addition to
making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a
matter or business was not properly brought before the meeting and if such chairperson should so determine, such chairperson shall so declare to the
meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined
by the Board or the chairperson of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary
procedure.
Section1.12: NoticeofStockholderBusiness;Nominations
1.12.1 Annual Meeting of Stockholders.
(a) Nominations of persons for election to the Board and the proposal of other business to be considered by the stockholders may be made at an
annual meeting of stockholders only: (i) pursuant to the Corporation’s notice of such meeting (or any supplement thereto), (ii) by or at the direction of the
Board or any committee thereof, or (iii) by any stockholder of the Corporation who was a stockholder of record at the time of giving of the notice provided for in
this Section 1.12 (the “Record Stockholder”), who is entitled to vote at such meeting and who complies with the notice and other procedures set forth in this
Section 1.12 in all applicable respects. For the avoidance of doubt, the foregoing clause (iii) shall be the exclusive means for a stockholder to make
nominations or propose business (other than business included in the Corporation’s proxy materials pursuant to Rule 14a-8 under the Securities Exchange
Act of 1934, as amended (such act, and the rules and regulations
5
promulgated thereunder, the “Exchange Act”)), at an annual meeting of stockholders, and such stockholder must fully comply with the notice and other
procedures set forth in this Section 1.12 to bring such nominations or other business properly before an annual meeting. During the period commencing
immediately following a Staggered Board Start Date (as defined in the Certificate of Incorporation) and ending upon the next Staggered Board End Date (as
defined in the Certificate of Incorporation), a nomination made pursuant to the Corporation’s notice of meeting (or any supplement thereto) pursuant to the
foregoing clause (i) or a nomination made by or at the direction of the Board or a committee thereof pursuant to the foregoing clause (ii), in each case, must
be approved by the affirmative vote of all of the directors then in office.
(b) For nominations or other business to be properly brought before an annual meeting by a Record Stockholder pursuant to Section 1.12.1(a):
(i) the Record Stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and have provided any updates
or supplements to such notice at the times and in the forms required by this Section 1.12;
(ii) such other business (other than the nomination of persons for election to the Board) must otherwise be a proper matter for stockholder
action;
(iii) if the Proposing Person (as defined below) has provided the Corporation with a Solicitation Notice (as defined below), such Proposing
Person must, in the case of a proposal other than the nomination of persons for election to the Board, have delivered a proxy statement and form of
proxy to holders of at least the percentage of the Corporation’s voting shares required under applicable law to carry any such proposal, or, in the case
of a nomination or nominations, have delivered a proxy statement and form of proxy to holders of a percentage of the Corporation’s voting shares
reasonably believed by such Proposing Person to be sufficient to elect the nominee or nominees proposed to be nominated by such Record
Stockholder, and must, in either case, have included in such materials the Solicitation Notice; and
(iv) if no Solicitation Notice relating thereto has been timely provided pursuant to this Section 1.12, the Proposing Person proposing such
business or nomination must not have solicited a number of proxies sufficient to have required the delivery of such a Solicitation Notice under this
Section 1.12.
To be timely, a Record Stockholder’s notice must be delivered to the Secretary at the principal executive offices of the Corporation not later than 5:00
p.m. Eastern Time on the ninetieth (90th) day nor earlier than 5:00 p.m. Eastern Time on the one hundred and twentieth (120th) day prior to the first
anniversary of the preceding year’s annual meeting (except in the case of the Corporation’s first annual meeting following the Effective Date (as defined in the
Certificate of Incorporation), for which such notice shall be timely if delivered in the same time period as if such meeting were a special meeting governed by
Section 1.12.3 of these Bylaws); provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than
seventy (70) days after such anniversary date, or if no annual meeting was held in the preceding year, notice by the Record Stockholder to be timely must be
so delivered (A) no earlier than 5:00 p.m. Eastern Time on the one hundred and twentieth (120th) day prior to such annual meeting and (B) no later than 5:00
p.m. Eastern Time on the later of the ninetieth (90th) day prior to such annual meeting or 5:00 p.m. Eastern Time on the tenth (10th) day following the day on
which Public Announcement (as defined below) of the date of such
6
meeting is first made by the Corporation. In no event shall an adjournment or postponement of an annual meeting commence a new time period (or extend
any time period) for providing the Record Stockholder’s notice.
(c) As to each person whom the Record Stockholder proposes to nominate for election or reelection as a director, in addition to the matters set
forth in paragraph (e) below, such Record Stockholder’s notice shall set forth:
(i) the name, age, business address and residence address of such person;
(ii) the principal occupation or employment of such nominee;
(iii) the class, series and number of any shares of stock of the Corporation that are beneficially owned or owned of record by such person or
any Associated Person (as defined in Section 1.12.4(c));
(iv) the date or dates such shares were acquired and the investment intent of such acquisition;
(v) all other information relating to such person that would be required to be disclosed in solicitations of proxies for election of directors in an
election contest (even if an election contest is not involved), or would be otherwise required, in each case pursuant to and in accordance with Section
14(a) (or any successor provision) under the Exchange Act and the rules and regulations thereunder;
(vi) such person’s written consent (A) to being named in the Corporation’s proxy statement as a nominee, (B) to the public disclosure of
information regarding or related to such person provided to the Corporation by such person or otherwise pursuant to this Section 1.12 and (C) to
serving as a director, if elected;
(vii) whether such person meets the independence requirements of the stock exchange upon which the Corporation’s Class A Common Stock
is primarily traded;
(viii) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during
the past three (3) years, and any other material relationships, between or among such Proposing Person or any of its respective affiliates and
associates, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, on the other hand, including all
information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the Proposing Person or any of its
respective affiliates and associates were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such
registrant; and
(ix) a completed and signed questionnaire, representation and agreement required by Section 1.12.2 of these Bylaws.
(d) As to any business other than the nomination of a director or directors that the Record Stockholder proposes to bring before the meeting, in
addition to the matters set forth in paragraph (e) below, such Record Stockholder’s notice shall set forth:
7
(i) a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any
resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws, the text of the proposed
amendment), the reasons for conducting such business at the meeting and any material interest in such business of such Proposing Person, including
any anticipated benefit to any Proposing Person therefrom; and
(ii) a description of all agreements, arrangements and understandings between or among any such Proposing Person and any of its
respective affiliates or associates, on the one hand, and any other person or persons, on the other hand, (including their names) in connection with the
proposal of such business by such Proposing Person;
(e) As to each Proposing Person giving the notice, such Record Stockholder’s notice shall set forth:
(i) the current name and address of such Proposing Person, including, if applicable, their name and address as they appear on the
Corporation’s stock ledger, if different;
(ii) the class or series and number of shares of stock of the Corporation that are directly or indirectly owned of record or beneficially owned by
such Proposing Person, including any shares of any class or series of the Corporation as to which such Proposing Person has a right to acquire
beneficial ownership at any time in the future;
(iii) whether and the extent to which any derivative interest in the Corporation’s equity securities (including without limitation any option,
warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at
a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of
shares of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of shares of the
Corporation or otherwise, and any cash-settled equity swap, total return swap, synthetic equity position or similar derivative arrangement (any of the
foregoing, a “Derivative Instrument”), as well as any rights to dividends on the shares of any class or series of shares of the Corporation that are
separated or separable from the underlying shares of the Corporation) or any short interest in any security of the Corporation (for purposes of this
Bylaw a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any increase or decrease in the value of the
subject security, including through performance-related fees) is held directly or indirectly by or for the benefit of such Proposing Person, including
without limitation whether and the extent to which any ongoing hedging or other transaction or series of transactions has been entered into by or on
behalf of, or any other agreement, arrangement or understanding (including without limitation any short position or any borrowing or lending of shares)
has been made, the effect or intent of which is to mitigate loss to or manage risk or benefit of share price changes for, or to increase or decrease the
voting power of, such Proposing
8
Person with respect to any share of stock of the Corporation (any of the foregoing, a “Short Interest”);
(iv) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited
partnership in which such Proposing Person or any of its respective affiliates or associates is a general partner or, directly or indirectly, beneficially
owns an interest in a general partner of such general or limited partnership;
(v) any direct or indirect material interest in any material contract or agreement with the Corporation, any affiliate of the Corporation or any
Competitor (as defined below) (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement);
(vi) any significant equity interests or any Derivative Instruments or Short Interests in any Competitor held by such Proposing Person and/or
any of its respective affiliates or associates;
(vii) any other material relationship between such Proposing Person, on the one hand, and the Corporation, any affiliate of the Corporation or
any Competitor, on the other hand;
(viii) all information that would be required to be set forth in a Schedule 13D filed pursuant to Rule 13d-1(a) or an amendment pursuant to
Rule 13d-2(a) if such a statement were required to be filed under the Exchange Act and the rules and regulations promulgated thereunder by such
Proposing Person and/or any of its respective affiliates or associates;
(ix) any other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or other filing required
to be made in connection with solicitations of proxies or consents by such Proposing Person in support of the business proposed to be brought before
the meeting pursuant to Section 14(a) (or any successor provision) under the Exchange Act and the rules and regulations thereunder;
(x) such Proposing Person’s written consent to the public disclosure of information provided to the Corporation pursuant to this Section 1.12;
(xI) a complete written description of any agreement, arrangement or understanding (whether oral or in writing) (including any knowledge that
another person or entity is Acting in Concert (as defined in Section 1.12.4(c)) with such Proposing Person) between or among such Proposing Person,
any of its respective affiliates or associates and any other person Acting in Concert with any of the foregoing persons;
(xii) a representation that the Record Stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends
to appear in person or by proxy at the meeting to propose such business or nomination;
(xiii) a representation whether such Proposing Person intends (or is part of a group that intends) to deliver a proxy statement or form of proxy
to holders of, in the case of a proposal, at least the percentage of the Corporation’s voting shares required
9
under applicable law to carry the proposal or, in the case of a nomination or nominations, a sufficient number of holders of the Corporation’s voting
shares to elect such nominee or nominees (an affirmative statement of such intent being a “Solicitation Notice”); and
(xiv) any proxy, contract, arrangement, or relationship pursuant to which the Proposing Person has a right to vote, directly or indirectly, any
shares of any security of the Corporation.
The disclosures to be made pursuant to the foregoing clauses (ii), (iii), (iv) and (vi) shall not include any information with respect to the ordinary course
business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the
stockholder directed to prepare and submit the notice required by these Bylaws on behalf of a beneficial owner.
(f) A stockholder providing written notice required by this Section 1.12 shall update such notice in writing, if necessary, so that the information
provided or required to be provided in such notice is true and correct in all material respects as of (i) the record date for determining the stockholders entitled
to notice of the meeting and (ii) 5:00 p.m. Eastern Time on the tenth (10th) business day prior to the meeting or any adjournment or postponement thereof. In
the case of an update pursuant to clause (i) of the foregoing sentence, such update shall be received by the Secretary of the Corporation at the principal
executive office of the Corporation not later than five (5) business days after the record date for determining the stockholders entitled to notice of the meeting,
and in the case of an update and supplement pursuant to clause (ii) of the foregoing sentence, such update and supplement shall be received by the
Secretary of the Corporation at the principal executive office of the Corporation not later than eight (8) business days prior to the date for the meeting, and, if
practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been
adjourned or postponed). For the avoidance of doubt, the obligation to update as set forth in this paragraph shall not limit the Corporation’s rights with respect
to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who
has previously submitted notice hereunder to amend or update any proposal or nomination or to submit any new proposal, including by changing or adding
nominees, matters, business and/or resolutions proposed to be brought before a meeting of the stockholders.
(g) Notwithstanding anything in Section 1.12 or any other provision of the Bylaws to the contrary, any person who has been determined by a
majority of the Whole Board to have violated Section 2.11 of these Bylaws or a Board Confidentiality Policy (as defined below) while serving as a director of
the Corporation in the preceding five (5) years shall be ineligible to be nominated to serve as a member of the Board, absent a prior waiver for such
nomination approved by two-thirds of the Whole Board.
1.12.2 Submission of Questionnaire, Representation and Agreement. To be eligible to be a nominee of any stockholder for election or reelection as a
director of the Corporation, the person proposed to be nominated must deliver (in accordance with the time periods prescribed for delivery of notice under
Section 1.12 of these Bylaws) to the Secretary at the principal executive offices of the Corporation a completed and signed questionnaire in the form required
by the Corporation (which form the stockholder shall request in writing from the Secretary of the Corporation and which the Secretary shall provide to such
stockholder within ten days of receiving such request) with respect to the background and qualification of such person to serve
10
as a director of the Corporation and the background of any other person or entity on whose behalf, directly or indirectly, the nomination is being made and a
signed representation and agreement (in the form available from the Secretary upon written request) that such person: (a) is not and will not become a party
to (i) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if
elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or
(ii) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s
fiduciary duties under applicable law, (b) is not and will not become a party to any Compensation Arrangement (as defined below) that has not been disclosed
therein, (c) if elected as a director of the Corporation, will comply with all informational and similar requirements of applicable insurance policies and laws and
regulations in connection with service or action as a director of the Corporation, (d) if elected as a director of the Corporation, will comply with all corporate
governance, conflict of interest, stock ownership requirements, confidentiality and trading policies and guidelines of the Corporation publicly disclosed from
time to time, (e) if elected as a director of the Corporation, will act in the best interests of the Corporation and its stockholders and not in the interests of
individual constituencies, (f) consents to being named as a nominee in the Corporation’s proxy statement pursuant to Rule 14a-4(d) under the Exchange Act
and any associated proxy card of the Corporation and agrees to serve if elected as a director and (g) intends to serve as a director for the full term for which
such individual is to stand for election.
1.12.3 Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought
before the meeting pursuant to the Corporation’s notice of such meeting. Nominations of persons for election to the Board may be made at a special meeting
of stockholders at which directors are to be elected pursuant to the Corporation’s notice of such meeting (a) by or at the direction of the Board or any
committee thereof or (b) provided that the Board has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is
a stockholder of record at the time of giving of notice of the special meeting, who shall be entitled to vote at the meeting and who complies with the notice and
other procedures set forth in this Section 1.12.3 in all applicable respects. During the period commencing immediately following a Staggered Board Start Date
and ending upon the next Staggered Board End Date, a nomination made by or at the direction of the Board or a committee thereof pursuant to the foregoing
clause (a) must be approved by the affirmative vote of all of the directors then in office. In the event the Corporation calls a special meeting of stockholders for
the purpose of electing one or more directors to the Board, any such stockholder may nominate a person or persons (as the case may be), for election to such
position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by Section 1.12.1(b) of these Bylaws shall be delivered to
the Secretary of the Corporation at the principal executive offices of the Corporation (i) no earlier than the one hundred and twentieth (120th) day prior to such
special meeting and (ii) no later than 5:00 p.m. Eastern Time on the later of the ninetieth (90th) day prior to such special meeting or the tenth (10th) day
following the day on which Public Announcement is first made of the date of the special meeting and of the nominees proposed by the Board to be elected at
such meeting. In no event shall an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for providing
such notice.
11
1.12.4 General.
(a) Except as otherwise expressly provided in any applicable rule or regulation promulgated under the Exchange Act, only such persons who are
nominated in accordance with the procedures set forth in this Section 1.12 shall be eligible to be elected at a meeting of stockholders and serve as directors
and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set
forth in this Section 1.12. Except as otherwise provided by law or these Bylaws, the chairperson of the meeting shall have the power and duty to determine
whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the
procedures set forth in this Section 1.12 and, if any proposed nomination or business is not in compliance herewith, to declare that such defective proposal or
nomination shall be disregarded. Notwithstanding the foregoing provisions of this Section 1.12, unless otherwise required by law, if the stockholder (or a
Qualified Representative of the stockholder (as defined below)) does not appear at the annual or special meeting of stockholders of the Corporation to present
a nomination or proposed business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies
in respect of such vote may have been received by the Corporation.
(b) Notwithstanding the foregoing provisions of this Section 1.12, a stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set forth herein. Nothing in this Section 1.12 shall be deemed to affect any rights of
(a) stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (b) the holders of
any series of Common Stock or Preferred Stock to elect directors pursuant to any applicable provisions of the Certificate of Incorporation.
(c) For purposes of these Bylaws the following definitions shall apply:
(A) a person shall be deemed to be “Acting in Concert” with another person if such person knowingly acts (whether or not pursuant
to an express agreement, arrangement or understanding) in concert with, or toward a common goal relating to the management, governance or
control of the Corporation in substantial parallel with, such other person where (1) each person is conscious of the other person’s conduct or
intent and this awareness is an element in their decision-making processes and (2) at least one additional factor suggests that such persons
intend to act in concert or in substantial parallel, which such additional factors may include, without limitation, exchanging information (whether
publicly or privately), attending meetings, conducting discussions or making or soliciting invitations to act in concert or in substantial parallel;
provided that a person shall not be deemed to be Acting in Concert with any other person solely as a result of the solicitation or receipt of
revocable proxies or consents from such other person in response to a solicitation made pursuant to, and in accordance with, Section 14(a) (or
any successor provision) of the Exchange Act by way of a proxy or consent solicitation statement filed on Schedule 14A. A person Acting in
Concert with another person shall be deemed to be Acting in Concert with any third party who is also Acting in Concert with such other person;
(B) “affiliate” and “associate” shall have the meanings ascribed thereto in Rule 405 under the Securities Act of 1933, as amended
(the
12
“Securities Act”); provided, however, that the term “partner” as used in the definition of “associate” shall not include any limited partner that is
not involved in the management of the relevant partnership;
(C) “Associated Person” shall mean with respect to any subject stockholder or other person (including any proposed nominee) (1)
any person directly or indirectly controlling, controlled by or under common control with such stockholder or other person, (2) any beneficial
owner of shares of stock of the Corporation owned of record or beneficially by such stockholder or other person, (3) any associate of such
stockholder or other person, and (4) any person directly or indirectly controlling, controlled by or under common control or Acting in Concert with
any such Associated Person;
(D) “Compensation Arrangement” shall mean any direct or indirect compensatory payment or other financial agreement,
arrangement or understanding with any person or entity other than the Corporation, including any agreement, arrangement or understanding
with respect to any direct or indirect compensation, reimbursement or indemnification in connection with candidacy, nomination, service or
action as a nominee or as a director of the Corporation;
(E) “Competitor” shall mean any entity that provides products or services that compete with or are alternatives to the principal
products produced or services provided by the Corporation or its affiliates;
(F) “Proposing Person” shall mean (1) the Record Stockholder providing the notice of business proposed to be brought before an
annual meeting or nomination of persons for election to the Board at a stockholder meeting, (2) the beneficial owner or beneficial owners, if
different, on whose behalf the notice of business proposed to be brought before the annual meeting or nomination of persons for election to the
Board at a stockholder meeting is made, and (3) any Associated Person on whose behalf the notice of business proposed to be brought before
the annual meeting or nomination of persons for election to the Board at a stockholder meeting is made;
(G) “Public Announcement” shall mean disclosure in a press release reported by a national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act; and
(H) to be considered a “Qualified Representative” of a stockholder, a person must be a duly authorized officer, manager, trustee or
partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such
stockholder to act for such stockholder as a proxy at the meeting of stockholders and such person must produce such writing or electronic
transmission, or a reliable reproduction thereof, at the meeting. The Secretary of the Corporation, or any other person who shall be appointed to
serve as secretary of the meeting, may require, on behalf of the Corporation, reasonable and appropriate documentation to verify the status of a
person purporting to be a “Qualified Representative” for purposes hereof.
13
Section1.13: DeliverytotheCorporation. Whenever this Article I requires one or more persons (including a record or beneficial owner of stock) to
deliver a document or information to the Corporation or any officer, employee or agent thereof (including any notice, request, questionnaire, revocation,
representation or other document or agreement), the Corporation shall not be required to accept delivery of such document or information unless the
document or information is in writing (and not in an electronic transmission) and delivered by hand (including, without limitation, overnight courier service) or
by certified or registered mail, return receipt requested.
ARTICLEII. BOARDOFDIRECTORS
Section2.1: Number;Qualifications. The total number of directors constituting the Whole Board shall be fixed from time to time in the manner set
forth in the Certificate of Incorporation and the term “Whole Board” shall have the meaning specified in the Certificate of Incorporation. No decrease in the
authorized number of directors constituting the Whole Board shall shorten the term of any incumbent director. Directors need not be stockholders of the
Corporation.
Section2.2: Election;Resignation;Removal;Vacancies. Election of directors need not be by written ballot. Each director shall hold office until the
annual meeting at which such director’s term expires and until such director’s successor is elected and qualified or until such director’s earlier death,
resignation, disqualification or removal. Any director may resign by delivering a resignation in writing or by electronic transmission to the Corporation at its
principal office or to the Chairperson of the Board, the Chief Executive Officer, or the Secretary. Such resignation shall be effective upon delivery unless it is
specified to be effective at a later time or upon the happening of an event. Subject to the special rights of holders of any series of Preferred Stock to elect
directors, directors may be removed only as provided by the Certificate of Incorporation and applicable law. All vacancies occurring in the Board and any
newly created directorships resulting from any increase in the authorized number of directors shall be filled in the manner set forth in the Certificate of
Incorporation.
Section2.3: RegularMeetings. Regular meetings of the Board may be held at such places, within or without the State of Delaware, and at such
times as the Board may from time to time determine. Notice of regular meetings need not be given if the date, times and places thereof are fixed by resolution
of the Board.
Section2.4: SpecialMeetings. Special meetings of the Board may be called by the Chairperson of the Board, the Chief Executive Officer, the Lead
Independent Director or a majority of the members of the Board then in office and may be held at any time, date or place, within or without the State of
Delaware, as the person or persons calling the meeting shall fix. Notice of the time, date and place of such meeting shall be given, orally, in writing or by
electronic transmission (including electronic mail), by or at the direction of the person or persons calling the meeting to all directors at least four (4) days
before the meeting if the notice is mailed, or at least twenty-four (24) hours before the meeting if such notice is given by telephone, hand delivery, telegram,
telex, mailgram, facsimile, electronic mail or other means of electronic transmission; provided, however, that if, under the circumstances, the Chairperson of
the Board, the Lead Independent Director or the Chief Executive Officer calling a special meeting deems that more immediate action is necessary or
appropriate, notice may be delivered on the day of such special meeting. Unless otherwise indicated in the notice, any and all business may be transacted at
a special meeting.
14
Section2.5: RemoteMeetingsPermitted. Members of the Board, or any committee of the Board, may participate in a meeting of the Board or such
committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each
other, and participation in a meeting pursuant to conference telephone or other communications equipment shall constitute presence in person at such
meeting.
Section2.6: Quorum; Vote Requiredfor Action. At all meetings of the Board, a majority of the Whole Board shall constitute a quorum for the
transaction of business. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date or time.
Except as otherwise provided herein or in the Certificate of Incorporation, or required by law, the vote of a majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board.
Section2.7: Organization. Meetings of the Board shall be presided over by (a) the Chairperson of the Board, or (b) in the absence of such person,
the Lead Independent Director, or (c) in such person’s absence, by the Chief Executive Officer, or (d) in such person’s absence, by a chairperson chosen by
the Board at the meeting. The Secretary shall act as secretary of the meeting, but in such person’s absence the chairperson of the meeting may appoint any
person to act as secretary of the meeting.
Section2.8: UnanimousActionbyDirectorsinLieuofaMeeting. Any action required or permitted to be taken at any meeting of the Board, or of
any committee thereof, may be taken without a meeting if all members of the Board or such committee, as the case may be, consent thereto in writing or by
electronic transmission. After an action is taken, the consent or consents shall be filed with the minutes of proceedings of the Board or committee, as
applicable. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in
electronic form.
Section2.9: Powers. Except as otherwise provided by the Certificate of Incorporation or the DGCL, the business and affairs of the Corporation shall
be managed by or under the direction of the Board.
Section 2.10: Compensation of Directors. Members of the Board, as such, may receive, pursuant to a resolution of the Board, fees and other
compensation for their services as directors, including without limitation their services as members of committees of the Board.
Section2.11: Confidentiality. Each director shall maintain the confidentiality of, and shall not share with any third party person or entity (including
third parties that originally sponsored, nominated or designated such director (the “Sponsoring Party”)), any nonpublic information learned in their capacities
as directors, including communications among Board members in their capacities as directors. The Board may adopt a board confidentiality policy further
implementing and interpreting this bylaw (a “Board Confidentiality Policy”). All directors are required to comply with this bylaw and any such Board
Confidentiality Policy unless such director or the Sponsoring Party for such director has entered into a specific written agreement with the Corporation, in
either case as approved by the Board, providing otherwise with respect to such confidential information.
Section 2.12: Emergency Bylaws. This Section 2.12 shall be operative during any emergency condition as contemplated by Section 110 of the
DGCL (an “Emergency”), notwithstanding any different or conflicting provisions in these Bylaws, the Certificate of
15
Incorporation or the DGCL. In the event of any Emergency, or other similar emergency condition, the director or directors in attendance at a meeting of the
Board or a standing committee thereof shall constitute a quorum. Such director or directors in attendance may further take action to appoint one or more of
themselves or other directors to membership on any standing or temporary committees of the Board as they shall deem necessary and appropriate. Except as
the Board may otherwise determine, during any Emergency, the Corporation and its directors and officers, may exercise any authority and take any action or
measure contemplated by Section 110 of the DGCL.
Section2.13: ChairpersonoftheBoard. The Board may, in its sole discretion, elect a chairperson of the Board. Subject to the provisions of Section
2.7 of these Bylaws, the Chairperson of the Board shall have the power to preside at all meetings of the Board and shall have such other powers and duties
as provided in these Bylaws and as the Board may from time to time prescribe. The Chairperson of the Board may or may not be an officer of the Corporation.
Section 2.14: Lead Independent Director. The Board may, in its discretion, elect a lead independent director from among its members that are
Independent Directors (as defined below) (such director, the “Lead Independent Director”). The Lead Independent Director shall preside at all Board
meetings at which the Chairperson of the Board is not present and shall exercise such other powers and duties as may from time to time be assigned to him
or her by the Board or as prescribed by these Bylaws. For purposes of these Bylaws, “Independent Director” has the meaning ascribed to such term under
the rules of the exchange upon which the Corporation’s Class A Common Stock is primarily traded.
ARTICLEIII. COMMITTEES
Section 3.1: Committees. The Board may designate one or more committees, each committee to consist of one or more of the directors of the
Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of a member of the committee, the member or members thereof present at any meeting of
such committee who are not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another
member of the Board to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent provided in a resolution of
the Board, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation and may
authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority in reference to the
following matters: (a) approving, adopting, or recommending to the stockholders any action or matter (other than the election or removal of members of the
Board) expressly required by the DGCL to be submitted to stockholders for approval or (b) adopting, amending or repealing any bylaw of the Corporation.
Section3.2: CommitteeRules. Each committee shall keep records of its proceedings and make such reports as the Board may from time to time
request. Unless the Board otherwise provides, each committee designated by the Board may make, alter and repeal rules for the conduct of its business. In
the absence of such rules, each committee shall conduct its business in the same manner as the Board conducts its business pursuant to Article II of these
Bylaws. Except as otherwise provided in the Certificate of Incorporation, these Bylaws or the
16
resolution of the Board designating the committee, any committee may create one or more subcommittees, each subcommittee to consist of one or more
members of the committee, and may delegate to any such subcommittee any or all of the powers and authority of the committee.
ARTICLEIV. OFFICERS
Section4.1: Generally. The officers of the Corporation shall consist of a Chief Executive Officer (who may be the Chairperson of the Board or the
President), a President, a Secretary and a Treasurer and may consist of such other officers, including, without limitation, a Chief Financial Officer, and one or
more Vice Presidents, as may from time to time be appointed by the Board. All officers shall be elected by the Board; provided, however, that the Board may
empower the Chief Executive Officer of the Corporation to appoint any officer other than the Chief Executive Officer, the President, the Chief Financial Officer
or the Treasurer. Except as otherwise provided by law, by the Certificate of Incorporation or these Bylaws, each officer shall hold office until such officer’s
successor is duly elected and qualified or until such officer’s earlier resignation, death, disqualification or removal. Any number of offices may be held by the
same person. Any officer may resign by delivering a resignation in writing or by electronic transmission to the Corporation at its principal office or to the
Chairperson of the Board, the Chief Executive Officer, or the Secretary. Such resignation shall be effective upon delivery unless it is specified to be effective at
some later time or upon the happening of some later event. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise
may be filled by the Board and the Board may, in its discretion, leave unfilled, for such period as it may determine, any offices. Each such successor shall hold
office for the unexpired term of such officer’s predecessor and until a successor is duly elected and qualified or until such officer’s earlier resignation, death,
disqualification or removal.
Section4.2: ChiefExecutiveOfficer. Subject to the control of the Board and such supervisory powers, if any, as may be given by the Board, the
powers and duties of the Chief Executive Officer of the Corporation are:
(a) to act as the general manager and, subject to the control of the Board, to have general supervision, direction and control of the business and
affairs of the Corporation; and
(b) to affix the signature of the Corporation to all deeds, conveyances, mortgages, guarantees, leases, obligations, bonds, certificates and other
papers and instruments in writing which have been authorized by the Board or which, in the judgment of the Chief Executive Officer, should be executed on
behalf of the Corporation; and, subject to the direction of the Board, to have general charge of the property of the Corporation and to supervise and control all
officers, agents and employees of the Corporation.
Section4.3: President. The person holding the office of Chief Executive Officer shall be the President of the Corporation unless the Board shall have
designated one individual as the President and a different individual as the Chief Executive Officer of the Corporation. Subject to the provisions of these
Bylaws and to the direction of the Board, and subject to the supervisory powers of the Chief Executive Officer (if the Chief Executive Officer is an officer other
than the President), and subject to such supervisory powers and authority as may be given by the Board to the Chairperson of the Board, and/or to any other
officer, the President shall have the responsibility for the general management and control of the business and affairs of the Corporation and the general
supervision and direction of all of the officers, employees and agents of the Corporation (other than the Chief Executive Officer, if the Chief Executive Officer
17
is an officer other than the President) and shall perform all duties and have all powers that are commonly incident to the office of President or that are
delegated to the President by the Board.
Section4.4: ChiefOperatingOfficer.Subject to the direction of the Board and the Chief Executive Officer, the person holding the office of Chief
Operating Officer shall have all such powers and duties as are commonly incident to the office of Chief Operating Officer or that are delegated to him or her by
the Board or the Chief Executive Officer.
Section4.5: ChiefFinancialOfficer. The person holding the office of Chief Financial Officer shall be the Treasurer of the Corporation unless the
Board shall have designated another officer as the Treasurer of the Corporation. Subject to the direction of the Board and the Chief Executive Officer, the
Chief Financial Officer shall perform all duties and have all powers that are commonly incident to the office of Chief Financial Officer, or as the Board or the
Chief Executive Officer may from time to time prescribe.
Section4.6: Treasurer. The person holding the office of Treasurer shall have custody of all monies and securities of the Corporation. The Treasurer
shall make such disbursements of the funds of the Corporation as are authorized and shall render from time to time an account of all such transactions. The
Treasurer shall also perform such other duties and have such other powers as are commonly incident to the office of Treasurer, or as the Board or the Chief
Executive Officer may from time to time prescribe.
Section4.7: VicePresident. Each Vice President shall have all such powers and duties as are commonly incident to the office of Vice President or
that are delegated to him or her by the Board or the Chief Executive Officer. A Vice President may be designated by the Board to perform the duties and
exercise the powers of the Chief Executive Officer or President in the event of the Chief Executive Officer’s or President’s absence or disability.
Section4.8: Secretary. The Secretary shall issue or cause to be issued all authorized notices for, and shall keep, or cause to be kept, minutes of all
meetings of the stockholders and the Board. The Secretary shall have charge of the corporate minute books and similar records and shall perform such other
duties and have such other powers as are commonly incident to the office of Secretary, or as the Board or the Chief Executive Officer may from time to time
prescribe.
Section4.9: DelegationofAuthority. Notwithstanding any provision hereof, the Board may from time to time delegate the powers or duties of any
officer of the Corporation to any other officers or agents of the Corporation, including, without limitation, Assistant Secretaries and Assistant Treasurers.
Section4.10: Removal. Any officer of the Corporation shall serve at the pleasure of the Board and may be removed at any time, with or without
cause, by the Board; provided that if the Board has empowered the Chief Executive Officer to appoint any officer of the Corporation, then such officer may
also be removed by the Chief Executive Officer. Such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation.
ARTICLEV. STOCK
Section5.1: Certificates;UncertificatedShares. The shares of capital stock of the Corporation shall be uncertificated shares; provided, however,
that the resolution of the Board that the shares of capital stock of the Corporation shall be uncertificated shares shall not apply
18
to shares represented by a certificate until such certificate is surrendered to the Corporation (or the transfer agent or registrar, as the case may be).
Notwithstanding the foregoing, the Board may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be
certificated shares. Every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of the Corporation, by any
two authorized officers of the Corporation (it being understood that each of the Chairperson of the Board, the Vice-Chairperson of the Board, the Chief
Executive Officer, the President, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary, and any Assistant Secretary shall be an
authorized officer for such purpose), representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to
be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were an
officer, transfer agent or registrar at the date of issue.
Section5.2: Lost,StolenorDestroyedStockCertificates;IssuanceofNewCertificatesorUncertificatedShares. The Corporation may issue a
new certificate of stock or uncertificated shares in the place of any certificate previously issued by it, alleged to have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed, and the Corporation may require the owner of
the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it, against any claim that
may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated
shares.
Section5.3: OtherRegulations. Subject to applicable law, the Certificate of Incorporation and these Bylaws, the issue, transfer, conversion and
registration of shares represented by certificates and of uncertificated shares shall be governed by such other regulations as the Board may establish.
ARTICLEVI. INDEMNIFICATION
Section6.1: IndemnificationofOfficersandDirectors. Each person who was or is made a party to, or is threatened to be made a party to, or is
involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, legislative, investigative, preliminary,
informal or formal, or any other type whatsoever, including any arbitration or other alternative dispute resolution and including any appeal of the foregoing (a
“Proceeding”), by reason of the fact that such person (or a person of whom such person is the legal representative), is or was a member of the Board of the
Corporation or is or was an officer of the Corporation designated by the Board (or, if authorized by the Board, designated by the Chief Operating Officer of the
Corporation) to be entitled to the indemnification and advancement rights set forth in this Article VI or, while serving in such capacity, is or was serving at the
request of the Corporation as a director, officer, employee, agent or trustee of another corporation, or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans (for purposes of this Article VI, an “Indemnitee”), shall be indemnified and held harmless by the
Corporation to the fullest extent permitted by the DGCL as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such
amendment), against all expenses, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes and
19
penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such Indemnitee in connection therewith, provided such Indemnitee
acted in good faith and in a manner that the Indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect
to any criminal Proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful. Such indemnification shall continue as to an
Indemnitee who has ceased to be a director or officer of the Corporation and shall inure to the benefit of such Indemnitees’ heirs, executors and
administrators. Notwithstanding the foregoing, subject to Section 6.5 of this Article VI, the Corporation shall indemnify any such Indemnitee seeking indemnity
in connection with a Proceeding (or part thereof) initiated by such Indemnitee only if such Proceeding (or part thereof) was authorized by the Board or such
indemnification is authorized by an agreement approved by the Board.
Section 6.2: Advance of Expenses. Except as otherwise provided in a written indemnification agreement between the Corporation and the
Indemnitee, the Corporation shall pay all reasonable expenses (including attorneys’ fees) incurred by an Indemnitee in defending any Proceeding as they are
incurred or otherwise in advance of its final disposition; provided, however , that if the DGCL then so requires, the advancement of such expenses (i.e.,
payment of such expenses as incurred or otherwise in advance of the final disposition of the Proceeding) shall be made only upon delivery to the Corporation
of an undertaking, by or on behalf of such Indemnitee, to repay such amounts if it shall ultimately be determined by final judicial decision from which there is
no appeal that such Indemnitee is not entitled to be indemnified under this Article VI or otherwise.
Section6.3: Non-Exclusivity ofRights. The rights conferred on any person in this Article VI shall not be exclusive of any other right that such
person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, Bylaws, agreement, vote or consent of stockholders or
disinterested directors, or otherwise. Additionally, nothing in this Article VI shall limit the ability of the Corporation, in its discretion, to indemnify or advance
expenses to persons whom the Corporation is not obligated to indemnify or advance expenses pursuant to this Article VI.
Section6.4: IndemnificationContracts. The Board is, or as otherwise delegated by the Board to the officers of the Corporation, the officers are,
authorized to cause the Corporation to enter into indemnification contracts with any member of the Board, officer, employee or agent of the Corporation, or
any person serving at the request of the Corporation as a director, officer, employee, agent or trustee of another corporation, partnership, joint venture, trust or
other enterprise, including employee benefit plans, providing indemnification or advancement rights to such person. Such rights may be greater than those
provided in this Article VI.
Section6.5: RightofIndemniteetoBringSuit.The following shall apply to the extent not in conflict with any indemnification contract provided for in
Section 6.4 of this Article VI.
6.5.1: Right to Bring Suit. If a claim under Section 6.1 or 6.2 of this Article VI is not paid in full by the Corporation within sixty (60) days after a written
claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be
twenty (20) days, the Indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If the Indemnitee is
successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the Indemnitee also shall
20
be entitled to be paid, to the fullest extent permitted by law, the expense of prosecuting or defending such suit. In any suit brought by the Indemnitee to
enforce a right to indemnification hereunder (but not in a suit brought by the Indemnitee to enforce a right to an advancement of expenses) it shall be a
defense that the Indemnitee has not met any applicable standard for indemnification set forth in applicable law. In any suit brought by the Corporation to
recover the advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final
adjudication that, the Indemnitee has not met any applicable standard for indemnification set forth in applicable law.
6.5.2: Effect of Determination. Neither the absence of a determination by or on behalf of the Corporation prior to the commencement of such suit that
indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the applicable standard of conduct set forth in applicable
law, nor an actual determination by or on behalf of the Corporation that the Indemnitee has not met such applicable standard of conduct, shall create a
presumption that the Indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the Indemnitee, be a defense to such
suit.
6.5.3: Burden of Proof. In any suit brought by the Indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or
brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the Indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under this Article VI, or otherwise, shall be on the Corporation.
Section6.6: SuccessfulDefense. To the extent that an Indemnitee has been successful on the merits or otherwise in defense of any proceeding (or
in defense of any claim, issue or matter therein), such Indemnitee shall be indemnified under this Section 6.6 against expenses (including attorneys’ fees)
actually and reasonably incurred in connection with such defense. Indemnification under this Section 6.6 shall not be subject to satisfaction of a standard of
conduct, and the Corporation may not assert the failure to satisfy a standard of conduct as a basis to deny indemnification or recover amounts advanced,
including in a suit brought pursuant to Section 6.5 of this Article VI (notwithstanding anything to the contrary therein); provided, however, that, any Indemnitee
who is not a current or former member of the Board or officer (as such term is defined in the final sentence of Section 145(c)(1) of the DGCL) shall be entitled
to indemnification under Section 6.1 of this Article VI and this Section 6.6 only if such Indemnitee has satisfied the standard of conduct required for
indemnification under Section 145(a) or Section 145(b) of the DGCL.
Section6.7: NatureofRights. The rights conferred upon Indemnitees in this Article VI shall be contract rights and such rights shall continue as to an
Indemnitee who has ceased to be a member of the Board, officer, employee or agent and shall inure to the benefit of the Indemnitee’s heirs, executors and
administrators. Any amendment, repeal or modification of any provision of this Article VI that adversely affects any right of an Indemnitee or an Indemnitee’s
successors shall be prospective only, and shall not adversely affect any right or protection conferred on a person pursuant to this Article VI with respect to any
Proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment, repeal or modification.
Section 6.8: Insurance. The Corporation may purchase and maintain insurance, at its expense, to protect itself and any member of the Board,
officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against
21
any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the
DGCL.
ARTICLEVII. NOTICES
Section7.1: Notice.
7.1.1: Form and Delivery. Except as otherwise required by law, notice may be given in writing directed to a stockholder’s mailing address as it
appears on the records of the Corporation and shall be given: (i) if mailed, when notice is deposited in the U.S. mail, postage prepaid; and (ii) if delivered by
courier service, the earlier of when the notice is received or left at such stockholder’s address. So long as the Corporation is subject to the Securities and
Exchange Commission’s proxy rules set forth in Regulation 14A under the Exchange Act, notice shall be given in the manner required by such rules. To the
extent permitted by such rules, or if the Corporation is not subject to Regulation 14A, notice may be given by electronic transmission directed to the
stockholder’s electronic mail address, and if so given, shall be given when directed to such stockholder’s electronic mail address unless the stockholder has
notified the Corporation in writing or by electronic transmission of an objection to receiving notice by electronic mail or such notice is prohibited by
Section 232(e) of the DGCL. If notice is given by electronic mail, such notice shall comply with the applicable provisions of Sections 232(a) and 232(d) of the
DGCL. Notice may be given by other forms of electronic transmission with the consent of a stockholder in the manner permitted by Section 232(b) of the
DGCL and shall be deemed given as provided therein.
7.1.2: Affidavit of Giving Notice. An affidavit of the Secretary or an Assistant Secretary or of the transfer agent or other agent of the Corporation that
the notice has been given in writing or by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
Section7.2: WaiverofNotice. Whenever notice is required to be given under any provision of the DGCL, the Certificate of Incorporation or these
Bylaws, a written waiver of notice, signed by the person entitled to notice, or waiver by electronic transmission by such person, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders,
directors or members of a committee of directors need be specified in any waiver of notice.
ARTICLEVIII. INTERESTEDDIRECTORS
Section8.1: InterestedDirectors. No contract or transaction between the Corporation and one or more of its members of the Board or officers, or
between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are
members of the board of directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or
officer is present at or participates in the meeting of the Board or committee thereof that authorizes the contract or transaction, or solely because his, her or
their votes are counted for such purpose, if: (a) the material facts as to his, her or their relationship or interest and as to the contract or transaction are
disclosed or are known to the Board or the committee, and the Board
22
or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; (b) the material facts as to his, her or their relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the
stockholders; or (c) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board, a committee
thereof, or the stockholders.
Section8.2: Quorum. Interested directors may be counted in determining the presence of a quorum at a meeting of the Board or of a committee
which authorizes a contract or transaction described in Section 8.1.
ARTICLEIX. MISCELLANEOUS
Section9.1: FiscalYear. The fiscal year of the Corporation shall be determined by resolution of the Board.
Section9.2: Seal. The Board may provide for a corporate seal, which may have the name of the Corporation inscribed thereon and shall otherwise
be in such form as may be approved from time to time by the Board.
Section9.3: FormofRecords. Any records administered by or on behalf of the Corporation in the regular course of its business, including its stock
ledger, books of account and minute books, may be kept on or by means of, or be in the form of, any other information storage device, method or one or more
electronic networks or databases (including one or more distributed electronic networks or databases), electronic or otherwise, provided that the records so
kept can be converted into clearly legible paper form within a reasonable time and otherwise comply with the DGCL. The Corporation shall so convert any
records so kept upon the request of any person entitled to inspect such records pursuant to any provision of the DGCL.
Section9.4: RelianceUponBooksandRecords. A member of the Board, or a member of any committee designated by the Board shall, in the
performance of such person’s duties, be fully protected in relying in good faith upon the books and records of the Corporation and upon such information,
opinions, reports or statements presented to the Corporation by any of the Corporation’s officers or employees, or committees of the Board, or by any other
person as to matters the member reasonably believes are within such other person’s professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation.
Section9.5: CertificateofIncorporationGoverns. In the event of any conflict between the provisions of the Certificate of Incorporation and Bylaws,
the provisions of the Certificate of Incorporation shall govern.
Section9.6: Severability. If any provision of these Bylaws shall be held to be invalid, illegal, unenforceable or in conflict with the provisions of the
Certificate of Incorporation, then such provision shall nonetheless be enforced to the maximum extent possible consistent with such holding and the remaining
provisions of these Bylaws (including without limitation, all portions of any section of these Bylaws containing any such provision held to be invalid, illegal,
unenforceable or in conflict with the Certificate of Incorporation, that are not themselves invalid, illegal, unenforceable or in conflict with the Certificate of
Incorporation) shall remain in full force and effect.
23
Section9.7: TimePeriods.In applying any provision of these Bylaws which requires that an act be done or not be done a specified number of days
prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used (unless otherwise
specified herein), the day of the doing of the act shall be excluded, and the day of the event shall be included.
ARTICLEX. AMENDMENT
Notwithstanding any other provision of these Bylaws, any alteration, amendment or repeal of these Bylaws, and any adoption of new Bylaws, shall
require the approval of the Board or the stockholders of the Corporation as expressly provided in the Certificate of Incorporation.
________________________
24
CERTIFICATIONOFRESTATEDBYLAWS
OF
COINBASEGLOBAL,INC.
(a Delaware corporation)
I, Paul Grewal, certify that I am Secretary of Coinbase Global, Inc., a Delaware corporation (the “Corporation”), that I am duly authorized to make and
deliver this certification, that the attached Bylaws are a true and complete copy of the Restated Bylaws of the Corporation in effect as of the date of this
certificate.
Dated: [l], 2021
Secretary
Exhibit 4.1
Exhibit 4.3
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE' NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"),OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR IN
FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH
REGISTRATION.
WARRANT TO PURCHASE COMMON STOCK
Company: Coinbase Global, Inc.
Number of Shares of Common Stock: 67,988
Warrant Price: $6.04054 per share
Issue Date: June 24, 2014
Expiration Date: June 24, 2024 See also Section 5 .1 (b).
Credit Facility: This Warrant to Purchase Common Stock ("Warrant") is issued in connection with that certain ACH Origination Services and Security
Agreement of even date herewith between Silicon Valley Bank and Coinbase, Inc. (a wholly-owned subsidiary of the Company).
THIS WARRANT CERTIFIES THAT, for good and valuable consideration, SILICON VALLEY BANK (together with any successor or permitted
assignee or transferee of this Warrant or of any shares issued upon exercise hereof, "Holder") is entitled to purchase the number of fully paid and non-assessable
shares (the "Shares") of the above-stated common stock (the "Common Stock") of the above-named company (the "Company") at the above-stated Warrant
Price, all as set forth above and as adjusted pursuant to Section 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this
Warrant. Reference is made to Section 5.4 of this Warrant whereby Silicon Valley Bank shall transfer this Warrant to its parent company, SVB Financial Group.
SECTION 1.EXERCISE.
1.1 Method of Exercise. Holder may at any time and from time to time exercise this Warrant, in whole or in part, by delivering to the Company
the original of this Warrant together with a duly executed Notice of Exercise in substantially the form attached hereto as Appendix 1 and, unless Holder is
exercising this Warrant pursuant to a cashless exercise set forth in Section 1.2, a check, wire transfer of same-day funds (to an account designated by the
Company), or other form of payment acceptable to the Company for the aggregate Warrant Price for the Shares being purchased.
1.2 Cashless Exercise. On any exercise of this Warrant, in lieu of payment of the aggregate Warrant Price in the manner as specified in Section
1. 1 above, but otherwise in accordance with the requirements of Section 1.1, Holder may elect to receive Shares equal to the value of this Warrant, or portion
hereof as to which this Warrant is being exercised. Thereupon, the Company shall issue to the Holder such number of fully paid and non-assessable Shares as are
computed using the following formula:
1
X = Y(A-B)/A
where:
X = the number of Shares to be issued to the Holder;
Y= the number of Shares with respect to which this Warrant is being exercised (inclusive of the Shares surrendered
to the Company in payment of the aggregate Warrant Price);
A= the Fair Market Value (as determined pursuant to Section 1.3 below) of one Share; and
B= the Warrant Price.
1.3 Fair Market Value. If the Company's Common Stock is then traded or quoted on a nationally recognized securities exchange, inter-dealer
quotation system or over-the-counter market (a "Trading Market"), the fair market value of a Share shall be the closing price or last sale price of a share of
Common Stock reported for the Business Day immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the
Company. If the Company's Common Stock is not traded in a Trading Market, the Board of Directors of the Company shall determine the fair market value of a
Share in its reasonable good faith judgment.
1.4 Delivery of Certificate and New Warrant. Within a reasonable time after Holder exercises this Warrant in the manner set forth in Section 1.1
or 1.2 above, the Company shall deliver to Holder a certificate representing the Shares issued to Holder upon such exercise and, if this Warrant has not been fully
exercised and has not expired, a new warrant of like tenor representing the Shares not so acquired.
1.5 Replacement of Warrant. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this
Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form, substance and amount to the Company
or, in the case of mutilation, on surrender of this Warrant to the Company for cancellation, the Company shall, within a reasonable time, execute and deliver to
Holder, in lieu of this Warrant, a new warrant of like tenor and amount.
1.6 Treatment of Warrant Upon Acquisition of Company.
(a) Acquisition. For the purpose of this Warrant, "Acquisition" means any means any Liquidation Event, as defined in the Company's Amended
and Restated Certificate of Incorporation, as in effect on the Issue Date.
(b) Treatment of Warrant at Acquisition. In the event of an Acquisition in which the consideration to be received by the Company's stockholders
consists solely of cash, solely of Marketable Securities or a combination of cash and Marketable Securities (a "Cash/Public Acquisition"), and the fair market
value of one Share as determined in accordance with Section 1.3 above would be greater than the Warrant Price in effect on such date immediately
2
prior to such Cash/Public Acquisition, and Holder has not exercised this Warrant pursuant to Section 1.1 above as to all Shares, then this Warrant shall
automatically be deemed to be Cashless Exercised pursuant to Section 1.2 above as to all Shares effective immediately prior to and contingent upon the
consummation of a Cash/Public Acquisition. In connection with such Cashless Exercise, Holder shall be deemed to have restated each of the representations and
warranties in Section 4 of the Warrant as the date thereof and the Company shall promptly notify the Holder of the number of Shares (or such other securities)
issued upon exercise. In the event of a Cash/Public Acquisition where the fair market value of one Share as determined in accordance with Section 1.3 above would
be less than the Warrant Price in effect immediately prior to such Cash/Public Acquisition, then this Warrant will expire immediately prior to the consummation of
such Cash/Public Acquisition.
(c) Upon the closing of any Acquisition other than a Cash/Public Acquisition defined above, the acquiring, surviving or successor entity shall
assume the obligations of this Warrant, and this Warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for
the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject
to further adjustment from time to time in accordance with the provisions of this Warrant.
(d) As used in this Warrant, "Marketable Securities" means securities meeting all of the following requirements: (i) the issuer thereof is then
subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is then current
in its filing of all required reports and other information under the Act and the Exchange Act; (ii) the class and series of shares or other security of the issuer that
would be received by Holder in connection with the Acquisition were Holder to exercise this Warrant on or prior to the closing thereof is then traded in Trading
Market, and (iii) following the closing of such Acquisition, Holder would not be restricted from publicly re-selling all of the issuer's shares and/or other securities
that would be received by Holder in such Acquisition were Holder to exercise or convert this Warrant in full on or prior to the closing of such Acquisition, except
to the extent that any such restriction (x) arises solely under federal or state securities laws, rules or regulations, and (y) does not extend beyond six (6) months
from the closing of such Acquisition.
SECTION 2. ADJUSTMENTS TO THE SHARES AND WARRANT PRICE.
2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a dividend or distribution on the outstanding shares of the Common Stock
payable in securities or property (other than cash), then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without additional cost to
Holder, the total number and kind of securities and property which Holder would have received had Holder owned the Shares of record as of the date the dividend
or distribution occurred. If the Company subdivides the outstanding shares of the Common Stock by reclassification or otherwise into a greater number of shares,
the number of Shares purchasable hereunder shall be proportionately increased and the Warrant Price shall be proportionately decreased. If the outstanding shares
of the Common Stock are combined or
3
consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased and the number of Shares shall be
proportionately decreased.
2.2 Reclassification, Exchange, Combinations or Substitution. Upon any event whereby all of the outstanding shares of the Common Stock are
reclassified, exchanged, combined, substituted, or replaced for, into, with or by Company securities of a different class and/or series, then from and after the
consummation of such event, this Warrant will be exercisable for the number, class and series of Company securities that Holder would have received had the
Shares been outstanding on and as of the consummation of such event, and subject to further adjustment thereafter from time to time in accordance with the
provisions of this Warrant. The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, combinations substitutions,
replacements or other similar events.
2.3 Intentionally Omitted.
2.4 Intentionally Omitted.
2.5 No Fractional Share. No fractional Share shall be issuable upon exercise of this Warrant and the number of Shares to be issued shall be
rounded down to the nearest whole Share. If a fractional Share interest arises upon any exercise of the Warrant, the Company shall eliminate such fractional Share
interest by paying Holder in cash the amount computed by multiplying the fractional interest by (i) the fair market value (as determined in accordance with Section
1.3 above) of a full Share, less (ii) the then-effective Warrant Price.
2.6 Notice/Certificate as to Adjustments. Upon each adjustment of the Warrant Price, Common Stock and/or number of Shares, the Company, at
the Company's expense, shall notify Holder in writing within a reasonable time setting forth the adjustments to the Warrant Price, class and/or number of Shares
and facts upon which such adjustment is based. The Company shall, upon written request from Holder, furnish Holder with a certificate of its Chief Financial
Officer, including computations of such adjustment and the Warrant Price, class and number of Shares in effect upon the date of such adjustment.
SECTION 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 Representations and Warranties. The Company represents and warrants to, and agrees with, the Holder as follows:
(a) The initial Warrant Price referenced on the first page of this Warrant is not greater than the price per share at which shares of Company
Common Stock or options to purchase shares of Company Common Stock were issued immediately prior to the Issue Date hereof.
(b) All Shares which may be issued upon the exercise of this Warrant, shall, upon issuance, be duly authorized, validly issued, fully paid and
non-assessable, and free of any liens and encumbrances except those in favor of Holder and for restrictions on transfer provided for herein or under applicable
federal and state securities laws. The Company covenants that it shall at all times cause to be reserved and kept available out of its authorized and unissued capital
stock such number of securities as will be sufficient to permit the exercise in full of this Warrant.
4
(c) The Company's capitalization table attached hereto as Schedule 1 is true and complete, in all material respects, as of the Issue Date.
3.2 Notice of Certain Events. If the Company proposes at any time to:
(a) declare any dividend or distribution upon the outstanding shares of the Company's stock, whether in cash, property, stock, or other
securities and whether or not a regular cash dividend;
(b) offer for subscription or sale pro rata to the holders of the outstanding shares any additional shares of any class or series of the
Company's stock (other than pursuant to contractual preemptive rights);
(c) effect any reclassification, exchange, combination, substitution, reorganization or recapitalization of the outstanding shares of the
Common Stock;
(d) effect an Acquisition or to liquidate, dissolve or wind up; or
(e) effect its initial, underwritten offering and sale of its securities to the public pursuant to an effective registration statement under the
Act (the "IPO");
then, in connection with each such event, the Company shall give Holder:
(1) in the case of the matters referred to in (a) and (b) above, at least seven (7) Business Days prior written notice of the earlier to occur
of the effective date thereof or the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date
on which the holders of outstanding shares of the Common Stock will be entitled thereto) or for determining rights to vote, if any,
(2) in the case of the matters referred to in (c) and (d) above at least seven (7) Business Days prior written notice of the date when the
same will take place (and specifying the date on which the holders of outstanding shares of the Class will be entitled to exchange their shares for the
securities or other property deliverable upon the occurrence of such event and such reasonable information as Holder may reasonably require
regarding the treatment of this Warrant in connection with such event giving rise to the notice); and
(3) with respect to the IPO, at least seven (7) Business Days prior written notice of the date on which the Company proposes to file its
registration statement in connection therewith.
Company will also provide information requested by Holder that is reasonably necessary to enable Holder to comply with Holder's accounting or reporting
requirements.
SECTION 4. REPRESENTATIONS, WARRANTIES OF THE HOLDER.
The Holder represents and warrants to the Company as follows:
5
4.1 Purchase for Own Account. This Warrant and the Shares to be acquired upon exercise of this Warrant by Holder are being acquired for
investment for Holder's account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the Act. Holder also
represents that it has not been formed for the specific purpose of acquiring this Warrant or the Shares.
4.2 Disclosure of Information. Holder is aware of the Company's business affairs and financial condition and has received or has had full access
to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its
underlying securities. Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the
offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire
it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder has access.
4.3 Investment Experience. Holder understands that the purchase of this Warrant and its underlying securities involves substantial risk. Holder
has experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such Holder's
investment in this Warrant and its underlying securities and has such knowledge and experience in financial or business matters that Holder is capable of evaluating
the merits and risks of its investment in this Warrant and its underlying securities and/or has a preexisting personal or business relationship with the Company and
certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the character, business acumen and financial
circumstances of such persons.
4.4 Accredited Investor Status. Holder is an "accredited investor" within the meaning of Regulation D promulgated under the Act.
4.5 The Act. Holder understands that this Warrant and the Shares issuable upon exercise hereof have not been registered under the Act in
reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Holder's investment intent as
expressed herein. Holder understands that this Warrant and the Shares issued upon any exercise hereof must be held indefinitely unless subsequently registered
under the Act and qualified under applicable state securities laws, or unless exemption from such registration and qualification are otherwise available. Holder is
aware of the provisions of Rule 144 promulgated under the Act.
4.6 Market Stand-off Agreement. The Holder agrees that the Shares shall be subject to the Market Stand-off provisions in Section 2.11 of the
Amended and Restated Investor Rights Agreement, dated as of December 12, 2013 (as amended from time to time) (the "Market Stand Off Agreement").
4.7 No Voting or Other Stockholder Rights. Holder, as a Holder of this Warrant, will not have any voting rights or other rights as a stockholder
of the Company until the exercise of this Warrant.
6
SECTION 5. MISCELLANEOUS.
5.1 Term and Automatic Conversion Upon Expiration.
(a) Term. Subject to the provisions of Section 1.6 above, this Warrant is exercisable in whole or in part at any time and from time to time on or
before 6:00 PM, Pacific time, on the Expiration Date and shall be void thereafter.
(b) Automatic Cashless Exercise upon Expiration. In the event that, upon the Expiration Date, the fair market value of one Share (or other
security issuable upon the exercise hereof) as determined in accordance with Section 1.3 above is greater than the Warrant Price in effect on such date, then this
Warrant shall automatically be deemed on and as of such date to be exercised pursuant to Section 1.2 above as to all Shares (or such other securities) for which it
shall not previously have been exercised, and the Company shall, within a reasonable time, deliver a certificate representing the Shares (or such other securities)
issued upon such exercise to Holder.
5.2 Legends. The Shares (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) shall be imprinted with a
legend in substantially the following form:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN
WARRANT TO PURCHASE COMMON STOCK ISSUED BY THE ISSUER TO SILICON VALLEY BANK DATED JUNE 24, 2014,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID
ACT AND LAWS OR IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER
TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
5.3 Compliance with Securities Laws on Transfer. This Warrant and the Shares issuable upon exercise of this Warrant ( and the securities
issuable, directly or indirectly, upon conversion of the Shares, if any) may not be transferred or assigned in whole or in part except in compliance with applicable
federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal
opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of
counsel if the transfer is to SVB Financial Group (Silicon Valley Bank's parent company) or any other Affiliate of Holder, provided that any such transferee is an
"accredited investor" as defined in Regulation D promulgated under the Act. Additionally, the Company shall also not require an opinion of counsel if there is no
material question as to the availability of Rule 144 promulgated under the Act. As used herein, an "Affiliate" means, with respect to any Holder, any other entity
which, directly or indirectly, controls, is controlled by, or is under common control with such Holder.
7
5.4 Transfer Procedure. After receipt by Silicon Valley Bank of the executed Warrant, Silicon Valley Bank will transfer all of this Warrant to its
parent company, SVB Financial Group. By its acceptance of this Warrant, SVB Financial Group hereby makes to the Company each of the representations and
warranties set forth in Section 4 hereof and agrees to be bound by all of the terms and conditions of this Warrant as if the original Holder hereof, including without
limitation Section 4.6 hereof. Subject to the provisions of Section 5.3 and upon providing the Company with written notice, SVB Financial Group and any
subsequent Holder may transfer all or part of this Warrant or the Shares issuable upon exercise of this Warrant (or the securities issuable directly or indirectly, upon
conversion of the Shares, if any) to any transferee, provided, however, in connection with any such transfer, SVB Financial Group or any subsequent Holder will
give the Company notice of the portion of the Warrant being transferred with the name, address and taxpayer identification number of the transferee and Holder
will surrender this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable); and provided further, that any subsequent transferee other
than SVB Financial Group shall agree in writing with the Company to be bound by all of the terms and conditions of this Warrant, including without limitation
Section 4.6 hereof. Notwithstanding any contrary provision herein, at all times prior to the IPO, Holder may not, without the Company's prior written consent,
transfer this Warrant or any portion hereof, or any Shares issued upon any exercise hereof, or any shares or other securities issued upon any conversion of any
Shares issued upon any exercise hereof, to any person or entity who directly competes with the Company, except in connection with an Acquisition of the
Company by such a direct competitor.
5.5 Notices. All notices and other communications hereunder from the Company to the Holder, or vice versa, shall be deemed delivered and
effective (i) when given personally, (ii) on the third (3rd) Business Day after being mailed by first-class registered or certified mail, postage prepaid, (iii) upon
actual receipt if given by facsimile or electronic mail and such receipt is confirmed in writing by the recipient, or (iv) on the first Business Day following delivery
to a reliable overnight courier service, courier fee prepaid, in any case at such address as may have been furnished to the Company or Holder, as the case may be, in
writing by the Company or such Holder from time to time in accordance with the provisions of this Section 5 .5. All notices to Holder shall be addressed as follows
until the Company receives notice of a change of address in connection with a transfer or otherwise:
SVB Financial Group
Attn: Treasury Department
3003 Tasman Drive, HC 215
Santa Clara, CA 95054
Telephone: (408) 654-7400
Facsimile: (408) 988-8317
Email address:
Notice to the Company shall be addressed as follows until Holder receives notice of a change in address:
Coinbase Global, Inc.
548 Market Street
8
No. 23008
San Francisco, CA 94104
Attn: Fred Ehrsam
Telephone:
Facsimile: N/A
Email:
5.6 Waiver. This Warrant and any term hereof may be changed, waived, discharged or terminated (either generally or in a particular instance and
either retroactively or prospectively) only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or
termination is sought.
5.7 Attorney's Fees. In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys' fees.
5.8 Counterparts; Facsimile/Electronic Signatures. This Warrant may be executed in counterparts, all of which together shall constitute one and
the same agreement. Any signature page delivered electronically or by facsimile shall be binding to the same extent as an original signature page with regards to
any agreement subject to the terms hereof or any amendment thereto.
5.9 Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of California, without giving
effect to its principles regarding conflicts of law.
5.10 Headings. The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any
provision of this Warrant.
5.11 Business Days. "Business Day" is any day that is not a Saturday, Sunday or a day on which Silicon Valley Bank is closed.
[Remainder of page left blank intentionally]
[Signature page follows]
9
IN WITNESS WHEREOF, the parties have caused this Warrant to Purchase Common Stock to be executed by their duly authorized representatives
effective as of the Issue Date written above.
"COMPANY"
COINBASE GLOBAL, INC.
By: /s/ Fred Ehrsam
Name: Fred Ehrsam
(Print)
Title: President
"HOLDER"
SILICON VALLEY BANK
By: /s/ Jason Mok
Name: Jason Mok
(Print)
Title: Director
10
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned Holder hereby exercises its right to purchase _____________ shares of the Common Stock of Coinbase Global, Inc. (the
"Company") in accordance with the attached Warrant To Purchase Common Stock (the "Warrant"), and tenders payment of the aggregate Warrant Price for such
shares as follows:
[ ] Check in the amount of $________payable to order of the Company enclosed herewith
[ ] Wire transfer of immediately available funds to the Company's account
[ ] Cashless Exercise pursuant to Section 1.2 of the Warrant
[ ] Other [Describe]
2. Please issue a certificate or certificates representing the Shares (as defined in the Warrant) in the name specified below:
Holder's Name
(Address)
3. By its execution below and for the benefit of the Company, Holder hereby restates each of the representations and warranties in Section 4 of the
Warrant as of the date hereof.
HOLDER:
By:
Name:
Title:
(Date):
Appendix 1
SCHEDULE 1
Company Capitalization Table
See attached
Schedule 1
Exhibit 4.4
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR IN FORM AND SUBSTANCE
SATISFACTORY TO THE COMPANY, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
WARRANT TO PURCHASE CLASS A COMMON STOCK
Company: Coinbase Global, Inc.
Number of Shares of Class A Common Stock: 4,201
Warrant Price: $5.26 per share
Issue Date: July 31, 2020
Expiration Date: July 31, 2030 See also Section 5.1(b).
This Warrant to Purchase Class A Common Stock (“Warrant”) is issued in connection with that certain Agreement and Plan of Merger, dated May 20,
2020 between the Company, Tagomi Holdings Inc. and other parties thereto.
THIS WARRANT CERTIFIES THAT, for good and valuable consideration, SVB FINANCIAL GROUP (together with any successor or permitted assignee or
transferee of this Warrant or of any shares issued upon exercise hereof, “Holder”) is entitled to purchase the number of fully paid and non- assessable shares (the “Shares”) of
the above-stated Class A Common Stock (the “Common Stock”) of the above-named company (the “Company”) at the above-stated Warrant Price, all as set forth above and
as adjusted pursuant to Section 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant.
SECTION 1. EXERCISE.
1.1 Method of Exercise. Holder may at any time and from time to time exercise this Warrant, in whole or in part, by delivering to the Company the
original of this Warrant together with a duly executed Notice of Exercise in substantially the form attached hereto as Appendix 1 and, unless Holder is exercising this Warrant
pursuant to a cashless exercise set forth in Section 1.2, a check, wire transfer of same-day funds (to an account designated by the Company), or other form of payment
acceptable to the Company for the aggregate Warrant Price for the Shares being purchased.
1.2 Cashless Exercise. On any exercise of this Warrant, in lieu of payment of the aggregate Warrant Price in the manner as specified in Section 1.1 above,
but otherwise in accordance with the requirements of Section 1.1, Holder may elect to receive Shares equal to the value of this Warrant, or portion hereof as to which this
Warrant is being exercised. Thereupon, the Company shall issue to the Holder such number of fully paid and non-assessable Shares as are computed using the following
formula:
X = Y(A-B)/A
where:
X = the number of Shares to be issued to the Holder;
Y = the number of Shares with respect to which this Warrant is being exercised (inclusive of the Shares surrendered to the Company in payment of
the aggregate Warrant Price);
A = the fair market value (as determined pursuant to Section 1.3 below) of one Share; and
B = the Warrant Price.
1.3 Fair Market Value. If the Company’s Common Stock is then traded or quoted on a nationally recognized securities exchange, inter-dealer quotation
system or over-the-counter market (a “Trading Market”), the fair market value of a Share shall be the closing price or last sale price of a share of Common Stock reported
for the Business Day immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the Company. If the Company’s Common
Stock is not traded in a Trading Market, the Board of Directors of the Company shall determine the fair market value of a Share in its reasonable good faith judgment.
1.4 Delivery of Certificate and New Warrant. Within a reasonable time after Holder exercises this Warrant in the manner set forth in Section 1.1 or 1.2
above, the Company shall deliver to Holder a certificate representing the Shares issued to Holder upon such exercise and, if this Warrant has not been fully exercised and has
not expired, a new warrant of like tenor representing the Shares not so acquired.
1.5 Replacement of Warrant. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form, substance and amount to the Company or, in the case of
mutilation, on surrender of this Warrant to the Company for cancellation, the Company shall, within a reasonable time, execute and deliver to Holder, in lieu of this Warrant, a
new warrant of like tenor and amount.
1.6 Treatment of Warrant Upon Acquisition of Company.
(a) Acquisition. For the purpose of this Warrant, “Acquisition” means any Liquidation Event, as defined in the Company’s Amended and Restated
Certificate of Incorporation, as amended from time to time.
(b) Treatment of Warrant at Acquisition. In the event of an Acquisition in which the consideration to be received by the Company’s stockholders consists
solely of cash, solely of Marketable Securities or a combination of cash and Marketable Securities (a “Cash/Public Acquisition”), and the fair market value of one Share as
determined in accordance with Section 1.3 above would be greater than the Warrant Price in effect on such date immediately prior to such Cash/Public Acquisition, and
Holder has not exercised this Warrant pursuant to Section 1.1 above as to all Shares, then this Warrant shall automatically be deemed to be Cashless Exercised pursuant to
Section 1.2 above as to all Shares effective immediately prior to and contingent upon the consummation of a Cash/Public Acquisition. In connection with such Cashless
Exercise, Holder shall be deemed to have restated each of the representations and warranties in Section 4 of the Warrant as the date thereof and the Company shall promptly
notify the Holder of the number of Shares (or such other securities) issued upon exercise. In the event of a Cash/Public Acquisition where the fair market value of one Share
as determined in accordance with Section 1.3 above would be less than the Warrant Price in effect
immediately prior to such Cash/Public Acquisition, then this Warrant will expire immediately prior to the consummation of such Cash/Public Acquisition.
(c) Upon the closing of any Acquisition other than a Cash/Public Acquisition defined above, the acquiring, surviving or successor entity shall assume the
obligations of this Warrant, and this Warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares issuable upon
exercise of the unexercised portion of this Warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to
time in accordance with the provisions of this Warrant.
(d) As used in this Warrant, “Marketable Securities” means securities meeting all of the following requirements: (i) the issuer thereof is then subject to
the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is then current in its filing of all
required reports and other information under the Act and the Exchange Act; (ii) the class and series of shares or other security of the issuer that would be received by Holder
in connection with the Acquisition were Holder to exercise this Warrant on or prior to the closing thereof is then traded in Trading Market, and (iii) following the closing of
such Acquisition, Holder would not be restricted from publicly re-selling all of the issuer’s shares and/or other securities that would be received by Holder in such Acquisition
were Holder to exercise or convert this Warrant in full on or prior to the closing of such Acquisition, except to the extent that any such restriction (x) arises solely under
federal or state securities laws, rules or regulations, and (y) does not extend beyond six (6) months from the closing of such Acquisition.
SECTION 2. ADJUSTMENTS TO THE SHARES AND WARRANT PRICE.
2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a dividend or distribution on the outstanding shares of the Common Stock payable in
securities or property (other than cash), then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without additional cost to Holder, the total number
and kind of securities and property which Holder would have received had Holder owned the Shares of record as of the date the dividend or distribution occurred. If the
Company subdivides the outstanding shares of the Common Stock by reclassification or otherwise into a greater number of shares, the number of Shares purchasable
hereunder shall be proportionately increased and the Warrant Price shall be proportionately decreased. If the outstanding shares of the Common Stock are combined or
consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased and the number of Shares shall be
proportionately decreased.
2.2 Reclassification, Exchange, Combinations or Substitution. Upon any event whereby all of the outstanding shares of the Common Stock are
reclassified, exchanged, combined, substituted, or replaced for, into, with or by Company securities of a different class and/or series, then from and after the consummation of
such event, this Warrant will be exercisable for the number, class and series of Company securities that Holder would have received had the Shares been outstanding on and
as of the consummation of such event, and subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant. The provisions of this
Section 2.2 shall similarly apply to successive reclassifications, exchanges, combinations substitutions, replacements or other similar events.
2.3 No Fractional Share. No fractional Share shall be issuable upon exercise of this Warrant and the number of Shares to be issued shall be rounded down
to the nearest whole Share. If a fractional Share interest arises upon any exercise of the Warrant, the Company shall eliminate such
fractional Share interest by paying Holder in cash the amount computed by multiplying the fractional interest by (i) the fair market value (as determined in accordance with
Section 1.3 above) of a full Share, less (ii) the then-effective Warrant Price.
2.4 Notice/Certificate as to Adjustments. Upon each adjustment of the Warrant Price, Common Stock and/or number of Shares, the Company, at the
Company’s expense, shall notify Holder in writing within a reasonable time setting forth the adjustments to the Warrant Price, class and/or number of Shares and facts upon
which such adjustment is based. The Company shall, upon written request from Holder, furnish Holder with a certificate of its Chief Financial Officer, including computations
of such adjustment and the Warrant Price, class and number of Shares in effect upon the date of such adjustment.
SECTION 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 Representations and Warranties. The Company represents and warrants to, and agrees with, the Holder as follows:
All Shares which may be issued upon the exercise of this Warrant, shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and
free of any liens and encumbrances except for those in favor of Holder and for restrictions on transfer provided for herein or under applicable federal and state securities laws.
The Company covenants that it shall at all times cause to be reserved and kept available out of its authorized and unissued capital stock such number of securities as will be
sufficient to permit the exercise in full of this Warrant.
3.2 Notice of Certain Events. If the Company proposes at any time to:
(a) declare any dividend or distribution upon the outstanding shares of the Company’s stock, whether in cash, property, stock, or other securities
and whether or not a regular cash dividend;
(b) effect an Acquisition or to liquidate, dissolve or wind up; or
(c) effect its initial, underwritten offering and sale of its securities to the public pursuant to an effective registration statement under the Act (the
“IPO”);
then, in connection with each such event, the Company shall give Holder:
(1) in the case of the matters referred to in (a) above, at least seven (7) Business Days prior written notice of the earlier to occur of the effective
date thereof or the date on which a record will be taken for such dividend or distribution,
(2) in the case of the matters referred to in (b) above at least seven (7) Business Days prior written notice of the date when the same will take
place (and specifying the date on which the holders of outstanding shares of the Class will be entitled to exchange their shares for the securities or other
property deliverable upon the occurrence of such event and such reasonable information as Holder may reasonably require regarding the treatment of this
Warrant in connection with such event giving rise to the notice); and
(3) with respect to the IPO, at least seven (7) Business Days prior written notice of the effective date of the Company’s registration statement in
connection therewith.
Company will also provide information requested by Holder that is reasonably necessary to enable Holder to comply with Holder’s accounting or reporting requirements;
provided, that any such information provided in connection with this Warrant shall be the confidential information of the Company.
SECTION 4. REPRESENTATIONS, WARRANTIES OF THE HOLDER.
The Holder represents and warrants to the Company as follows:
4.1 Purchase for Own Account. This Warrant and the Shares to be acquired upon exercise of this Warrant by Holder are being acquired for investment for
Holder’s account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the Act. Holder also represents that it has not been
formed for the specific purpose of acquiring this Warrant or the Shares.
4.2 Disclosure of Information. Holder is aware of the Company’s business affairs and financial condition and has received or has had full access to all the
information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities. Holder
further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying
securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to
verify any information furnished to Holder or to which Holder has access.
4.3 Investment Experience. Holder understands that the purchase of this Warrant and its underlying securities involves substantial risk. Holder has
experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such Holder’s investment in this
Warrant and its underlying securities and has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its
investment in this Warrant and its underlying securities and/or has a preexisting personal or business relationship with the Company and certain of its officers, directors or
controlling persons of a nature and duration that enables Holder to be aware of the character, business acumen and financial circumstances of such persons.
4.4 Accredited Investor Status. Holder is an “accredited investor” within the meaning of Regulation D promulgated under the Act.
4.5 The Act. Holder understands that this Warrant and the Shares issuable upon exercise hereof have not been registered under the Act in reliance upon a
specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Holder’s investment intent as expressed herein. Holder
understands that this Warrant and the Shares issued upon any exercise hereof must be held indefinitely unless subsequently registered under the Act and qualified under
applicable state securities laws, or unless exemption from such registration and qualification are otherwise available. Holder is aware of the provisions of Rule 144
promulgated under the Act.
4.6 Market Stand-off Agreement. The Holder agrees that the Shares shall be subject to the Market Stand-off provisions in Section 2.11 of the Amended
and Restated Investor Rights Agreement, dated as of June 15, 2017 (as amended from time to time) (the “Market Stand Off Agreement”).
4.7 No Voting or Other Stockholder Rights. Holder, as a Holder of this Warrant, will not have any voting rights or other rights as a stockholder of the
Company until the exercise of this Warrant.
SECTION 5. MISCELLANEOUS.
5.1 Term and Automatic Conversion Upon Expiration.
(a) Term. Subject to the provisions of Section 1.6 above, this Warrant is exercisable in whole or in part at any time and from time to time on or before
6:00 PM, Pacific time, on the Expiration Date and shall be void thereafter.
(b) Automatic Cashless Exercise upon Expiration. In the event that, upon the Expiration Date, the fair market value of one Share (or other security
issuable upon the exercise hereof) as determined in accordance with Section 1.3 above is greater than the Warrant Price in effect on such date, then this Warrant shall
automatically be deemed on and as of such date to be exercised pursuant to Section 1.2 above as to all Shares (or such other securities) for which it shall not previously have
been exercised, and the Company shall, within a reasonable time, deliver a certificate representing the Shares (or such other securities) issued upon such exercise to Holder.
5.2 Legends. The Shares (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) shall be imprinted with a legend in
substantially the following form:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT
TO PURCHASE CLASS A COMMON STOCK ISSUED BY THE ISSUER TO SVB FINANCIAL GROUP DATED JULY 31, 2020, MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS
OR IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT
FROM SUCH REGISTRATION.
5.3 Compliance with Securities Laws on Transfer. This Warrant and the Shares issuable upon exercise of this Warrant (and the securities issuable, directly
or indirectly, upon conversion of the Shares, if any) may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities
laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the
Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to any Affiliate of Holder,
provided that any such transferee is an “accredited investor” as defined in Regulation D promulgated under the Act. Additionally, the Company shall also not require an
opinion of counsel if there is no material question as to the availability of Rule 144 promulgated under the Act. As used herein, an “Affiliate” means, with respect to any
Holder, any other entity which, directly or indirectly, controls, is controlled by, or is under common control with such Holder.
5.4 Notices. All notices and other communications hereunder from the Company to the Holder, or vice versa, shall be deemed delivered and effective (i)
when given personally, (ii) on the
third (3rd) Business Day after being mailed by first-class registered or certified mail, postage prepaid, (iii) if given by facsimile, upon confirmation of facsimile transfer, or if
sent via electronic mail, upon transmission when directed to the relevant electronic mail address, or (iv) on the first Business Day following delivery to a reliable overnight
courier service, courier fee prepaid, in any case at such address as may have been furnished to the Company or Holder, as the case may be, in writing by the Company or such
Holder from time to time in accordance with the provisions of this Section 5.4. All notices to Holder shall be addressed as follows until the Company receives notice of a
change of address in connection with a transfer or otherwise:
SVB Financial Group
Attn: Treasury Department
3003 Tasman Drive, HC 215
Santa Clara, CA 95054
Telephone: (408) 654-7400
Facsimile: (408) 988-8317
Email address:
Notice to the Company shall be addressed as follows until Holder receives notice of a change in address:
Coinbase Global, Inc.
100 Pine Street, Suite 1250
San Francisco, CA 94111
Attn: General Counsel
Email:
5.5 Waiver. This Warrant and any term hereof may be changed, waived, discharged or terminated (either generally or in a particular instance and either
retroactively or prospectively) only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.
5.6 Attorney’s Fees. In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such
dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.
5.7 Counterparts; Facsimile/Electronic Signatures. This Warrant may be executed in counterparts, all of which together shall constitute one and the same
agreement. Any signature page delivered electronically or by facsimile shall be binding to the same extent as an original signature page with regards to any agreement subject
to the terms hereof or any amendment thereto.
5.8 Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of California, without giving effect to its
principles regarding conflicts of law.
5.9 Headings. The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this
Warrant.
5.10 Business Days. “Business Day” is any day that is not a Saturday, Sunday or a day on which SVB Financial Group is closed.
[Remainder of page left blank intentionally]
[Signature page follows]
IN WITNESS WHEREOF, the parties have caused this Warrant to Purchase Class A Common Stock to be executed by their duly authorized representatives effective
as of the Issue Date written above.
“COMPANY”
COINBASE GLOBAL, INC.
By: /s/ Alesia Haas
Name: Alesia Haas
Title: Chief Financial Officer
“HOLDER”
SVB FINANCIAL GROUP
By: /s/ David Busch
Name: David Busch
Title: Senior Manager, Corporate Investments & Funding
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned Holder hereby exercises its right to purchase shares of the Class A Common Stock of Coinbase Global, Inc. (the “Company”) in
accordance with the attached Warrant To Purchase Class A Common Stock (the “Warrant”), and tenders payment of the aggregate Warrant Price for such shares as follows:
[ ] Check in the amount of $ payable to order of the Company enclosed herewith
[ ] Wire transfer of immediately available funds to the Company’s account
[ ] Cashless Exercise pursuant to Section 1.2 of the Warrant
[ ] Other [Describe] _______________________________________________
2. Please issue a certificate or certificates representing the Shares (as defined in the Warrant) in the name specified below:
Holder’s Name
(Address)
3. By its execution below and for the benefit of the Company, Holder hereby restates each of the representations and warranties in Section 4 of the Warrant as of
the date hereof.
HOLDER:
By:
Name:
Title:
(Date):
Exhibit 10.1
INDEMNITY AGREEMENT
This Indemnity Agreement, dated as of ____________________ is made by and between Coinbase Global, Inc., a Delaware corporation (collectively with its
subsidiaries, the “Company”), and _____________________, a director, officer or key employee of the Company or one of the Company’s subsidiaries or other service
provider who satisfies the definition of Indemnifiable Person set forth below (“Indemnitee”).
RECITALS
A. The Company is aware that competent and experienced persons are increasingly reluctant to serve as representatives of corporations unless they are protected
by comprehensive liability insurance and indemnification, due to increased exposure to litigation costs and risks resulting from their service to such corporations, and due to
the fact that the exposure frequently bears no relationship to the compensation of such representatives;
B. The members of the Board of Directors of the Company (the “Board”) have concluded that to retain and attract talented and experienced individuals to serve
as representatives of the Company and its Subsidiaries and Affiliates and to encourage such individuals to take the business risks necessary for the success of the Company
and its Subsidiaries and Affiliates, it is necessary for the Company to contractually indemnify certain of its representatives and the representatives of its Subsidiaries and
Affiliates, and to assume for itself maximum liability for Expenses and Other Liabilities in connection with claims against such representatives in connection with their
service to the Company and its Subsidiaries and Affiliates;
C. Section 145 of the Delaware General Corporation Law (“Section 145”), empowers the Company to indemnify by agreement its officers, directors, employees
and agents, and persons who serve, at the request of the Company, as directors, officers, employees or agents of other corporations, partnerships, joint ventures, trusts or other
enterprises, and expressly provides that the indemnification provided thereby is not exclusive; and
D. The Company desires and has requested Indemnitee to serve or continue to serve as a representative of the Company and/or the Subsidiaries or Affiliates of
the Company free from undue concern about inappropriate claims for damages arising out of or related to such services to the Company and/or the Subsidiaries or Affiliates of
the Company.
E. The Indemnitee may have certain rights to indemnification and/or insurance which are intended to be secondary to the primary obligation of the Company to
indemnify Indemnitee as provided herein, with the Company’s acknowledgment and agreement to the foregoing being a material condition to Indemnitee’s willingness to
serve on the Company’s Board of Directors.
AGREEMENT
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Definitions.
(a) Affiliate. For purposes of this Agreement, “Affiliate” of the Company means any corporation, partnership, limited liability company, joint venture,
trust or other enterprise in respect of which Indemnitee is or was or will be serving as a director, officer, trustee, manager, member, partner, employee, agent, attorney,
consultant, member of the entity’s governing body (whether constituted as a board of directors, board of managers, general partner or otherwise), fiduciary, or in any other
similar capacity at the request, election or direction of the Company, and including, but not limited to, any employee benefit plan of the Company or a Subsidiary or Affiliate
of the Company.
(b) Change in Control. For purposes of this Agreement, “Change in Control” means any event or circumstance where (i) any “person” (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than a Subsidiary or a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or Subsidiary, is or becomes the “Beneficial Owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing 50% or more of the total voting power represented by the Company’s then outstanding capital stock, (ii) during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board and any new director whose election by the Board or nomination for election by the Company’s
stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to constitute a majority thereof, (iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or consolidation that would result in the outstanding capital stock of the Company outstanding
immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into capital stock of the surviving entity) at least 50% of the total
voting power represented by the capital stock of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the stockholders of
the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company (in one transaction or a series of
transactions) of all or substantially all of the Company’s assets.
(c) Expenses. For purposes of this Agreement, “Expenses” means all direct and indirect costs of any type or nature whatsoever (including, without
limitation, all reasonable and documented attorneys’ fees and related disbursements, and other out-of-pocket costs), paid or incurred by Indemnitee in connection with either
the investigation, defense or appeal of, or being a witness or otherwise involved in, a Proceeding (as defined below), or establishing or enforcing a right to indemnification
under this Agreement, Section 145 or otherwise; provided, however, that Expenses shall not include any judgments, fines, taxes (including ERISA or other benefit plan related
excise taxes or penalties) or amounts paid in settlement of a Proceeding.
(d) Indemnifiable Event. For purposes of this Agreement, “Indemnifiable Event” means any event or occurrence related to Indemnitee’s service for the
Company or any Subsidiary or Affiliate as an Indemnifiable Person (as defined below), or by reason of anything done or not done, or any act or omission, by Indemnitee in
any such capacity.
2
(e) Indemnifiable Person. For the purposes of this Agreement, “Indemnifiable Person” means any person who is or was a director, officer, trustee,
manager, member, partner, employee, attorney, consultant, member of an entity’s governing body (whether constituted as a board of directors, board of managers, general
partner or otherwise) or other agent or fiduciary of the Company or a Subsidiary or Affiliate of the Company.
(f) Independent Counsel. For purposes of this Agreement, “Independent Counsel” means legal counsel that has not performed services for the Company
or Indemnitee in the five years preceding the time in question and that would not, under applicable standards of professional conduct, have a conflict of interest in representing
either the Company or Indemnitee.
(g) Independent Director. For purposes of this Agreement, “Independent Director” means a member of the Board who is not a party to the Proceeding for
which a claim is made under this Agreement.
(h) Other Liabilities. For purposes of this Agreement, “Other Liabilities” means any and all liabilities of any type whatsoever (including, but not limited
to, judgments, fines, penalties, taxes (including ERISA or other benefit plan related excise taxes or penalties), and amounts paid in settlement and all interest, taxes,
assessments and other charges paid or payable in connection with or in respect of any such judgments, fines, ERISA (or other benefit plan related) excise taxes or penalties, or
amounts paid in settlement).
(i) Proceeding. For the purposes of this Agreement, “Proceeding” means any threatened, pending, or completed action, suit or other proceeding, whether
civil, criminal, administrative, investigative, legislative or any other type whatsoever, preliminary, informal or formal, including any arbitration or other alternative dispute
resolution and including any appeal of any of the foregoing.
(j) Subsidiary. For purposes of this Agreement, “Subsidiary” means any entity of which more than 50% of the outstanding voting securities is owned
directly or indirectly by the Company.
2. Agreement to Serve. The Indemnitee agrees to serve and/or continue to serve as an Indemnifiable Person in the capacity or capacities in which Indemnitee
currently serves the Company as an Indemnifiable Person, and any additional capacity in which Indemnitee may agree to serve, until such time as Indemnitee’s service in a
particular capacity shall end according to the terms of an agreement, the Company’s Certificate of Incorporation or Bylaws, governing law, or otherwise. Nothing contained in
this Agreement is intended to create any right to continued employment or other form of service for the Company or a Subsidiary or Affiliate of the Company by Indemnitee.
3. Mandatory Indemnification.
(a) Agreement to Indemnify. In the event Indemnitee is a person who was or is a party to or witness in or is threatened to be made a party to or witness in
any Proceeding by reason of an Indemnifiable Event, the Company shall indemnify Indemnitee from and against any and all Expenses and Other Liabilities incurred by
Indemnitee in connection with (including in preparation for) such Proceeding to the fullest extent not prohibited by the provisions of the Company’s Bylaws and the Delaware
General Corporation Law (“DGCL”), as the same may be amended from time to time (but only to the extent that such amendment permits the Company to provide broader
indemnification rights than the Bylaws or the DGCL permitted prior to the adoption of such amendment).
3
(b) Exception for Amounts Covered by Insurance and Other Sources. Notwithstanding the foregoing, the Company shall not be obligated to indemnify
Indemnitee for Expenses or Other Liabilities of any type whatsoever (including, but not limited to judgments, fines, penalties, ERISA excise taxes or penalties and amounts
paid in settlement) to the extent such have been paid directly to Indemnitee (or paid directly to a third party on Indemnitee’s behalf) by any directors and officers, or other
type, of insurance maintained by the Company; provided, however, that payment made to Indemnitee pursuant to an insurance policy purchased and maintained by
Indemnitee at his or her own expense of any amounts otherwise indemnifiable or obligated to be made pursuant to this Agreement shall not reduce the Company’s obligations
to Indemnitee pursuant to this Agreement.
(c) Company Obligations Primary. The Company hereby acknowledges that Indemnitee may have rights to indemnification for Expenses and Other
Liabilities provided by a venture capital firm or other sponsoring organization (“Other Indemnitor”). The Company agrees with Indemnitee that the Company is the
indemnitor of first resort of Indemnitee with respect to matters for which indemnification is provided under this Agreement and that the Company will be obligated to make
all payments due to or for the benefit of Indemnitee under this Agreement without regard to any rights that Indemnitee may have against the Other Indemnitor. The Company
hereby waives any equitable rights to contribution or indemnification from the Other Indemnitor in respect of any amounts paid to Indemnitee hereunder. The Company
further agrees that no reimbursement of Other Liabilities or payment of Expenses by the Other Indemnitor to or for the benefit of Indemnitee shall affect the obligations of the
Company hereunder, and that the Company shall be obligated to repay the Other Indemnitor for all amounts so paid or reimbursed to the extent that the Company has an
obligation to indemnify Indemnitee for such Expenses or Other Liabilities hereunder.
4. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of any
Expenses or Other Liabilities but not entitled, however, to indemnification for the total amount of such Expenses or Other Liabilities, the Company shall nevertheless
indemnify Indemnitee for such total amount except as to the portion thereof for which indemnification is prohibited by the provisions of the Company’s Bylaws or the DGCL.
In any review or Proceeding to determine the extent of indemnification, the Company shall bear the burden to establish, by clear and convincing evidence, the lack of a
successful resolution of a particular claim, issue or matter and which amounts sought in indemnity are allocable to claims, issues or matters which were not successfully
resolved.
5. Liability Insurance. So long as Indemnitee shall continue to serve the Company or a Subsidiary or Affiliate of the Company as an Indemnifiable Person and
thereafter so long as Indemnitee shall be subject to any possible claim or threatened, pending or completed Proceeding as a result of an Indemnifiable Event, the Company
shall use reasonable efforts to maintain in full force and effect for the benefit of Indemnitee as an insured (i) liability insurance issued by one or more reputable insurers and
having the policy amount and deductible deemed appropriate by the Board and providing in all respects coverage at least comparable to and in the same amount as that
provided to the Chairman of the Board or the Chief Executive Officer of the Company and (ii) any replacement or substitute policies issued by one or more reputable insurers
providing in all respects coverage at least comparable to and in the same amount as that being provided to the Chairman of the Board or the Chief Executive Officer of the
Company. The purchase, establishment and maintenance of any such insurance or other arrangements shall not in any way limit or affect the rights and obligations of the
Company or of Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Company and Indemnitee shall
not in any way limit or affect the rights and obligations of the Company or the other party or parties thereto under any such insurance or other arrangement. In the event of a
Change
4
in Control subsequent to the date of this Agreement, or the Company’s becoming insolvent, including being placed into receivership or entering the federal bankruptcy
process, the Company shall use reasonable efforts to maintain in force any and all insurance policies then maintained by the Company in providing insurance—directors’ and
officers’ liability, fiduciary, employment practices or otherwise—in respect of the individual directors and officers of the Company, for a fixed period of six years thereafter.
Such coverage shall be non-cancelable and shall be placed and serviced by the Company’s incumbent insurance broker or a broker selected by a majority of the Independent
Directors.
6. Mandatory Advancement of Expenses. If requested by Indemnitee, the Company shall advance all Expenses incurred by Indemnitee prior to the final
disposition of the Proceeding / in connection with (including in preparation for) a Proceeding related to an Indemnifiable Event within (30) days after the receipt by the
Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding.
Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee. The right to advances under this section shall in all events continue until final
disposition of any Proceeding, including any appeal therein. Indemnitee hereby undertakes to repay such amounts advanced if, and only if and to the extent that, it shall
ultimately be determined that Indemnitee is not entitled to be indemnified by the Company under the provisions of this Agreement, the Company’s Bylaws or the DGCL, and
no additional form of undertaking with respect to such obligation to repay shall be required. Indemnitee’s undertaking to repay any Expenses advanced to Indemnitee
hereunder shall be unsecured and shall not be subject to the accrual or payment of any interest thereon. In the event that Indemnitee’s request for the advancement of expenses
shall be accompanied by an affidavit of counsel to Indemnitee to the effect that such counsel has reviewed such Expenses and that such Expenses are reasonable in such
counsel’s view, then such expenses shall be deemed reasonable in the absence of clear and convincing evidence to the contrary.
7. Notice and Other Indemnification Procedures.
(a) Notification. Promptly after receipt by Indemnitee of notice of the commencement of or the threat of commencement of any Proceeding, unless the
Company is a named co-defendant with Indemnitee, Indemnitee shall, if Indemnitee believes that indemnification or advancement of Expenses with respect thereto may be
sought from the Company under this Agreement, notify the Company of the commencement or threat of commencement thereof. However, a failure so to notify the Company
promptly following Indemnitee’s receipt of such notice shall not relieve the Company from any liability that it may have to Indemnitee except to the extent that the Company
is materially prejudiced in its defense of such Proceeding as a result of such failure.
(b) Insurance and Other Matters. If, at the time of the receipt of a notice of the commencement of a Proceeding pursuant to Section 7(a) above, the
Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such Proceeding to the issuers in accordance
with the procedures set forth in the respective policies. The Company shall thereafter take all reasonable action to cause such insurers to pay, on behalf of Indemnitee, all
amounts payable as a result of such Proceeding in accordance with the terms of such insurance policies. In addition, the Company will instruct the insurers and the Company’s
insurance broker that they may communicate directly with Indemnitee regarding such claim.
(c) Assumption of Defense. In the event the Company shall be obligated to advance the Expenses for any Proceeding against Indemnitee, the Company, if
deemed appropriate by the Company, shall be entitled to assume the defense of such Proceeding as provided herein. Such defense
5
by the Company may include the representation of two or more parties by one attorney or law firm as permitted under the ethical rules and legal requirements related to joint
representations. Following delivery of written notice to Indemnitee of the Company’s election to assume the defense of such Proceeding, the approval by Indemnitee (which
approval shall not be unreasonably withheld) of counsel designated by the Company and the retention of such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any fees and expenses of counsel subsequently incurred by Indemnitee with respect to the same Proceeding. If (A) the employment of
counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have notified the Board in writing that Indemnitee has reasonably concluded that
there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense, (C) the Company fails to employ counsel to assume the defense
of such Proceeding, or (D) after a Change in Control, the employment of counsel by Indemnitee has been approved by the Independent Counsel, the Expenses related to work
conducted by Indemnitee’s counsel shall be subject to indemnification and/or advancement pursuant to the terms of this Agreement. Nothing herein shall prevent Indemnitee
from employing counsel for any such Proceeding at Indemnitee’s expense. Indemnitee agrees that any such separate counsel retained by Indemnitee will be a member of any
approved list of panel counsel under the Company’s applicable directors’ and officers’ insurance policy, should the applicable policy provide for a panel of approved counsel.
(d) Settlement. The Company shall not be liable to indemnify Indemnitee under this Agreement or otherwise for any amounts paid in settlement of any
Proceeding effected without the Company’s written consent; provided, however, that if a Change in Control has occurred subsequent to the date of this Agreement, the
Company shall be liable for indemnification of Indemnitee for amounts paid in settlement if the Independent Counsel has approved the settlement. Neither the Company nor
any Subsidiary or Affiliate shall enter into a settlement of any Proceeding that might result in the imposition of any Expense, Other Liability, penalty, limitation or detriment
on Indemnitee, whether indemnifiable under this Agreement or otherwise, without Indemnitee’s written consent. Neither the Company nor Indemnitee shall unreasonably
withhold consent from any settlement of any Proceeding. The Company shall promptly notify Indemnitee upon the Company’s receipt of an offer to settle, or if the Company
makes an offer to settle, any Proceeding, and provide Indemnitee with a reasonable amount of time to consider such settlement, in the case of any such settlement for which
the consent of Indemnitee would be required hereunder. The Company shall not, on its own behalf, settle any part of any Proceeding to which Indemnitee is a party with
respect to other parties (including the Company) without the written consent of Indemnitee if any portion of the settlement is to be funded from insurance proceeds unless
approved by a majority of the Independent Directors, provided that this sentence shall cease to be of any force and effect if it has been determined in accordance with this
Agreement that Indemnitee is not entitled to indemnification hereunder with respect to such Proceeding or if the Company’s obligations hereunder to Indemnitee with respect
to such Proceeding have been fully discharged.
8. Determination of Right to Indemnification.
(a) Success on the Merits or Otherwise. To the extent that Indemnitee has been successful on the merits or otherwise in defense of any Proceeding
referred to in Section 3(a) above or in the defense of any claim, issue or matter described therein, the Company shall indemnify Indemnitee against Expenses actually and
reasonably incurred in connection therewith.
(b) Indemnification in Other Situations. In the event that Section 8(a) is inapplicable, the Company shall also indemnify Indemnitee if Indemnitee has not
failed to meet the applicable standard of conduct for indemnification.
6
(c) Forum. Indemnitee shall be entitled to select the forum in which determination of whether or not Indemnitee has met the applicable standard of
conduct shall be decided, and such election will be made from among the following:
a. Those members of the Board who are Independent Directors even though less than a quorum;
b. A committee of Independent Directors designated by a majority vote of Independent Directors, even though less than a quorum; or
c. Independent Counsel selected by Indemnitee and approved by the Board, which approval may not be unreasonably withheld, which counsel
shall make such determination in a written opinion.
If Indemnitee is an officer or a director of the Company at the time that Indemnitee is selecting the forum, then Indemnitee shall not select
Independent Counsel as such forum unless there are no Independent Directors or unless the Independent Directors agree to the selection of Independent Counsel as the forum.
The selected forum shall be referred to herein as the “Reviewing Party”. Notwithstanding the foregoing, following any Change in Control subsequent to the date of
this Agreement, the Reviewing Party shall be Independent Counsel selected in the manner provided in c. above.
(d) Decision Timing and Expenses. As soon as practicable, and in no event later than thirty (30) days after receipt by the Company of written notice of
Indemnitee’s choice of forum pursuant to Section 8(c) above, the Company and Indemnitee shall each submit to the Reviewing Party such information as they believe is
appropriate for the Reviewing Party to consider. The Reviewing Party shall arrive at its decision within a reasonable period of time following the receipt of all such
information from the Company and Indemnitee, but in no event later than thirty (30) days following the receipt of all such information, provided that the time by which the
Reviewing Party must reach a decision may be extended by mutual agreement of the Company and Indemnitee. All Expenses associated with the process set forth in this
Section 8(d), including but not limited to the Expenses of the Reviewing Party, shall be paid by the Company.
(e) Delaware Court of Chancery. Notwithstanding a final determination by any Reviewing Party that Indemnitee is not entitled to indemnification with
respect to a specific Proceeding, Indemnitee shall have the right to apply to the Court of Chancery, for the purpose of enforcing Indemnitee’s right to indemnification pursuant
to this Agreement.
(f) Expenses. The Company shall indemnify Indemnitee against all Expenses incurred by Indemnitee in connection with any hearing or Proceeding under
this Section 8 involving Indemnitee and against all Expenses and Other Liabilities incurred by Indemnitee in connection with any other Proceeding between the Company and
Indemnitee involving the interpretation or enforcement of the rights of Indemnitee under this Agreement unless a court of competent jurisdiction finds that each of the
material claims of Indemnitee in any such Proceeding was frivolous or made in bad faith.
(g) Determination of “Good Faith”. For purposes of any determination of whether Indemnitee acted in “good faith” or acted in “bad faith”, Indemnitee
shall be deemed to have acted in good faith or not acted in bad faith if in taking or failing to take the action in question Indemnitee relied on the records or books of account of
the Company or a Subsidiary or Affiliate, including financial
7
statements, or on information, opinions, reports or statements provided to Indemnitee by the officers or other employees of the Company or a Subsidiary or Affiliate in the
course of their duties, or on the advice of legal counsel for the Company or a Subsidiary or Affiliate, or on information or records given or reports made to the Company or a
Subsidiary or Affiliate by an independent certified public accountant or by an appraiser or other expert selected by the Company or a Subsidiary or Affiliate, or by any other
person (including legal counsel, accountants and financial advisors) as to matters Indemnitee reasonably believes are within such other person’s professional or expert
competence and who has been selected with reasonable care by or on behalf of the Company or a Subsidiary or Affiliate. In connection with any determination as to whether
Indemnitee is entitled to be indemnified hereunder, or to advancement of Expenses, the Reviewing Party or court shall presume that Indemnitee has satisfied the applicable
standard of conduct and is entitled to indemnification or advancement of Expenses, as the case may be, and the burden of proof shall be on the Company to establish, by clear
and convincing evidence, that Indemnitee is not so entitled. The provisions of this Section 8(g) shall not be deemed to be exclusive or to limit in any way the other
circumstances in which Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement. In addition, the knowledge and/or actions, or
failures to act, of any other person serving the Company or a Subsidiary or Affiliate as an Indemnifiable Person shall not be imputed to Indemnitee for purposes of
determining the right to indemnification hereunder.
9. Exceptions. Any other provision herein to the contrary notwithstanding,
(a) Claims Initiated by Indemnitee. The Company shall not be obligated pursuant to the terms of this Agreement to indemnify or advance Expenses to
Indemnitee with respect to Proceedings or claims initiated or brought voluntarily by Indemnitee and not by way of defense, except (1) with respect to Proceedings brought to
establish or enforce a right to indemnification under this Agreement, any other statute or law, as permitted under Section 145, or otherwise, (2) where the Board has consented
to the initiation of such Proceeding, or (3) with respect to Proceedings brought to discharge Indemnitee’s fiduciary responsibilities, whether under ERISA or otherwise, but
such indemnification or advancement of Expenses may be provided by the Company in specific cases if the Board finds it to be appropriate; or
(b) Actions Based on Federal Statutes Regarding Profit Recovery and Return of Bonus Payments. The Company shall not be obligated pursuant to the
terms of this Agreement to indemnify Indemnitee on account of (i) any suit in which judgment is rendered against Indemnitee by a court of competent jurisdiction in a final
adjudication not subject to further appeal for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of l934 and amendments thereto or similar provisions of any federal, state or local statutory law, or (ii) any reimbursement of the
Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by the Indemnitee from the sale of securities of the
Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section
304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities
in violation of Section 306 of the Sarbanes-Oxley Act); or
(c) Unlawful Indemnification. The Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee for Other Liabilities
if such indemnification is prohibited by law as determined by a court of competent jurisdiction in a final adjudication not subject to further appeal.
8
10. Non-exclusivity. The provisions for indemnification and advancement of Expenses set forth in this Agreement shall not be deemed exclusive of any other
rights which Indemnitee may have under any provision of law, the Company’s Certificate of Incorporation or Bylaws, the vote of the Company’s stockholders or disinterested
directors, other agreements, or otherwise, both as to acts or omissions in his or her official capacity and to acts or omissions in another capacity while serving the Company or
a Subsidiary or Affiliate as an Indemnifiable Person and Indemnitee’s rights hereunder shall continue after Indemnitee has ceased serving the Company or a Subsidiary or
Affiliate as an Indemnifiable Person and shall inure to the benefit of the heirs, executors and administrators of Indemnitee.
11. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever, (i) the validity,
legality and enforceability of the remaining provisions of the Agreement (including, without limitation, all portions of any paragraphs of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby, and (ii) to
the fullest extent possible, the provisions of this Agreement (including, without limitation, all portions of any paragraphs of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision
held invalid, illegal or unenforceable.
12. Supersession, Modification and Waiver. This Agreement supersedes any prior indemnification agreement between the Indemnitee and the Company, its
Subsidiaries or its Affiliates. If the Company and Indemnitee have previously entered into an indemnification agreement providing for the indemnification of Indemnitee by
the Company, parties entry into this Agreement shall be deemed to amend and restate such prior agreement to read in its entirety as, and be superseded by, this Agreement. No
supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar) and except as expressly provided herein, no such waiver shall
constitute a continuing waiver.
13. Successors and Assigns. The terms of this Agreement shall bind, and shall inure to the benefit of, and be enforceable by the parties hereto and their respective
successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company),
assigns, spouses, heirs and personal and legal representatives. In addition, the Company shall require and cause any successor (whether direct or indirect by purchase, merger,
consolidation or otherwise) to all, substantially all, or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory
to Indemnitee, expressly to assume and agree to perform this Agreement and indemnify Indemnitee to the fullest extent permitted by law.
14. Notice. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed duly given (i) if delivered by
hand and a receipt is provided by the party to whom such communication is delivered, (ii) if mailed by certified or registered mail with postage prepaid, return receipt
requested, on the signing by the recipient of an acknowledgement of receipt form accompanying delivery through the U.S. mail, (iii) by personal service by a process server,
or (iv) by delivery to the recipient’s address by overnight delivery (e.g., FedEx, UPS or DHL) or other commercial delivery service. Addresses for notice to either party are as
shown on the signature page of this Agreement, or as subsequently modified by written notice complying with the provisions of this Section
9
14. Delivery of communications to the Company with respect to this Agreement shall be sent to the attention of the Company’s Chief Legal Officer.
15. No Presumptions. For purposes of this Agreement, the termination of any Proceeding, by judgment, order, settlement (whether with or without court approval)
or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not meet any particular standard of conduct or
have any particular belief or that a court has determined that indemnification is not permitted by applicable law or otherwise. In addition, neither the failure of the Company or
a Reviewing Party to have made a determination as to whether Indemnitee has met any particular standard of conduct or had any particular belief, nor an actual determination
by the Company or a Reviewing Party that Indemnitee has not met such standard of conduct or did not have such belief, prior to the commencement of Proceedings by
Indemnitee to secure a judicial determination by exercising Indemnitee’s rights under Section 8(e) of this Agreement shall be a defense to Indemnitee’s claim or create a
presumption that Indemnitee has failed to meet any particular standard of conduct or did not have any particular belief or is not entitled to indemnification under applicable
law or otherwise. Additionally, any admission of liability by the Company in connection with any settlement by the Company with a regulatory agency shall not, of itself,
create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not
permitted by applicable law or otherwise.
16. Survival of Rights. The rights conferred on Indemnitee by this Agreement shall continue after Indemnitee has ceased to serve the Company or a Subsidiary or
Affiliate of the Company as an Indemnifiable Person and shall inure to the benefit of Indemnitee’s heirs, executors and administrators.
17. Subrogation and Contribution.
(a) Except as otherwise expressly provided in this Agreement, in the event of payment under this Agreement, the Company shall be subrogated to the
extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such
rights and to enable the Company effectively to bring suit to enforce such rights.
(b) To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any
reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by or on behalf of Indemnitee, whether for judgments, fines,
penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an Indemnifiable Event under this Agreement, in
such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company
and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers,
employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).
18. Specific Performance, Etc. The parties recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate
remedy at law. Accordingly, in the event of any such violation, Indemnitee shall be entitled, if Indemnitee so elects, to institute Proceedings, either in law or at equity, to
obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue.
10
19. Counterparts. This Agreement may be executed in counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall
constitute one and the same agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of
this Agreement.
20. Headings. The headings of the sections and paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction or interpretation thereof.
21. Governing Law. This Agreement shall be governed exclusively by and construed according to the laws of the State of Delaware, as applied to contracts
between Delaware residents entered into and to be performed entirely with Delaware.
22. Consent to Jurisdiction. The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the State of Delaware for all
purposes in connection with any Proceeding which arises out of or relates to this Agreement.
[Signature Page Follows]
11
The parties hereto have entered into this Indemnity Agreement effective as of the date first above written.
COINBASE GLOBAL, INC.:
By:
Name:
Title:
INDEMNITEE:
By:
Name:
Address:
SIGNATURE PAGE TO INDEMNIFICATION AGREEMENT
Exhibit 10.2
COINBASE GLOBAL, INC.
AMENDED AND RESTATED 2013 STOCK PLAN
(ASSUMED BY COINBASE GLOBAL, INC. EFFECTIVE APRIL 7TH, 2014, AMENDED AND RESTATED EFFECTIVE AUGUST 3, 2018
AND AMENDED EFFECTIVE OCTOBER 25, 2018)
1. Purposes of the Plan. The purposes of this Plan, which Plan is Amended and Restated effective as of August 3, 2018 (the “Restatement Date”) as
set forth herein, are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees and
Consultants, and to promote the success of the Company’s business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock
Options, as determined by the Administrator at the time of grant of an Option and subject to the applicable provisions of Section 422 of the Code and the
regulations promulgated thereunder. Restricted Stock may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) “Administrator” means the Board or a Committee.
(b) “Affiliate” means (i) an entity other than a Subsidiary which, together with the Company, is under common control of a third person or
entity and (ii) an entity other than a Subsidiary in which the Company and /or one or more Subsidiaries own a controlling interest.
(c) “Applicable Laws” means all applicable laws, rules, regulations and requirements, including, but not limited to, all applicable U.S. federal
or state laws, any Stock Exchange rules or regulations, and the applicable laws, rules or regulations of any other country or jurisdiction where Options or
Restricted Stock are granted under the Plan or Participants reside or provide services, as such laws, rules, and regulations shall be in effect from time to time.
(d) “Award” means any award of an Option or Restricted Stock under the Plan.
(e) “Board” means the Board of Directors of the Company.
(f) “California Participant” means a Participant whose Award is issued in reliance on Section 25102(o) of the California Corporations Code.
(g) “Cashless Exercise” means a program approved by the Administrator in which payment of the Option exercise price or tax withholding
obligations or other required deductions may be satisfied, in whole or in part, with Shares subject to the Option, including by delivery of an irrevocable direction to
a securities broker (on a form prescribed by the Company) to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of such amount.
1
(h) “Cause” for termination of a Participant’s Continuous Service Status will exist (unless another definition is provided in an applicable Option
Agreement, Restricted Stock Purchase Agreement, employment agreement or other applicable written agreement) if the Participant’s Continuous Service Status is
terminated for any of the following reasons: (i) any material breach by Participant of any material written agreement between Participant and the Company and
Participant’s failure to cure such breach within 30 days after receiving written notice thereof; (ii) any failure by Participant to comply with the Company’s material
written policies or rules as they may be in effect from time to time; (iii) neglect or persistent unsatisfactory performance of Participant’s duties and Participant’s
failure to cure such condition within 30 days after receiving written notice thereof; (iv) Participant’s repeated failure to follow reasonable and lawful instructions
from the Board or Chief Executive Officer and Participant’s failure to cure such condition within 30 days after receiving written notice thereof; (v) Participant’s
conviction of, or plea of guilty or nolo contendre to, any felony or crime that results in, or is reasonably expected to result in, a material adverse effect on the
business or reputation of the Company; (vi) Participant’s commission of or participation in an act of fraud against the Company; (vii) Participant’s intentional
material damage to the Company’s business, property or reputation; or (viii) Participant’s unauthorized use or disclosure of any proprietary information or trade
secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company. For
purposes of clarity, a termination without “Cause” does not include any termination that occurs as a result of Participant’s death or Disability. The determination as
to whether a Participant’s Continuous Service Status has been terminated for Cause shall be made in good faith by the Company and shall be final and binding on
the Participant. The foregoing definition does not in any way limit the Company’s ability to terminate a Participant’s employment or consulting relationship at any
time, and the term “Company” will be interpreted to include any Subsidiary, Parent, Affiliate, or any successor thereto, if appropriate.
(i) “Change of Control” means (i) a sale of all or substantially all of the Company’s assets other than to an Excluded Entity (as defined below),
(ii) a merger, consolidation or other capital reorganization or business combination transaction of the Company with or into another corporation, limited liability
company or other entity other than an Excluded Entity, or (iii) the consummation of a transaction, or series of related transactions, in which any “person” (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of all of the Company’s then outstanding voting securities.
Notwithstanding the foregoing, a transaction shall not constitute a Change of Control if its purpose is to (A) change the jurisdiction of the Company’s
incorporation, (B) create a holding company that will be owned in substantially the same proportions by the persons who hold the Company’s securities
immediately before such transaction, or (C) obtain funding for the Company in a financing that is approved by the Company’s Board. An “Excluded Entity” means
a corporation or other entity of which the holders of voting capital stock of the Company outstanding immediately prior to such transaction are the direct or indirect
holders of voting securities representing at least a majority of the votes entitled to be cast by all of such corporation’s or other entity’s voting securities outstanding
immediately after such transaction.
2
(j) “Code” means the Internal Revenue Code of 1986, as amended.
(k) “Committee” means one or more committees or subcommittees of the Board consisting of two (2) or more Directors (or such lesser or
greater number of Directors as shall constitute the minimum number permitted by Applicable Laws to establish a committee or sub-committee of the Board)
appointed by the Board to administer the Plan in accordance with Section 4 below.
(l) “Common Stock” means the Company’s Class A Common Stock,$0.00001 par value per share (“Class A Common Stock”), or the
Company’s Class B Common Stock, $0.00001 par value per share (“Class B Common Stock”), in each case as adjusted pursuant to Section 10 below.
(m) “Company” means Coinbase Global, Inc., a Delaware corporation. This Plan was originally adopted by Coinbase, Inc., a Delaware
corporation (“Coinbase”). Effective as of April 7, 2014, Coinbase became a wholly-owned subsidiary of the Company and the Company assumed the Plan and
any outstanding Awards granted under the Plan.
(n) “Consultant” means any person or entity, including an advisor but not an Employee, that renders, or has rendered, services to the Company,
or any Parent, Subsidiary or Affiliate and is compensated for such services, and any Director whether compensated for such services or not.
(o) “Continuous Service Status” means the absence of any interruption or termination of service as an Employee or Consultant. Continuous
Service Status as an Employee or Consultant shall not be considered interrupted or terminated in the case of: (i) Company approved sick leave; (ii) military leave;
(iii) any other bona fide leave of absence approved by the Company, provided that, if an Employee is holding an Incentive Stock Option and such leave exceeds 3
months, such Employee’s service as an Employee shall be deemed terminated on the 1st day following such 3-month period and the Incentive Stock Option shall
thereafter automatically become a Nonstatutory Stock Option in accordance with Applicable Laws, unless reemployment upon the expiration of such leave is
guaranteed by contract or statute, or unless provided otherwise pursuant to a written Company policy. Also, Continuous Service Status as an Employee or
Consultant shall not be considered interrupted or terminated in the case of a transfer between locations of the Company or between the Company, its Parents,
Subsidiaries or Affiliates, or their respective successors, or a change in status from an Employee to a Consultant or from a Consultant to an Employee.
(p) “Director” means a member of the Board.
(q) “Disability” means “disability” within the meaning of Section 22(e)(3) of the Code.
(r) “Employee” means any person employed by the Company, or any Parent, Subsidiary or Affiliate, with the status of employment determined
pursuant to such factors as are deemed appropriate by the Company in its sole discretion, subject to any requirements of
3
Applicable Laws, including the Code. The payment by the Company of a director’s fee shall not be sufficient to constitute “employment” of such director by the
Company or any Parent, Subsidiary or Affiliate.
(s) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(t) “Fair Market Value” means, as of any date, the per share fair market value of the Class A Common Stock, as determined by the
Administrator in good faith on such basis as it deems appropriate and applied consistently with respect to Participants. Whenever possible, the determination of
Fair Market Value shall be based upon the per share closing price for the Shares as reported in The Wall Street Journal for the applicable date.
(u) “Family Members” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in- law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships) of the Participant, any person sharing
the Participant’s household (other than a tenant or employee), a trust in which these persons (or the Participant) have more than 50% of the beneficial interest, a
foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more
than 50% of the voting interests.
(v) “Incentive Stock Option” means an Option intended to, and which does, in fact, qualify as an incentive stock option within the meaning of
Section 422 of the Code.
(w) “Involuntary Termination” means (unless another definition is provided in the applicable Option Agreement, Restricted Stock Purchase
Agreement, employment agreement or other applicable written agreement) the termination of a Participant’s Continuous Service Status other than for (i) death, (ii)
Disability or (iii) for Cause by the Company or a Parent, Subsidiary, Affiliate or successor thereto, as appropriate.
(x) “Listed Security” means any security of the Company that is listed or approved for listing on a national securities exchange or designated or
approved for designation as a national market system security on an interdealer quotation system by the Financial Industry Regulatory Authority (or any successor
thereto).
(y) “Nonstatutory Stock Option” means an Option that is not intended to, or does not, in fact, qualify as an Incentive Stock Option.
(z) “Option” means a stock option granted pursuant to the Plan.
(aa) “Option Agreement” means a written or electronic document, the form(s) of which shall be approved from time to time by the
Administrator, reflecting the terms of an Option granted under the Plan and includes any documents attached to or incorporated into such Option Agreement,
including, but not limited to, a notice of stock option grant and a form of exercise notice (which may be electronic).
4
(bb) “Option Exchange Program” means a program approved by the Administrator whereby outstanding Options (i) are exchanged for Options
with a lower exercise price, Restricted Stock, cash or other property or (ii) are amended to decrease the exercise price as a result of a decline in the Fair Market
Value.
(cc) “Optioned Stock” means Shares that are subject to an Option or that were issued pursuant to the exercise of an Option.
(dd) “Optionee” means an Employee or Consultant who receives an Option.
(ee) “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if, at the time of
grant of the Award, each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent
commencing as of such date.
(ff) “Participant” means any holder of one or more Awards or Shares issued pursuant to an Award.
(gg) “Plan” means this Coinbase, Inc., Amended and Restated 2013 Stock Plan.
(hh) “Restricted Stock” means Shares acquired pursuant to a right to purchase or receive Common Stock granted pursuant to Section 8 below.
(ii) “Restricted Stock Purchase Agreement” means a written or electronic document, the form(s) of which shall be approved from time to time
by the Administrator, reflecting the terms of Restricted Stock granted under the Plan and includes any documents attached to such agreement.
(jj) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act, as amended from time to time, or any successor provision.
(kk) “Share” means a share of Class A Common Stock, as adjusted in accordance with Section 10 below.
(ll) “Stock Exchange” means any stock exchange or consolidated stock price reporting system on which prices for the Common Stock are
quoted at any given time.
(mm) “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the
time of grant of the Award, each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after the adoption
of the Plan shall be considered a Subsidiary commencing as of such date.
5
(nn) “Ten Percent Holder” means a person who owns stock representing more than 10% of the voting power of all classes of stock of the
Company or any Parent or Subsidiary measured as of an Award’s date of grant.
3. Stock Subject to the Plan. Subject to the provisions of Section 10 below, the maximum aggregate number of Shares that may be issued under the
Plan is 9,293,956 Shares, all of which Shares may be issued under the Plan pursuant to Incentive Stock Options. The Shares issued under the Plan may be
authorized, but unissued, or reacquired Shares. If an Award should expire or become unexercisable for any reason without having been exercised in full, or is
surrendered pursuant to an Option Exchange Program, the unpurchased Shares that were subject thereto shall, unless the Plan shall have been terminated, become
available for future grant under the Plan. In addition, any Shares which are retained by the Company upon exercise of an Award in order to satisfy the exercise or
purchase price for such Award or any withholding taxes due with respect to such Award shall be treated as not issued and shall continue to be available under the
Plan and Shares issued under the Plan and later forfeited to the Company due to the failure to vest or repurchased by the Company at the original purchase price
paid to the Company for the Shares (including, without limitation, upon forfeiture to or repurchase by the Company in connection with the termination of a
Participant’s Continuous Service Status) shall again be available for future grant under the Plan. As of and following the Restatement Date, to the extent the shares
issuable under an Award under the Plan was for Class B Common Stock and those shares are forfeited or repurchased or otherwise would become available for
issuance again under this Section 3, the shares of Common Stock to be issued under the Plan thereafter shall be shares of Class A Common Stock.
4. Administration of the Plan.
(a) General. The Plan shall be administered by the Board, a Committee appointed by the Board, or any combination thereof, as determined by
the Board. The Plan may be administered by different administrative bodies with respect to different classes of Participants and, if permitted by Applicable Laws,
the Board may authorize one or more officers of the Company to make Awards under the Plan to Employees and Consultants (who are not subject to Section 16 of
the Exchange Act) within parameters specified by the Board.
(b) Committee Composition. If a Committee has been appointed pursuant to this Section 4, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board. From time to time the Board may increase the size of any Committee and appoint additional members
thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies (however caused) and dissolve a Committee and
thereafter directly administer the Plan, all to the extent permitted by Applicable Laws and, in the case of a Committee administering the Plan in accordance with the
requirements of Rule 16b-3 or Section 162(m) of the Code, to the extent permitted or required by such provisions.
6
(c) Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its sole discretion:
(i) to determine the Fair Market Value in accordance with Section 2(t) above, provided that such determination shall be applied
consistently with respect to Participants under the Plan;
(ii) to select the Employees and Consultants to whom Awards may from time to time be granted;
(iii) to determine the number of Shares to be covered by each Award;
(iv) to approve the form(s) of agreement(s) and other related documents used under the Plan;
(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder, which terms and
conditions include but are not limited to the exercise or purchase price, the time or times when Awards may vest and/or be exercised (which may be based on
performance criteria), the circumstances (if any) when vesting will be accelerated or forfeiture restrictions will be waived, and any restriction or limitation
regarding any Award, Optioned Stock, or Restricted Stock;
(vi) to amend any outstanding Award or agreement related to any Optioned Stock or Restricted Stock, including any amendment adjusting
vesting (e.g., in connection with a change in the terms or conditions under which such person is providing services to the Company), provided that no amendment
shall be made that would materially and adversely affect the rights of any Participant without his or her consent;
(vii) to determine whether and under what circumstances an Option may be settled in cash under Section 7(c)(iii) below instead of
Common Stock;
(viii) subject to Applicable Laws, to implement an Option Exchange Program and establish the terms and conditions of such Option
Exchange Program without consent of the holders of capital stock of the Company, provided that no amendment or adjustment to an Option that would materially
and adversely affect the rights of any Participant shall be made without his or her consent;
(ix) to approve addenda pursuant to Section 15 below or to grant Awards to, or to modify the terms of, any outstanding Option Agreement
or Restricted Stock Purchase Agreement or any agreement related to any Optioned Stock or Restricted Stock held by Participants who are foreign nationals or
employed outside of the United States with such terms and conditions as the Administrator deems necessary or appropriate to accommodate differences
7
in local law, tax policy or custom which deviate from the terms and conditions set forth in this Plan to the extent necessary or appropriate to accommodate such
differences; and
(x) to construe and interpret the terms of the Plan, any Option Agreement or Restricted Stock Purchase Agreement, and any agreement
related to any Optioned Stock or Restricted Stock, which constructions, interpretations and decisions shall be final and binding on all Participants.
(d) Indemnification. To the maximum extent permitted by Applicable Laws, each member of the Committee (including officers of the
Company, if applicable), or of the Board, as applicable, shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability, or
expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or
she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan or pursuant to the terms and conditions of
any Award except for actions taken in bad faith or failures to act in bad faith, and (ii) any and all amounts paid by him or her in settlement thereof, with the
Company’s approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided that such
member shall give the Company an opportunity, at its own expense, to handle and defend any such claim, action, suit or proceeding before he or she undertakes to
handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such
persons may be entitled under the Company’s Certificate of Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any other power that
the Company may have to indemnify or hold harmless each such person.
5. Eligibility.
(a) Recipients of Grants. Nonstatutory Stock Options and Restricted Stock may be granted to Employees and Consultants. Incentive Stock
Options may be granted only to Employees, provided that Employees of Affiliates shall not be eligible to receive Incentive Stock Options.
(b) Type of Option. Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option.
(c) ISO $100,000 Limitation. Notwithstanding any designation under Section 5(b) above, to the extent that the aggregate Fair Market Value of
Shares with respect to which options designated as incentive stock options are exercisable for the first time by any Optionee during any calendar year (under all
plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess options shall be treated as nonstatutory stock options. For purposes of this
Section 5(c), incentive stock options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares subject to an
incentive stock option shall be determined as of the date of the grant of such option.
(d) No Employment Rights. Neither the Plan nor any Award shall confer upon any Employee or Consultant any right with respect to
continuation of an employment or
8
consulting relationship with the Company (any Parent, Subsidiary or Affiliate), nor shall it interfere in any way with such Employee’s or Consultant’s right or the
Company’s (Parent’s, Subsidiary’s or Affiliate’s) right to terminate his or her employment or consulting relationship at any time, with or without cause.
6. Term of Plan. The Plan shall become effective upon its adoption by the Board and shall continue in effect for a term of 10 years unless sooner
terminated under Section 14 below.
7. Options.
(a) Term of Option. The term of each Option shall be the term stated in the Option Agreement; provided that the term shall be no more than 10
years from the date of grant thereof or such shorter term as may be provided in the Option Agreement and provided further that, in the case of an Incentive Stock
Option granted to a person who at the time of such grant is a Ten Percent Holder, the term of the Option shall be 5 years from the date of grant thereof or such
shorter term as may be provided in the Option Agreement.
(b) Option Exercise Price and Consideration.
(i) Exercise Price. The per Share exercise price for the Shares to be issued pursuant to the exercise of an Option shall be such price as is
determined by the Administrator and set forth in the Option Agreement, but shall be subject to the following:
(1) In the case of an Incentive Stock Option
a. granted to an Employee who at the time of grant is a Ten Percent Holder, the per Share exercise price shall be no less
than 110% of the Fair Market Value on the date of grant;
b. granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value on
the date of grant;
(2) Except as provided in subsection (3) below, in the case of a Nonstatutory Stock Option the per Share exercise price shall be
such price as is determined by the Administrator, provided that, if the per Share exercise price is less than 100% of the Fair Market Value on the date of grant, it
shall otherwise comply with all Applicable Laws, including Section 409A of the Code; and
(3) Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant
to a merger or other corporate transaction.
(ii) Permissible Consideration. The consideration to be paid for the Shares to be issued upon exercise of an Option, including the
method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option and to the extent required by Applicable Laws, shall be
determined at the time of grant) and may consist entirely
9
of (1) cash; (2) check; (3) to the extent permitted under, and in accordance with, Applicable Laws, delivery of a promissory note with such recourse, interest,
security and redemption provisions as the Administrator determines to be appropriate (subject to the provisions of Section152 of the General Corporation Law); (4)
cancellation of indebtedness; (5) other previously owned shares of Common Stock that have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which the Option is exercised; (6) a Cashless Exercise; (7) such other consideration and method of payment permitted under
Applicable Laws; or (8) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the
Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company and the Administrator may, in its sole
discretion, refuse to accept a particular form of consideration at the time of any Option exercise.
(c) Exercise of Option.
(i) General.
(1) Exercisability. Any Option granted hereunder shall be exercisable at such times and under such conditions as determined by
the Administrator,consistent with the terms of the Plan and reflected in the Option Agreement, including vesting requirements and/or performance criteria with
respect to the Company, and Parent, Subsidiary or Affiliate, and/or the Optionee.
(2) Leave of Absence. The Administrator shall have the discretion to determine whether and to what extent the vesting of
Options shall be tolled during any leave of absence; provided, however, that in the absence of such determination, vesting of Options shall be tolled during any
leave (unless otherwise required by Applicable Laws). Notwithstanding the foregoing, in the event of military leave, vesting shall toll during any unpaid portion of
such leave, provided that, upon an Optionee’s returning from military leave (under conditions that would entitle him or her to protection upon such return under the
Uniform Services Employment and Reemployment Rights Act), he or she shall be given vesting credit with respect to Options to the same extent as would have
applied had the Optionee continued to provide services to the Company (or any Parent, Subsidiary or Affiliate, if applicable) throughout the leave on the same
terms as he or she was providing services immediately prior to such leave.
(3) Minimum Exercise Requirements. An Option may not be exercised for a fraction of a Share. The Administrator may require
that an Option be exercised as to a minimum number of Shares, provided that such requirement shall not prevent an Optionee from exercising the full number of
Shares as to which the Option is then exercisable.
(4) Procedures for and Results of Exercise. An Option shall be deemed exercised when written (or electronic) notice of such
exercise has been received by the Company in accordance with the terms of the Option Agreement by the person entitled to exercise the Option and the Company
has received full payment for the Shares with respect to which the Option is exercised and has paid, or made arrangements to satisfy, any applicable taxes,
withholding, required deductions or other required payments in accordance with Section 9
10
below. The exercise of an Option shall result in a decrease in the number of Shares that thereafter may be available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
(5) Rights as Holder of Capital Stock. Until the issuance of the Shares (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a holder of capital stock shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option. No adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock is issued, except as provided in Section 10 below.
(ii) Termination of Continuous Service Status. The Administrator shall establish and set forth in the applicable Option Agreement the
terms and conditions upon which an Option shall remain exercisable, if at all, following termination of an Optionee’s Continuous Service Status, which provisions
may be waived or modified by the Administrator at any time. To the extent that an Option Agreement does not specify the terms and conditions upon which an
Option shall terminate upon termination of an Optionee’s Continuous Service Status, the following provisions shall apply:
(1) General Provisions. If the Optionee (or other person entitled to exercise the Option) does not exercise the Option to the
extent so entitled within the time specified below, the Option shall terminate and the Optioned Stock underlying the unexercised portion of the Option shall revert
to the Plan. In no event may any Option be exercised after the expiration of the Option term as set forth in the Option Agreement (and subject to this Section 7).
(2) Termination other than Upon Disability or Death or for Cause. In the event of termination of an Optionee’s Continuous
Service Status other than under the circumstances set forth in the subsections (3) through (5) below, such Optionee may exercise any outstanding Option at any
time within 3 month(s) following such termination to the extent the Optionee is vested in the Optioned Stock.
(3) Disability of Optionee. In the event of termination of an Optionee’s Continuous Service Status as a result of his or her
Disability, such Optionee may exercise any outstanding Option at any time within 12 month(s) following such termination to the extent the Optionee is vested in
the Optioned Stock.
(4) Death of Optionee. In the event of the death of an Optionee during the period of Continuous Service Status since the date of
grant of any outstanding Option, or within 3 month(s) following termination of the Optionee’s Continuous Service Status, the Option may be exercised by any
beneficiaries designated in accordance with Section 16 below, or if there are no such beneficiaries, by the Optionee’s estate, or by a person who acquired the right
to exercise the Option by bequest or inheritance, at any time within 12
11
month(s) following the date the Optionee’s Continuous Service Status terminated, but only to the extent the Optionee is vested in the Optioned Stock.
(5) Termination for Cause. In the event of termination of an Optionee’s Continuous Service Status for Cause, any outstanding
Option (including any vested portion thereof) held by such Optionee shall immediately terminate in its entirety upon first notification to the Optionee of
termination of the Optionee’s Continuous Service Status for Cause. If an Optionee’s Continuous Service Status is suspended pending an investigation of whether
the Optionee’s Continuous Service Status will be terminated for Cause, all the Optionee’s rights under any Option, including the right to exercise the Option, shall
be suspended during the investigation period. Nothing in this Section 7(c)(ii)(5) shall in any way limit the Company’s right to purchase unvested Shares issued
upon exercise of an Option as set forth in the applicable Option Agreement.
(iii) Buyout Provisions. The Administrator may at any time offer to buy out for a payment in cash or shares an Option
previously granted under the Plan based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such
offer is made.
8. Restricted Stock.
(a) Rights to Purchase. When a right to purchase or receive Restricted Stock is granted under the Plan, the Company shall advise the recipient
in writing of the terms,conditions and restrictions related to the offer, including the number of Shares that such person shall be entitled to purchase, the price to be
paid, if any (which shall be as determined by the Administrator, subject to Applicable Laws, including any applicable securities laws), and the time within which
such person must accept such offer. The permissible consideration for Restricted Stock shall be determined by the Administrator and shall be the same as is set
forth in Section 7(b)(ii) above with respect to exercise of Options. The offer to purchase Shares shall be accepted by execution of a Restricted Stock Purchase
Agreement in the form (which may be electronic) determined by the Administrator.
(b) Repurchase Option.
(i) General. Unless the Administrator determines otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of the Participant’s Continuous Service Status for any reason (including death or
Disability) at a purchase price for Shares equal to the original purchase price paid by the purchaser to the Company for such Shares and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall lapse at such rate as the Administrator may determine.
(ii) Leave of Absence. The Administrator shall have the discretion to determine whether and to what extent the lapsing of Company
repurchase rights shall be tolled during any leave of absence; provided, however, that in the absence of such determination, such lapsing shall be tolled during any
leave (unless otherwise required by Applicable Laws).
12
Notwithstanding the foregoing, in the event of military leave, the lapsing of Company repurchase rights shall toll during any unpaid portion of such leave, provided
that, upon a Participant’s returning from military leave (under conditions that would entitle him or her to protection upon such return under the Uniform Services
Employment and Reemployment Rights Act), he or she shall be given vesting credit with respect to Shares purchased pursuant to the Restricted Stock Purchase
Agreement to the same extent as would have applied had the Participant continued to provide services to the Company (or any Parent, Subsidiary or Affiliate, if
applicable) throughout the leave on the same terms as he or she was providing services immediately prior to such leave.
(c) Other Provisions. The Restricted Stock Purchase Agreement shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion. In addition, the provisions of Restricted Stock Purchase Agreements need not be the same
with respect to each Participant.
(d) Rights as a Holder of Capital Stock. Once the Restricted Stock is purchased, the Participant shall have the rights equivalent to those of a
holder of capital stock, and shall be a record holder when his or her purchase and the issuance of the Shares is entered upon the records of the duly authorized
transfer agent of the Company. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Restricted Stock is
purchased, except as provided in Section 10 below.
9. Taxes.
(a) As a condition of the grant, vesting and exercise of an Award, the Participant (or in the case of the Participant’s death or a permitted
transferee, the person holding or exercising the Award) shall make such arrangements as the Administrator may require for the satisfaction of any applicable U.S.
federal, state, local or foreign tax, withholding, and any other required deductions or payments that may arise in connection with such Award. The Company shall
not be required to issue any Shares under the Plan until such obligations are satisfied.
(b) The Administrator may, to the extent permitted under Applicable Laws, permit a Participant (or in the case of the Participant’s death or a
permitted transferee, the person holding or exercising the Award) to satisfy all or part of his or her tax, withholding, or any other required deductions or payments
by Cashless Exercise or by surrendering Shares (either directly or by stock attestation) that he or she previously acquired; provided that, unless specifically
permitted by the Company, any such Cashless Exercise must be an approved broker-assisted Cashless Exercise or the Shares withheld in the Cashless Exercise
must be limited to avoid financial accounting charges under applicable accounting guidance and any such surrendered Shares must have been previously held for
any minimum duration required to avoid financial accounting charges under applicable accounting guidance. Any payment of taxes by surrendering
13
Shares to the Company may be subject to restrictions, including, but not limited to, any restrictions required by rules of the Securities and Exchange Commission.
10. Adjustments Upon Changes in Capitalization, Merger or Certain Other Transactions.
(a) Changes in Capitalization. Subject to any action required under Applicable Laws by the holders of capital stock of the Company, (i) the
numbers and class of Shares or other stock or securities: (x) available for future Awards under Section 3 above and (y) covered by each outstanding Award, (ii) the
exercise price per Share of each such outstanding Option, and (iii) any repurchase price per Share applicable to Shares issued pursuant to any Award, shall be
automatically proportionately adjusted in the event of a stock split, reverse stock split, stock dividend, combination, consolidation, reclassification of the Shares or
subdivision of the Shares. In the event of any increase or decrease in the number of issued Shares effected without receipt of consideration by the Company, a
declaration of an extraordinary dividend with respect to the Shares payable in a form other than Shares in an amount that has a material effect on the Fair Market
Value, a recapitalization (including a recapitalization through a large nonrecurring cash dividend), a rights offering, a reorganization, merger, a spin-off, split-up,
change in corporate structure or a similar occurrence, the Administrator shall make appropriate adjustments, in its discretion, in one or more of (i) the numbers and
class of Shares or other stock or securities: (x) available for future Awards under Section 3 above and (y) covered by each outstanding Award, (ii) the exercise
price per Share of each outstanding Option and (iii) any repurchase price per Share applicable to Shares issued pursuant to any Award, and any such adjustment by
the Administrator shall be made in the Administrator’s sole and absolute discretion and shall be final, binding and conclusive. Except as expressly provided herein,
no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of Shares subject to an Award. If, by reason of a transaction described in this Section 10(a) or an
adjustment pursuant to this Section 10(a), a Participant’s Award agreement or agreement related to any Optioned Stock or Restricted Stock covers additional or
different shares of stock or securities, then such additional or different shares, and the Award agreement or agreement related to the Optioned Stock or Restricted
Stock in respect thereof, shall be subject to all of the terms, conditions and restrictions which were applicable to the Award, Optioned Stock and Restricted Stock
prior to such adjustment.
(b) Dissolution or Liquidation. In the event of the dissolution or liquidation of the Company, each Award will terminate immediately prior to
the consummation of such action, unless otherwise determined by the Administrator.
(c) Corporate Transactions. In the event of (i) a transfer of all or substantially all of the Company’s assets, (ii) a merger, consolidation or other
capital reorganization or business combination transaction of the Company with or into another corporation, entity or person, or (iii) the consummation of a
transaction, or series of related transactions, in which any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial
owner” (as defined in Rule 13d-3 of the Exchange Act),
14
directly or indirectly, of more than 50% of the Company’s then outstanding capital stock (a “Corporate Transaction”), each outstanding Award (vested or unvested)
will be treated as the Administrator determines (subject to the last sentence of this paragraph), which determination may be made without the consent of any
Participant and need not treat all outstanding Awards (or portion thereof) in an identical manner. Such determination, without the consent of any Participant, may
dispose of Awards that are not vested as of the effective date of such Corporate Transaction in any manner permitted by Applicable Laws, including (without
limitation) the cancellation of such Awards without the payment of any consideration. Without limiting the foregoing, such determination, without the consent of
any Participant, may provide for one or more of the following with respect to Awards that are vested and exercisable as of the effective date of such Corporate
Transaction: (A) the continuation of such outstanding Awards by the Company (if the Company is the surviving corporation); (B) the assumption of such
outstanding Awards by the surviving corporation or its parent; (C) the substitution by the surviving corporation or its parent of new options or equity awards for
such Awards; (D) the cancellation of such Awards and a payment to the Participants equal to the excess of (1) the Fair Market Value of the Shares subject to such
Awards as of the closing date of such Corporate Transaction over (2) the exercise price or purchase price for the Shares to be issued pursuant to the exercise of
such Awards (such payment shall be made in the form of cash, cash equivalents and/or securities of the surviving corporation or its parent with a Fair Market Value
equal to the required amount; if the exercise price or purchase price per Share of the Shares to be issued pursuant to the exercise of such Awards exceeds the Fair
Market Value per Share of such Shares, as of the closing date of the Corporate Transaction, then such Awards may be cancelled without making a payment to the
Participants); or (E) the cancellation of such Awards for no consideration.
11. Non-Transferability of Awards.
(a) General. Except as set forth in this Section 11, Awards may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any
manner other than by will or by the laws of descent or distribution. The designation of a beneficiary by a Participant will not constitute a transfer. An Option may
be exercised, during the lifetime of the holder of the
Option, only by such holder or a transferee permitted by this Section 11.
(b) Limited Transferability Rights. Notwithstanding anything else in this Section 11, the Administrator may in its sole discretion grant
Nonstatutory Stock Options that may be transferred by instrument to an inter vivos or testamentary trust in which the Options are to be passed to beneficiaries upon
the death of the trustor (settlor) or by gift to Family Members. Further, beginning with (i) the period when the Company begins to rely on the exemption described
in Rule 12h-1(f)(1) promulgated under the Exchange Act, as determined by the Board in its sole discretion, and (ii) ending on the earlier of (A) the date when the
Company ceases to rely on such exemption, as determined by the Board in its sole discretion, or (B) the date when the Company becomes subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, an Option, or prior to exercise, the Shares subject to the Option, may not be pledged, hypothecated or
otherwise transferred or disposed of, in any manner, including by entering into any short position, any “put equivalent position” or any “call equivalent
15
position” (as defined in Rule 16a-1(h) and Rule 16a-1(b) of the Exchange Act, respectively), other than to (i) persons who are Family Members through gifts or
domestic relations orders, or (ii) to an executor or guardian of the Participant upon the death or disability of the Participant. Notwithstanding the foregoing
sentence, the Board, in its sole discretion, may permit transfers of Nonstatutory Stock Options to the Company or in connection with a Change of Control or other
acquisition transactions involving the Company to the extent permitted by Rule 12h-1(f).
12. Non-Transferability of Stock Underlying Awards.
(a) General. Notwithstanding anything to the contrary, a stockholder shall not transfer, whether by sale, gift or otherwise, any shares of the
Company’s stock to any person unless such transfer is approved by the Board prior to such transfer, which approval may be granted or withheld in the Board’s sold
and absolute discretion. Any purported transfer of any shares of the Company’s stock effected in violation of this Section 12 shall be null and void and shall have
no force or effect and the Company shall not register any such purported transfer.
(b) Approval Process. Any stockholder seeking the approval of the Board of a transfer of some or all of its shares shall give written (or
electronic) notice thereof to the Secretary of the Company that shall include: (1) the name of the stockholder; (2) the proposed transferee; (3) the number of shares
of the transfer of which approval is thereby requested; and (4) the purchase price, if any, of the shares proposed for transfer. The Company may require the
stockholder to supplement its notice with such additional information as the Company may request.
(c) Legend. Certificates representing or in the case of uncertificated securities, notices of issuance with respect to, shares of stock of the
Company shall have impressed on, printed on, written on or otherwise affixed to them the following legend:
THE TRANSFER OF SECURITIES REFERENCED HEREIN IS SUBJECT TO RESTRICTIONS REQUIRING APPROVAL OF THE BOARD OF DIRECTORS
PURSUANT TO AND IN ACCORDANCE WITH THE COMPANY’S STOCK PLAN, COPIES OF WHICH MAY BE OBTAINED UPON WRITTEN
REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS. THE COMPANY SHALL NOT REGISTER OR OTHERWISE RECOGNIZE OR
GIVE EFFECT TO ANY PURPORTED TRANSFER OF SHARES OF STOCK THAT DOES NOT COMPLY WITH THE COMPANY’S STOCK PLAN.
The Company shall take all such actions as are practicable to cause the certificates representing or in the case of uncertificated securities, notices of issuance
with respect to, shares that are subject to the restrictions on transfer set forth in this Section to contain the foregoing legend.
13. Time of Granting Awards. The date of grant of an Award shall, for all purposes, be the date on which the Administrator makes the determination
granting such Award, or such other date as is determined by the Administrator.
16
14. Amendment and Termination of the Plan. The Board may at any time amend or terminate the Plan, but no amendment or termination shall be
made that would materially and adversely affect the rights of any Participant under any outstanding Award, without his or her consent. In addition, to the extent
necessary and desirable to comply with Applicable Laws, the Company shall obtain the approval of holders of capital stock with respect to any Plan amendment in
such a manner and to such a degree as required.
15. Conditions Upon Issuance of Shares. Notwithstanding any other provision of the Plan or any agreement entered into by the Company pursuant to
the Plan, the Company shall not be obligated, and shall have no liability for failure, to issue or deliver any Shares under the Plan unless such issuance or delivery
would comply with Applicable Laws, with such compliance determined by the Company in consultation with its legal counsel. As a condition to the exercise of
any Option or purchase of any Restricted Stock, the Company may require the person exercising the Option or purchasing the Restricted Stock to represent and
warrant at the time of any such exercise or purchase that the Shares are being purchased only for investment and without any present intention to sell or distribute
such Shares if, in the opinion of counsel for the Company, such a representation is advisable or required by Applicable Laws. Shares issued upon exercise of
Options or purchase of Restricted Stock prior to the date, if ever, on which the Common Stock becomes a Listed Security shall be subject to a right of first refusal
in favor of the Company pursuant to which the Participant will be required to offer Shares to the Company before selling or transferring them to any third party on
such terms and subject to such conditions as is reflected in the applicable Option Agreement or Restricted Stock Purchase Agreement.
16. Beneficiaries. If permitted by the Company, a Participant may designate one or more beneficiaries with respect to an Award by timely filing the
prescribed form with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Participant’s
death. Except as otherwise provided in an Award Agreement, if no beneficiary was designated or if no designated beneficiary survives the Participant, then after a
Participant’s death any vested Award(s) shall be transferred or distributed to the Participant’s estate or to any person who has the right to acquire the Award by
bequest or inheritance.
17. Approval of Holders of Capital Stock. If required by Applicable Laws, continuance of the Plan shall be subject to approval by the holders of
capital stock of the Company within 12 months before or after the date the Plan is adopted or, to the extent required by Applicable Laws, any date the Plan is
amended. Such approval shall be obtained in the manner and to the degree required under Applicable Laws.
18. Addenda. The Administrator may approve such addenda to the Plan as it may consider necessary or appropriate for the purpose of granting Awards
to Employees or Consultants, which Awards may contain such terms and conditions as the Administrator deems necessary or appropriate to accommodate
differences in local law, tax policy or custom, which may deviate from the terms and conditions set forth in this Plan. The terms of any such addenda shall
supersede the terms of the Plan to the extent necessary to accommodate such differences but shall not otherwise affect the terms of the Plan as in effect for any
other purpose.
17
19. Information to Holders of Options. In the event the Company is relying on the exemption provided by Rule 12h-1(f) under the Exchange Act, the
Company shall provide the information described in Rule 701(e)(3), (4) and (5) of the Securities Act of 1933, as amended, to all holders of Options in accordance
with the requirements thereunder until such time as the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act. The
Company may request that holders of Options agree to keep the information to be provided pursuant to this Section confidential. If the holder does not agree to
keep the information to be provided pursuant to this Section confidential, then the Company will not be required to provide the information unless otherwise
required pursuant to Rule 12h-1(f)(1) of the Exchange Act.
18
ADDENDUM A
Coinbase Global, Inc., Amended and Restated 2013 Stock Plan
(California Participants)
Prior to the date, if ever, on which the Common Stock becomes a Listed Security and/or the Company is subject to the reporting requirements of the
Exchange Act, the terms set forth herein shall apply to Awards issued to California Participants. All capitalized terms used herein but not otherwise defined shall
have the respective meanings set forth in the Plan.
1. The following rules shall apply to any Option in the event of termination of the Participant’s Continuous Service Status:
(a) If such termination was for reasons other than death, “Permanent Disability” (as defined below), or Cause, the Participant shall have at least
30 days after the date of such termination to exercise his or her Option to the extent the Participant is entitled to exercise on his or her termination date, provided
that in no event shall the Option be exercisable after the expiration of the term as set forth in the Option Agreement.
(b) If such termination was due to death or Permanent Disability, the Participant shall have at least 6 months after the date of such termination to
exercise his or her Option to the extent the Participant is entitled to exercise on his or her termination date, provided that in no event shall the Option be exercisable
after the expiration of the term as set forth in the Option Agreement.
“Permanent Disability” for purposes of this Addendum shall mean the inability of the Participant, in the opinion of a qualified physician acceptable to the
Company, to perform the major duties of the Participant’s position with the Company or any Parent or Subsidiary because of the sickness or injury of the
Participant.
2. Notwithstanding anything to the contrary in Section 10(a) of the Plan, the Administrator shall in any event make such adjustments as may be
required by Section 25102(o) of the California Corporations Code.
3. Notwithstanding anything stated herein to the contrary, no Option shall be exercisable on or after the 10th anniversary of the date of grant and any
Award agreement shall terminate on or before the 10th anniversary of the date of grant.
4. The Company shall furnish summary financial information (audited or unaudited) of the Company’s financial condition and results of operations,
consistent with the requirements of Applicable Laws, at least annually to each California Participant during the period such Participant has one or more Awards
outstanding, and in the case of an individual who acquired Shares pursuant to the Plan, during the period such Participant owns such Shares; provided, however, the
Company shall not be required to provide such information if (i) the issuance is limited to key persons whose duties in connection with the Company assure their
access to
1
equivalent information or (ii) the Plan or any agreement complies with all conditions of Rule 701 of the Securities Act of 1933, as amended; provided that for
purposes of determining such compliance, any registered domestic partner shall be considered a “family member” as that term is defined in Rule 701.
2
COINBASE GLOBAL, INC.
2013 STOCK PLAN
NOTICE OF STOCK OPTION GRANT
Name: [l] (the “eShares”)
Address: [l]
You have been granted an option to purchase Class A Common Stock of Coinbase Global, Inc., a Delaware corporation (the “Company”), as follows:
Date of Grant: [l]
Exercise Price Per Share: [l]
Total Number of Shares: [l]
Total Exercise Price: [l]
Type of Option [l]
Expiration Date: [l]
Vesting Commencement Date: [l]
Vesting/Exercise Schedule: [l].
Termination Period: Except as set forth in Section 5 of the Stock Option Agreement, you may exercise this Option
for 3 months after termination of your Continuous Service Status, provided that if on your
termination date, you have completed a minimum of 2 years of Continuous Service Status (as
determined by the Company), then you may exercise this Option for 7 years after termination
of your Continuous Service Status; provided, however, in no event may the Option be
exercised later than the Expiration Date. Notwithstanding the foregoing, this Option may
terminate earlier pursuant to the Coinbase Global, Inc. 2013 Stock Plan (the “Plan”),
including (without limitation) upon a dissolution, liquidation or Corporate Transaction (as
defined in the Plan) of the Company. You are responsible for keeping track of these exercise
periods following the termination of your
1
Continuous Service Status for any reason. The Company will not provide further notice of
such periods.
Transferability: You may not transfer this Option except as set out in Section 6 of the Stock Option
Agreement. You must obtain Board approval prior to any transfer of the Shares received
upon exercise of this Option.
By your and the Company’s mutual acceptance of this Option via eShares, you and the Company agree that this Option is granted under and governed by
the terms and conditions of this Notice and the Coinbase Global, Inc. 2013 Stock Plan and Stock Option Agreement, both of which are attached to and made a part
of this Notice. In addition, this Option and any Shares subject to the Option as well as any Shares issued after February 12, 2016 (regardless of how you acquired
the Shares) shall be subject to the Company’s Second Amended and Restated Bylaws (the “Bylaws”), including, but not limited to, certain transfer restrictions as
summarized in Section 6 of the Stock Option Agreement below, as in effect at the time of any proposed transfer (the “Bylaw Restrictions”). By your signature
below, you agree that the Bylaw Restrictions, including the transfer restrictions set forth in Section 6 of the Stock Option Agreement, shall also apply to any Shares
or other stock options or equity awards that you have acquired or been granted in the past (including, without limitation, any Shares, options or other equity awards
that you acquired or were granted prior to the Date of Grant of this Option).
In addition, you agree and acknowledge that your rights to any Shares underlying this Option will be earned only as you provide services to the Company
over time, that the grant of this Option is not as consideration for services you rendered to the Company prior to your date of hire, and that nothing in this Notice or
the attached documents confers upon you any right to continue your employment or consulting relationship with the Company for any period of time, nor does it
interfere in any way with your right or the Company’s right to terminate that relationship at any time, for any reason, with or without cause. Also, to the extent
applicable, the Exercise Price Per Share has been set in good faith compliance with the applicable guidance issued by the IRS under Section 409A of the Code.
However, there is no guarantee that the IRS will agree with the valuation, and by signing below, you agree and acknowledge that the Company, its Board, officers,
employees, agents and stockholders shall not be held liable for any applicable costs, taxes, or penalties associated with this Option if, in fact, the IRS or any other
person (including, without limitation, a successor corporation or an acquirer in a Change of Control) were to determine that this Option constitutes deferred
compensation under Section 409A of the Code. You should consult with your own tax advisor concerning the tax consequences of such a determination by the IRS.
For purposes of this paragraph, the term “Company” will be interpreted to include any Parent, Subsidiary or Affiliate.
2
COINBASE GLOBAL, INC.
2013 STOCK PLAN STOCK
STOCK OPTION AGREEMENT
1. Grant of Option. Coinbase Global, Inc., a Delaware corporation (the “Company”), hereby grants to [] (“Optionee”), an option (the “Option”) to
purchase the total number of shares of Class A Common Stock (the “Shares”) set forth in the Notice, at the exercise price per Share set forth in the Notice (the
“Exercise Price”), subject to the terms, definitions and provisions of the Coinbase Global, Inc. 2013 Stock Plan (the “Plan”) adopted by the Company, which is
incorporated in this Stock Option Agreement (this “Agreement”) by reference. Unless otherwise defined in this Agreement, the terms used in this Agreement or the
Notice shall have the meanings defined in the Plan.
2. Designation of Option. This Option is intended to be an Incentive Stock Option as defined in Section 422 of the Code only to the extent so
designated in the Notice, and to the extent it is not so designated or to the extent this Option does not qualify as an Incentive Stock Option, it is intended to be a
Nonstatutory Stock Option.
Notwithstanding the above, if designated as an Incentive Stock Option, in the event that the Shares subject to this Option (and all other incentive stock
options granted to Optionee by the Company or any Parent or Subsidiary, including under other plans) that first become exercisable in any calendar year have an
aggregate fair market value (determined for each Share as of the date of grant of the option covering such Share) in excess of $100,000, the Shares in excess of
$100,000 shall be treated as subject to a nonstatutory stock option, in accordance with Section 5(c) of the Plan.
3. Exercise of Option. This Option shall be exercisable during its term in accordance with the Vesting/Exercise Schedule set out in the Notice and
with the provisions of Section 7(c) of the Plan as follows:
(a) Right to Exercise.
(i) This Option may not be exercised for a fraction of a share.
(ii) In the event of Optionee’s death, Disability or other termination of Continuous Service Status, the exercisability of this Option is
governed by Section 5, subject to the limitations contained in this Section 3.
(iii) In no event may this Option be exercised after the Expiration Date set forth in the Notice.
(b) Method of Exercise.
(i) This Option shall be exercisable by execution and delivery of the Early Exercise Notice and Restricted Stock Purchase Agreement
attached hereto as Exhibit A
3
electronically via eSharesInc., the Exercise Agreement attached hereto as Exhibit B or of any other form of written or electronic notice approved for such purpose
by the Company which shall state Optionee’s election to exercise this Option, the number of Shares in respect of which this Option is being exercised, and such
other representations and agreements as to the holder’s investment intent with respect to such Shares as may be required by the Company pursuant to the provisions
of the Plan. Such written or electronic notice shall be signed (digitally, if applicable) by Optionee and delivered to the Company by such means as are in
accordance with Section 11(e) below. The written or electronic notice shall be accompanied by payment of the aggregate Exercise Price for the purchased Shares in
accordance with Section 4 below.
(ii) As a condition to the exercise of this Option and as further set forth in Section 9 of the Plan, Optionee agrees to make adequate
provision for federal, state or other applicable tax, withholding, required deductions or other payments, if any, which arise upon the grant, vesting or exercise of
this Option, or disposition of Shares, whether by withholding, direct payment to the Company in accordance with Section 4 below, or otherwise, as determined by
the Company in its sole discretion.
(iii) The Company is not obligated, and will have no liability for failure, to issue or deliver any Shares upon exercise of this Option unless
such issuance or delivery would comply with the Applicable Laws, with such compliance determined by the Company in consultation with its legal counsel. This
Option may not be exercised until such time as the Plan has been approved by the holders of capital stock of the Company, or if the issuance of such Shares upon
such exercise or the method of payment of consideration for such Shares would constitute a violation of any Applicable Laws, including any applicable U.S.
federal or state securities laws or any other law or regulation, including any rule under Part 221 of Title 12 of the Code of Federal Regulations as promulgated by
the Federal Reserve Board. As a condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the
Company as may be required by the Applicable Laws. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to Optionee
on the date on which this Option is exercised with respect to such Shares.
(iv) Subject to compliance with Applicable Laws, this Option shall be deemed to be exercised upon receipt by the Company via eShares
of the appropriate written or electronic notice of exercise accompanied by the Exercise Price and the satisfaction of any applicable obligations described in Section
3(b)(i) and 3(b)(ii) above.
4. Method of Payment. Payment of the Exercise Price shall be by cash or check, Automated Clearing House (or similar) electronic transfer (an
“Electronic Transfer”) via eShares to the Company’s bank account designated for receipt of such transfers or, following the initial public offering of the
Company’s Common Stock, by Cashless Exercise pursuant to which the Optionee delivers an irrevocable direction to a securities broker (on a form prescribed by
the Company and according to a procedure established by the Company). For avoidance of uncertainty: Electronic Transfers that have been successfully received
by the Company into its bank account designated for receipt of such transfers via eShares shall be deemed to have been received for all purposes of this Option as
of the date on which such transfers were initiated from the Optionee’s account and made irrevocable by Optionee.
4
5. Termination of Relationship. Following the date of termination of Optionee’s Continuous Service Status for any reason (the “Termination Date”),
Optionee may exercise this Option only as set forth in the Notice and this Section 5. If Optionee does not exercise this Option within the Termination Period set
forth in the Notice or the termination periods set forth below, this Option shall terminate in its entirety. In no event, may any Option be exercised after the
Expiration Date of this Option as set forth in the Notice.
(a) Termination Prior to 2 Years of Continuous Service Status. If Optionee’s Continuous Service Status terminates prior to Optionee’s
completion of 2 years of Continuous Service Status (as determined by the Company), then Optionee may, to the extent Optionee is vested in the Optioned Stock,
exercise this Option as follows:
(i) General Termination. In the event of termination of Optionee’s Continuous Service Status other than as a result of Optionee’s
Disability or death or Optionee’s termination for Cause, Optionee may, to the extent Optionee is vested in the Optioned Stock, exercise this Option during the
Termination Period set forth in the Notice.
(ii) Termination upon Disability of Optionee. In the event of termination of Optionee’s Continuous Service Status as a result of
Optionee’s Disability, Optionee may, but only within 12 months following the Termination Date, exercise this Option to the extent Optionee is vested in the
Optioned Stock.
(iii) Death of Optionee. In the event of termination of Optionee’s Continuous Service Status as a result of Optionee’s death, or in the
event of Optionee’s death within 3 months following Optionee’s Termination Date, this Option may be exercised at any time within 12 months following the
Termination Date, or if later, 12 months following the date of death by any beneficiaries designated in accordance with Section 16 of the Plan or, if there are no
such beneficiaries, by the Optionee’s estate, or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent Optionee
is vested in the Optioned Stock.
(b) Termination On or After 2 Years of Continuous Service Status. If Optionee’s Continuous Service Status terminates (other than a
termination for Cause) on or after the date on which Optionee has completed 2 years of Continuous Service Status (as determined by the Company), Optionee may,
to the extent Optionee is vested in the Optioned Stock, exercise this Option during the Termination Period set forth in the Notice and this Option shall terminate
with respect to the unvested Shares subject to the Option on the date that is 3 months following Optionee’s termination of Continuous Service Status. In the event
that Optionee’s Continuous Service Status terminates as a result of Optionee’s death, this Option may be exercised by any beneficiaries designated in accordance
with Section 16 of the Plan or, if there are no such beneficiaries, by the Optionee’s estate, or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent Optionee is vested in the Optioned Stock.
(c) Termination for Cause. In the event of termination of Optionee’s Continuous Service Status for Cause at any time, this Option (including
any vested portion thereof) shall immediately terminate in its entirety upon first notification to Optionee of such termination for Cause. If Optionee’s Continuous
Service Status is suspended pending an
5
investigation of whether Optionee’s Continuous Service Status will be terminated for Cause, all Optionee’s rights under this Option, including the right to exercise
this Option, shall be suspended during the investigation period.
6. Non-Transferability of Option.
(a) This Option (or any rights of or interests in the Option) may not be Transferred (as defined below) in any manner otherwise than by will or
by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by him or her. The terms of this Option shall be binding upon the
executors, administrators, heirs, successors and assigns of Optionee.
(b) In addition, any Shares issued to you, including any Shares received upon exercise of this Option (or any rights of or interests in such Shares)
may not be Transferred to any person unless such Transfer is approved by the Board prior to such Transfer, which approval may be granted or withheld in the
Board’s sole and absolute discretion.
“Transferred” or “Transfer” shall mean, with respect to any Option and the Shares underlying the Option or any other Company security, the direct or
indirect assignment, sale, transfer, tender, pledge, hypothecation, or the grant, creation or suffrage of a lien or encumbrance in or upon, or the gift, placement in
trust, or the Constructive Sale (as such term is defined below) or other disposition of such security (including transfer by testamentary or intestate succession,
merger or otherwise by operation of law) or any right, title or interest therein (including, but not limited to, any right or power to vote to which the holder thereof
may be entitled, whether such right or power is granted by proxy or otherwise), or the record or beneficial ownership thereof, the offer to make such a sale, transfer,
Constructive Sale or other disposition, and each agreement, arrangement or understanding, whether or not in writing, to effect any of the foregoing. “Constructive
Sale” shall mean, with respect to any security, a short sale with respect to such security, entering into or acquiring an offsetting derivative contract with respect to
such security, entering into or acquiring a futures or forward contract to deliver such security, or entering into any other hedging or other derivative transaction that
has the effect of materially changing the economic benefits and risks of ownership. Any purported Transfer of any shares of the Company’s stock effected in
violation of these transfer restrictions shall be null and void and shall have no force or effect and the Company shall not register any such purported Transfer.
Any stockholder seeking the approval of the Board of a Transfer of some or all of its shares shall give written notice thereof to the Secretary of the
Company that shall include: (a) the name of the stockholder; (b) the proposed transferee; (c) the number of shares of the Transfer of which approval is thereby
requested; and (d) the purchase price (if any) of the Shares proposed for Transfer. The Company may require the stockholder to supplement its notice with such
additional information as the Company may request.
Notwithstanding the foregoing, in the event of a conflict between the terms and provisions of the Bylaws and the terms and provisions of the Notice and this
Agreement, the terms and provisions in the Bylaws shall prevail.
6
7. Lock-Up Agreement. If so requested by the Company or the underwriters in connection with the initial public offering of the Company’s securities
registered under the Securities Act of 1933, as amended, Optionee shall not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise
dispose of any securities of the Company however or whenever acquired (except for those being registered) without the prior written consent of the Company or
such underwriters, as the case may be, for 180 days from the effective date of the registration statement, plus such additional period, to the extent required by
FINRA rules, up to a maximum of 216 days from the effective date of the registration statement, and Optionee shall execute an agreement reflecting the foregoing
as may be requested by the underwriters at the time of such offering.
8. Effect of Agreement. Optionee acknowledges receipt via eShares of a copy of the Plan and represents that he or she is familiar with the terms and
provisions thereof (and has had an opportunity to consult counsel regarding the Option terms), and hereby accepts this Option and agrees to be bound by its
contractual terms as set forth herein and in the Plan. Optionee hereby agrees to accept as binding, conclusive and final all decisions and interpretations of the
Administrator regarding any questions relating to this Option. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions
of the Notice and this Agreement, the Plan terms and provisions shall prevail.
9. Imposition of Other Requirements. The Company reserves the right to impose other requirements on Optionee’s participation in the Plan, on this
Option and the Shares subject to this Option and on any other Award or Shares acquired under the Plan, to the extent the Company determines it is necessary or
advisable in order to comply with Applicable Laws or facilitate the administration of the Plan. Optionee agrees to sign any additional agreements or undertakings
that may be necessary to accomplish the foregoing. Furthermore, Optionee acknowledges that the Applicable Laws of the country in which Optionee is residing or
working at the time of grant, holding, vesting, and exercise of the Option or the holding or sale of Shares received pursuant to the Option (including any rules or
regulations governing securities, foreign exchange, tax, labor, or other matters) may subject Optionee to additional procedural or regulatory requirements that
Optionee is and will be solely responsible for and must fulfill.
10. Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to Optionee’s current or future participation
in the Plan, this Option, the Shares subject to this Option, any other Company Securities or any other Company-related documents, by electronic means, including,
without limitation, via eShares, according to the protocols thereof, or to request Optionee’s consent to participate in the Plan by electronic means, including,
without limitation, via eShares, according to the protocols thereof. By accepting this Option, whether electronically or otherwise, Optionee hereby (i) consents to
receive such documents by electronic means, including, without limitation, via eShares, according to the protocols thereof, (ii) consents to the use of electronic
signatures, and (iii) if applicable, agrees to participate in the Plan and/or receive any such documents through an on-line or electronic system established and
maintained by the Company or a third party designated by the Company, including but not limited to the use of electronic signatures or click-through electronic
acceptance of terms and conditions. Any delivery or receipt of any document or other materials in connection with this Option, whether by the Company or by the
Optionee, shall be deemed valid and effective when made in accordance with the protocols of the eShares system.
7
11. Miscellaneous.
(a) Governing Law. The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto
and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of California, without
giving effect to principles of conflicts of law. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby
submit and consent to the exclusive jurisdiction of the state of California and agree that any such litigation shall be conducted only in the courts of California or the
federal courts of the United States located in California and no other courts.
(b) Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and
supersedes all prior or contemporaneous discussions, understandings and agreements, whether oral or written, between them relating to the subject matter hereof.
(c) Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall
be effective unless in writing signed by the parties to this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute
a waiver of that provision as to that or any other instance.
(d) Successors and Assigns. Except as otherwise provided in this Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The
Company may assign any of its rights and obligations under this Agreement. No other party to this Agreement may assign, whether voluntarily or by operation of
law, any of its rights and obligations under this Agreement, except with the prior written consent of the Company.
(e) Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed
sufficient (i) when delivered personally or by overnight courier or sent by email, (ii) when effected via eShares by the party giving such notice, demand or request
(regardless of the time of actual receipt by the party to receive such notice, demand or request) or (iii) 48 hours after being deposited in the U.S. mail as certified or
registered mail with postage prepaid, addressed to the party to be notified at such party’s address as set forth on the signature page, as subsequently modified by
written notice, or if no address is specified on the signature page, at the most recent address set forth in the Company’s books and records.
(f) Severability. If one or more provisions of this Agreement are held to be unenforceable under Applicable Laws, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i)
such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the
balance of the Agreement shall be enforceable in accordance with its terms.
8
(g) Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against
any one of the parties hereto.
(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered, including,
without limitation, via eShares, shall be deemed an original, and all of which together shall constitute one and the same agreement. Execution of a facsimile copy
will have the same force and effect as execution of an original, and a facsimile signature will be deemed an original and valid signature.
9
EXHIBIT A
COINBASE GLOBAL, INC.
2013 STOCK PLAN
EARLY EXERCISE NOTICE AND RESTRICTED STOCK PURCHASE AGREEMENT
This Agreement (“Agreement”) is made as of___________by and between Coinbase Global, Inc., a Delaware corporation (the “Company”), and
______________________ (“Purchaser”). To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to
them in the Company’s 2013 Stock Plan (the “Plan”) and the Option Agreement (as defined below).
1. Exercise of Option. Subject to the terms and conditions hereof, Purchaser hereby elects to exercise his or her option to purchase ___________
shares of the Class A Common Stock (the “Shares”) of the Company under and pursuant to the Plan, the Notice of Stock Option Grant and the Stock Option
Agreement granted ___________ (the “Option Agreement”). Of these Shares, Purchaser has elected to purchase ___________of those Shares which have become
vested as of the date hereof under the Vesting/Exercise Schedule set forth in the Notice of Stock Option Grant (the “Vested Shares”) and ___________ Shares
which have not yet vested under such Vesting/Exercise Schedule (the “Unvested Shares”). The purchase price for the Shares shall be $___________ per Share for a
total purchase price of $ ___________. The term “Shares” refers to the purchased Shares and all securities received in connection with the Shares pursuant to stock
dividends or splits, all securities received in replacement of the Shares in a recapitalization, merger, reorganization, exchange or the like, and all new, substituted or
additional securities or other property to which Purchaser is entitled by reason of Purchaser’s ownership of the Shares.
2. Time and Place of Exercise. The purchase and sale of the Shares under this Agreement shall occur at the principal office of the Company
simultaneously with the execution and delivery of this Agreement, the payment of the aggregate exercise price by any method listed in Section 4 of the Option
Agreement, and the satisfaction of any applicable tax, withholding, required deductions or other payments, all in accordance with the provisions of Section 3(b) of
the Option Agreement, including, without limitation, via eShares. The Company shall issue the Shares to Purchaser by entering such Shares in Purchaser’s name as
of such date in the books and records of the Company or, if applicable, a duly authorized transfer agent (including, without limitation, via eShares) of the
Company, against payment of the exercise price therefor by Purchaser. The Company will deliver to Purchaser a stock certificate or, in the case of uncertificated
securities, notice of issuance, including, without limitation, via eShares, for the Shares as soon as practicable following such date.
3. Limitations on Transfer. Purchaser acknowledges and agrees that the Shares purchased under this Agreement are subject to (i) the transfer
restrictions set forth in Section 12 of the Plan, (ii) the terms and conditions that apply to the Company’s Class A Common Stock, as set forth in the Company’s
Amended and Restated Bylaws, including (without limitation) certain transfer restrictions set forth in Section 8.9 of the Company’s Second Amended and Restated
Bylaws (as summarized in Section 6 of the Option Agreement), as in effect at the time of any
10
proposed transfer (the “Bylaw Restrictions”), and (iii) any other limitation or restriction on transfer created by Applicable Laws. In addition to the foregoing
limitations on transfer, Purchaser shall not assign, encumber or dispose of any interest in the Shares while the Shares are subject to the Company’s Repurchase
Option (as defined below). After any Shares have been released from such Repurchase Option, Purchaser shall not assign, encumber or dispose of any interest in
the Shares except to the extent permitted by, and in compliance with, Section 12 of the Plan, the Bylaw Restrictions, Applicable Laws, and the provisions below.
(a) Repurchase Option.
(i) In the event of the voluntary or involuntary termination of Purchaser’s Continuous Service Status with the Company for any reason
(including, without limitation, resignation, death or Disability), with or without Cause, the Company shall upon the date of such termination (the “Termination
Date”) have an irrevocable, exclusive option (the “Repurchase Option”) for a period of 3 months from such date to repurchase all or any portion of the Unvested
Shares (as defined below) held by Purchaser as of the Termination Date at the original purchase price per Share (adjusted for any stock splits, stock dividends and
the like) specified in Section 1. As used herein, “Unvested Shares” means Shares that have not yet been released from the Repurchase Option.
(ii) Unless the Company notifies Purchaser within 3 months from the Termination Date that it does not intend to exercise its Repurchase
Option with respect to some or all of the Unvested Shares, the Repurchase Option shall be deemed automatically exercised by the Company as of the end of such 3-
month period following the Termination Date, provided that the Company may notify Purchaser that it is exercising its Repurchase Option as of a date prior to the
end of such 3-month period. Unless Purchaser is otherwise notified by the Company pursuant to the preceding sentence that the Company does not intend to
exercise its Repurchase Option as to some or all of the Unvested Shares to which it applies at the time of termination, execution of this Agreement by Purchaser
constitutes written notice to Purchaser of the Company’s intention to exercise its Repurchase Option with respect to all Unvested Shares to which such Repurchase
Option applies. The Company, at its choice, may satisfy its payment obligation to Purchaser with respect to exercise of the Repurchase Option by either (A)
delivering a check to Purchaser in the amount of the purchase price for the Unvested Shares being repurchased, or (B) in the event Purchaser is indebted to the
Company, canceling an amount of such indebtedness equal to the purchase price for the Unvested Shares being repurchased, or (C) by a combination of (A) and
(B) so that the combined payment and cancellation of indebtedness equals such purchase price. In the event of any deemed automatic exercise of the Repurchase
Option pursuant to this Section 3(a)(ii) in which Purchaser is indebted to the Company, such indebtedness equal to the purchase price of the Unvested Shares being
repurchased shall be deemed automatically canceled as of the end of such 3-month period following the Termination Date unless the Company otherwise satisfies
its payment obligations. As a result of any repurchase of Unvested Shares pursuant to this Section 3, the Company shall become the legal and beneficial owner of
the Unvested Shares being repurchased and shall have all rights and interest therein or related thereto, and the Company shall have the right to transfer to its own
name the number of Unvested Shares being repurchased by the Company, without further action by Purchaser.
11
(iii) One hundred percent (100%) of the Shares shall initially be subject to the Repurchase Option. The Unvested Shares shall be released
from the Repurchase Option in accordance with the Vesting/Exercise Schedule set forth in the Notice of Stock Option Grant until all Shares are released from the
Repurchase Option; provided, however, that such scheduled releases from the Repurchase Option shall immediately cease as of the Termination Date. Fractional
shares shall be rounded to the nearest whole share.
(b) Transfer Restrictions; Right of First Refusal. Before any Shares held by Purchaser or any transferee of Purchaser (either being sometimes
referred to herein as the “Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law), the Company shall first have the right to
approve such sale or transfer, in full or in part, and shall then have the right to purchase all or any part of the Shares proposed to be sold or transferred, in each case,
in its sole and absolute discretion (the “Right of First Refusal”). If the Holder would like to sell or transfer any Shares, the Holder must provide the Company or its
assignee(s) with a Notice (as defined below) requesting approval to sell or transfer the Shares and offering the Company or its assignee(s) a Right of First Refusal
on the same terms and conditions set forth in this Section 3(b). The Company may either (1) exercise its Right of First Refusal in full or in part and purchase such
Shares pursuant to this Section 3(b), (2) decline to exercise its Right of First Refusal in full or in part and permit the sale or transfer of such Shares to the Proposed
Transferee (as defined below) in full or in part, or (3) decline to exercise its Right of First Refusal in full or in part and decline the request to sell or transfer the
Shares in full or in part.
(i) Notice of Proposed Transfer. The Holder of the Shares shall deliver to the Company a written or electronic notice (the “Notice”)
stating: (A) the Holder’s intention to sell or otherwise transfer such Shares; (B) the name of each proposed purchaser or other transferee (“Proposed Transferee”);
(C) the number of Shares to be sold or transferred to each Proposed Transferee; (D) the terms and conditions of each proposed sale or transfer, including (without
limitation) the purchase price for such Shares (the “Purchase Price”); and (E) the Holder’s offer to the Company or its assignee(s) to purchase the Shares at the
Purchase Price and upon the same terms (or terms that are no less favorable to the Company).
(ii) Exercise of Right of First Refusal. At any time within 30 days after receipt of the Notice, the Company and/or its assignee(s) shall
deliver a written or electronic notice to the Holder indicating whether the Company and/or its assignee(s) elect to permit or reject the proposed sale or transfer, in
full or in part, and/or elect to accept or decline the offer to purchase any or all of the Shares proposed to be sold or transferred to any one or more of the Proposed
Transferees, at the Purchase Price, provided that if the Purchase Price consists of no legal consideration (as, for example, in the case of a transfer by gift), the
purchase price will be the fair market value of the Shares as determined in good faith by the Company. If the Purchase Price includes consideration other than cash,
the cash equivalent value of the non- cash consideration shall be determined by the Company in good faith.
(iii) Payment. Payment of the Purchase Price shall be made, at the election of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness, by Electronic Transfer to the Holder’s bank account or by any combination thereof within 60 days
after receipt of the Notice or in the manner and at the times set forth in the Notice.
12
(iv) Holder’s Right to Transfer. If any of the Shares proposed in the Notice to be sold or transferred to a given Proposed Transferee are
both (A) not purchased by the Company and/or its assignee(s) as provided in this Section 3(b) and (B) approved by the Company to be sold or transferred, then the
Holder may sell or otherwise transfer any such Shares to the applicable Proposed Transferee at the Purchase Price or at a higher price, provided that such sale or
other transfer is consummated within 120 days after the date of the Notice; provided that any such sale or other transfer is also effected in accordance with the
Bylaw Restrictions, the transfer restrictions set forth in the Plan and any Applicable Laws and the Proposed Transferee agrees in writing that the Plan, the Bylaw
Restrictions, and the provisions of the Option Agreement and this Agreement, including this Section 3 and the waiver of statutory information rights in Section 10,
shall continue to apply to the Shares in the hands of such Proposed Transferee. The Company, in consultation with its legal counsel, may require the Holder to
provide an opinion of counsel evidencing compliance with Applicable Laws. If the Shares described in the Notice are not transferred to the Proposed Transferee
within such period, or if the Holder proposes to change the price or other terms to make them more favorable to the Proposed Transferee, a new Notice shall be
given to the Company, and the Company and/or its assignees shall again have the right to approve such transfer and be offered the Right of First Refusal.
(v) Exception for Certain Family Transfers. Anything to the contrary contained in this Section 3(b) notwithstanding, the transfer of
any or all of the Shares during Holder’s lifetime or on Holder’s death by will or intestacy to Holder’s Immediate Family or a trust for the benefit of Holder’s
Immediate Family shall be exempt from the provisions of this Section 3(b). “Immediate Family” as used herein shall mean lineal descendant or antecedent, spouse
(or spouse’s antecedents), father, mother, brother or sister (or their descendants), stepchild (or their antecedents or descendants), aunt or uncle (or their antecedents
or descendants), brother-in-law or sister-in-law (or their antecedents or descendants) and shall include adoptive relationships. In such case, the transferee or other
recipient shall receive and hold the Shares so transferred subject to the provisions of the Plan, the Bylaw Restrictions, and the provisions of the Option Agreement
and this Agreement, including this Section 3 and Section 10, and there shall be no further transfer of such Shares except in accordance with the terms of this
Section 3, the Plan and the Bylaw Restrictions.
(c) Company’s Right to Purchase upon Involuntary Transfer. In the event of any transfer by operation of law or other involuntary transfer
(including death or divorce, but excluding a transfer to Immediate Family as set forth in Section 3(b)(v) above) of all or a portion of the Shares by the record holder
thereof, the Company shall have an option to purchase any or all of the Shares transferred at the Fair Market Value of the Shares on the date of transfer (as
determined by the Company in its sole discretion). Upon such a transfer, the Holder shall promptly notify the Secretary of the Company of such transfer. The right
to purchase such Shares shall be provided to the Company for a period of 30 days following receipt by the Company of written or electronic notice from the
Holder.
(d) Assignment. The right of the Company to purchase any part of the Shares may be assigned in whole or in part to any holder or holders of
capital stock of the Company or other persons or organizations.
13
(e) Restrictions Binding on Transferees. All transferees of Shares or any interest therein will receive and hold such Shares or interest subject
to the Plan, the Bylaw Restrictions, and the provisions of the Option Agreement and this Agreement, including, without limitation, Section 7 of the Option
Agreement, Sections 3 and 10 of this Agreement and Section 12 of the Plan and, including, insofar as applicable, the Repurchase Option. In the event of any
purchase by the Company hereunder where the Shares or interest are held by a transferee, the transferee shall be obligated, if requested by the Company, to
transfer the Shares or interest to the Purchaser for consideration equal to the amount to be paid by the Company hereunder. In the event the Repurchase Option is
deemed exercised by the Company pursuant to Section 3(a)(ii) hereof, the Company may deem any transferee to have transferred the Shares or interest to
Purchaser prior to their purchase by the Company, and payment of the purchase price by the Company to such transferee shall be deemed to satisfy Purchaser’s
obligation to pay such transferee for such Shares or interest, and also to satisfy the Company’s obligation to pay Purchaser for such Shares or interest. Any sale
or transfer of the Shares shall be void unless the provisions of this Agreement are satisfied.
(f) Termination of Rights. The transfer restrictions set forth in Section 3(b) above and Section 12 of the Plan, the Right of First Refusal
granted the Company by Section 3(b) above and the right to repurchase the Shares in the event of an involuntary transfer granted the Company by Section 3(c)
above shall terminate upon (i) the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission under the Securities Act (other than a registration statement relating solely to the issuance of Common Stock
pursuant to a business combination or an employee incentive or benefit plan) or (ii) any transfer or conversion of Shares made pursuant to a statutory merger or
statutory consolidation of the Company with or into another corporation or corporations if the common stock of the surviving corporation or any direct or indirect
parent corporation thereof is registered under the Exchange Act. Upon termination of such transfer restrictions, the Company will remove any stop-transfer notices
referred to in Section 7(b) below and related to the restrictions in this Section 3 and a new stock certificate or, in the case of uncertificated securities, notice of
issuance, for the Shares not repurchased shall be issued, on request, without the legend referred to in Section 7(a)(ii) below and delivered to Holder.
(g) Lock-Up Agreement. The lock-up provisions set forth in Section 7 of the Option Agreement shall apply to the Shares issued upon exercise
of the Option hereunder and Purchaser reaffirms Purchaser’s obligations set forth therein.
4. Escrow of Unvested Shares. For purposes of facilitating the enforcement of the provisions of Section 3(a) above, Purchaser agrees, immediately
upon receipt of the stock certificate(s) or, in the case of uncertificated securities, notice of issuance, for the Shares subject to the Repurchase Option, to deliver any
such stock certificate(s), as well as a Stock Power in the form attached to this Agreement as Attachment A executed by Purchaser and by Purchaser’s spouse (if
required for transfer), in blank, to the Secretary of the Company, or the Secretary’s designee, to hold such Shares (and such stock certificate(s), if any) and Stock
Power in escrow and to take all such actions and to effectuate all such transfers and/or releases as are required in accordance with the terms of this Agreement.
Purchaser hereby acknowledges that the Secretary of the Company, or the Secretary’s designee, is so appointed as the escrow holder with the
14
foregoing authorities as a material inducement to make this Agreement and that said appointment is coupled with an interest and is accordingly irrevocable.
Purchaser agrees that said escrow holder shall not be liable to any party hereof (or to any other party). The escrow holder may rely upon any letter, notice or other
document executed by any signature purported to be genuine and may resign at any time. Purchaser agrees that if the Secretary of the Company, or the Secretary’s
designee, resigns as escrow holder for any or no reason, the Board shall have the power to appoint a successor to serve as escrow holder pursuant to the terms of
this Agreement.
5. Investment and Taxation Representations. In connection with the purchase of the Shares, Purchaser represents to the Company the following:
(a) Purchaser is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Shares. Purchaser is purchasing the Shares for investment for Purchaser’s own account only and not
with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act or under any applicable provision of state law.
Purchaser does not have any present intention to transfer the Shares to any other person or entity.
(b) Purchaser understands that the Shares have not been registered under the Securities Act by reason of a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Purchaser’s investment intent as expressed herein.
(c) Purchaser further acknowledges and understands that the securities must be held indefinitely unless they are subsequently registered under
the Securities Act or an exemption from such registration is available. Purchaser further acknowledges and understands that the Company is under no obligation to
register the securities.
(d) Purchaser is familiar with the provisions of Rule 144, promulgated under the Securities Act, which, in substance, permits limited public
resale of “restricted securities” acquired, directly or indirectly, from the issuer of the securities (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions. Purchaser understands that the Company provides no assurances as to whether he or she will be able to resell any or all of
the Shares pursuant to Rule 144, which rule requires, among other things, that the Company be subject to the reporting requirements of the Exchange Act, that
resales of securities take place only after the holder of the Shares has held the Shares for certain specified time periods, and under certain circumstances, that
resales of securities be limited in volume and take place only pursuant to brokered transactions. Notwithstanding this Section 5(d), Purchaser acknowledges and
agrees to the restrictions set forth in Section 5(e) below.
(e) Purchaser further understands that in the event all of the applicable requirements of Rule 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not
exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available
for such offers or sales, and
15
that such persons and their respective brokers who participate in such transactions do so at their own risk.
(f) Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase or disposition of the Shares.
Purchaser represents that Purchaser has consulted any tax consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and
that Purchaser is not relying on the Company for any tax advice.
6. Voting Provisions. As a condition precedent to entering into this Agreement, at the request of the Company, Purchaser shall become a party to any
voting agreement to which the Company is a party at the time of Purchaser’s execution and delivery of this Agreement, as such voting agreement may be thereafter
amended from time to time (the “Voting Agreement”), by executing an adoption agreement or counterpart signature page agreeing to be bound by and subject to
the terms of the Voting Agreement and to vote the Shares in the capacity of a “Common Holder” and a “Stockholder,” as such terms may be defined in the Voting
Agreement.
7. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. Any stock certificate or, in the case of uncertificated securities, any notice of issuance, for the Shares shall bear the following
legends (as well as any legends required by the Company or applicable state and federal corporate and securities laws):
(i) “THE SECURITIES REFERENCED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933.”
(ii) “THE SECURITIES REFERENCED HEREIN MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF
AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH AND MAY BE OBTAINED FROM
THE SECRETARY OF THE COMPANY AT NO CHARGE.”
(iii) “THE TRANSFER OF THE SECURITIES REFERENCED HEREIN IS SUBJECT TO CERTAIN TRANSFER RESTRICTIONS
SET FORTH IN THE COMPANY’S AMENDED AND RESTATED BYLAWS (AS AMENDED FROM TIME TO TIME) AND THE COMPANY’S STOCK
PLAN, COPIES OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS. THE
COMPANY SHALL NOT REGISTER OR OTHERWISE RECOGNIZE OR GIVE EFFECT TO ANY PURPORTED TRANSFER OF SECURITIES THAT
DOES NOT COMPLY WITH SUCH TRANSFER RESTRICTIONS.”
16
(iv) Any legend required by the Voting Agreement, if applicable.
(b) Stop-Transfer Notices. Purchaser agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue
appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the
same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Agreement or the Plan or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so transferred.
(d) Required Notices. Purchaser acknowledges that the Shares are issued and shall be held subject to all the provisions of this Section 7, the
Certificate of Incorporation and the Bylaws of the Company and any amendments thereto, copies of which are on file at the principal office of the Company. A
statement of all of the rights, preferences, privileges and restrictions granted to or imposed upon the respective classes and/or series of shares of stock of the
Company and upon the holders thereof may be obtained by any stockholder upon request and without charge, at the principal office of the Company, and the
Company will furnish any stockholder, upon request and without charge, a copy of such statement. Purchaser acknowledges that the provisions of this Section 7
shall constitute the notices required by Sections 151(f) and 202(a) of the Delaware General Corporation Law and the Purchaser hereby expressly waives the
requirement of Section 151(f) of the Delaware General Corporation Law that it receive the written notice provided for in Sections 151(f) and 202(a) of the
Delaware General Corporation Law within a reasonable time after the issuance of the Shares.
8. No Employment Rights. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a parent,
subsidiary or affiliate of the Company, to terminate Purchaser’s employment or consulting relationship, for any reason, with or without cause.
9. Section 83(b) Election.
(a) Purchaser understands that Section 83(a) of the Internal Revenue Code of 1986, as amended (the “Code”), taxes as ordinary income for a
Nonstatutory Stock Option and as alternative minimum taxable income for an Incentive Stock Option the difference between the amount paid for the Shares and
the Fair Market Value of the Shares as of the date any restrictions on the Shares lapse. In this context, “restriction” means the right of the Company to buy back the
Shares pursuant to the Repurchase Option set forth in Section 3(a) of this Agreement. Purchaser understands that Purchaser may elect to be taxed at the time the
Shares are purchased, rather than when and as the Repurchase Option expires, by filing an election under Section 83(b) (an “83(b) Election”) of the Code with the
Internal Revenue Service within 30 days from the date of purchase. Even if the Fair Market Value of the Shares at the time of the execution of this Agreement
equals the amount paid for the Shares, the election must be made to avoid income and alternative minimum tax treatment under Section 83(a) in the future.
Purchaser understands that failure to file such an election in a timely manner may result in adverse tax consequences for
17
Purchaser. Purchaser further understands that an additional copy of such election form should be filed with his or her federal income tax return for the calendar year
in which the date of this Agreement falls. Purchaser acknowledges that the foregoing is only a summary of the effect of United States federal income taxation with
respect to purchase of the Shares hereunder, does not purport to be complete, and is not intended or written to be used, and cannot be used, for the purposes of
avoiding taxpayer penalties. Purchaser further acknowledges that the Company has directed Purchaser to seek independent advice regarding the applicable
provisions of the Code, the income tax laws of any municipality, state or foreign country in which Purchaser may reside, and the tax consequences of Purchaser’s
death, and Purchaser has consulted, and has been fully advised by, Purchaser’s own tax advisor regarding such tax laws and tax consequences or has knowingly
chosen not to consult such a tax advisor. Purchaser further acknowledges that neither the Company nor any subsidiary or representative of the Company has made
any warranty or representation to Purchaser with respect to the tax consequences of Purchaser’s purchase of the Shares or of the making or failure to make an 83(b)
Election. PURCHASER (AND NOT THE COMPANY, ITS AGENTS OR ANY OTHER PERSON) SHALL BE SOLELY RESPONSIBLE FOR
APPROPRIATELY FILING SUCH FORM WITH THE IRS, EVEN IF PURCHASER REQUESTS THE COMPANY, ITS AGENTS OR ANY OTHER PERSON
MAKE THIS FILING ON PURCHASER’S BEHALF.
(b) Purchaser agrees that he or she will execute and deliver to the Company with this executed Agreement a copy of the Acknowledgment and
Statement of Decision Regarding Section 83(b) Election (the “Acknowledgment”) attached hereto as Attachment B. Purchaser further agrees that he or she will
execute and submit with the Acknowledgment a copy of the 83(b) Election attached hereto as Attachment C (for tax purposes in connection with the early exercise
of an option) if Purchaser has indicated in the Acknowledgment his or her decision to make such an election.
10. Waiver of Statutory Information Rights. Purchaser acknowledges and understands that, but for the waiver made herein, Purchaser would be
entitled, upon written demand under oath stating the purpose thereof, to inspect for any proper purpose, and to make copies and extracts from, the Company’s stock
ledger, a list of its stockholders, and its other books and records, and the books and records of subsidiaries of the Company, if any, under the circumstances and in
the manner provided in Section 220 of the General Corporation Law of Delaware (any and all such rights, and any and all such other rights of Purchaser as may be
provided for in Section 220, the “Inspection Rights”). In light of the foregoing, until the first sale of Common Stock of the Company to the general public pursuant
to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended, Purchaser
hereby unconditionally and irrevocably waives the Inspection Rights, whether such Inspection Rights would be exercised or pursued directly or indirectly pursuant
to Section 220 or otherwise, and covenants and agrees never to directly or indirectly commence, voluntarily aid in any way, prosecute, assign, transfer, or cause to
be commenced any claim, action, cause of action, or other proceeding to pursue or exercise the Inspection Rights. The foregoing waiver applies to the Inspection
Rights of Purchaser in Purchaser’s capacity as a stockholder and shall not affect any rights of a director, in his or her capacity as such, under Section 220. The
foregoing waiver shall not apply to any contractual inspection rights of Purchaser under any written agreement with the Company.
18
11. Miscellaneous.
(a) Governing Law. The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto
and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of California, without
giving effect to principles of conflicts of law. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby
submit and consent to the exclusive jurisdiction of the state of California and agree that any such litigation shall be conducted only in the courts of California or the
federal courts of the United States located in California and no other courts.
(b) Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and
supersedes all prior or contemporaneous discussions, understandings and agreements, whether oral or written, between them relating to the subject matter hereof.
Notwithstanding the foregoing, in the event of a conflict between the terms and provisions of the Bylaws and the terms and provisions of this Agreement, the terms
and provisions in the Bylaws shall prevail.
(c) Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall
be effective unless in writing signed by the parties to this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute
a waiver of that provision as to that or any other instance.
(d) Successors and Assigns. Except as otherwise provided in this Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The
Company may assign any of its rights and obligations under this Agreement. No other party to this Agreement may assign, whether voluntarily or by operation of
law, any of its rights and obligations under this Agreement, except with the prior written consent of the Company.
(e) Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed
sufficient (i) when delivered personally or by overnight courier or sent by email, (ii) when effected via eShares by the party giving such notice, demand or request
(regardless of the time of actual receipt by the party to receive such notice, demand or request) or (iii) 48 hours after being deposited in the U.S. mail as certified or
registered mail with postage prepaid, addressed to the party to be notified at such party’s address as set forth on the signature page, as subsequently modified by
written notice, or if no address is specified on the signature page, at the most recent address set forth in the Company’s books and records.
(f) Severability. If one or more provisions of this Agreement are held to be unenforceable under Applicable Law, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i)
such provision shall be excluded from this Agreement, the balance of
19
the Agreement shall be interpreted as if such provision were so excluded and the balance of the Agreement shall be enforceable in accordance with its terms.
(g) Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against
any one of the parties hereto.
(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be
deemed an original, and all of which together shall constitute one and the same agreement. Execution of a facsimile copy will have the same force and effect as
execution of an original, and a facsimile signature will be deemed an original and valid signature.
(i) Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to this Agreement or any notices
required by applicable law or the Company’s Certificate of Incorporation or Bylaws by email or any other electronic means, including, without limitation, via
eShares, according to the protocols thereof. Purchaser hereby consents to (i) conduct business electronically (ii) receive such documents and notices by such
electronic delivery, including, without limitation, via eShares, according to the protocols thereof and (iii) sign documents electronically and agrees to participate
through an on-line or electronic system established and maintained by the Company or a third party designated by the Company. Any delivery or receipt of any
document or other materials in connection with this Option, whether by the Company or by the Optionee, shall be deemed valid and effective when made in
accordance with the protocols of the eShares platform.
(j) California Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS
UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION
BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
[Signature Page Follows]
20
The parties have executed this Early Exercise Notice and Restricted Stock Purchase Agreement as of the date first set forth above.
THE COMPANY:
COINBASE GLOBAL, INC.
By:
(Signature)
Name:
Title:
Address:
PURCHASER:
(PRINT NAME)
(Signature) Address:
Email:
21
I, ______________________ , spouse of ______________________ (“Purchaser”), ”), have read and hereby approve the foregoing Agreement. In consideration of
the Company’s granting my spouse the right to purchase the Shares as set forth in the Agreement, I hereby agree to be bound irrevocably by the Agreement and
further agree that any community property or other such interest that I may have in the Shares shall hereby be similarly bound by the Agreement. I hereby appoint
my spouse as my attorney-in-fact with respect to any amendment or exercise or waiver of any rights under the Agreement.
Spouse of Purchaser (if applicable)
22
ATTACHMENT A
STOCK POWER
FOR VALUE RECEIVED, the undersigned (“Holder”), hereby sells, assigns and transfers unto_ (“Transferee”) ___________ shares of the Class A
Common Stock of Coinbase Global, Inc., a Delaware corporation (the “Company”), standing in Holder’s name on the Company’s books as Certificate No. CS-
___________ whether held in certificated or uncertificated form, and does hereby irrevocably constitute and appoint _________________________________ to
transfer said stock on the books of the Company with full power of substitution in the premises.
Dated: HOLDER:
(PRINT NAME)
(Signature)
Spouse of Holder (if applicable)
This Stock Power may only be used as authorized by the Early Exercise Notice and Restricted Stock Purchase Agreement between the Holder and the
Company, dated ___________ and the exhibits thereto.
Instructions: Please do not fill in any blanks other than the signature line. The purpose of this assignment is to enable the Company to exercise its
repurchase option set forth in the Agreement without requiring additional signatures on the part of Holder.
23
IF YOU WISH TO MAKE A SECTION 83(B) ELECTION, THE FILING OF SUCH
ELECTION IS YOUR RESPONSIBILITY.
THE FORM FOR MAKING THIS SECTION 83(B) ELECTION IS ATTACHED TO THIS
AGREEMENT.
YOU MUST FILE THIS FORM WITHIN 30 DAYS OF PURCHASING THE SHARES.
YOU (AND NOT THE COMPANY, ANY OF ITS AGENTS OR ANY OTHER PERSON)
SHALL BE SOLELY RESPONSIBLE FOR FILING SUCH FORM WITH THE IRS, EVEN IF
YOU REQUEST THE COMPANY, ITS AGENTS OR ANY OTHER PERSON TO MAKE
THIS FILING ON YOUR BEHALF AND EVEN IF THE COMPANY, ANY OF ITS AGENTS
OR ANY OTHER PERSON HAS PREVIOUSLY MADE THIS FILING ON YOUR BEHALF.
The election should be filed by mailing a signed election form by certified mail, return receipt requested to the IRS Service
Center where you file your tax returns. See www.irs.gov.
24
ATTACHMENT B
ACKNOWLEDGMENT AND STATEMENT OF DECISION
REGARDING SECTION 83(b) ELECTION
The undersigned has entered into a stock purchase agreement with Coinbase Global, Inc., a Delaware corporation (the “Company”), pursuant to which the
undersigned is purchasing ______________________ shares of Class A Common Stock of the Company (the “Shares”). In connection with the purchase of the
Shares, the undersigned hereby represents as follows:
1. The undersigned has carefully reviewed the stock purchase agreement pursuant to which the undersigned is purchasing the Shares.
2. The undersigned either [check and complete as applicable]:
(a) _____ has consulted, and has been fully advised by, the undersigned’s own tax advisor, _________________, whose business address is
_________________________________, regarding the federal, state and local tax consequences of purchasing the Shares, and particularly regarding the
advisability of making elections pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”) and pursuant to the corresponding
provisions, if any, of applicable state law; or
(b) _____ has knowingly chosen not to consult such a tax advisor.
3. The undersigned hereby states that the undersigned has decided [check as applicable]:
(a) _____ to make an election pursuant to Section 83(b) of the Code, and is submitting to the Company, together with the undersigned’s executed
stock purchase agreement, an executed form entitled “Election Under Section 83(b) of the Internal Revenue Code of 1986;” or
(b) _____ not to make an election pursuant to Section 83(b) of the Code.
4. Neither the Company nor any subsidiary or representative of the Company has made any warranty or representation to the undersigned
with respect to the tax consequences of the undersigned’s purchase of the Shares or of the making or failure to make an election pursuant to Section 83(b)
of the Code or the corresponding provisions, if any, of applicable state law.
25
Dated: PURCHASER:
(PRINT NAME)
(Signature)
Spouse of Purchaser (if applicable)
26
ATTACHMENT C
ELECTION UNDER SECTION 83(B)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code, to include in taxpayer’s gross income or alternative
minimum taxable income, as applicable, for the current taxable year, the amount of any income that may be taxable to taxpayer in connection with taxpayer’s
receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of the undersigned are as follows:
NAME OF TAXPAYER: ___________ NAME OF SPOUSE: ___________
ADDRESS: ______________________
______________________
United States
IDENTIFICATION NO. OF TAXPAYER: ______________________
IDENTIFICATION NO. OF SPOUSE: ______________________
TAXABLE YEAR: ______________________
2. The property with respect to which the election is made is described as follows:
______________________shares of the Class A Common Stock of Coinbase Global, Inc., a Delaware corporation (the “Company”).
3. The date on which the property was transferred is:
4. The property is subject to the following restrictions:
Repurchase option at cost in favor of the Company upon termination of taxpayer’s employment or consulting relationship.
5. The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such
property is:
$ _______________
6. The amount (if any) paid for such property: $_____
27
The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned’s receipt of the
above-described property. The transferee of such property is the person performing the services in connection with the transfer of said property.
The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.
Dated: PURCHASER:
(Signature)
Spouse of Purchaser (if applicable)
28
EXHIBIT B
COINBASE GLOBAL, INC.
2013 STOCK PLAN
EXERCISE AGREEMENT
This Exercise Agreement (this “Agreement”) is made as of ___________, by and between Coinbase Global, Inc., a Delaware corporation (the “Company”),
and ___________ ______________________ (“Purchaser”). To the extent any capitalized terms used in this Agreement are not defined, they shall have the
meaning ascribed to them in the Company’s 2013 Stock Plan (the “Plan”) and the Option Agreement (as defined below).
1. Exercise of Option. Subject to the terms and conditions hereof, Purchaser hereby elects to exercise his or her option to purchase
___________shares of the Class A Common Stock (the “Shares”) of the Company under and pursuant to the Plan, the Notice of Stock Option Grant and the Stock
Option Agreement granted ___________ (the “Option Agreement”). The purchase price for the Shares shall be $ per Share for a total purchase price of
$___________.The term “Shares” refers to the purchased Shares and all securities received in connection with the Shares pursuant to stock dividends or splits, all
securities received in replacement of the Shares in a recapitalization, merger, reorganization, exchange or the like, and all new, substituted or additional securities
or other property to which Purchaser is entitled by reason of Purchaser’s ownership of the Shares.
2. Time and Place of Exercise. The purchase and sale of the Shares under this Agreement shall occur at the principal office of the Company
simultaneously with the execution and delivery of this Agreement, the payment of the aggregate exercise price by any method listed in Section 4 of the Option
Agreement, and the satisfaction of any applicable tax, withholding, required deductions or other payments, all in accordance with the provisions of Section 3(b) of
the Option Agreement, including, without limitation, via eShares. The Company shall issue the Shares to Purchaser by entering such Shares in Purchaser’s name as
of such date in the books and records of the Company or, if applicable, a duly authorized transfer agent (including, without limitation, via eShares) of the
Company, against payment of the exercise price therefor by Purchaser. The Company will deliver to Purchaser a stock certificate or, in the case of uncertificated
securities, notice of issuance, including, without limitation, via eShares, for the Shares as soon as practicable following such date.
3. Limitations on Transfer. Purchaser acknowledges and agrees that the Shares purchased under this Agreement are subject to (i) the transfer
restrictions set forth in Section 12 of the Plan, (ii) the terms and conditions that apply to the Company’s Class A Common Stock, as set forth in the Company’s
Amended and Restated Bylaws, including (without limitation) certain transfer restrictions set forth in Section 8.9 of the Company’s Second Amended and Restated
Bylaws (as summarized in Section 6 of the Option Agreement), as in effect at the time of any proposed transfer (the “Bylaw Restrictions”), and (iii) any other
limitation or restriction on transfer created by Applicable Laws. Purchaser shall not assign, encumber or dispose of any
29
interest in the Shares except to the extent permitted by, and in compliance with, Section 12 of the Plan, the Bylaw Restrictions, Applicable Laws, and the
provisions below.
(a) Transfer Restrictions; Right of First Refusal. Before any Shares held by Purchaser or any transferee of Purchaser (either being sometimes
referred to herein as the “Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law), the Company shall first have the right to
approve such sale or transfer, in full or in part, and shall then have the right to purchase all or any part of the Shares proposed to be sold or transferred, in each case,
in its sole and absolute discretion (the “Right of First Refusal”). If the Holder would like to sell or transfer any Shares, the Holder must provide the Company or its
assignee(s) with a Notice (as defined below) requesting approval to sell or transfer the Shares and offering the Company or its assignee(s) a Right of First Refusal
on the terms and conditions set forth in this Section 3(a). The Company may either (1) exercise its Right of First Refusal in full or in part and purchase such Shares
pursuant to this Section 3(a), (2) decline to exercise its Right of First Refusal in full or in part and permit the sale or transfer of such Shares to the Proposed
Transferee (as defined below) in full or in part, or (3) decline to exercise its Right of First Refusal in full or in part and decline the request to sell or transfer the
Shares in full or in part.
(i) Notice of Proposed Transfer. The Holder of the Shares shall deliver to the Company a written or electronic notice (the “Notice”)
stating: (A) the Holder’s desire to sell or otherwise transfer such Shares; (B) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (C)
the number of Shares to be sold or transferred to each Proposed Transferee; (D) the terms and conditions of each proposed sale or transfer, including (without
limitation) the purchase price for such Shares (the “Purchase Price”); and (E) the Holder’s offer to the Company or its assignee(s) to purchase the Shares at the
Purchase Price and upon the same terms (or terms that are no less favorable to the Company).
(ii) Exercise of Right of First Refusal. At any time within 30 days after receipt of the Notice, the Company and/or its assignee(s) shall
deliver a written or electronic notice to the Holder indicating whether the Company and/or its assignee(s) elect to permit or reject the proposed sale or transfer, in
full or in part, and/or elect to accept or decline the offer to purchase any or all of the Shares proposed to be sold or transferred to any one or more of the Proposed
Transferees, at the Purchase Price, provided that if the Purchase Price consists of no legal consideration (as, for example, in the case of a transfer by gift), the
purchase price will be the fair market value of the Shares as determined in good faith by the Company. If the Purchase Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by the Company in good faith.
(iii) Payment. Payment of the Purchase Price shall be made, at the election of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness, by Electronic Transfer to the Holder’s bank account or by any combination thereof within 60 days
after receipt of the Notice or in the manner and at the times set forth in the Notice.
(iv) Holder’s Right to Transfer. If any of the Shares proposed in the Notice to be sold or transferred to a given Proposed Transferee are
both (A) not purchased by the Company and/or its assignee(s) as provided in this Section 3(a) and (B) approved by the
30
Company to be sold or transferred, then the Holder may sell or otherwise transfer any such Shares to the applicable Proposed Transferee at the Purchase Price or at
a higher price, provided that such sale or other transfer is consummated within 120 days after the date of the Notice; provided that any such sale or other transfer is
also effected in accordance with the Bylaw Restrictions, the transfer restrictions set forth in the Plan and any Applicable Laws and the Proposed Transferee agrees
in writing that the Plan, the Bylaw Restrictions, and the provisions of the Option Agreement and this Agreement, including this Section 3 and the waiver of
statutory information rights in Section 8, shall continue to apply to the Shares in the hands of such Proposed Transferee. The Company, in consultation with its
legal counsel, may require the Holder to provide an opinion of counsel evidencing compliance with Applicable Laws. If the Shares described in the Notice are not
transferred to the Proposed Transferee within such period, or if the Holder proposes to change the price or other terms to make them more favorable to the
Proposed Transferee, a new Notice shall be given to the Company, and the Company and/or its assignees shall again have the right to approve such transfer and be
offered the Right of First Refusal.
(v) Exception for Certain Family Transfers. Anything to the contrary contained in this Section 3(a) notwithstanding, the transfer of
any or all of the Shares during Holder’s lifetime or on Holder’s death by will or intestacy to Holder’s Immediate Family or a trust for the benefit of Holder’s
Immediate Family shall be exempt from the provisions of this Section 3(a). “Immediate Family” as used herein shall mean lineal descendant or antecedent, spouse
(or spouse’s antecedents), father, mother, brother or sister (or their descendants), stepchild (or their antecedents or descendants), aunt or uncle (or their antecedents
or descendants), brother-in-law or sister-in-law (or their antecedents or descendants) and shall include adoptive relationships. In such case, the transferee or other
recipient shall receive and hold the Shares so transferred subject to the provisions of the Plan, the Bylaw Restrictions, and the provisions of the Option Agreement
and this Agreement, including this Section 3 and Section 8, and there shall be no further transfer of such Shares except in accordance with the terms of this Section
3, the Plan and the Bylaw Restrictions.
(b) Company’s Right to Purchase upon Involuntary Transfer. In the event of any transfer by operation of law or other involuntary transfer
(including death or divorce, but excluding a transfer to Immediate Family as set forth in Section 3(a)(v) above) of all or a portion of the Shares by the record holder
thereof, the Company shall have an option to purchase any or all of the Shares transferred at the Fair Market Value of the Shares on the date of transfer (as
determined by the Company in its sole discretion). Upon such a transfer, the Holder shall promptly notify the Secretary of the Company of such transfer. The right
to purchase such Shares shall be provided to the Company for a period of 30 days following receipt by the Company of written or electronic notice from the
Holder.
(c) Assignment. The right of the Company to purchase any part of the Shares may be assigned in whole or in part to any holder or holders of
capital stock of the Company or other persons or organizations.
(d) Restrictions Binding on Transferees. All transferees of Shares or any interest therein will receive and hold such Shares or interest subject
to the Plan, the Bylaw Restrictions, and the provisions of the Option Agreement and this Agreement, including, without
31
limitation, Section 7 of the Option Agreement, Sections 3 and 8 of this Agreement and Section 12 of the Plan. Any sale or transfer of the Shares shall be void
unless the provisions of this Agreement are satisfied.
(e) Termination of Rights. The transfer restrictions set forth in Section 3(a) above and Section 12 of the Plan, the Right of First Refusal granted
the Company by Section 3(a) above and the option to repurchase the Shares in the event of an involuntary transfer granted the Company by Section 3(b) above
shall terminate upon (i) the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective
by the Securities and Exchange Commission under the Securities Act (other than a registration statement relating solely to the issuance of Common Stock pursuant
to a business combination or an employee incentive or benefit plan) or (ii) any transfer or conversion of Shares made pursuant to a statutory merger or statutory
consolidation of the Company with or into another corporation or corporations if the common stock of the surviving corporation or any direct or indirect parent
corporation thereof is registered under the Exchange Act. Upon termination of such transfer restrictions, the Company will remove any stop-transfer notices
referred to in Section 6(b) below and related to the restrictions in this Section 3 and a new stock certificate or, in the case of uncertificated securities, notice of
issuance, for the Shares not repurchased shall be issued, on request, without the legend referred to in Section 6(a)(ii) below and delivered to Holder.
(f) Lock-Up Agreement. The lock-up provisions set forth in Section 7 of the Option Agreement shall apply to the Shares issued upon exercise
of the Option hereunder and Purchaser reaffirms Purchaser’s obligations set forth therein.
4. Investment and Taxation Representations. In connection with the purchase of the Shares, Purchaser represents to the Company the following:
(a) Purchaser is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Shares. Purchaser is purchasing the Shares for investment for Purchaser’s own account only and not
with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act or under any applicable provision of state law.
Purchaser does not have any present intention to transfer the Shares to any other person or entity.
(b) Purchaser understands that the Shares have not been registered under the Securities Act by reason of a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Purchaser’s investment intent as expressed herein.
(c) Purchaser further acknowledges and understands that the securities must be held indefinitely unless they are subsequently registered under
the Securities Act or an exemption from such registration is available. Purchaser further acknowledges and understands that the Company is under no obligation to
register the securities.
(d) Purchaser is familiar with the provisions of Rule 144, promulgated under the Securities Act, which, in substance, permits limited public
resale of “restricted securities”
32
acquired, directly or indirectly, from the issuer of the securities (or from an affiliate of such issuer), in a non-public offering subject to the satisfaction of certain
conditions. Purchaser understands that the Company provides no assurances as to whether he or she will be able to resell any or all of the Shares pursuant to Rule
144, which rule requires, among other things, that the Company be subject to the reporting requirements of the Exchange Act, that resales of securities take place
only after the holder of the Shares has held the Shares for certain specified time periods, and under certain circumstances, that resales of securities be limited in
volume and take place only pursuant to brokered transactions. Notwithstanding this Section 4(d), Purchaser acknowledges and agrees to the restrictions set forth in
Section 4(e) below.
(e) Purchaser further understands that in the event all of the applicable requirements of Rule 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not
exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available
for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.
(f) Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase or disposition of the Shares.
Purchaser represents that Purchaser has consulted any tax consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and
that Purchaser is not relying on the Company for any tax advice.
5. Voting Provisions. As a condition precedent to entering into this Agreement, at the request of the Company, Purchaser shall become a party to any
voting agreement to which the Company is a party at the time of Purchaser’s execution and delivery of this Agreement, as such voting agreement may be thereafter
amended from time to time (the “Voting Agreement”), by executing an adoption agreement or counterpart signature page agreeing to be bound by and subject to
the terms of the Voting Agreement and to vote the Shares in the capacity of a “Common Holder” and a “Stockholder,” as such terms may be defined in the Voting
Agreement.
6. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. Any stock certificate or, in the case of uncertificated securities, notice of issuance, for the Shares shall bear the following legends
(as well as any legends required by the Company or applicable state and federal corporate and securities laws):
(i) “THE SECURITIES REFERENCED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO
33
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”
(ii) “THE SECURITIES REFERENCED HEREIN MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF
AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH AND MAY BE OBTAINED FROM
THE SECRETARY OF THE COMPANY AT NO CHARGE.”
(iii) “THE TRANSFER OF THE SECURITIES IS SUBJECT TO CERTAIN TRANSFER RESTRICTIONS SET FORTH IN THE
COMPANY’S AMENDED AND RESTATED BYLAWS (AS AMENDED FROM TIME TO TIME) AND THE COMPANY’S STOCK PLAN, COPIES OF
WHICH MAY BE OBTAINED UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS. THE COMPANY SHALL
NOT REGISTER OR OTHERWISE RECOGNIZE OR GIVE EFFECT TO ANY PURPORTED TRANSFER OF SECURITIES THAT DOES NOT COMPLY
WITH SUCH TRANSFER RESTRICTIONS.”
(iv) Any legend required by the Voting Agreement, as applicable.
(b) Stop-Transfer Notices. Purchaser agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue
appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the
same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Agreement or the Plan or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so transferred.
(d) Required Notices. Purchaser acknowledges that the Shares are issued and shall be held subject to all the provisions of this Section 6, the
Certificate of Incorporation and the Bylaws of the Company and any amendments thereto, copies of which are on file at the principal office of the Company. A
statement of all of the rights, preferences, privileges and restrictions granted to or imposed upon the respective classes and/or series of shares of stock of the
Company and upon the holders thereof may be obtained by any stockholder upon request and without charge, at the principal office of the Company, and the
Company will furnish any stockholder, upon request and without charge, a copy of such statement. Purchaser acknowledges that the provisions of this Section 6
shall constitute the notices required by Sections 151(f) and 202(a) of the Delaware General Corporation Law and the Purchaser hereby expressly waives the
requirement of Section 151(f) of the Delaware General Corporation Law that it receive the written notice provided for in Sections 151(f) and 202(a) of the
Delaware General Corporation Law within a reasonable time after the issuance of the Shares.
7. No Employment Rights. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a parent,
subsidiary or affiliate of the
34
Company, to terminate Purchaser’s employment or consulting relationship, for any reason, with or without cause.
8. Waiver of Statutory Information Rights. Purchaser acknowledges and understands that, but for the waiver made herein, Purchaser would be
entitled, upon written demand under oath stating the purpose thereof, to inspect for any proper purpose, and to make copies and extracts from, the Company’s stock
ledger, a list of its stockholders, and its other books and records, and the books and records of subsidiaries of the Company, if any, under the circumstances and in
the manner provided in Section 220 of the General Corporation Law of Delaware (any and all such rights, and any and all such other rights of Purchaser as may be
provided for in Section 220, the “Inspection Rights”). In light of the foregoing, until the first sale of Common Stock of the Company to the general public pursuant
to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended, Purchaser
hereby unconditionally and irrevocably waives the Inspection Rights, whether such Inspection Rights would be exercised or pursued directly or indirectly pursuant
to Section 220 or otherwise, and covenants and agrees never to directly or indirectly commence, voluntarily aid in any way, prosecute, assign, transfer, or cause to
be commenced any claim, action, cause of action, or other proceeding to pursue or exercise the Inspection Rights. The foregoing waiver applies to the Inspection
Rights of Purchaser in Purchaser’s capacity as a stockholder and shall not affect any rights of a director, in his or her capacity as such, under Section 220. The
foregoing waiver shall not apply to any contractual inspection rights of Purchaser under any written agreement with the Company.
9. Miscellaneous.
(a) Governing Law. The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto
and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of California, without
giving effect to principles of conflicts of law. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby
submit and consent to the exclusive jurisdiction of the state of California and agree that any such litigation shall be conducted only in the courts of California or the
federal courts of the United States located in California and no other courts.
(b) Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and
supersedes all prior or contemporaneous discussions, understandings and agreements, whether oral or written, between them relating to the subject matter hereof.
Notwithstanding the foregoing, in the event of a conflict between the terms and provisions of the Bylaws and the terms and provisions of this Agreement, the terms
and provisions in the Bylaws shall prevail.
(c) Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall
be effective unless in writing signed by the parties to this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute
a waiver of that provision as to that or any other instance.
35
(d) Successors and Assigns. Except as otherwise provided in this Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The
Company may assign any of its rights and obligations under this Agreement. No other party to this Agreement may assign, whether voluntarily or by operation of
law, any of its rights and obligations under this Agreement, except with the prior written consent of the Company.
(e) Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed
sufficient (i) when delivered personally or by overnight courier or sent by email, (ii) when effected via eShares by the Party giving such notice, demand or request
(regardless of the time of actual receipt by the party to receive such notice, demand or request) or (iii) 48 hours after being deposited in the U.S. mail as certified or
registered mail with postage prepaid, addressed to the party to be notified at such party’s address as set forth on the signature page, as subsequently modified by
written notice, or if no address is specified on the signature page, at the most recent address set forth in the Company’s books and records.
(f) Severability. If one or more provisions of this Agreement are held to be unenforceable under Applicable Law, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i)
such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the
balance of the Agreement shall be enforceable in accordance with its terms.
(g) Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against
any one of the parties hereto.
(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be
deemed an original, and all of which together shall constitute one and the same agreement. Execution of a facsimile copy will have the same force and effect as
execution of an original, and a facsimile signature will be deemed an original and valid signature.
(i) Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to this Agreement or any notices
required by applicable law or the Company’s Certificate of Incorporation or Bylaws by email or any other electronic means, including, without limitation, via
eShares, according to the protocols thereof. Purchaser hereby consents to (i) conduct business electronically (ii) receive such documents and notices by such
electronic delivery including, without limitation, via eShares, according to the protocols thereof and (iii) sign documents electronically and agrees to participate
through an on-line or electronic system including, without limitation, via eShares, according to the protocols thereof established and maintained by the Company or
a third party designated by the Company. Any delivery or receipt of any document or other materials in connection with this Option, whether by the
36
Company or by the Optionee, shall be deemed valid and effective when made in accordance with the protocols of the eShares platform.
(j) California Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS
UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION
BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
[Signature Page Follows]
37
The parties have executed this Exercise Agreement as of the date first set forth above.
THE COMPANY:
COINBASE GLOBAL, INC.
By:
(Signature)
Name:
Title:
Address:
PURCHASER:
(PRINT NAME)
(Signature) Address:
Email:
38
I, ______________________, spouse of ______________________ (“Purchaser”), have read and hereby approve the foregoing Agreement. In consideration of the
Company’s granting my spouse the right to purchase the Shares as set forth in the Agreement, I hereby agree to be bound irrevocably by the Agreement and further
agree that any community property or other such interest that I may have in the Shares shall hereby be similarly bound by the Agreement. I hereby appoint my
spouse as my attorney-in-fact with respect to any amendment or exercise of any rights under the Agreement.
Spouse of Purchaser (if applicable)
39
COINBASE GLOBAL, INC.
2013 STOCK PLAN
NOTICE OF STOCK OPTION GRANT
[Optionee Name]
[Optionee Address Line 1]
[Optionee Address Line 2]
You have been granted an option to purchase Common Stock of Coinbase Global, Inc., a Delaware corporation (the “Company”), as follows:
Date of Grant: [l]
Exercise Price Per Share: $[l]
Total Number of Shares: [l]
Total Exercise Price: $[l]
Type of Option: [l] Incentive Stock Option
[l] Nonstatutory Stock Option
Expiration Date: [l]
Vesting Commencement Date: [l]
Vesting/Exercise
Schedule:
The Option is immediately exercisable. So long as your Continuous Service
Status does not terminate, the Shares underlying this Option shall vest in
accordance with the following schedule: [l] of the Total Number of Shares
shall vest on the [l] anniversary of the Vesting Commencement Date and [l]
of the Total Number of Shares shall vest on the corresponding day of each
month thereafter (and if there is no corresponding day, the last day of the
month).
Termination Period: Except as set forth in Section 5 of the Stock Option Agreement, you may
exercise this Option for 3 months after termination of your Continuous Service
Status, provided that if on your termination date, you have completed a
minimum of 2 years of Continuous Service Status (as determined by the
Company), then you may exercise this Option for 7 years after termination of
your Continuous Service Status; provided, however, in no event may the Option
be exercised later than the Expiration Date. Notwithstanding the foregoing, this
Option may terminate earlier pursuant to the Coinbase Global, Inc. 2013 Stock
Plan (the “Plan”), including (without limitation) upon a dissolution, liquidation
or Corporate Transaction (as defined in the Plan) of the Company. You are
responsible for keeping track of these exercise periods following the termination
of your Continuous Service Status for any reason. The Company will not
provide further notice of such periods.
Transferability: You may not transfer this Option except as set out in Section 6 of the Stock
Option Agreement. You must obtain Board approval prior to any transfer of the
Shares received upon exercise of this Option.
2
By your signature and the signature of the Company’s representative below, you and the Company agree that this Option is granted under and governed by the
terms and conditions of this Notice and the Coinbase Global, Inc. 2013 Stock Plan and Option Agreement, both of which are attached to and made a part of this
Notice.
In addition, you agree and acknowledge that your rights to any Shares underlying this Option will be earned only as you provide services to the Company
over time, that the grant of this Option is not as consideration for services you rendered to the Company prior to your date of hire, and that nothing in this Notice or
the attached documents confers upon you any right to continue your employment or consulting relationship with the Company for any period of time, nor does it
interfere in any way with your right or the Company’s right to terminate that relationship at any time, for any reason, with or without cause. Also, to the extent
applicable, the Exercise Price Per Share has been set in good faith compliance with the applicable guidance issued by the IRS under Section 409A of the Code.
However, there is no guarantee that the IRS will agree with the valuation, and by signing below, you agree and acknowledge that the Company, its Board, officers,
employees, agents and stockholders shall not be held liable for any applicable costs, taxes, or penalties associated with this Option if, in fact, the IRS or any other
person (including, without limitation, a successor corporation or an acquirer in a Change of Control) were to determine that this Option constitutes deferred
compensation under Section 409A of the Code. You should consult with your own tax advisor concerning the tax consequences of such a determination by the IRS.
For purposes of this paragraph, the term “Company” will be interpreted to include any Parent, Subsidiary or Affiliate.
THE COMPANY:
COINBASE GLOBAL, INC.
By:
(Signature)
Name:
Title:
OPTIONEE:
(PRINT NAME)
(Signature)
Address:
3
COINBASE GLOBAL, INC.
2013 STOCK PLAN
STOCK OPTION AGREEMENT
1. Grant of Option. Coinbase Global, Inc., a Delaware corporation (the “Company”), hereby grants to the person (“Optionee”) named in the Notice of
Stock Option Grant (the “Notice”), an option (the “Option”) to purchase the total number of shares of Common Stock (the “Shares”) set forth in the Notice, at the
exercise price per Share set forth in the Notice (the “Exercise Price”), subject to the terms, definitions and provisions of the Coinbase Global, Inc. 2013 Stock Plan
(the “Plan”) adopted by the Company, which is incorporated in this Stock Option Agreement (this “Agreement”) by reference. Unless otherwise defined in this
Agreement, the terms used in this Agreement or the Notice shall have the meanings defined in the Plan.
2. Designation of Option. This Option is intended to be an Incentive Stock Option as defined in Section 422 of the Code only to the extent so
designated in the Notice, and to the extent it is not so designated or to the extent this Option does not qualify as an Incentive Stock Option, it is intended to be a
Nonstatutory Stock Option.
Notwithstanding the above, if designated as an Incentive Stock Option, in the event that the Shares subject to this Option (and all other incentive stock
options granted to Optionee by the Company or any Parent or Subsidiary, including under other plans) that first become exercisable in any calendar year have an
aggregate fair market value (determined for each Share as of the date of grant of the option covering such Share) in excess of $100,000, the Shares in excess of
$100,000 shall be treated as subject to a nonstatutory stock option, in accordance with Section 5(c) of the Plan.
3. Exercise of Option. This Option shall be exercisable during its term in accordance with the Vesting/Exercise Schedule set out in the Notice and
with the provisions of Section 7(c) of the Plan as follows:
(a) Right to Exercise.
(i) This Option may not be exercised for a fraction of a share.
(ii) In the event of Optionee’s death, Disability or other termination of Continuous Service Status, the exercisability of this Option is
governed by Section 5 below, subject to the limitations contained in this Section 3.
(ii) In no event may this Option be exercised after the Expiration Date set forth in the Notice.
(b) Method of Exercise.
(i) This Option shall be exercisable by execution and delivery of the Early Exercise Notice and Restricted Stock Purchase Agreement
attached hereto as Exhibit A, the Exercise Agreement attached hereto as Exhibit B or of any other form of written notice approved for such purpose by the
Company which shall state Optionee’s election to exercise this Option, the number of Shares in respect of which this Option is being exercised, and such other
representations and agreements as to the holder’s investment intent with respect to such Shares as may be required by the Company pursuant to the provisions of
the Plan. Such written notice shall be signed by Optionee and shall be delivered to the Company by such means as are determined by the Company in its discretion
to constitute adequate delivery. The written notice shall be accompanied by payment of the aggregate Exercise Price for the purchased Shares.
(ii) As a condition to the exercise of this Option and as further set forth in Section 9 of the Plan, Optionee agrees to make adequate
provision for federal, state or other applicable tax, withholding, required deductions or other payments, if any, which arise upon the grant, vesting or exercise of
this Option, or disposition of Shares, whether by withholding, direct payment to the Company, or otherwise, as determined by the Company in its sole discretion.
(iii) The Company is not obligated, and will have no liability for failure, to issue or deliver any Shares upon exercise of this Option unless
such issuance or delivery would comply with the Applicable Laws, with such compliance determined by the Company in consultation with its legal counsel. This
Option may not be exercised until such time as the Plan has been approved by the holders of capital stock of the Company, or if the issuance of such Shares upon
such exercise or the method of payment of consideration for such Shares would constitute a violation of any Applicable Laws, including any applicable U.S.
federal or state securities laws or any other law or regulation, including any rule under Part 221 of Title 12 of the Code of Federal Regulations as promulgated by
the Federal Reserve Board. As a condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the
Company as may be required by the Applicable Laws. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to Optionee
on the date on which this Option is exercised with respect to such Shares.
(iv) Subject to compliance with Applicable Laws, this Option shall be deemed to be exercised upon receipt by the Company of the
appropriate written notice of exercise accompanied by the Exercise Price and the satisfaction of any applicable obligations described in Section 3(b)(ii) above.
4 Method of Payment. Payment of the Exercise Price shall be by cash or check or, following the initial public offering of the Company’s Common
Stock, by Cashless Exercise pursuant to which the Optionee delivers an irrevocable direction to a securities broker (on a form prescribed by the Company and
according to a procedure established by the Company).
5 Termination of Relationship. Following the date of termination of Optionee’s Continuous Service Status for any reason (the “Termination Date”),
Optionee may exercise this Option only as set forth in the Notice and this Section 5. If Optionee does not exercise this
2
Option within the Termination Period set forth in the Notice or the termination periods set forth below, this Option shall terminate in its entirety. In no event, may
any Option be exercised after the Expiration Date of this Option as set forth in the Notice.
(a) Termination Prior to 2 Years of Continuous Service Status. If Optionee’s Continuous Service Status terminates prior to Optionee’s
completion of 2 years of Continuous Service Status (as determined by the Company), then Optionee may, to the extent Optionee is vested in the Optioned Stock,
exercise this Option as follows:
(i) General Termination. In the event of termination of Optionee’s Continuous Service Status other than as a result of Optionee’s
Disability or death or Optionee’s termination for Cause, Optionee may, to the extent Optionee is vested in the Optioned Stock, exercise this Option during the
Termination Period set forth in the Notice.
(ii) Termination upon Disability of Optionee. In the event of termination of Optionee’s Continuous Service Status as a result of
Optionee’s Disability, Optionee may, but only within 12 months following the Termination Date, exercise this Option to the extent Optionee is vested in the
Optioned Stock.
(iii) Death of Optionee. In the event of termination of Optionee’s Continuous Service Status as a result of Optionee’s death, or in the
event of Optionee’s death within 3 months following Optionee’s Termination Date, this Option may be exercised at any time within 12 months following the
Termination Date, or if later, 12 months following the date of death by any beneficiaries designated in accordance with Section 16 of the Plan or, if there are no
such beneficiaries, by the Optionee’s estate, or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent Optionee
is vested in the Optioned Stock.
(b) Termination On or After 2 Years of Continuous Service Status. If Optionee’s Continuous Service Status terminates (other than a
termination for Cause) on or after the date on which Optionee has completed 2 years of Continuous Service Status (as determined by the Company), Optionee may,
to the extent Optionee is vested in the Optioned Stock, exercise this Option during the Termination Period set forth in the Notice and this Option shall terminate
with respect to the unvested Shares subject to the Option on the date that is 3 months following Optionee’s termination of Continuous Service Status. In the event
that Optionee’s Continuous Service Status terminates as a result of Optionee’s death, this Option may be exercised by any beneficiaries designated in accordance
with Section 16 of the Plan or, if there are no such beneficiaries, by the Optionee’s estate, or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent Optionee is vested in the Optioned Stock.
(c) Termination for Cause. In the event of termination of Optionee’s Continuous Service Status for Cause at any time, this Option (including
any vested portion thereof) shall immediately terminate in its entirety upon first notification to Optionee of such termination for Cause. If Optionee’s Continuous
Service Status is suspended pending an investigation of whether Optionee’s Continuous Service Status will be terminated for Cause, all
3
Optionee’s rights under this Option, including the right to exercise this Option, shall be suspended during the investigation period.
6 Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of Optionee only by him or her. The terms of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of Optionee.
7 Lock-Up Agreement. If so requested by the Company or the underwriters in connection with the initial public offering of the Company’s securities
registered under the Securities Act of 1933, as amended, Optionee shall not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise
dispose of any securities of the Company however or whenever acquired (except for those being registered) without the prior written consent of the Company or
such underwriters, as the case may be, for 180 days from the effective date of the registration statement, plus such additional period, to the extent required by
FINRA rules, up to a maximum of 216 days from the effective date of the registration statement, and Optionee shall execute an agreement reflecting the foregoing
as may be requested by the underwriters at the time of such offering.
8 Effect of Agreement. Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions
thereof (and has had an opportunity to consult counsel regarding the Option terms), and hereby accepts this Option and agrees to be bound by its contractual terms
as set forth herein and in the Plan. Optionee hereby agrees to accept as binding, conclusive and final all decisions and interpretations of the Administrator regarding
any questions relating to this Option. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of the Notice and this
Agreement, the Plan terms and provisions shall prevail.
9 Imposition of Other Requirements. The Company reserves the right to impose other requirements on Optionee’s participation in the Plan, on this
Option and the Shares subject to this Option and on any other Award or Shares acquired under the Plan, to the extent the Company determines it is necessary or
advisable in order to comply with Applicable Laws or facilitate the administration of the Plan. Optionee agrees to sign any additional agreements or undertakings
that may be necessary to accomplish the foregoing. Furthermore, Optionee acknowledges that the Applicable Laws of the country in which Optionee is residing or
working at the time of grant, holding, vesting, and exercise of the Option or the holding or sale of Shares received pursuant to the Option (including any rules or
regulations governing securities, foreign exchange, tax, labor, or other matters) may subject Optionee to additional procedural or regulatory requirements that
Optionee is and will be solely responsible for and must fulfill.
10 Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to Optionee’s current or future participation
in the Plan, this Option, the Shares subject to this Option, any other Company Securities or any other Company-related documents, by electronic means. By
accepting this Option, whether electronically or otherwise, Optionee hereby (i) consents to receive such documents by electronic means, (ii) consents to the use of
electronic signatures, and (iii) if applicable, agrees to participate in the Plan and/or receive
4
any such documents through an on-line or electronic system established and maintained by the Company or a third party designated by the Company, including but
not limited to the use of electronic signatures or click-through electronic acceptance of terms and conditions.
11 Miscellaneous.
(a) Governing Law. The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto
and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of California, without
giving effect to principles of conflicts of law. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby
submit and consent to the exclusive jurisdiction of the state of California and agree that any such litigation shall be conducted only in the courts of California or the
federal courts of the United States located in California and no other courts.
(b) Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and
supersedes all prior or contemporaneous discussions, understandings and agreements, whether oral or written, between them relating to the subject matter hereof.
(c) Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall
be effective unless in writing signed by the parties to this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute
a waiver of that provision as to that or any other instance.
(d) Successors and Assigns. Except as otherwise provided in this Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The
Company may assign any of its rights and obligations under this Agreement. No other party to this Agreement may assign, whether voluntarily or by operation of
law, any of its rights and obligations under this Agreement, except with the prior written consent of the Company.
(e) Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed
sufficient when delivered personally or by overnight courier or sent by email, or 48 hours after being deposited in the U.S. mail as certified or registered mail with
postage prepaid, addressed to the party to be notified at such party’s address as set forth on the signature page, as subsequently modified by written notice, or if no
address is specified on the signature page, at the most recent address set forth in the Company’s books and records.
(f) Severability. If one or more provisions of this Agreement are held to be unenforceable under Applicable Laws, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i)
such provision shall be excluded from this Agreement,
5
(ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in
accordance with its terms.
(g) Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against
any one of the parties hereto.
(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be
deemed an original, and all of which together shall constitute one and the same agreement. Execution of a facsimile copy will have the same force and effect as
execution of an original, and a facsimile signature will be deemed an original and valid signature.
6
EXHIBIT A
COINBASE GLOBAL, INC.
2013 STOCK PLAN
EARLY EXERCISE NOTICE AND RESTRICTED STOCK PURCHASE AGREEMENT
This Agreement (“Agreement”) is made as of [l] by and between Coinbase Global, Inc., a Delaware corporation (the “Company”), and [l] (“Purchaser”).
To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Company’s 2013 Stock Plan (the
“Plan”) and the Option Agreement (as defined below).
1. Exercise of Option. Subject to the terms and conditions hereof, Purchaser hereby elects to exercise his or her option to purchase [l] shares of the
Common Stock (the “Shares”) of the Company under and pursuant to the Plan, the Notice of Stock Option Grant and the Stock Option Agreement granted [l] (the
“Option Agreement”). Of these Shares, Purchaser has elected to purchase [l] of those Shares which have become vested as of the date hereof under the
Vesting/Exercise Schedule set forth in the Notice of Stock Option Grant (the “Vested Shares”) and [l] Shares which have not yet vested under such
Vesting/Exercise Schedule (the “Unvested Shares”). The purchase price for the Shares shall be $[l] per Share for a total purchase price of $[l]. The term “Shares”
refers to the purchased Shares and all securities received in connection with the Shares pursuant to stock dividends or splits, all securities received in replacement
of the Shares in a recapitalization, merger, reorganization, exchange or the like, and all new, substituted or additional securities or other property to which
Purchaser is entitled by reason of Purchaser’s ownership of the Shares.
2. Time and Place of Exercise. The purchase and sale of the Shares under this Agreement shall occur at the principal office of the Company
simultaneously with the execution and delivery of this Agreement, the payment of the aggregate exercise price by any method listed in Section 4 of the Option
Agreement, and the satisfaction of any applicable tax, withholding, required deductions or other payments, all in accordance with the provisions of Section 3(b) of
the Option Agreement. The Company shall issue the Shares to Purchaser by entering such Shares in Purchaser’s name as of such date in the books and records of
the Company or, if applicable, a duly authorized transfer agent of the Company, against payment of the exercise price therefor by Purchaser. The Company will
deliver to Purchaser a stock certificate or, in the case of uncertificated securities, notice of issuance, for the Shares as soon as practicable following such date.
3. Limitations on Transfer. Purchaser acknowledges and agrees that the Shares purchased under this Agreement are subject to (i) the transfer
restrictions set forth in Section 12 of the Plan, (ii) the terms and conditions that apply to the Company’s Common Stock, as set forth in the Company’s Amended
and Restated Bylaws, including (without limitation) certain transfer restrictions set forth in Section 8.9 of the Company’s Amended and Restated Bylaws, as in
effect at the time of any proposed transfer (the “Bylaw Restrictions”), and (iii) any other limitation or restriction on transfer created by Applicable Laws. In
addition to the foregoing
limitations on transfer, Purchaser shall not assign, encumber or dispose of any interest in the Shares while the Shares are subject to the Company’s Repurchase
Option (as defined below). After any Shares have been released from such Repurchase Option, Purchaser shall not assign, encumber or dispose of any interest in
the Shares except to the extent permitted by, and in compliance with, Section 12 of the Plan, the Bylaw Restrictions, Applicable Laws, and the provisions below.
(a) Repurchase Option.
(i) In the event of the voluntary or involuntary termination of Purchaser’s Continuous Service Status with the Company for any reason
(including, without limitation, resignation, death or Disability), with or without Cause, the Company shall upon the date of such termination (the “Termination
Date”) have an irrevocable, exclusive option (the “Repurchase Option”) for a period of 3 months from such date to repurchase all or any portion of the Unvested
Shares (as defined below) held by Purchaser as of the Termination Date at the original purchase price per Share (adjusted for any stock splits, stock dividends and
the like) specified in Section 1. As used herein, “Unvested Shares” means Shares that have not yet been released from the Repurchase Option.
(ii) Unless the Company notifies Purchaser within 3 months from the Termination Date that it does not intend to exercise its Repurchase
Option with respect to some or all of the Unvested Shares, the Repurchase Option shall be deemed automatically exercised by the Company as of the end of such 3-
month period following the Termination Date, provided that the Company may notify Purchaser that it is exercising its Repurchase Option as of a date prior to the
end of such 3-month period. Unless Purchaser is otherwise notified by the Company pursuant to the preceding sentence that the Company does not intend to
exercise its Repurchase Option as to some or all of the Unvested Shares to which it applies at the time of termination, execution of this Agreement by Purchaser
constitutes written notice to Purchaser of the Company’s intention to exercise its Repurchase Option with respect to all Unvested Shares to which such Repurchase
Option applies. The Company, at its choice, may satisfy its payment obligation to Purchaser with respect to exercise of the Repurchase Option by either
(A) delivering a check to Purchaser in the amount of the purchase price for the Unvested Shares being repurchased, or (B) in the event Purchaser is indebted to the
Company, canceling an amount of such indebtedness equal to the purchase price for the Unvested Shares being repurchased, or (C) by a combination of (A) and
(B) so that the combined payment and cancellation of indebtedness equals such purchase price. In the event of any deemed automatic exercise of the Repurchase
Option pursuant to this Section 3(a)(ii) in which Purchaser is indebted to the Company, such indebtedness equal to the purchase price of the Unvested Shares being
repurchased shall be deemed automatically canceled as of the end of such 3-month period following the Termination Date unless the Company otherwise satisfies
its payment obligations. As a result of any repurchase of Unvested Shares pursuant to this Section 3, the Company shall become the legal and beneficial owner of
the Unvested Shares being repurchased and shall have all rights and interest therein or related thereto, and the Company shall have the right to transfer to its own
name the number of Unvested Shares being repurchased by the Company, without further action by Purchaser.
2
(iii) One hundred percent (100%) of the Shares shall initially be subject to the Repurchase Option. The Unvested Shares shall be released
from the Repurchase Option in accordance with the Vesting/Exercise Schedule set forth in the Notice of Stock Option Grant until all Shares are released from the
Repurchase Option; provided, however, that such scheduled releases from the Repurchase Option shall immediately cease as of the Termination Date. Fractional
shares shall be rounded to the nearest whole share.
(b) Transfer Restrictions; Right of First Refusal. Before any Shares held by Purchaser or any transferee of Purchaser (either being sometimes
referred to herein as the “Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law), the Company shall first have the right to
approve such sale or transfer, in full or in part, and shall then have the right to purchase all or any part of the Shares proposed to be sold or transferred, in each case,
in its sole and absolute discretion (the “Right of First Refusal”). If the Holder would like to sell or transfer any Shares, the Holder must provide the Company or its
assignee(s) with a Notice (as defined below) requesting approval to sell or transfer the Shares and offering the Company or its assignee(s) a Right of First Refusal
on the same terms and conditions set forth in this Section 3(b). The Company may either (1) exercise its Right of First Refusal in full or in part and purchase such
Shares pursuant to this Section 3(b), (2) decline to exercise its Right of First Refusal in full or in part and permit the sale or transfer of such Shares to the Proposed
Transferee (as defined below) in full or in part, or (3) decline to exercise its Right of First Refusal in full or in part and decline the request to sell or transfer the
Shares in full or in part.
(i) Notice of Proposed Transfer. The Holder of the Shares shall deliver to the Company a written notice (the “Notice”) stating: (A) the
Holder’s intention to sell or otherwise transfer such Shares; (B) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (C) the number
of Shares to be sold or transferred to each Proposed Transferee; (D) the terms and conditions of each proposed sale or transfer, including (without limitation) the
purchase price for such Shares (the “Purchase Price”); and (E) the Holder’s offer to the Company or its assignee(s) to purchase the Shares at the Purchase Price and
upon the same terms (or terms that are no less favorable to the Company).
(ii) Exercise of Right of First Refusal. At any time within 30 days after receipt of the Notice, the Company and/or its assignee(s) shall
deliver a written notice to the Holder indicating whether the Company and/or its assignee(s) elect to permit or reject the proposed sale or transfer, in full or in part,
and/or elect to accept or decline the offer to purchase any or all of the Shares proposed to be sold or transferred to any one or more of the Proposed Transferees, at
the Purchase Price, provided that if the Purchase Price consists of no legal consideration (as, for example, in the case of a transfer by gift), the purchase price will
be the fair market value of the Shares as determined in good faith by the Company. If the Purchase Price includes consideration other than cash, the cash equivalent
value of the non-cash consideration shall be determined by the Company in good faith.
(iii) Payment. Payment of the Purchase Price shall be made, at the election of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion
3
of any outstanding indebtedness, or by any combination thereof within 60 days after receipt of the Notice or in the manner and at the times set forth in the Notice.
(iv) Holder’s Right to Transfer. If any of the Shares proposed in the Notice to be sold or transferred to a given Proposed Transferee are
both (A) not purchased by the Company and/or its assignee(s) as provided in this Section 3(b) and (B) approved by the Company to be sold or transferred, then the
Holder may sell or otherwise transfer any such Shares to the applicable Proposed Transferee at the Purchase Price or at a higher price, provided that such sale or
other transfer is consummated within 120 days after the date of the Notice; provided that any such sale or other transfer is also effected in accordance with the
Bylaw Restrictions, the transfer restrictions set forth in the Plan and any Applicable Laws and the Proposed Transferee agrees in writing that the Plan, the Bylaw
Restrictions, and the provisions of the Option Agreement and this Agreement, including this Section 3 and the waiver of statutory information rights in Section 10,
shall continue to apply to the Shares in the hands of such Proposed Transferee. The Company, in consultation with its legal counsel, may require the Holder to
provide an opinion of counsel evidencing compliance with Applicable Laws. If the Shares described in the Notice are not transferred to the Proposed Transferee
within such period, or if the Holder proposes to change the price or other terms to make them more favorable to the Proposed Transferee, a new Notice shall be
given to the Company, and the Company and/or its assignees shall again have the right to approve such transfer and be offered the Right of First Refusal.
(v) Exception for Certain Family Transfers. Anything to the contrary contained in this Section 3(b) notwithstanding, the transfer of
any or all of the Shares during Holder’s lifetime or on Holder’s death by will or intestacy to Holder’s Immediate Family or a trust for the benefit of Holder’s
Immediate Family shall be exempt from the provisions of this Section 3(b). “Immediate Family” as used herein shall mean lineal descendant or antecedent, spouse
(or spouse’s antecedents), father, mother, brother or sister (or their descendants), stepchild (or their antecedents or descendants), aunt or uncle (or their antecedents
or descendants), brother-in-law or sister-in-law (or their antecedents or descendants) and shall include adoptive relationships. In such case, the transferee or other
recipient shall receive and hold the Shares so transferred subject to the provisions of the Plan, the Bylaw Restrictions, and the provisions of the Option Agreement
and this Agreement, including this Section 3 and Section 10, and there shall be no further transfer of such Shares except in accordance with the terms of this
Section 3, the Plan and the Bylaw Restrictions.
(c) Company’s Right to Purchase upon Involuntary Transfer. In the event of any transfer by operation of law or other involuntary transfer
(including death or divorce, but excluding a transfer to Immediate Family as set forth in Section 3(b)(v) above) of all or a portion of the Shares by the record holder
thereof, the Company shall have an option to purchase any or all of the Shares transferred at the Fair Market Value of the Shares on the date of transfer (as
determined by the Company in its sole discretion). Upon such a transfer, the Holder shall promptly notify the Secretary of the Company of such transfer. The right
to purchase such Shares shall be provided to the Company for a period of 30 days following receipt by the Company of written notice from the Holder.
4
(d) Assignment. The right of the Company to purchase any part of the Shares may be assigned in whole or in part to any holder or holders of
capital stock of the Company or other persons or organizations.
(e) Restrictions Binding on Transferees. All transferees of Shares or any interest therein will receive and hold such Shares or interest subject
to the Plan, the Bylaw Restrictions, and the provisions of the Option Agreement and this Agreement, including, without limitation, Section 7 of the Option
Agreement, Sections 3 and 10 of this Agreement and Section 12 of the Plan and, including, insofar as applicable, the Repurchase Option. In the event of any
purchase by the Company hereunder where the Shares or interest are held by a transferee, the transferee shall be obligated, if requested by the Company, to transfer
the Shares or interest to the Purchaser for consideration equal to the amount to be paid by the Company hereunder. In the event the Repurchase Option is deemed
exercised by the Company pursuant to Section 3(a)(ii) hereof, the Company may deem any transferee to have transferred the Shares or interest to Purchaser prior to
their purchase by the Company, and payment of the purchase price by the Company to such transferee shall be deemed to satisfy Purchaser’s obligation to pay such
transferee for such Shares or interest, and also to satisfy the Company’s obligation to pay Purchaser for such Shares or interest. Any sale or transfer of the Shares
shall be void unless the provisions of this Agreement are satisfied.
(f) Termination of Rights. The transfer restrictions set forth in Section 3(b) above and Section 12 of the Plan, the Right of First Refusal
granted the Company by Section 3(b) above and the right to repurchase the Shares in the event of an involuntary transfer granted the Company by Section 3(c)
above shall terminate upon the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission under the Securities Act (other than a registration statement relating solely to the issuance of Common Stock
pursuant to a business combination or an employee incentive or benefit plan) or any transfer or conversion of Shares made pursuant to a statutory merger or
statutory consolidation of the Company with or into another corporation or corporations if the common stock of the surviving corporation or any direct or indirect
parent corporation thereof is registered under the Exchange Act. Upon termination of such transfer restrictions, the Company will remove any stop-transfer notices
referred to in Section 7(b) below and related to the restrictions in this Section 3 and a new stock certificate or, in the case of uncertificated securities, notice of
issuance, for the Shares not repurchased shall be issued, on request, without the legend referred to in Section 7(a)(ii) below and delivered to Holder.
(g) Lock-Up Agreement. The lock-up provisions set forth in Section 7 of the Option Agreement shall apply to the Shares issued upon exercise
of the Option hereunder and Purchaser reaffirms Purchaser’s obligations set forth therein.
4. Escrow of Unvested Shares. For purposes of facilitating the enforcement of the provisions of Section 3(a) above, Purchaser agrees, immediately
upon receipt of the stock certificate(s) or, in the case of uncertificated securities, notice of issuance, for the Shares subject to the Repurchase Option, to deliver any
such stock certificate(s), as well as a Stock Power in the
5
form attached to this Agreement as Attachment A executed by Purchaser and by Purchaser’s spouse (if required for transfer), in blank, to the Secretary of the
Company, or the Secretary’s designee, to hold such Shares (and such stock certificate(s), if any) and Stock Power in escrow and to take all such actions and to
effectuate all such transfers and/or releases as are required in accordance with the terms of this Agreement. Purchaser hereby acknowledges that the Secretary of
the Company, or the Secretary’s designee, is so appointed as the escrow holder with the foregoing authorities as a material inducement to make this Agreement and
that said appointment is coupled with an interest and is accordingly irrevocable. Purchaser agrees that said escrow holder shall not be liable to any party hereof (or
to any other party). The escrow holder may rely upon any letter, notice or other document executed by any signature purported to be genuine and may resign at any
time. Purchaser agrees that if the Secretary of the Company, or the Secretary’s designee, resigns as escrow holder for any or no reason, the Board shall have the
power to appoint a successor to serve as escrow holder pursuant to the terms of this Agreement.
5. Investment and Taxation Representations. In connection with the purchase of the Shares, Purchaser represents to the Company the following:
(a) Purchaser is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Shares. Purchaser is purchasing the Shares for investment for Purchaser’s own account only and not
with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act or under any applicable provision of state law.
Purchaser does not have any present intention to transfer the Shares to any other person or entity.
(b) Purchaser understands that the Shares have not been registered under the Securities Act by reason of a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Purchaser’s investment intent as expressed herein.
(c) Purchaser further acknowledges and understands that the securities must be held indefinitely unless they are subsequently registered under
the Securities Act or an exemption from such registration is available. Purchaser further acknowledges and understands that the Company is under no obligation to
register the securities.
(d) Purchaser is familiar with the provisions of Rule 144, promulgated under the Securities Act, which, in substance, permits limited public
resale of “restricted securities” acquired, directly or indirectly, from the issuer of the securities (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions. Purchaser understands that the Company provides no assurances as to whether he or she will be able to resell any or all of
the Shares pursuant to Rule 144, which rule requires, among other things, that the Company be subject to the reporting requirements of the Exchange Act, that
resales of securities take place only after the holder of the Shares has held the Shares for certain specified time periods, and under certain circumstances, that
resales of securities be limited in volume and take place only pursuant to brokered transactions. Notwithstanding this Section 5(d), Purchaser acknowledges and
agrees to the restrictions set forth in Section 5(e) below.
6
(e) Purchaser further understands that in the event all of the applicable requirements of Rule 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not
exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available
for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.
(f) Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase or disposition of the Shares.
Purchaser represents that Purchaser has consulted any tax consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and
that Purchaser is not relying on the Company for any tax advice.
6. Voting Provisions. As a condition precedent to entering into this Agreement, at the request of the Company, Purchaser shall become a party to any
voting agreement to which the Company is a party at the time of Purchaser’s execution and delivery of this Agreement, as such voting agreement may be thereafter
amended from time to time (the “Voting Agreement”), by executing an adoption agreement or counterpart signature page agreeing to be bound by and subject to
the terms of the Voting Agreement and to vote the Shares in the capacity of a “Common Holder” and a “Stockholder,” as such terms may be defined in the Voting
Agreement.
7. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. Any stock certificate or, in the case of uncertificated securities, any notice of issuance, for the Shares shall bear the following
legends (as well as any legends required by the Company or applicable state and federal corporate and securities laws):
(i) “THE SECURITIES REFERENCED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933.”
(ii) “THE SECURITIES REFERENCED HEREIN MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF
AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH AND MAY BE OBTAINED FROM
THE SECRETARY OF THE COMPANY AT NO CHARGE.”
7
(iii) “THE TRANSFER OF THE SECURITIES REFERENCED HEREIN IS SUBJECT TO CERTAIN TRANSFER RESTRICTIONS
SET FORTH IN THE COMPANY’S AMENDED AND RESTATED BYLAWS (AS AMENDED FROM TIME TO TIME) AND THE COMPANY’S STOCK
PLAN, COPIES OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS. THE
COMPANY SHALL NOT REGISTER OR OTHERWISE RECOGNIZE OR GIVE EFFECT TO ANY PURPORTED TRANSFER OF SECURITIES THAT
DOES NOT COMPLY WITH SUCH TRANSFER RESTRICTIONS.”
(iv) Any legend required by the Voting Agreement, if applicable.
(b) Stop-Transfer Notices. Purchaser agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue
appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the
same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Agreement or the Plan or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so transferred.
(d) Required Notices. Purchaser acknowledges that the Shares are issued and shall be held subject to all the provisions of this Section 7, the
Certificate of Incorporation and the Bylaws of the Company and any amendments thereto, copies of which are on file at the principal office of the Company. A
statement of all of the rights, preferences, privileges and restrictions granted to or imposed upon the respective classes and/or series of shares of stock of the
Company and upon the holders thereof may be obtained by any stockholder upon request and without charge, at the principal office of the Company, and the
Company will furnish any stockholder, upon request and without charge, a copy of such statement. Purchaser acknowledges that the provisions of this Section 7
shall constitute the notices required by Sections 151(f) and 202(a) of the Delaware General Corporation Law and the Purchaser hereby expressly waives the
requirement of Section 151(f) of the Delaware General Corporation Law that it receive the written notice provided for in Sections 151(f) and 202(a) of the
Delaware General Corporation Law within a reasonable time after the issuance of the Shares.
8. No Employment Rights. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a parent,
subsidiary or affiliate of the Company, to terminate Purchaser’s employment or consulting relationship, for any reason, with or without cause.
9. Section 83(b) Election.
(a) Purchaser understands that Section 83(a) of the Internal Revenue Code of 1986, as amended (the “Code”), taxes as ordinary income for a
Nonstatutory Stock Option and as alternative minimum taxable income for an Incentive Stock Option the difference between the
8
amount paid for the Shares and the Fair Market Value of the Shares as of the date any restrictions on the Shares lapse. In this context, “restriction” means the right
of the Company to buy back the Shares pursuant to the Repurchase Option set forth in Section 3(a) of this Agreement. Purchaser understands that Purchaser may
elect to be taxed at the time the Shares are purchased, rather than when and as the Repurchase Option expires, by filing an election under Section 83(b) (an “83(b)
Election”) of the Code with the Internal Revenue Service within 30 days from the date of purchase. Even if the Fair Market Value of the Shares at the time of the
execution of this Agreement equals the amount paid for the Shares, the election must be made to avoid income and alternative minimum tax treatment under
Section 83(a) in the future. Purchaser understands that failure to file such an election in a timely manner may result in adverse tax consequences for Purchaser.
Purchaser further understands that an additional copy of such election form should be filed with his or her federal income tax return for the calendar year in which
the date of this Agreement falls. Purchaser acknowledges that the foregoing is only a summary of the effect of United States federal income taxation with respect to
purchase of the Shares hereunder, does not purport to be complete, and is not intended or written to be used, and cannot be used, for the purposes of avoiding
taxpayer penalties. Purchaser further acknowledges that the Company has directed Purchaser to seek independent advice regarding the applicable provisions of the
Code, the income tax laws of any municipality, state or foreign country in which Purchaser may reside, and the tax consequences of Purchaser’s death, and
Purchaser has consulted, and has been fully advised by, Purchaser’s own tax advisor regarding such tax laws and tax consequences or has knowingly chosen not to
consult such a tax advisor. Purchaser further acknowledges that neither the Company nor any subsidiary or representative of the Company has made any warranty
or representation to Purchaser with respect to the tax consequences of Purchaser’s purchase of the Shares or of the making or failure to make an 83(b) Election.
PURCHASER (AND NOT THE COMPANY, ITS AGENTS OR ANY OTHER PERSON) SHALL BE SOLELY RESPONSIBLE FOR APPROPRIATELY
FILING SUCH FORM WITH THE IRS, EVEN IF PURCHASER REQUESTS THE COMPANY, ITS AGENTS OR ANY OTHER PERSON MAKE THIS
FILING ON PURCHASER’S BEHALF.
(b) Purchaser agrees that he or she will execute and deliver to the Company with this executed Agreement a copy of the Acknowledgment and
Statement of Decision Regarding Section 83(b) Election (the “Acknowledgment”) attached hereto as Attachment B. Purchaser further agrees that he or she will
execute and submit with the Acknowledgment a copy of the 83(b) Election attached hereto as Attachment C (for tax purposes in connection with the early exercise
of an option) if Purchaser has indicated in the Acknowledgment his or her decision to make such an election.
10. Waiver of Statutory Information Rights. Purchaser acknowledges and understands that, but for the waiver made herein, Purchaser would be
entitled, upon written demand under oath stating the purpose thereof, to inspect for any proper purpose, and to make copies and extracts from, the Company’s stock
ledger, a list of its stockholders, and its other books and records, and the books and records of subsidiaries of the Company, if any, under the circumstances and in
the manner provided in Section 220 of the General Corporation Law of Delaware (any and all such rights, and any and all such other rights of Purchaser as may be
provided for in Section 220, the “Inspection Rights”). In light of the foregoing, until the first
9
sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange
Commission under the Securities Act of 1933, as amended, Purchaser hereby unconditionally and irrevocably waives the Inspection Rights, whether such
Inspection Rights would be exercised or pursued directly or indirectly pursuant to Section 220 or otherwise, and covenants and agrees never to directly or indirectly
commence, voluntarily aid in any way, prosecute, assign, transfer, or cause to be commenced any claim, action, cause of action, or other proceeding to pursue or
exercise the Inspection Rights. The foregoing waiver applies to the Inspection Rights of Purchaser in Purchaser’s capacity as a stockholder and shall not affect any
rights of a director, in his or her capacity as such, under Section 220. The foregoing waiver shall not apply to any contractual inspection rights of Purchaser under
any written agreement with the Company.
11. Miscellaneous.
(a) Governing Law. The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto
and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of California, without
giving effect to principles of conflicts of law. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby
submit and consent to the exclusive jurisdiction of the state of California and agree that any such litigation shall be conducted only in the courts of California or the
federal courts of the United States located in California and no other courts.
(b) Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and
supersedes all prior or contemporaneous discussions, understandings and agreements, whether oral or written, between them relating to the subject matter hereof.
(c) Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall
be effective unless in writing signed by the parties to this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute
a waiver of that provision as to that or any other instance.
(d) Successors and Assigns. Except as otherwise provided in this Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The
Company may assign any of its rights and obligations under this Agreement. No other party to this Agreement may assign, whether voluntarily or by operation of
law, any of its rights and obligations under this Agreement, except with the prior written consent of the Company.
(e) Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed
sufficient when delivered personally or by overnight courier or sent by email, or 48 hours after being deposited in the U.S. mail as certified or registered mail with
postage prepaid, addressed to the party to be notified at
10
such party’s address as set forth on the signature page, as subsequently modified by written notice, or if no address is specified on the signature page, at the most
recent address set forth in the Company’s books and records.
(f) Severability. If one or more provisions of this Agreement are held to be unenforceable under Applicable Law, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i)
such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the
balance of the Agreement shall be enforceable in accordance with its terms.
(g) Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against
any one of the parties hereto.
(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be
deemed an original, and all of which together shall constitute one and the same agreement. Execution of a facsimile copy will have the same force and effect as
execution of an original, and a facsimile signature will be deemed an original and valid signature.
(i) Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to this Agreement or any notices
required by applicable law or the Company’s Certificate of Incorporation or Bylaws by email or any other electronic means. Purchaser hereby consents to (i)
conduct business electronically (ii) receive such documents and notices by such electronic delivery and (iii) sign documents electronically and agrees to participate
through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
(j) California Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS
UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION
BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
[Signature Page Follows]
11
The parties have executed this Early Exercise Notice and Restricted Stock Purchase Agreement as of the date first set forth above.
THE COMPANY:
COINBASE GLOBAL, INC.
By:
(Signature)
Name:
Title:
Address:
PURCHASER:
(PRINT NAME)
(Signature)
Address:
Email:
I, __________________________, spouse of __________________________ (“Purchaser”), have read and hereby approve the foregoing Agreement. In
consideration of the Company’s granting my spouse the right to purchase the Shares as set forth in the Agreement, I hereby agree to be bound irrevocably by the
Agreement and further agree that any community property or other such interest that I may have in the Shares shall hereby be similarly bound by the Agreement. I
hereby appoint my spouse as my attorney-in-fact with respect to any amendment or exercise or waiver of any rights under the Agreement.
Spouse of Purchaser (if applicable)
ATTACHMENT A
STOCK POWER
FOR VALUE RECEIVED, the undersigned (“Holder”), hereby sells, assigns and transfers unto
_________________________________________________ (“Transferee”) ____________ shares of the Common Stock of Coinbase Global, Inc., a Delaware
corporation (the “Company”), standing in Holder’s name on the Company’s books as Certificate No. CS-____ whether held in certificated or uncertificated form,
and does hereby irrevocably constitute and appoint to transfer said stock on the books of the Company with full power of
substitution in the premises.
Dated: HOLDER:
(PRINT NAME)
(Signature)
Spouse of Holder (if applicable)
This Stock Power may only be used as authorized by the Early Exercise Notice and Restricted Stock Purchase Agreement between the Holder and the
Company, dated ____________ and the exhibits thereto.
Instructions: Please do not fill in any blanks other than the signature line. The purpose of this assignment is to enable the Company to exercise its
repurchase option set forth in the Agreement without requiring additional signatures on the part of Holder.
IF YOU WISH TO MAKE A SECTION 83(B) ELECTION, THE FILING OF SUCH
ELECTION IS YOUR RESPONSIBILITY.
THE FORM FOR MAKING THIS SECTION 83(B) ELECTION IS ATTACHED TO
THIS AGREEMENT.
YOU MUST FILE THIS FORM WITHIN 30 DAYS OF PURCHASING THE SHARES.
YOU (AND NOT THE COMPANY, ANY OF ITS AGENTS OR ANY OTHER
PERSON) SHALL BE SOLELY RESPONSIBLE FOR FILING SUCH FORM WITH
THE IRS, EVEN IF YOU REQUEST THE COMPANY, ITS AGENTS OR ANY
OTHER PERSON TO MAKE THIS FILING ON YOUR BEHALF AND EVEN IF THE
COMPANY, ANY OF ITS AGENTS OR ANY OTHER PERSON HAS PREVIOUSLY
MADE THIS FILING ON YOUR BEHALF.
The election should be filed by mailing a signed election form by certified mail, return receipt requested to the IRS Service
Center where you file your tax returns. See www.irs.gov.
ATTACHMENT B
ACKNOWLEDGMENT AND STATEMENT OF DECISION
REGARDING SECTION 83(B) ELECTION
The undersigned has entered into a stock purchase agreement with Coinbase Global, Inc., a Delaware corporation (the “Company”), pursuant to which the
undersigned is purchasing [l] shares of Common Stock of the Company (the “Shares”). In connection with the purchase of the Shares, the undersigned hereby
represents as follows:
The undersigned has carefully reviewed the stock purchase agreement pursuant to which the undersigned is purchasing the Shares.
1. The undersigned either [check and complete as applicable]:
(a) ______ has consulted, and has been fully advised by, the undersigned’s own tax advisor, [l], whose business address is [l], regarding the
federal, state and local tax consequences of purchasing the Shares, and particularly regarding the advisability of making elections pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended (the “Code”) and pursuant to the corresponding provisions, if any, of applicable state law; or
(b) ______ has knowingly chosen not to consult such a tax advisor.
2. The undersigned hereby states that the undersigned has decided [check as applicable]:
(a) ______ to make an election pursuant to Section 83(b) of the Code, and is submitting to the Company, together with the undersigned’s
executed stock purchase agreement, an executed form entitled “Election Under Section 83(b) of the Internal Revenue Code of 1986;” or
(b) ______ not to make an election pursuant to Section 83(b) of the Code.
3. Neither the Company nor any subsidiary or representative of the Company has made any warranty or representation to the undersigned with respect
to the tax consequences of the undersigned’s purchase of the Shares or of the making or failure to make an election pursuant to Section 83(b) of the Code or the
corresponding provisions, if any, of applicable state law.
Dated: PURCHASER:
(PRINT NAME)
(Signature)
Spouse of Purchaser (if applicable)
ATTACHMENT C
ELECTION UNDER SECTION 83(B)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code, to include in taxpayer’s gross income or alternative
minimum taxable income, as applicable, for the current taxable year, the amount of any income that may be taxable to taxpayer in connection with taxpayer’s
receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of the undersigned are as follows:
NAME OF TAXPAYER: NAME OF SPOUSE:
ADDRESS:
United States
IDENTIFICATION NO. OF TAXPAYER:
IDENTIFICATION NO. OF SPOUSE:
TAXABLE YEAR:
2. The property with respect to which the election is made is described as follows:
_________________ shares of the Common Stock of Coinbase Global, Inc., a Delaware corporation (the “Company”).
3. The date on which the property was transferred is: _______________________
4. The property is subject to the following restrictions:
Repurchase option at cost in favor of the Company upon termination of taxpayer’s employment or consulting relationship.
5. The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of
such property is: $________________.
6. The amount (if any) paid for such property: $________________.
The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned’s receipt of the
above described property. The transferee of such property is the person performing the services in connection with the transfer of said property.
The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.
Dated: PURCHASER:
(Signature)
Spouse of Purchaser (if applicable)
2
EXHIBIT B
COINBASE GLOBAL, INC.
2013 STOCK PLAN
EXERCISE AGREEMENT
This Exercise Agreement (this “Agreement”) is made as of [l], by and between Coinbase Global, Inc., a Delaware corporation (the “Company”), and [l]
(“Purchaser”). To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Company’s 2013
Stock Plan (the “Plan”) and the Option Agreement (as defined below).
1. Exercise of Option. Subject to the terms and conditions hereof, Purchaser hereby elects to exercise his or her option to purchase [l] shares of the
Common Stock (the “Shares”) of the Company under and pursuant to the Plan, the Notice of Stock Option Grant and the Stock Option Agreement granted [l] (the
“Option Agreement”). The purchase price for the Shares shall be $[l] per Share for a total purchase price of $[l]. The term “Shares” refers to the purchased
Shares and all securities received in connection with the Shares pursuant to stock dividends or splits, all securities received in replacement of the Shares in a
recapitalization, merger, reorganization, exchange or the like, and all new, substituted or additional securities or other property to which Purchaser is entitled by
reason of Purchaser’s ownership of the Shares.
2. Time and Place of Exercise. The purchase and sale of the Shares under this Agreement shall occur at the principal office of the Company
simultaneously with the execution and delivery of this Agreement, the payment of the aggregate exercise price by any method listed in Section 4 of the Option
Agreement, and the satisfaction of any applicable tax, withholding, required deductions or other payments, all in accordance with the provisions of Section 3(b) of
the Option Agreement. The Company shall issue the Shares to Purchaser by entering such Shares in Purchaser’s name as of such date in the books and records of
the Company or, if applicable, a duly authorized transfer agent of the Company, against payment of the exercise price therefor by Purchaser. The Company will
deliver to Purchaser a stock certificate or, in the case of uncertificated securities, notice of issuance, for the Shares as soon as practicable following such date.
3. Limitations on Transfer. Purchaser acknowledges and agrees that the Shares purchased under this Agreement are subject to (i) the transfer
restrictions set forth in Section 12 of the Plan, (ii) the terms and conditions that apply to the Company’s Common Stock, as set forth in the Company’s Amended
and Restated Bylaws, including (without limitation) certain transfer restrictions set forth in Section 8.9 of the Company’s Amended and Restated Bylaws, as in
effect at the time of any proposed transfer (the “Bylaw Restrictions”), and (iii) any other limitation or restriction on transfer created by Applicable Laws. Purchaser
shall not assign, encumber or dispose of any interest in the Shares except to the extent permitted by, and in
compliance with, Section 12 of the Plan, the Bylaw Restrictions, Applicable Laws, and the provisions below.
(a) Transfer Restrictions; Right of First Refusal. Before any Shares held by Purchaser or any transferee of Purchaser (either being sometimes
referred to herein as the “Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law), the Company shall first have the right to
approve such sale or transfer, in full or in part, and shall then have the right to purchase all or any part of the Shares proposed to be sold or transferred, in each case,
in its sole and absolute discretion (the “Right of First Refusal”). If the Holder would like to sell or transfer any Shares, the Holder must provide the Company or its
assignee(s) with a Notice (as defined below) requesting approval to sell or transfer the Shares and offering the Company or its assignee(s) a Right of First Refusal
on the terms and conditions set forth in this Section 3(a). The Company may either (1) exercise its Right of First Refusal in full or in part and purchase such Shares
pursuant to this Section 3(a), (2) decline to exercise its Right of First Refusal in full or in part and permit the sale or transfer of such Shares to the Proposed
Transferee (as defined below) in full or in part, or (3) decline to exercise its Right of First Refusal in full or in part and decline the request to sell or transfer the
Shares in full or in part.
(i) Notice of Proposed Transfer. The Holder of the Shares shall deliver to the Company a written notice (the “Notice”) stating: (A) the
Holder’s desire to sell or otherwise transfer such Shares; (B) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (C) the number of
Shares to be sold or transferred to each Proposed Transferee; (D) the terms and conditions of each proposed sale or transfer, including (without limitation) the
purchase price for such Shares (the “Purchase Price”); and (E) the Holder’s offer to the Company or its assignee(s) to purchase the Shares at the Purchase Price and
upon the same terms (or terms that are no less favorable to the Company).
(ii) Exercise of Right of First Refusal. At any time within 30 days after receipt of the Notice, the Company and/or its assignee(s) shall
deliver a written notice to the Holder indicating whether the Company and/or its assignee(s) elect to permit or reject the proposed sale or transfer, in full or in part,
and/or elect to accept or decline the offer to purchase any or all of the Shares proposed to be sold or transferred to any one or more of the Proposed Transferees, at
the Purchase Price, provided that if the Purchase Price consists of no legal consideration (as, for example, in the case of a transfer by gift), the purchase price will
be the fair market value of the Shares as determined in good faith by the Company. If the Purchase Price includes consideration other than cash, the cash equivalent
value of the non-cash consideration shall be determined by the Company in good faith.
(iii) Payment. Payment of the Purchase Price shall be made, at the election of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness, or by any combination thereof within 60 days after receipt of the Notice or in the manner and at the
times set forth in the Notice.
(iv) Holder’s Right to Transfer. If any of the Shares proposed in the Notice to be sold or transferred to a given Proposed Transferee are
both (A) not purchased by the Company and/or its assignee(s) as provided in this Section 3(a) and (B) approved by the
2
Company to be sold or transferred, then the Holder may sell or otherwise transfer any such Shares to the applicable Proposed Transferee at the Purchase Price or at
a higher price, provided that such sale or other transfer is consummated within 120 days after the date of the Notice; provided that any such sale or other transfer is
also effected in accordance with the Bylaw Restrictions, the transfer restrictions set forth in the Plan and any Applicable Laws and the Proposed Transferee agrees
in writing that the Plan, the Bylaw Restrictions, and the provisions of the Option Agreement and this Agreement, including this Section 3 and the waiver of
statutory information rights in Section 8, shall continue to apply to the Shares in the hands of such Proposed Transferee. The Company, in consultation with its
legal counsel, may require the Holder to provide an opinion of counsel evidencing compliance with Applicable Laws. If the Shares described in the Notice are not
transferred to the Proposed Transferee within such period, or if the Holder proposes to change the price or other terms to make them more favorable to the
Proposed Transferee, a new Notice shall be given to the Company, and the Company and/or its assignees shall again have the right to approve such transfer and be
offered the Right of First Refusal.
(v) Exception for Certain Family Transfers. Anything to the contrary contained in this Section 3(a) notwithstanding, the transfer of
any or all of the Shares during Holder’s lifetime or on Holder’s death by will or intestacy to Holder’s Immediate Family or a trust for the benefit of Holder’s
Immediate Family shall be exempt from the provisions of this Section 3(a). “Immediate Family” as used herein shall mean lineal descendant or antecedent, spouse
(or spouse’s antecedents), father, mother, brother or sister (or their descendants), stepchild (or their antecedents or descendants), aunt or uncle (or their antecedents
or descendants), brother-in-law or sister-in-law (or their antecedents or descendants) and shall include adoptive relationships. In such case, the transferee or other
recipient shall receive and hold the Shares so transferred subject to the provisions of the Plan, the Bylaw Restrictions, and the provisions of the Option Agreement
and this Agreement, including this Section 3 and Section 8, and there shall be no further transfer of such Shares except in accordance with the terms of this Section
3, the Plan and the Bylaw Restrictions.
(b) Company’s Right to Purchase upon Involuntary Transfer. In the event of any transfer by operation of law or other involuntary transfer
(including death or divorce, but excluding a transfer to Immediate Family as set forth in Section 3(a)(v) above) of all or a portion of the Shares by the record holder
thereof, the Company shall have an option to purchase any or all of the Shares transferred at the Fair Market Value of the Shares on the date of transfer (as
determined by the Company in its sole discretion). Upon such a transfer, the Holder shall promptly notify the Secretary of the Company of such transfer. The right
to purchase such Shares shall be provided to the Company for a period of 30 days following receipt by the Company of written notice from the Holder.
(c) Assignment. The right of the Company to purchase any part of the Shares may be assigned in whole or in part to any holder or holders of
capital stock of the Company or other persons or organizations.
3
(d) Restrictions Binding on Transferees. All transferees of Shares or any interest therein will receive and hold such Shares or interest subject
to the Plan, the Bylaw Restrictions, and the provisions of the Option Agreement and this Agreement, including, without limitation, Section 7 of the Option
Agreement, Sections 3 and 8 of this Agreement and Section 12 of the Plan. Any sale or transfer of the Shares shall be void unless the provisions of this Agreement
are satisfied.
(e) Termination of Rights. The transfer restrictions set forth in Section 3(a) above and Section 12 of the Plan, the Right of First Refusal granted
the Company by Section 3(a) above and the option to repurchase the Shares in the event of an involuntary transfer granted the Company by Section 3(b) above
shall terminate upon the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by
the Securities and Exchange Commission under the Securities Act (other than a registration statement relating solely to the issuance of Common Stock pursuant to
a business combination or an employee incentive or benefit plan) or any transfer or conversion of Shares made pursuant to a statutory merger or statutory
consolidation of the Company with or into another corporation or corporations if the common stock of the surviving corporation or any direct or indirect parent
corporation thereof is registered under the Exchange Act. Upon termination of such transfer restrictions, the Company will remove any stop-transfer notices
referred to in Section 6(b) below and related to the restrictions in this Section 3 and a new stock certificate or, in the case of uncertificated securities, notice of
issuance, for the Shares not repurchased shall be issued, on request, without the legend referred to in Section 6(a)(ii) below and delivered to Holder.
(f) Lock-Up Agreement. The lock-up provisions set forth in Section 7 of the Option Agreement shall apply to the Shares issued upon exercise
of the Option hereunder and Purchaser reaffirms Purchaser’s obligations set forth therein.
4. Investment and Taxation Representations. In connection with the purchase of the Shares, Purchaser represents to the Company the following:
(a) Purchaser is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Shares. Purchaser is purchasing the Shares for investment for Purchaser’s own account only and not
with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act or under any applicable provision of state law.
Purchaser does not have any present intention to transfer the Shares to any other person or entity.
(b) Purchaser understands that the Shares have not been registered under the Securities Act by reason of a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Purchaser’s investment intent as expressed herein.
(c) Purchaser further acknowledges and understands that the securities must be held indefinitely unless they are subsequently registered under
the Securities Act or an
4
exemption from such registration is available. Purchaser further acknowledges and understands that the Company is under no obligation to register the securities.
(d) Purchaser is familiar with the provisions of Rule 144, promulgated under the Securities Act, which, in substance, permits limited public
resale of “restricted securities” acquired, directly or indirectly, from the issuer of the securities (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions. Purchaser understands that the Company provides no assurances as to whether he or she will be able to resell any or all of
the Shares pursuant to Rule 144, which rule requires, among other things, that the Company be subject to the reporting requirements of the Exchange Act, that
resales of securities take place only after the holder of the Shares has held the Shares for certain specified time periods, and under certain circumstances, that
resales of securities be limited in volume and take place only pursuant to brokered transactions. Notwithstanding this Section 4(d), Purchaser acknowledges and
agrees to the restrictions set forth in Section 4(e) below.
(e) Purchaser further understands that in the event all of the applicable requirements of Rule 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not
exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available
for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.
(f) Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase or disposition of the Shares.
Purchaser represents that Purchaser has consulted any tax consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and
that Purchaser is not relying on the Company for any tax advice.
5. Voting Provisions. As a condition precedent to entering into this Agreement, at the request of the Company, Purchaser shall become a party to any
voting agreement to which the Company is a party at the time of Purchaser’s execution and delivery of this Agreement, as such voting agreement may be thereafter
amended from time to time (the “Voting Agreement”), by executing an adoption agreement or counterpart signature page agreeing to be bound by and subject to
the terms of the Voting Agreement and to vote the Shares in the capacity of a “Common Holder” and a “Stockholder,” as such terms may be defined in the Voting
Agreement.
5
6. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. Any stock certificate or, in the case of uncertificated securities, notice of issuance, for the Shares shall bear the following legends
(as well as any legends required by the Company or applicable state and federal corporate and securities laws):
(i) “THE SECURITIES REFERENCED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933.”
(ii) “THE SECURITIES REFERENCED HEREIN MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF
AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH AND MAY BE OBTAINED FROM
THE SECRETARY OF THE COMPANY AT NO CHARGE.”
(iii) “THE TRANSFER OF THE SECURITIES IS SUBJECT TO CERTAIN TRANSFER RESTRICTIONS SET FORTH IN THE
COMPANY’S AMENDED AND RESTATED BYLAWS (AS AMENDED FROM TIME TO TIME) AND THE COMPANY’S STOCK PLAN, COPIES OF
WHICH MAY BE OBTAINED UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS. THE COMPANY SHALL
NOT REGISTER OR OTHERWISE RECOGNIZE OR GIVE EFFECT TO ANY PURPORTED TRANSFER OF SECURITIES THAT DOES NOT COMPLY
WITH SUCH TRANSFER RESTRICTIONS.”
(iv) Any legend required by the Voting Agreement, as applicable.
(b) Stop-Transfer Notices. Purchaser agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue
appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the
same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Agreement or the Plan or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so transferred.
(d) Required Notices. Purchaser acknowledges that the Shares are issued and shall be held subject to all the provisions of this Section 6, the
Certificate of Incorporation and the Bylaws of the Company and any amendments thereto, copies of which are on file at the
6
principal office of the Company. A statement of all of the rights, preferences, privileges and restrictions granted to or imposed upon the respective classes and/or
series of shares of stock of the Company and upon the holders thereof may be obtained by any stockholder upon request and without charge, at the principal office
of the Company, and the Company will furnish any stockholder, upon request and without charge, a copy of such statement. Purchaser acknowledges that the
provisions of this Section 6 shall constitute the notices required by Sections 151(f) and 202(a) of the Delaware General Corporation Law and the Purchaser hereby
expressly waives the requirement of Section 151(f) of the Delaware General Corporation Law that it receive the written notice provided for in Sections 151(f) and
202(a) of the Delaware General Corporation Law within a reasonable time after the issuance of the Shares.
7. No Employment Rights. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a parent,
subsidiary or affiliate of the Company, to terminate Purchaser’s employment or consulting relationship, for any reason, with or without cause.
8. Waiver of Statutory Information Rights. Purchaser acknowledges and understands that, but for the waiver made herein, Purchaser would be
entitled, upon written demand under oath stating the purpose thereof, to inspect for any proper purpose, and to make copies and extracts from, the Company’s stock
ledger, a list of its stockholders, and its other books and records, and the books and records of subsidiaries of the Company, if any, under the circumstances and in
the manner provided in Section 220 of the General Corporation Law of Delaware (any and all such rights, and any and all such other rights of Purchaser as may be
provided for in Section 220, the “Inspection Rights”). In light of the foregoing, until the first sale of Common Stock of the Company to the general public pursuant
to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended, Purchaser
hereby unconditionally and irrevocably waives the Inspection Rights, whether such Inspection Rights would be exercised or pursued directly or indirectly pursuant
to Section 220 or otherwise, and covenants and agrees never to directly or indirectly commence, voluntarily aid in any way, prosecute, assign, transfer, or cause to
be commenced any claim, action, cause of action, or other proceeding to pursue or exercise the Inspection Rights. The foregoing waiver applies to the Inspection
Rights of Purchaser in Purchaser’s capacity as a stockholder and shall not affect any rights of a director, in his or her capacity as such, under Section 220. The
foregoing waiver shall not apply to any contractual inspection rights of Purchaser under any written agreement with the Company.
9. Miscellaneous.
(a) Governing Law. The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto
and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of California, without
giving effect to principles of conflicts of law. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby
submit and consent to the exclusive jurisdiction of the state of California and
7
agree that any such litigation shall be conducted only in the courts of California or the federal courts of the United States located in California and no other courts.
(b) Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and
supersedes all prior or contemporaneous discussions, understandings and agreements, whether oral or written, between them relating to the subject matter hereof.
(c) Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall
be effective unless in writing signed by the parties to this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute
a waiver of that provision as to that or any other instance.
(d) Successors and Assigns. Except as otherwise provided in this Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The
Company may assign any of its rights and obligations under this Agreement. No other party to this Agreement may assign, whether voluntarily or by operation of
law, any of its rights and obligations under this Agreement, except with the prior written consent of the Company.
(e) Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed
sufficient when delivered personally or by overnight courier or sent by email, or 48 hours after being deposited in the U.S. mail as certified or registered mail with
postage prepaid, addressed to the party to be notified at such party’s address as set forth on the signature page, as subsequently modified by written notice, or if no
address is specified on the signature page, at the most recent address set forth in the Company’s books and records.
(f) Severability. If one or more provisions of this Agreement are held to be unenforceable under Applicable Law, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i)
such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the
balance of the Agreement shall be enforceable in accordance with its terms.
(g) Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against
any one of the parties hereto.
(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be
deemed an original, and all of which together shall constitute one and the same agreement. Execution of a facsimile copy
8
will have the same force and effect as execution of an original, and a facsimile signature will be deemed an original and valid signature.
(i) Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to this Agreement or any notices
required by applicable law or the Company’s Certificate of Incorporation or Bylaws by email or any other electronic means. Purchaser hereby consents to (i)
conduct business electronically (ii) receive such documents and notices by such electronic delivery and (iii) sign documents electronically and agrees to participate
through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
(j) California Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS
UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION
BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
[Signature Page Follows]
9
The parties have executed this Exercise Agreement as of the date first set forth above.
THE COMPANY:
COINBASE GLOBAL, INC.
By:
(Signature)
Name:
Title:
PURCHASER:
(PRINT NAME)
(Signature)
Address:
Email:
I, _______________________, spouse of _______________________ (“Purchaser”), have read and hereby approve the foregoing Agreement. In
consideration of the Company’s granting my spouse the right to purchase the Shares as set forth in the Agreement, I hereby agree to be bound irrevocably by the
Agreement and further agree that any community property or other such interest that I may have in the Shares shall hereby be similarly bound by the Agreement. I
hereby appoint my spouse as my attorney-in-fact with respect to any amendment or exercise of any rights under the Agreement.
Spouse of Purchaser (if applicable)
COINBASE GLOBAL, INC.
2013 STOCK PLAN
NOTICE OF STOCK OPTION GRANT
[Optionee Name]
[Optionee Address Line 1]
[Optionee Address Line 2]
You have been granted an option to purchase Common Stock of Coinbase Global, Inc., a Delaware corporation (the “Company”), as follows:
Date of Grant: [l]
Exercise Price Per Share: $[l]
Total Number of Shares: [l]
Total Exercise Price: $[l]
Type of Option: [l] Incentive Stock Option
[l] Nonstatutory Stock Option
Expiration Date: [l]
Vesting Commencement Date: [l]
Vesting/Exercise
Schedule:
So long as your Continuous Service Status does not terminate, the
Shares underlying this Option shall vest and become exercisable in
accordance with the following schedule: [l] of the Total Number of
Shares shall vest and become exercisable on the –month anniversary of
the Vesting Commencement Date and [l] of the Total Number of
Shares shall vest and become exercisable on the [l] day of each month
thereafter (and if there is no corresponding day, the last day of the
month).
Termination Period: You may exercise this Option for 3 month(s) after termination of your
Continuous Service Status except as set out in Section 5 of the Stock Option
Agreement (but in no event later than the Expiration Date). You are
responsible for keeping track of these exercise periods following the
termination of your Continuous Service Status for any reason. The Company
will not provide further notice of such periods.
Transferability: You may not transfer this Option. You must obtain Board approval prior to
any transfer of the stock underlying this Option.
[Signature Page Follows]
2
By your signature and the signature of the Company’s representative below, you and the Company agree that this Option is granted under and governed by
the terms and conditions of this Notice and the Coinbase Global, Inc., 2013 Stock Plan and Option Agreement, both of which are attached to and made a part of this
Notice.
In addition, you agree and acknowledge that your rights to any Shares underlying this Option will be earned only as you provide services to the Company
over time, that the grant of this Option is not as consideration for services you rendered to the Company prior to your date of hire, and that nothing in this Notice or
the attached documents confers upon you any right to continue your employment or consulting relationship with the Company for any period of time, nor does it
interfere in any way with your right or the Company’s right to terminate that relationship at any time, for any reason, with or without cause. Also, to the extent
applicable, the Exercise Price Per Share has been set in good faith compliance with the applicable guidance issued by the IRS under Section 409A of the Code.
However, there is no guarantee that the IRS will agree with the valuation, and by signing below, you agree and acknowledge that the Company, its Board, officers,
employees and agents shall not be held liable for any applicable costs, taxes, or penalties associated with this Option if, in fact, the IRS or any other person
(including, without limitation, a successor corporation or an acquirer in a Change of Control) were to determine that this Option constitutes deferred compensation
under Section 409A of the Code. You should consult with your own tax advisor concerning the tax consequences of such a determination by the IRS. For purposes
of this paragraph, the term “Company” will be interpreted to include any Parent, Subsidiary or Affiliate.
THE COMPANY:
COINBASE GLOBAL, INC.
By:
(Signature)
Name:
Title:
OPTIONEE:
(PRINT NAME)
(Signature)
Address:
COINBASE GLOBAL, INC.
2013 STOCK PLAN
STOCK OPTION AGREEMENT
1. Grant of Option. Coinbase Global, Inc., a Delaware corporation (the “Company”), hereby grants to [l] (“Optionee”), an option (the “Option”) to purchase
the total number of shares of Common Stock (the “Shares”) set forth in the Notice of Stock Option Grant (the “Notice”), at the exercise price per Share set forth in
the Notice (the “Exercise Price”) subject to the terms, definitions and provisions of the Coinbase Global, Inc., 2013 Stock Plan (the “Plan”) adopted by the
Company, which is incorporated in this Stock Option Agreement (this “Agreement”) by reference. Unless otherwise defined in this Agreement, the terms used in
this Agreement or the Notice shall have the meanings defined in the Plan.
2. Designation of Option. This Option is intended to be an Incentive Stock Option as defined in Section 422 of the Code only to the extent so designated in
the Notice, and to the extent it is not so designated or to the extent this Option does not qualify as an Incentive Stock Option, it is intended to be a Nonstatutory
Stock Option.
Notwithstanding the above, if designated as an Incentive Stock Option, in the event that the Shares subject to this Option (and all other incentive stock
options granted to Optionee by the Company or any Parent or Subsidiary, including under other plans) that first become exercisable in any calendar year have an
aggregate fair market value (determined for each Share as of the date of grant of the option covering such Share) in excess of $100,000, the Shares in excess of
$100,000 shall be treated as subject to a nonstatutory stock option, in accordance with Section 5(c) of the Plan.
3. Exercise of Option. This Option shall be exercisable during its term in accordance with the Vesting/Exercise Schedule set out in the Notice and with the
provisions of Section 7(c) of the Plan as follows:
(a) Right to Exercise.
(i) This Option may not be exercised for a fraction of a share.
(ii) In the event of Optionee’s death, Disability or other termination of Continuous Service Status, the exercisability of this Option is governed
by Section 5 below, subject to the limitations contained in this Section 3.
(iii) In no event may this Option be exercised after the Expiration Date set forth in the Notice.
(b) Method of Exercise.
(i) This Option shall be exercisable by execution and delivery of the Exercise Agreement attached hereto as Exhibit A or of any other form of
written notice approved for such
purpose by the Company which shall state Optionee’s election to exercise this Option, the number of Shares in respect of which this Option is being exercised, and
such other representations and agreements as to the holder’s investment intent with respect to such Shares as may be required by the Company pursuant to the
provisions of the Plan. Such written notice shall be signed by Optionee and shall be delivered to the Company by such means as are determined by the Company in
its discretion to constitute adequate delivery. The written notice shall be accompanied by payment of the aggregate Exercise Price for the purchased Shares.
(ii) As a condition to the exercise of this Option and as further set forth in Section 9 of the Plan, Optionee agrees to make adequate provision for
federal, state or other applicable tax, withholding, required deductions or other payments, if any, which arise upon the grant, vesting or exercise of this Option, or
disposition of Shares, whether by withholding, direct payment to the Company, or otherwise, as determined by the Company in its sole discretion.
(iii) The Company is not obligated, and will have no liability for failure, to issue or deliver any Shares upon exercise of this Option unless such
issuance or delivery would comply with the Applicable Laws, with such compliance determined by the Company in consultation with its legal counsel. This Option
may not be exercised until such time as the Plan has been approved by the holders of capital stock of the Company, or if the issuance of such Shares upon such
exercise or the method of payment of consideration for such Shares would constitute a violation of any Applicable Laws, including any applicable U.S. federal or
state securities laws or any other law or regulation, including any rule under Part 221 of Title 12 of the Code of Federal Regulations as promulgated by the Federal
Reserve Board. As a condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the Company as may
be required by the Applicable Laws. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to Optionee on the date on
which this Option is exercised with respect to such Shares.
(iv) Subject to compliance with Applicable Laws, this Option shall be deemed to be exercised upon receipt by the Company of the appropriate
written notice of exercise accompanied by the Exercise Price and the satisfaction of any applicable obligations described in Section 3(b)(ii) above.
4. Method of Payment. Payment of the Exercise Price shall be by cash or check or, following the initial public offering of the Company’s Common Stock, by
Cashless Exercise pursuant to which the Optionee delivers an irrevocable direction to a securities broker (on a form prescribed by the Company and according to a
procedure established by the Company).
5. Termination of Relationship. Following the date of termination of Optionee’s Continuous Service Status for any reason (the “Termination Date”),
Optionee may exercise this Option only as set forth in the Notice and this Section 5. If Optionee does not exercise this Option within the Termination Period set
forth in the Notice or the termination periods set forth
2
below, this Option shall terminate in its entirety. In no event, may any Option be exercised after the Expiration Date of this Option as set forth in the Notice.
(a) General Termination. In the event of termination of Optionee’s Continuous Service Status other than as a result of Optionee’s Disability or death
or Optionee’s termination for Cause, Optionee may, to the extent Optionee is vested in the Optioned Stock, exercise this Option during the Termination Period set
forth in the Notice.
(b) Termination upon Disability of Optionee. In the event of termination of Optionee’s Continuous Service Status as a result of Optionee’s Disability,
Optionee may, but only within 12 month(s) following the Termination Date, exercise this Option to the extent Optionee is vested in the Optioned Stock.
(c) Death of Optionee. In the event of termination of Optionee’s Continuous Service Status as a result of Optionee’s death, or in the event of
Optionee’s death within 3 month(s) following Optionee’s Termination Date, this Option may be exercised at any time within 12 month(s) following the
Termination Date, or if later, 12 month(s) following the date of death by any beneficiaries designated in accordance with Section 16 of the Plan or, if there are no
such beneficiaries, by the Optionee’s estate, or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent Optionee
is vested in this Option.
(d) Termination for Cause. In the event of termination of Optionee’s Continuous Service Status for Cause, this Option (including any vested portion
thereof) shall immediately terminate in its entirety upon first notification to Optionee of such termination for Cause. If Optionee’s Continuous Service Status is
suspended pending an investigation of whether Optionee’s Continuous Service Status will be terminated for Cause, all Optionee’s rights under this Option,
including the right to exercise this Option, shall be suspended during the investigation period.
6. Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by him or her. The terms of this Option shall be binding upon the executors, administrators, heirs, successors and
assigns of Optionee. Further, beginning with (i) the period when the Company begins to rely on the exemption described in Rule 12h-1(f)(1) promulgated under the
Exchange Act, as determined by the Board in its sole discretion, and (ii) ending on the earlier of (A) the date when the Company ceases to rely on such exemption,
as determined by the Board in its sole discretion, or (B) the date when the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, an Option, or prior to exercise, the Shares subject to the Option, may not be pledged, hypothecated or otherwise transferred or disposed of, in any
manner, including by entering into any short position, any “put equivalent position” or any “call equivalent position” (as defined in Rule 16a-1(h) and Rule 16a-
1(b) of the Exchange Act, respectively), other than to (i) persons who are Family Members through gifts or domestic relations orders, or (ii) to an executor or
guardian of Optionee upon the death or disability of Optionee. Notwithstanding the foregoing sentence, the Board, in its sole discretion, may permit transfers of
Nonstatutory Stock Options to the Company
3
or in connection with a Change of Control or other acquisition transactions involving the Company to the extent permitted by Rule 12h-1(f).
7. Lock-Up Agreement. If so requested by the Company or the underwriters in connection with the initial public offering of the Company’s securities
registered under the Securities Act of 1933, as amended, Optionee shall not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise
dispose of any securities of the Company however or whenever acquired (except for those being registered) without the prior written consent of the Company or
such underwriters, as the case may be, for 180 days from the effective date of the registration statement, plus such additional period, to the extent required by
FINRA rules, up to a maximum of 216 days from the effective date of the registration statement, and Optionee shall execute an agreement reflecting the foregoing
as may be requested by the underwriters at the time of such offering.
8. Effect of Agreement. Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof
(and has had an opportunity to consult counsel regarding the Option terms), and hereby accepts this Option and agrees to be bound by its contractual terms as set
forth herein and in the Plan. Optionee hereby agrees to accept as binding, conclusive and final all decisions and interpretations of the Administrator regarding any
questions relating to this Option. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of the Notice and this
Agreement, the Plan terms and provisions shall prevail.
9. Imposition of Other Requirements. The Company reserves the right to impose other requirements on Optionee’s participation in the Plan, on the Option
and on any Award or Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with Applicable Laws or
facilitate the administration of the Plan. Optionee agrees to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
Furthermore, Optionee acknowledges that the laws of the country in which Optionee is working at the time of grant, vesting and exercise of the Option or the sale
of Shares received pursuant to this Agreement (including any rules or regulations governing securities, foreign exchange, tax, labor, or other matters) may subject
Optionee to additional procedural or regulatory requirements that Optionee is and will be solely responsible for and must fulfill.
10. Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to Optionee’s current or future participation in the
Plan by electronic means or to request Optionee’s consent to participate in the Plan by electronic means. Optionee hereby consents to receive such documents by
electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party
designated by the Company.
11. Miscellaneous.
(a) Governing Law. The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto and the
rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the
4
state of California, without giving effect to principles of conflicts of law. For purposes of litigating any dispute that may arise directly or indirectly from this
Agreement, the parties hereby submit and consent to the exclusive jurisdiction of the state of California and agree that any such litigation shall be conducted only in
the courts of California or the federal courts of the United States located in California and no other courts.
(b) Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and
supersedes all prior or contemporaneous discussions, understandings and agreements, whether oral or written, between them relating to the subject matter hereof.
(c) Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be
effective unless in writing signed by the parties to this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute a
waiver of that provision as to that or any other instance.
(d) Successors and Assigns. Except as otherwise provided in this Agreement, this Agreement, and the rights and obligations of the parties hereunder,
will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The Company may
assign any of its rights and obligations under this Agreement. No other party to this Agreement may assign, whether voluntarily or by operation of law, any of its
rights and obligations under this Agreement, except with the prior written consent of the Company.
(e) Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed sufficient
when delivered personally or by overnight courier or sent by email, or 48 hours after being deposited in the U.S. mail as certified or registered mail with postage
prepaid, addressed to the party to be notified at such party’s address as set forth on the signature page, as subsequently modified by written notice, or if no address
is specified on the signature page, at the most recent address set forth in the Company’s books and records.
(f) Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall
be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
(g) Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against
any one of the parties hereto.
5
(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an
original, and all of which together shall constitute one and the same agreement.
6
EXHIBIT A
COINBASE GLOBAL, INC.
2013 STOCK PLAN
EXERCISE AGREEMENT
This Exercise Agreement (this “Agreement”) is made as of ________________, by and between Coinbase Global, Inc., a Delaware corporation (the
“Company”), and ____________________ (“Purchaser”). To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning
ascribed to them in the Company’s 2013 Stock Plan (the “Plan”) and the Option Agreement (as defined below).
1. Exercise of Option. Subject to the terms and conditions hereof, Purchaser hereby elects to exercise his or her option to purchase ________________ shares
of the Common Stock (the “Shares”) of the Company under and pursuant to the Plan, the Notice of Stock Option Grant and the Stock Option Agreement granted
________________ (the “Option Agreement”). The purchase price for the Shares shall be $______ per Share for a total purchase price of $__________. The term
“Shares” refers to the purchased Shares and all securities received in connection with the Shares pursuant to stock dividends or splits, all securities received in
replacement of the Shares in a recapitalization, merger, reorganization, exchange or the like, and all new, substituted or additional securities or other property to
which Purchaser is entitled by reason of Purchaser’s ownership of the Shares.
2. Time and Place of Exercise. The purchase and sale of the Shares under this Agreement shall occur at the principal office of the Company simultaneously
with the execution and delivery of this Agreement, the payment of the aggregate exercise price by any method listed in Section 4 of the Option Agreement, and the
satisfaction of any applicable tax, withholding, required deductions or other payments, all in accordance with the provisions of Section 3(b) of the Option
Agreement. The Company shall issue the Shares to Purchaser by entering such Shares in Purchaser’s name as of such date in the books and records of the
Company or, if applicable, a duly authorized transfer agent of the Company, against payment of the exercise price therefor by Purchaser. The Company will deliver
to Purchaser a stock certificate or, in the case of uncertificated securities, notice of issuance, for the Shares as soon as practicable following such date.
3. Limitations on Transfer. In addition to any other limitation on transfer created by the transfer restrictions set forth in the Plan or by Applicable Laws,
Purchaser shall not assign, encumber or dispose of any interest in the Shares except in compliance with the provisions below and Applicable Laws.
(a) Right of First Refusal. Before any Shares held by Purchaser or any transferee of Purchaser (either being sometimes referred to herein as the
“Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law), the Company or its assignee(s) shall
have a right of first refusal to purchase the Shares on the terms and conditions set forth in this Section 3(a) (the “Right of First Refusal”).
(i) Notice of Proposed Transfer. The Holder of the Shares shall deliver to the Company a written notice (the “Notice”) stating: (A) the
Holder’s bona fide intention to sell or otherwise transfer such Shares; (B) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (C) the
number of Shares to be transferred to each Proposed Transferee; and (D) the terms and conditions of each proposed sale or transfer, including (without limitation)
the purchase price for such Shares (the “Purchase Price”). The Holder shall offer the Shares at the Purchase Price and upon the same terms (or terms as similar as
reasonably possible) to the Company or its assignee(s).
(ii) Exercise of Right of First Refusal. At any time within 30 days after receipt of the Notice, the Company and/or its assignee(s) may, by
giving written notice to the Holder, elect to purchase any or all of the Shares proposed to be transferred to any one or more of the Proposed Transferees, at the
Purchase Price, provided that if the Purchase Price consists of no legal consideration (as, for example, in the case of a transfer by gift), the purchase price will be
the fair market value of the Shares as determined in good faith by the Board. If the Purchase Price includes consideration other than cash, the cash equivalent value
of the non-cash consideration shall be determined by the Board in good faith.
(iii) Payment. Payment of the Purchase Price shall be made, at the election of the Company or its assignee(s), in cash (by check), by cancellation
of all or a portion of any outstanding indebtedness, or by any combination thereof within 60 days after receipt of the Notice or in the manner and at the times set
forth in the Notice.
(iv) Holder’s Right to Transfer. If any of the Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased
by the Company and/or its assignee(s) as provided in this Section 3(a), then the Holder may sell or otherwise transfer any unpurchased Shares to that Proposed
Transferee at the Purchase Price or at a higher price, provided that such sale or other transfer is consummated within 120 days after the date of the Notice and
provided further that any such sale or other transfer is effected in accordance with the transfer restrictions set forth in the Plan and any Applicable Laws and the
Proposed Transferee agrees in writing that the provisions of this Section 3 and the waiver of statutory information rights in Section 8 shall continue to apply to the
Shares in the hands of such Proposed Transferee. The Company, in consultation with its legal counsel, may require the Holder to provide an opinion of counsel
evidencing compliance with Applicable Laws. If the Shares described in the Notice are not transferred to the Proposed Transferee within such period, or if the
Holder proposes to change the price or other terms to make them more favorable to the Proposed Transferee, a new Notice shall be given to the Company, and the
Company and/or its assignees shall again be offered the Right of First Refusal before any Shares held by the Holder may be sold or otherwise transferred.
(v) Exception for Certain Family Transfers. Anything to the contrary contained in this Section 3(a) notwithstanding, the transfer of any or all
of the Shares during Holder’s lifetime or on Holder’s death by will or intestacy to Holder’s Immediate Family or a
2
trust for the benefit of Holder’s Immediate Family shall be exempt from the provisions of this Section 3(a). “Immediate Family” as used herein shall mean lineal
descendant or antecedent, spouse (or spouse’s antecedents), father, mother, brother or sister (or their descendants), stepchild (or their antecedents or descendants),
aunt or uncle (or their antecedents or descendants), brother-in-law or sister-in-law (or their antecedents or descendants) and shall include adoptive relationships. In
such case, the transferee or other recipient shall receive and hold the Shares so transferred subject to the provisions of this Section 3, and there shall be no further
transfer of such Shares except in accordance with the terms of this Section 3.
(b) Company’s Right to Purchase upon Involuntary Transfer. In the event of any transfer by operation of law or other involuntary transfer
(including death or divorce, but excluding a transfer to Immediate Family as set forth in Section 3(a)(v) above) of all or a portion of the Shares by the record holder
thereof, the Company shall have an option to purchase any or all of the Shares transferred at the greater of the purchase price paid by Purchaser pursuant to this
Agreement or the Fair Market Value of the Shares on the date of transfer (as determined by the Company). Upon such a transfer, the Holder shall promptly notify
the Secretary of the Company of such transfer. The right to purchase such Shares shall be provided to the Company for a period of 30 days following receipt by the
Company of written notice from the Holder.
(c) Assignment. The right of the Company to purchase any part of the Shares may be assigned in whole or in part to any holder or holders of capital
stock of the Company or other persons or organizations.
(d) Restrictions Binding on Transferees. All transferees of Shares or any interest therein will receive and hold such Shares or interest subject to the
provisions of this Agreement and the terms of the Option Agreement, including, without limitation, Section 7 of the Option Agreement. Any sale or transfer of the
Shares shall be void unless the provisions of this Agreement are satisfied.
(e) Termination of Rights. The Right of First Refusal granted the Company by Section 3(a) above and the option to repurchase the Shares in the event
of an involuntary transfer granted the Company by Section 3(b) above shall terminate upon the first sale of Common Stock of the Company to the general public
pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act (other than a registration
statement relating solely to the issuance of Common Stock pursuant to a business combination or an employee incentive or benefit plan) or any transfer or
conversion of Shares made pursuant to a statutory merger or statutory consolidation of the Company with or into another corporation or corporations if the
common stock of the surviving corporation or any direct or indirect parent corporation thereof is registered under the Exchange Act. Upon termination of such
transfer restrictions, the Company will remove any stop-transfer notices referred to in Section 6(b) below and related to the restrictions in this Section 3 and a new
stock certificate or, in the case of uncertificated securities, notice of issuance, for the Shares not repurchased shall be issued, on request, without the legend referred
to in Section 6(a)(ii) below and delivered to Holder.
3
(f) Lock-Up Agreement. The lock-up provisions set forth in Section 7 of the Option Agreement shall apply to the Shares issued upon exercise of the
Option hereunder and Purchaser reaffirms Purchaser’s obligations set forth therein.
4. Investment and Taxation Representations. In connection with the purchase of the Shares, Purchaser represents to the Company the following:
(a) Purchaser is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Shares. Purchaser is purchasing the Shares for investment for Purchaser’s own account only and not with a
view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act or under any applicable provision of state law.
Purchaser does not have any present intention to transfer the Shares to any other person or entity.
(b) Purchaser understands that the Shares have not been registered under the Securities Act by reason of a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Purchaser’s investment intent as expressed herein.
(c) Purchaser further acknowledges and understands that the securities must be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. Purchaser further acknowledges and understands that the Company is under no obligation to
register the securities.
(d) Purchaser is familiar with the provisions of Rule 144, promulgated under the Securities Act, which, in substance, permits limited public resale of
“restricted securities” acquired, directly or indirectly, from the issuer of the securities (or from an affiliate of such issuer), in a non-public offering subject to the
satisfaction of certain conditions. Purchaser understands that the Company provides no assurances as to whether he or she will be able to resell any or all of the
Shares pursuant to Rule 144, which rule requires, among other things, that the Company be subject to the reporting requirements of the Exchange Act, that resales
of securities take place only after the holder of the Shares has held the Shares for certain specified time periods, and under certain circumstances, that resales of
securities be limited in volume and take place only pursuant to brokered transactions. Notwithstanding this Section 4(d), Purchaser acknowledges and agrees to the
restrictions set forth in Section 4(e) below.
(e) Purchaser further understands that in the event all of the applicable requirements of Rule 144 are not satisfied, registration under the Securities Act,
compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of
the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and
otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales,
and that such persons and their respective brokers who participate in such transactions do so at their own risk.
4
(f) Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase or disposition of the Shares.
Purchaser represents that Purchaser has consulted any tax consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and
that Purchaser is not relying on the Company for any tax advice.
5. Voting Provisions. As a condition precedent to entering into this Agreement, at the request of the Company, Purchaser shall become a party to any voting
agreement to which the Company is a party at the time of Purchaser’s execution and delivery of this Agreement, as such voting agreement may be thereafter
amended from time to time (the “Voting Agreement”), by executing an adoption agreement or counterpart signature page agreeing to be bound by and subject to
the terms of the Voting Agreement and to vote the Shares in the capacity of a “Common Holder” and a “Stockholder,” as such terms may be defined in the Voting
Agreement.
6. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. Any stock certificate or, in the case of uncertificated securities, notice of issuance, for the Shares shall bear the following legends (as well
as any legends required by the Company or applicable state and federal corporate and securities laws):
(i) “THE SECURITIES REFERENCED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”
(ii) “THE SHARES REFERENCED HEREIN MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH AND MAY BE
OBTAINED FROM THE SECRETARY OF THE COMPANY AT NO CHARGE.”
(iii) “THE TRANSFER OF SECURITIES REFERENCED HEREIN IS SUBJECT TO RESTRICTIONS REQUIRING APPROVAL OF THE
BOARD OF DIRECTORS PURSUANT TO AND IN ACCORDANCE WITH THE COMPANY’S STOCK PLAN, COPIES OF WHICH
MAY BE OBTAINED UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS. THE
COMPANY SHALL NOT REGISTER OR OTHERWISE RECOGNIZE OR GIVE EFFECT TO ANY PURPORTED TRANSFER OF
SHARES OF STOCK THAT DOES NOT COMPLY WITH THE COMPANY’S STOCK PLAN.”
5
(iv) Any legend required by the Voting Agreement.
(b) Stop-Transfer Notices. Purchaser agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue
appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the
same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other
transferee to whom such Shares shall have been so transferred.
7. No Employment Rights. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a parent, subsidiary or
affiliate of the Company, to terminate Purchaser’s employment or consulting relationship, for any reason, with or without cause.
8. Waiver of Statutory Information Rights. Purchaser acknowledges and understands that, but for the waiver made herein, Purchaser would be entitled,
upon written demand under oath stating the purpose thereof, to inspect for any proper purpose, and to make copies and extracts from, the Company’s stock ledger,
a list of its stockholders, and its other books and records, and the books and records of subsidiaries of the Company, if any, under the circumstances and in the
manner provided in Section 220 of the Delaware General Corporation Law (any and all such rights, and any and all such other rights of Purchaser as may be
provided for in Section 220, the “Inspection Rights”). In light of the foregoing, until the first sale of Common Stock of the Company to the general public pursuant
to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended, Purchaser
hereby unconditionally and irrevocably waives the Inspection Rights, whether such Inspection Rights would be exercised or pursued directly or indirectly pursuant
to Section 220 or otherwise, and covenants and agrees never to directly or indirectly commence, voluntarily aid in any way, prosecute, assign, transfer, or cause to
be commenced any claim, action, cause of action, or other proceeding to pursue or exercise the Inspection Rights. The foregoing waiver applies to the Inspection
Rights of Purchaser in Purchaser’s capacity as a stockholder and shall not affect any rights of a director, in his or her capacity as such, under Section 220. The
foregoing waiver shall not apply to any contractual inspection rights of Purchaser under any written agreement with the Company.
9. Miscellaneous.
(a) Governing Law. The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto and the
rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of California, without giving effect
to principles of conflicts of law. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby submit and
consent to the exclusive jurisdiction of the state of California and agree that any such
6
litigation shall be conducted only in the courts of California or the federal courts of the United States located in California and no other courts.
(b) Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and
supersedes all prior or contemporaneous discussions, understandings and agreements, whether oral or written, between them relating to the subject matter hereof.
(c) Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be
effective unless in writing signed by the parties to this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute a
waiver of that provision as to that or any other instance.
(d) Successors and Assigns. Except as otherwise provided in this Agreement, this Agreement, and the rights and obligations of the parties hereunder,
will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The Company may
assign any of its rights and obligations under this Agreement. No other party to this Agreement may assign, whether voluntarily or by operation of law, any of its
rights and obligations under this Agreement, except with the prior written consent of the Company.
(e) Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed sufficient
when delivered personally or by overnight courier or sent by email, or 48 hours after being deposited in the U.S. mail as certified or registered mail with postage
prepaid, addressed to the party to be notified at such party’s address as set forth on the signature page, as subsequently modified by written notice, or if no address
is specified on the signature page, at the most recent address set forth in the Company’s books and records.
(f) Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall
be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
(g) Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against
any one of the parties hereto.
(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an
original, and all of which together shall constitute one and the same agreement.
7
(i) Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to this Agreement or any notices required by
applicable law or the Company’s Certificate of Incorporation or Bylaws by email or any other electronic means. Purchaser hereby consents to receive such
documents and notices by such electronic delivery and agrees to participate through an on-line or electronic system established and maintained by the Company or
a third party designated by the Company.
(j) Reserved
(k) California Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT
BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES
OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS
THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED,
UNLESS THE SALE IS SO EXEMPT.
8
The parties have executed this Exercise Agreement as of the date first set forth above.
THE COMPANY:
COINBASE GLOBAL, INC.
By:
(Signature)
Name:
Title:
Address:
PURCHASER:
(PRINT NAME)
(Signature)
Address:
Email:
I, __________________________, spouse of __________________________ (“Purchaser”), have read and hereby approve the foregoing Agreement. In
consideration of the Company’s granting my spouse the right to purchase the Shares as set forth in the Agreement, I hereby agree to be bound irrevocably by the
Agreement and further agree that any community property or other such interest that I may have in the Shares shall hereby be similarly bound by the Agreement. I
hereby appoint my spouse as my attorney-in-fact with respect to any amendment or exercise or waiver of any rights under the Agreement.
Spouse of Purchaser (if applicable)
2
COINBASE GLOBAL, INC.
2013 STOCK PLAN
NOTICE OF STOCK OPTION GRANT
[Optionee Name]
[Optionee Address Line 1]
[Optionee Address Line 2]
You have been granted an option to purchase Common Stock of Coinbase Global, Inc., a Delaware corporation (the “Company”), as follows:
Date of Grant: [l]
Exercise Price Per Share: $[l]
Total Number of Shares: [l]
Total Exercise Price: $[l]
Type of Option: [l] Incentive Stock Option
[l] Nonstatutory Stock Option
Expiration Date: [l]
Vesting Commencement Date: [l]
Vesting/Exercise
Schedule:
The Option is immediately exercisable. So long as your Continuous Service
Status does not terminate, the Shares underlying this Option shall vest in
accordance with the following schedule: [l] of the Total Number of Shares
shall vest on the [l] anniversary of the Vesting Commencement Date and [l]
of the Total Number of Shares shall vest on the corresponding day of each
month thereafter (and if there is no corresponding day, the last day of the
month).
1
Termination Period: Except as set forth in Section 5 of the Stock Option Agreement, you may
exercise this Option for 3 months after termination of your Continuous Service
Status, provided that if on your termination date, you have completed a
minimum of 2 years of Continuous Service Status (as determined by the
Company), then you may exercise this Option for 7 years after termination of
your Continuous Service Status; provided, however, in no event may the Option
be exercised later than the Expiration Date. Notwithstanding the foregoing, this
Option may terminate earlier pursuant to the Coinbase Global, Inc. 2013 Stock
Plan (the “Plan”), including (without limitation) upon a dissolution, liquidation
or Corporate Transaction (as defined in the Plan) of the Company. You are
responsible for keeping track of these exercise periods following the termination
of your Continuous Service Status for any reason. The Company will not
provide further notice of such periods.
Transferability: You may not transfer this Option except as set out in Section 6 of the Stock
Option Agreement. You must obtain Board approval prior to any transfer of the
Shares received upon exercise of this Option.
2
By your signature and the signature of the Company’s representative below, you and the Company agree that this Option is granted under and governed by the
terms and conditions of this Notice and the Coinbase Global, Inc. 2013 Stock Plan and Option Agreement, both of which are attached to and made a part of this
Notice.
In addition, you agree and acknowledge that your rights to any Shares underlying this Option will be earned only as you provide services to the Company
over time, that the grant of this Option is not as consideration for services you rendered to the Company prior to your date of hire, and that nothing in this Notice or
the attached documents confers upon you any right to continue your employment or consulting relationship with the Company for any period of time, nor does it
interfere in any way with your right or the Company’s right to terminate that relationship at any time, for any reason, with or without cause. Also, to the extent
applicable, the Exercise Price Per Share has been set in good faith compliance with the applicable guidance issued by the IRS under Section 409A of the Code.
However, there is no guarantee that the IRS will agree with the valuation, and by signing below, you agree and acknowledge that the Company, its Board, officers,
employees, agents and stockholders shall not be held liable for any applicable costs, taxes, or penalties associated with this Option if, in fact, the IRS or any other
person (including, without limitation, a successor corporation or an acquirer in a Change of Control) were to determine that this Option constitutes deferred
compensation under Section 409A of the Code. You should consult with your own tax advisor concerning the tax consequences of such a determination by the IRS.
For purposes of this paragraph, the term “Company” will be interpreted to include any Parent, Subsidiary or Affiliate.
THE COMPANY:
COINBASE GLOBAL, INC.
By:
(Signature)
Name:
Title:
OPTIONEE:
(PRINT NAME)
(Signature) Address:
3
COINBASE GLOBAL, INC.
2013 STOCK PLAN STOCK
OPTION AGREEMENT
1. Grant of Option. Coinbase Global, Inc., a Delaware corporation (the “Company”), hereby grants to the person (“Optionee”) named in the Notice of
Stock Option Grant (the “Notice”), an option (the “Option”) to purchase the total number of shares of Common Stock (the “Shares”) set forth in the Notice, at the
exercise price per Share set forth in the Notice (the “Exercise Price”), subject to the terms, definitions and provisions of the Coinbase Global, Inc. 2013 Stock Plan
(the “Plan”) adopted by the Company, which is incorporated in this Stock Option Agreement (this “Agreement”) by reference. Unless otherwise defined in this
Agreement, the terms used in this Agreement or the Notice shall have the meanings defined in the Plan.
2. Designation of Option. This Option is intended to be an Incentive Stock Option as defined in Section 422 of the Code only to the extent so
designated in the Notice, and to the extent it is not so designated or to the extent this Option does not qualify as an Incentive Stock Option, it is intended to be a
Nonstatutory Stock Option.
Notwithstanding the above, if designated as an Incentive Stock Option, in the event that the Shares subject to this Option (and all other incentive stock
options granted to Optionee by the Company or any Parent or Subsidiary, including under other plans) that first become exercisable in any calendar year have an
aggregate fair market value (determined for each Share as of the date of grant of the option covering such Share) in excess of $100,000, the Shares in excess of
$100,000 shall be treated as subject to a nonstatutory stock option, in accordance with Section 5(c) of the Plan.
3. Exercise of Option. This Option shall be exercisable during its term in accordance with the Vesting/Exercise Schedule set out in the Notice and
with the provisions of Section 7(c) of the Plan as follows:
(a) Right to Exercise.
(i) This Option may not be exercised for a fraction of a share.
(ii) In the event of Optionee’s death, Disability or other termination of Continuous Service Status, the exercisability of this Option is
governed by Section 5 below, subject to the limitations contained in this Section 3.
(ii) In no event may this Option be exercised after the Expiration Date set forth in the Notice.
4
(b) Method of Exercise.
(i) This Option shall be exercisable by execution and delivery of the Early Exercise Notice and Restricted Stock Purchase Agreement
attached hereto as Exhibit A, the Exercise Agreement attached hereto as Exhibit B or of any other form of written notice approved for such purpose by the
Company which shall state Optionee’s election to exercise this Option, the number of Shares in respect of which this Option is being exercised, and such other
representations and agreements as to the holder’s investment intent with respect to such Shares as may be required by the Company pursuant to the provisions of
the Plan. Such written notice shall be signed by Optionee and shall be delivered to the Company by such means as are determined by the Company in its discretion
to constitute adequate delivery. The written notice shall be accompanied by payment of the aggregate Exercise Price for the purchased Shares.
(ii) As a condition to the exercise of this Option and as further set forth in Section 9 of the Plan, Optionee agrees to make adequate
provision for federal, state or other applicable tax, withholding, required deductions or other payments, if any, which arise upon the grant, vesting or exercise of
this Option, or disposition of Shares, whether by withholding, direct payment to the Company, or otherwise, as determined by the Company in its sole discretion.
(iii) The Company is not obligated, and will have no liability for failure, to issue or deliver any Shares upon exercise of this Option unless
such issuance or delivery would comply with the Applicable Laws, with such compliance determined by the Company in consultation with its legal counsel. This
Option may not be exercised until such time as the Plan has been approved by the holders of capital stock of the Company, or if the issuance of such Shares upon
such exercise or the method of payment of consideration for such Shares would constitute a violation of any Applicable Laws, including any applicable U.S.
federal or state securities laws or any other law or regulation, including any rule under Part 221 of Title 12 of the Code of Federal Regulations as promulgated by
the Federal Reserve Board. As a condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the
Company as may be required by the Applicable Laws. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to Optionee
on the date on which this Option is exercised with respect to such Shares.
(iv) Subject to compliance with Applicable Laws, this Option shall be deemed to be exercised upon receipt by the Company of the
appropriate written notice of exercise accompanied by the Exercise Price and the satisfaction of any applicable obligations described in Section 3(b)(ii) above.
4. Method of Payment. Payment of the Exercise Price shall be by cash or check or, following the initial public offering of the Company’s Common
Stock, by Cashless Exercise pursuant to which the Optionee delivers an irrevocable direction to a securities broker (on a form prescribed by the Company and
according to a procedure established by the Company).
5. Termination of Relationship. Following the date of termination of Optionee’s Continuous Service Status for any reason (the “Termination Date”),
Optionee may exercise this Option only as set forth in the Notice and this Section 5. If Optionee does not exercise this
5
Option within the Termination Period set forth in the Notice or the termination periods set forth below, this Option shall terminate in its entirety. In no event, may
any Option be exercised after the Expiration Date of this Option as set forth in the Notice.
(a) Termination Prior to 2 Years of Continuous Service Status. If Optionee’s Continuous Service Status terminates prior to Optionee’s
completion of 2 years of Continuous Service Status (as determined by the Company), then Optionee may, to the extent Optionee is vested in the Optioned Stock,
exercise this Option as follows:
(i) General Termination. In the event of termination of Optionee’s Continuous Service Status other than as a result of Optionee’s
Disability or death or Optionee’s termination for Cause, Optionee may, to the extent Optionee is vested in the Optioned Stock, exercise this Option during the
Termination Period set forth in the Notice.
(ii) Termination upon Disability of Optionee. In the event of termination of Optionee’s Continuous Service Status as a result of
Optionee’s Disability, Optionee may, but only within 12 months following the Termination Date, exercise this Option to the extent Optionee is vested in the
Optioned Stock.
(iii) Death of Optionee. In the event of termination of Optionee’s Continuous Service Status as a result of Optionee’s death, or in the
event of Optionee’s death within 3 months following Optionee’s Termination Date, this Option may be exercised at any time within 12 months following the
Termination Date, or if later, 12 months following the date of death by any beneficiaries designated in accordance with Section 16 of the Plan or, if there are no
such beneficiaries, by the Optionee’s estate, or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent Optionee
is vested in the Optioned Stock.
(b) Termination On or After 2 Years of Continuous Service Status. If Optionee’s Continuous Service Status terminates (other than a
termination for Cause) on or after the date on which Optionee has completed 2 years of Continuous Service Status (as determined by the Company), Optionee may,
to the extent Optionee is vested in the Optioned Stock, exercise this Option during the Termination Period set forth in the Notice and this Option shall terminate
with respect to the unvested Shares subject to the Option on the date that is 3 months following Optionee’s termination of Continuous Service Status. In the event
that Optionee’s Continuous Service Status terminates as a result of Optionee’s death, this Option may be exercised by any beneficiaries designated in accordance
with Section 16 of the Plan or, if there are no such beneficiaries, by the Optionee’s estate, or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent Optionee is vested in the Optioned Stock.
(c) Termination for Cause. In the event of termination of Optionee’s Continuous Service Status for Cause at any time, this Option (including
any vested portion thereof) shall immediately terminate in its entirety upon first notification to Optionee of such termination for Cause. If Optionee’s Continuous
Service Status is suspended pending an investigation of whether Optionee’s Continuous Service Status will be terminated for Cause, all
6
Optionee’s rights under this Option, including the right to exercise this Option, shall be suspended during the investigation period.
6. Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of Optionee only by him or her. The terms of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of Optionee.
7. Lock-Up Agreement. If so requested by the Company or the underwriters in connection with the initial public offering of the Company’s securities
registered under the Securities Act of 1933, as amended, Optionee shall not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise
dispose of any securities of the Company however or whenever acquired (except for those being registered) without the prior written consent of the Company or
such underwriters, as the case may be, for 180 days from the effective date of the registration statement, plus such additional period, to the extent required by
FINRA rules, up to a maximum of 216 days from the effective date of the registration statement, and Optionee shall execute an agreement reflecting the foregoing
as may be requested by the underwriters at the time of such offering.
8. Effect of Agreement. Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions
thereof (and has had an opportunity to consult counsel regarding the Option terms), and hereby accepts this Option and agrees to be bound by its contractual terms
as set forth herein and in the Plan. Optionee hereby agrees to accept as binding, conclusive and final all decisions and interpretations of the Administrator regarding
any questions relating to this Option. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of the Notice and this
Agreement, the Plan terms and provisions shall prevail.
9. Imposition of Other Requirements. The Company reserves the right to impose other requirements on Optionee’s participation in the Plan, on this
Option and the Shares subject to this Option and on any other Award or Shares acquired under the Plan, to the extent the Company determines it is necessary or
advisable in order to comply with Applicable Laws or facilitate the administration of the Plan. Optionee agrees to sign any additional agreements or undertakings
that may be necessary to accomplish the foregoing. Furthermore, Optionee acknowledges that the Applicable Laws of the country in which Optionee is residing or
working at the time of grant, holding, vesting, and exercise of the Option or the holding or sale of Shares received pursuant to the Option (including any rules or
regulations governing securities, foreign exchange, tax, labor, or other matters) may subject Optionee to additional procedural or regulatory requirements that
Optionee is and will be solely responsible for and must fulfill.
10. Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to Optionee’s current or future participation
in the Plan, this Option, the Shares subject to this Option, any other Company Securities or any other Company-related documents, by electronic means. By
accepting this Option, whether electronically or otherwise, Optionee hereby (i) consents to receive such documents by electronic means, (ii) consents to the use of
electronic signatures, and (iii) if applicable, agrees to participate in the Plan and/or receive
7
any such documents through an on-line or electronic system established and maintained by the Company or a third party designated by the Company, including but
not limited to the use of electronic signatures or click-through electronic acceptance of terms and conditions.
11. Miscellaneous.
(a) Governing Law. The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto
and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of California, without
giving effect to principles of conflicts of law. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby
submit and consent to the exclusive jurisdiction of the state of California and agree that any such litigation shall be conducted only in the courts of California or the
federal courts of the United States located in California and no other courts.
(b) Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and
supersedes all prior or contemporaneous discussions, understandings and agreements, whether oral or written, between them relating to the subject matter hereof.
(c) Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall
be effective unless in writing signed by the parties to this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute
a waiver of that provision as to that or any other instance.
(d) Successors and Assigns. Except as otherwise provided in this Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The
Company may assign any of its rights and obligations under this Agreement. No other party to this Agreement may assign, whether voluntarily or by operation of
law, any of its rights and obligations under this Agreement, except with the prior written consent of the Company.
(e) Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed
sufficient when delivered personally or by overnight courier or sent by email, or 48 hours after being deposited in the U.S. mail as certified or registered mail with
postage prepaid, addressed to the party to be notified at such party’s address as set forth on the signature page, as subsequently modified by written notice, or if no
address is specified on the signature page, at the most recent address set forth in the Company’s books and records.
(f) Severability. If one or more provisions of this Agreement are held to be unenforceable under Applicable Laws, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i)
such provision shall be excluded from this Agreement,
8
(ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in
accordance with its terms.
(g) Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against
any one of the parties hereto.
(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be
deemed an original, and all of which together shall constitute one and the same agreement. Execution of a facsimile copy will have the same force and effect as
execution of an original, and a facsimile signature will be deemed an original and valid signature.
9
EXHIBIT A
COINBASE GLOBAL, INC.
2013 STOCK PLAN
EARLY EXERCISE NOTICE AND RESTRICTED STOCK PURCHASE AGREEMENT
This Agreement (“Agreement”) is made as of [l] by and between Coinbase Global, Inc., a Delaware corporation (the “Company”), and [l] (“Purchaser”).
To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Company’s 2013 Stock Plan (the
“Plan”) and the Option Agreement (as defined below).
1. Exercise of Option. Subject to the terms and conditions hereof, Purchaser hereby elects to exercise his or her option to purchase [l] shares of the
Common Stock (the “Shares”) of the Company under and pursuant to the Plan, the Notice of Stock Option Grant and the Stock Option Agreement granted [l] (the
“Agreement”). Of these Shares, Purchaser has elected to purchase [l] of those Shares which have become vested as of the date hereof under the Vesting/Exercise
Schedule set forth in the Notice of Stock Option Grant (the “Vested Shares”) and [l] Shares which have not yet vested under such Vesting/Exercise Schedule (the
“Unvested Shares”). The purchase price for the Shares shall be $[l] per Share for a total purchase price of $[l]. The term “Shares” refers to the purchased Shares
and all securities received in connection with the Shares pursuant to stock dividends or splits, all securities received in replacement of the Shares in a
recapitalization, merger, reorganization, exchange or the like, and all new, substituted or additional securities or other property to which Purchaser is entitled by
reason of Purchaser’s ownership of the Shares.
2. Time and Place of Exercise. The purchase and sale of the Shares under this Agreement shall occur at the principal office of the Company
simultaneously with the execution and delivery of this Agreement, the payment of the aggregate exercise price by any method listed in Section 4 of the Option
Agreement, and the satisfaction of any applicable tax, withholding, required deductions or other payments, all in accordance with the provisions of Section 3(b) of
the Option Agreement. The Company shall issue the Shares to Purchaser by entering such Shares in Purchaser’s name as of such date in the books and records of
the Company or, if applicable, a duly authorized transfer agent of the Company, against payment of the exercise price therefor by Purchaser. The Company will
deliver to Purchaser a stock certificate or, in the case of uncertificated securities, notice of issuance, for the Shares as soon as practicable following such date.
3. Limitations on Transfer. Purchaser acknowledges and agrees that the Shares purchased under this Agreement are subject to (i) the transfer
restrictions set forth in Section 12 of the Plan, (ii) the terms and conditions that apply to the Company’s Common Stock, as set forth in the Company’s Amended
and Restated Bylaws, including (without limitation) certain transfer restrictions set forth in Section 8.9 of the Company’s Amended and Restated Bylaws, as in
effect at the time of any proposed transfer (the “Bylaw Restrictions”), and (iii) any other limitation or restriction on transfer created by Applicable Laws. In
addition to the foregoing
10
limitations on transfer, Purchaser shall not assign, encumber or dispose of any interest in the Shares while the Shares are subject to the Company’s Repurchase
Option (as defined below). After any Shares have been released from such Repurchase Option, Purchaser shall not assign, encumber or dispose of any interest in
the Shares except to the extent permitted by, and in compliance with, Section 12 of the Plan, the Bylaw Restrictions, Applicable Laws, and the provisions below.
(a) Repurchase Option.
(i) In the event of the voluntary or involuntary termination of Purchaser’s Continuous Service Status with the Company for any reason
(including, without limitation, resignation, death or Disability), with or without Cause, the Company shall upon the date of such termination (the “Termination
Date”) have an irrevocable, exclusive option (the “Repurchase Option”) for a period of 3 months from such date to repurchase all or any portion of the Unvested
Shares (as defined below) held by Purchaser as of the Termination Date at the original purchase price per Share (adjusted for any stock splits, stock dividends and
the like) specified in Section 1. As used herein, “Unvested Shares” means Shares that have not yet been released from the Repurchase Option.
(ii) Unless the Company notifies Purchaser within 3 months from the Termination Date that it does not intend to exercise its Repurchase
Option with respect to some or all of the Unvested Shares, the Repurchase Option shall be deemed automatically exercised by the Company as of the end of such 3-
month period following the Termination Date, provided that the Company may notify Purchaser that it is exercising its Repurchase Option as of a date prior to the
end of such 3-month period. Unless Purchaser is otherwise notified by the Company pursuant to the preceding sentence that the Company does not intend to
exercise its Repurchase Option as to some or all of the Unvested Shares to which it applies at the time of termination, execution of this Agreement by Purchaser
constitutes written notice to Purchaser of the Company’s intention to exercise its Repurchase Option with respect to all Unvested Shares to which such Repurchase
Option applies. The Company, at its choice, may satisfy its payment obligation to Purchaser with respect to exercise of the Repurchase Option by either
(A) delivering a check to Purchaser in the amount of the purchase price for the Unvested Shares being repurchased, or (B) in the event Purchaser is indebted to the
Company, canceling an amount of such indebtedness equal to the purchase price for the Unvested Shares being repurchased, or (C) by a combination of (A) and
(B) so that the combined payment and cancellation of indebtedness equals such purchase price. In the event of any deemed automatic exercise of the Repurchase
Option pursuant to this Section 3(a)(ii) in which Purchaser is indebted to the Company, such indebtedness equal to the purchase price of the Unvested Shares being
repurchased shall be deemed automatically canceled as of the end of such 3-month period following the Termination Date unless the Company otherwise satisfies
its payment obligations. As a result of any repurchase of Unvested Shares pursuant to this Section 3, the Company shall become the legal and beneficial owner of
the Unvested Shares being repurchased and shall have all rights and interest therein or related thereto, and the Company shall have the right to transfer to its own
name the number of Unvested Shares being repurchased by the Company, without further action by Purchaser.
11
(iii) One hundred percent (100%) of the Shares shall initially be subject to the Repurchase Option. The Unvested Shares shall be released
from the Repurchase Option in accordance with the Vesting/Exercise Schedule set forth in the Notice of Stock Option Grant until all Shares are released from the
Repurchase Option; provided, however, that such scheduled releases from the Repurchase Option shall immediately cease as of the Termination Date. Fractional
shares shall be rounded to the nearest whole share.
(b) Transfer Restrictions; Right of First Refusal. Before any Shares held by Purchaser or any transferee of Purchaser (either being sometimes
referred to herein as the “Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law), the Company shall first have the right to
approve such sale or transfer, in full or in part, and shall then have the right to purchase all or any part of the Shares proposed to be sold or transferred, in each case,
in its sole and absolute discretion (the “Right of First Refusal”). If the Holder would like to sell or transfer any Shares, the Holder must provide the Company or its
assignee(s) with a Notice (as defined below) requesting approval to sell or transfer the Shares and offering the Company or its assignee(s) a Right of First Refusal
on the same terms and conditions set forth in this Section 3(b). The Company may either (1) exercise its Right of First Refusal in full or in part and purchase such
Shares pursuant to this Section 3(b), (2) decline to exercise its Right of First Refusal in full or in part and permit the sale or transfer of such Shares to the Proposed
Transferee (as defined below) in full or in part, or (3) decline to exercise its Right of First Refusal in full or in part and decline the request to sell or transfer the
Shares in full or in part.
(i) Notice of Proposed Transfer. The Holder of the Shares shall deliver to the Company a written notice (the “Notice”) stating: (A) the
Holder’s intention to sell or otherwise transfer such Shares; (B) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (C) the number
of Shares to be sold or transferred to each Proposed Transferee; (D) the terms and conditions of each proposed sale or transfer, including (without limitation) the
purchase price for such Shares (the “Purchase Price”); and (E) the Holder’s offer to the Company or its assignee(s) to purchase the Shares at the Purchase Price and
upon the same terms (or terms that are no less favorable to the Company).
(ii) Exercise of Right of First Refusal. At any time within 30 days after receipt of the Notice, the Company and/or its assignee(s) shall
deliver a written notice to the Holder indicating whether the Company and/or its assignee(s) elect to permit or reject the proposed sale or transfer, in full or in part,
and/or elect to accept or decline the offer to purchase any or all of the Shares proposed to be sold or transferred to any one or more of the Proposed Transferees, at
the Purchase Price, provided that if the Purchase Price consists of no legal consideration (as, for example, in the case of a transfer by gift), the purchase price will
be the fair market value of the Shares as determined in good faith by the Company. If the Purchase Price includes consideration other than cash, the cash equivalent
value of the non-cash consideration shall be determined by the Company in good faith.
(iii) Payment. Payment of the Purchase Price shall be made, at the election of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion
12
of any outstanding indebtedness, or by any combination thereof within 60 days after receipt of the Notice or in the manner and at the times set forth in the Notice.
(iv) Holder’s Right to Transfer. If any of the Shares proposed in the Notice to be sold or transferred to a given Proposed Transferee are
both (A) not purchased by the Company and/or its assignee(s) as provided in this Section 3(b) and (B) approved by the Company to be sold or transferred, then the
Holder may sell or otherwise transfer any such Shares to the applicable Proposed Transferee at the Purchase Price or at a higher price, provided that such sale or
other transfer is consummated within 120 days after the date of the Notice; provided that any such sale or other transfer is also effected in accordance with the
Bylaw Restrictions, the transfer restrictions set forth in the Plan and any Applicable Laws and the Proposed Transferee agrees in writing that the Plan, the Bylaw
Restrictions, and the provisions of the Option Agreement and this Agreement, including this Section 3 and the waiver of statutory information rights in Section 10,
shall continue to apply to the Shares in the hands of such Proposed Transferee. The Company, in consultation with its legal counsel, may require the Holder to
provide an opinion of counsel evidencing compliance with Applicable Laws. If the Shares described in the Notice are not transferred to the Proposed Transferee
within such period, or if the Holder proposes to change the price or other terms to make them more favorable to the Proposed Transferee, a new Notice shall be
given to the Company, and the Company and/or its assignees shall again have the right to approve such transfer and be offered the Right of First Refusal.
(v) Exception for Certain Family Transfers. Anything to the contrary contained in this Section 3(b) notwithstanding, the transfer of
any or all of the Shares during Holder’s lifetime or on Holder’s death by will or intestacy to Holder’s Immediate Family or a trust for the benefit of Holder’s
Immediate Family shall be exempt from the provisions of this Section 3(b). “Immediate Family” as used herein shall mean lineal descendant or antecedent, spouse
(or spouse’s antecedents), father, mother, brother or sister (or their descendants), stepchild (or their antecedents or descendants), aunt or uncle (or their antecedents
or descendants), brother-in-law or sister-in-law (or their antecedents or descendants) and shall include adoptive relationships. In such case, the transferee or other
recipient shall receive and hold the Shares so transferred subject to the provisions of the Plan, the Bylaw Restrictions, and the provisions of the Option Agreement
and this Agreement, including this Section 3 and Section 10, and there shall be no further transfer of such Shares except in accordance with the terms of this
Section 3, the Plan and the Bylaw Restrictions.
(c) Company’s Right to Purchase upon Involuntary Transfer. In the event of any transfer by operation of law or other involuntary transfer
(including death or divorce, but excluding a transfer to Immediate Family as set forth in Section 3(b)(v) above) of all or a portion of the Shares by the record holder
thereof, the Company shall have an option to purchase any or all of the Shares transferred at the Fair Market Value of the Shares on the date of transfer (as
determined by the Company in its sole discretion). Upon such a transfer, the Holder shall promptly notify the Secretary of the Company of such transfer. The right
to purchase such Shares shall be provided to the Company for a period of 30 days following receipt by the Company of written notice from the Holder.
13
(d) Assignment. The right of the Company to purchase any part of the Shares may be assigned in whole or in part to any holder or holders of
capital stock of the Company or other persons or organizations.
(e) Restrictions Binding on Transferees. All transferees of Shares or any interest therein will receive and hold such Shares or interest subject
to the Plan, the Bylaw Restrictions, and the provisions of the Option Agreement and this Agreement, including, without limitation, Section 7 of the Option
Agreement, Sections 3 and 10 of this Agreement and Section 12 of the Plan and, including, insofar as applicable, the Repurchase Option. In the event of any
purchase by the Company hereunder where the Shares or interest are held by a transferee, the transferee shall be obligated, if requested by the Company, to transfer
the Shares or interest to the Purchaser for consideration equal to the amount to be paid by the Company hereunder. In the event the Repurchase Option is deemed
exercised by the Company pursuant to Section 3(a)(ii) hereof, the Company may deem any transferee to have transferred the Shares or interest to Purchaser prior to
their purchase by the Company, and payment of the purchase price by the Company to such transferee shall be deemed to satisfy Purchaser’s obligation to pay such
transferee for such Shares or interest, and also to satisfy the Company’s obligation to pay Purchaser for such Shares or interest. Any sale or transfer of the Shares
shall be void unless the provisions of this Agreement are satisfied.
(f) Termination of Rights. The transfer restrictions set forth in Section 3(b) above and Section 12 of the Plan, the Right of First Refusal
granted the Company by Section 3(b) above and the right to repurchase the Shares in the event of an involuntary transfer granted the Company by Section 3(c)
above shall terminate upon the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission under the Securities Act (other than a registration statement relating solely to the issuance of Common Stock
pursuant to a business combination or an employee incentive or benefit plan) or any transfer or conversion of Shares made pursuant to a statutory merger or
statutory consolidation of the Company with or into another corporation or corporations if the common stock of the surviving corporation or any direct or indirect
parent corporation thereof is registered under the Exchange Act. Upon termination of such transfer restrictions, the Company will remove any stop-transfer notices
referred to in Section 7(b) below and related to the restrictions in this Section 3 and a new stock certificate or, in the case of uncertificated securities, notice of
issuance, for the Shares not repurchased shall be issued, on request, without the legend referred to in Section 7(a)(ii) below and delivered to Holder.
(g) Lock-Up Agreement. The lock-up provisions set forth in Section 7 of the Option Agreement shall apply to the Shares issued upon exercise
of the Option hereunder and Purchaser reaffirms Purchaser’s obligations set forth therein.
4. Escrow of Unvested Shares. For purposes of facilitating the enforcement of the provisions of Section 3(a) above, Purchaser agrees, immediately
upon receipt of the stock certificate(s) or, in the case of uncertificated securities, notice of issuance, for the Shares subject to the Repurchase Option, to deliver any
such stock certificate(s), as well as a Stock Power in the
14
form attached to this Agreement as Attachment A executed by Purchaser and by Purchaser’s spouse (if required for transfer), in blank, to the Secretary of the
Company, or the Secretary’s designee, to hold such Shares (and such stock certificate(s), if any) and Stock Power in escrow and to take all such actions and to
effectuate all such transfers and/or releases as are required in accordance with the terms of this Agreement. Purchaser hereby acknowledges that the Secretary of
the Company, or the Secretary’s designee, is so appointed as the escrow holder with the foregoing authorities as a material inducement to make this Agreement and
that said appointment is coupled with an interest and is accordingly irrevocable. Purchaser agrees that said escrow holder shall not be liable to any party hereof (or
to any other party). The escrow holder may rely upon any letter, notice or other document executed by any signature purported to be genuine and may resign at any
time. Purchaser agrees that if the Secretary of the Company, or the Secretary’s designee, resigns as escrow holder for any or no reason, the Board shall have the
power to appoint a successor to serve as escrow holder pursuant to the terms of this Agreement.
5. Investment and Taxation Representations. In connection with the purchase of the Shares, Purchaser represents to the Company the following:
(a) Purchaser is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Shares. Purchaser is purchasing the Shares for investment for Purchaser’s own account only and not
with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act or under any applicable provision of state law.
Purchaser does not have any present intention to transfer the Shares to any other person or entity.
(b) Purchaser understands that the Shares have not been registered under the Securities Act by reason of a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Purchaser’s investment intent as expressed herein.
(c) Purchaser further acknowledges and understands that the securities must be held indefinitely unless they are subsequently registered under
the Securities Act or an exemption from such registration is available. Purchaser further acknowledges and understands that the Company is under no obligation to
register the securities.
(d) Purchaser is familiar with the provisions of Rule 144, promulgated under the Securities Act, which, in substance, permits limited public
resale of “restricted securities” acquired, directly or indirectly, from the issuer of the securities (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions. Purchaser understands that the Company provides no assurances as to whether he or she will be able to resell any or all of
the Shares pursuant to Rule 144, which rule requires, among other things, that the Company be subject to the reporting requirements of the Exchange Act, that
resales of securities take place only after the holder of the Shares has held the Shares for certain specified time periods, and under certain circumstances, that
resales of securities be limited in volume and take place only pursuant to brokered transactions. Notwithstanding this Section 5(d), Purchaser acknowledges and
agrees to the restrictions set forth in Section 5(e) below.
15
(e) Purchaser further understands that in the event all of the applicable requirements of Rule 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not
exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available
for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.
(f) Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase or disposition of the Shares.
Purchaser represents that Purchaser has consulted any tax consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and
that Purchaser is not relying on the Company for any tax advice.
6. Voting Provisions. As a condition precedent to entering into this Agreement, at the request of the Company, Purchaser shall become a party
to any voting agreement to which the Company is a party at the time of Purchaser’s execution and delivery of this Agreement, as such voting agreement may be
thereafter amended from time to time (the “Voting Agreement”), by executing an adoption agreement or counterpart signature page agreeing to be bound by and
subject to the terms of the Voting Agreement and to vote the Shares in the capacity of a “Common Holder” and a “Stockholder,” as such terms may be defined in
the Voting Agreement.
7. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. Any stock certificate or, in the case of uncertificated securities, any notice of issuance, for the Shares shall bear the following
legends (as well as any legends required by the Company or applicable state and federal corporate and securities laws):
(i) “THE SECURITIES REFERENCED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933.”
(ii) “THE SECURITIES REFERENCED HEREIN MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF
AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH AND MAY BE OBTAINED FROM
THE SECRETARY OF THE COMPANY AT NO CHARGE.”
16
(iii) “THE TRANSFER OF THE SECURITIES REFERENCED HEREIN IS SUBJECT TO CERTAIN TRANSFER RESTRICTIONS
SET FORTH IN THE COMPANY’S AMENDED AND RESTATED BYLAWS (AS AMENDED FROM TIME TO TIME) AND THE COMPANY’S STOCK
PLAN, COPIES OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS. THE
COMPANY SHALL NOT REGISTER OR OTHERWISE RECOGNIZE OR GIVE EFFECT TO ANY PURPORTED TRANSFER OF SECURITIES THAT
DOES NOT COMPLY WITH SUCH TRANSFER RESTRICTIONS.”
(iv) Any legend required by the Voting Agreement, if applicable.
(b) Stop-Transfer Notices. Purchaser agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue
appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the
same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Agreement or the Plan or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so transferred.
(d) Required Notices. Purchaser acknowledges that the Shares are issued and shall be held subject to all the provisions of this Section 7, the
Certificate of Incorporation and the Bylaws of the Company and any amendments thereto, copies of which are on file at the principal office of the Company. A
statement of all of the rights, preferences, privileges and restrictions granted to or imposed upon the respective classes and/or series of shares of stock of the
Company and upon the holders thereof may be obtained by any stockholder upon request and without charge, at the principal office of the Company, and the
Company will furnish any stockholder, upon request and without charge, a copy of such statement. Purchaser acknowledges that the provisions of this Section 7
shall constitute the notices required by Sections 151(f) and 202(a) of the Delaware General Corporation Law and the Purchaser hereby expressly waives the
requirement of Section 151(f) of the Delaware General Corporation Law that it receive the written notice provided for in Sections 151(f) and 202(a) of the
Delaware General Corporation Law within a reasonable time after the issuance of the Shares.
8. No Employment Rights. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a parent,
subsidiary or affiliate of the Company, to terminate Purchaser’s employment or consulting relationship, for any reason, with or without cause.
9. Section 83(b) Election.
(a) Purchaser understands that Section 83(a) of the Internal Revenue Code of 1986, as amended (the “Code”), taxes as ordinary income for a
Nonstatutory Stock Option and as alternative minimum taxable income for an Incentive Stock Option the difference between the
17
amount paid for the Shares and the Fair Market Value of the Shares as of the date any restrictions on the Shares lapse. In this context, “restriction” means the right
of the Company to buy back the Shares pursuant to the Repurchase Option set forth in Section 3(a) of this Agreement. Purchaser understands that Purchaser may
elect to be taxed at the time the Shares are purchased, rather than when and as the Repurchase Option expires, by filing an election under Section 83(b) (an “83(b)
Election”) of the Code with the Internal Revenue Service within 30 days from the date of purchase. Even if the Fair Market Value of the Shares at the time of the
execution of this Agreement equals the amount paid for the Shares, the election must be made to avoid income and alternative minimum tax treatment under
Section 83(a) in the future. Purchaser understands that failure to file such an election in a timely manner may result in adverse tax consequences for Purchaser.
Purchaser further understands that an additional copy of such election form should be filed with his or her federal income tax return for the calendar year in which
the date of this Agreement falls. Purchaser acknowledges that the foregoing is only a summary of the effect of United States federal income taxation with respect to
purchase of the Shares hereunder, does not purport to be complete, and is not intended or written to be used, and cannot be used, for the purposes of avoiding
taxpayer penalties. Purchaser further acknowledges that the Company has directed Purchaser to seek independent advice regarding the applicable provisions of the
Code, the income tax laws of any municipality, state or foreign country in which Purchaser may reside, and the tax consequences of Purchaser’s death, and
Purchaser has consulted, and has been fully advised by, Purchaser’s own tax advisor regarding such tax laws and tax consequences or has knowingly chosen not to
consult such a tax advisor. Purchaser further acknowledges that neither the Company nor any subsidiary or representative of the Company has made any warranty
or representation to Purchaser with respect to the tax consequences of Purchaser’s purchase of the Shares or of the making or failure to make an 83(b) Election.
PURCHASER (AND NOT THE COMPANY, ITS AGENTS OR ANY OTHER PERSON) SHALL BE SOLELY RESPONSIBLE FOR APPROPRIATELY
FILING SUCH FORM WITH THE IRS, EVEN IF PURCHASER REQUESTS THE COMPANY, ITS AGENTS OR ANY OTHER PERSON MAKE THIS
FILING ON PURCHASER’S BEHALF.
(b) Purchaser agrees that he or she will execute and deliver to the Company with this executed Agreement a copy of the Acknowledgment and
Statement of Decision Regarding Section 83(b) Election (the “Acknowledgment”) attached hereto as Attachment B. Purchaser further agrees that he or she will
execute and submit with the Acknowledgment a copy of the 83(b) Election attached hereto as Attachment C (for tax purposes in connection with the early exercise
of an option) if Purchaser has indicated in the Acknowledgment his or her decision to make such an election.
10. Waiver of Statutory Information Rights. Purchaser acknowledges and understands that, but for the waiver made herein, Purchaser would be
entitled, upon written demand under oath stating the purpose thereof, to inspect for any proper purpose, and to make copies and extracts from, the Company’s stock
ledger, a list of its stockholders, and its other books and records, and the books and records of subsidiaries of the Company, if any, under the circumstances and in
the manner provided in Section 220 of the General Corporation Law of Delaware (any and all such rights, and any and all such other rights of Purchaser as may be
provided for in Section 220, the “Inspection Rights”). In light of the foregoing, until the first
18
sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange
Commission under the Securities Act of 1933, as amended, Purchaser hereby unconditionally and irrevocably waives the Inspection Rights, whether such
Inspection Rights would be exercised or pursued directly or indirectly pursuant to Section 220 or otherwise, and covenants and agrees never to directly or indirectly
commence, voluntarily aid in any way, prosecute, assign, transfer, or cause to be commenced any claim, action, cause of action, or other proceeding to pursue or
exercise the Inspection Rights. The foregoing waiver applies to the Inspection Rights of Purchaser in Purchaser’s capacity as a stockholder and shall not affect any
rights of a director, in his or her capacity as such, under Section 220. The foregoing waiver shall not apply to any contractual inspection rights of Purchaser under
any written agreement with the Company.
11. Miscellaneous.
(a) Governing Law. The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto
and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of California, without
giving effect to principles of conflicts of law. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby
submit and consent to the exclusive jurisdiction of the state of California and agree that any such litigation shall be conducted only in the courts of California or the
federal courts of the United States located in California and no other courts.
(b) Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and
supersedes all prior or contemporaneous discussions, understandings and agreements, whether oral or written, between them relating to the subject matter hereof.
(c) Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall
be effective unless in writing signed by the parties to this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute
a waiver of that provision as to that or any other instance.
(d) Successors and Assigns. Except as otherwise provided in this Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The
Company may assign any of its rights and obligations under this Agreement. No other party to this Agreement may assign, whether voluntarily or by operation of
law, any of its rights and obligations under this Agreement, except with the prior written consent of the Company.
(e) Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed
sufficient when delivered personally or by overnight courier or sent by email, or 48 hours after being deposited in the U.S. mail as certified or registered mail with
postage prepaid, addressed to the party to be notified at
19
such party’s address as set forth on the signature page, as subsequently modified by written notice, or if no address is specified on the signature page, at the most
recent address set forth in the Company’s books and records.
(f) Severability. If one or more provisions of this Agreement are held to be unenforceable under Applicable Law, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i)
such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the
balance of the Agreement shall be enforceable in accordance with its terms.
(g) Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against
any one of the parties hereto.
(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be
deemed an original, and all of which together shall constitute one and the same agreement. Execution of a facsimile copy will have the same force and effect as
execution of an original, and a facsimile signature will be deemed an original and valid signature.
(i) Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to this Agreement or any notices
required by applicable law or the Company’s Certificate of Incorporation or Bylaws by email or any other electronic means. Purchaser hereby consents to (i)
conduct business electronically (ii) receive such documents and notices by such electronic delivery and (iii) sign documents electronically and agrees to participate
through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
(i) California Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS
UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION
BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
[Signature Page Follows]
20
The parties have executed this Early Exercise Notice and Restricted Stock Purchase Agreement as of the date first set forth above.
THE COMPANY:
COINBASE GLOBAL, INC.
By:
(Signature)
Name:
Title:
Address:
PURCHASER:
(PRINT NAME)
(Signature) Address:
Email:
21
I, [l], spouse of [l] (“Purchaser”), have read and hereby approve the foregoing Agreement. In consideration of the Company’s granting my spouse the right to
purchase the Shares as set forth in the Agreement, I hereby agree to be bound irrevocably by the Agreement and further agree that any community property or other
such interest that I may have in the Shares shall hereby be similarly bound by the Agreement. I hereby appoint my spouse as my attorney-in-fact with respect to any
amendment or exercise or waiver of any rights under the Agreement.
Spouse of Purchaser (if applicable)
22
ATTACHMENT A
STOCK POWER
FOR VALUE RECEIVED, the undersigned (“Holder”), hereby sells, assigns and transfers unto ___________________________________ (“Transferee”)
____________ shares of the Common Stock of Coinbase Global, Inc., a Delaware corporation (the “Company”), standing in Holder’s name on the Company’s
books as Certificate No. CS-_______ whether held in certificated or uncertificated form, and does hereby irrevocably constitute and appoint
___________________________________to transfer said stock on the books of the Company with full power of substitution in the premises.
Dated: HOLDER:
(PRINT NAME)
(Signature)
Spouse of Holder (if applicable)
This Stock Power may only be used as authorized by the Early Exercise Notice and Restricted Stock Purchase Agreement between the Holder and the
Company, dated _______ and the exhibits thereto.
Instructions: Please do not fill in any blanks other than the signature line. The purpose of this assignment is to enable the Company to exercise its
repurchase option set forth in the Agreement without requiring additional signatures on the part of Holder.
23
IF YOU WISH TO MAKE A SECTION 83(B) ELECTION, THE FILING OF SUCH
ELECTION IS YOUR RESPONSIBILITY.
THE FORM FOR MAKING THIS SECTION 83(B) ELECTION IS ATTACHED TO THIS
AGREEMENT.
YOU MUST FILE THIS FORM WITHIN 30 DAYS OF PURCHASING THE SHARES.
YOU (AND NOT THE COMPANY, ANY OF ITS AGENTS OR ANY OTHER PERSON)
SHALL BE SOLELY RESPONSIBLE FOR FILING SUCH FORM WITH THE IRS, EVEN IF
YOU REQUEST THE COMPANY, ITS AGENTS OR ANY OTHER PERSON TO MAKE
THIS FILING ON YOUR BEHALF AND EVEN IF THE COMPANY, ANY OF ITS AGENTS
OR ANY OTHER PERSON HAS PREVIOUSLY MADE THIS FILING ON YOUR BEHALF.
The election should be filed by mailing a signed election form by certified mail, return receipt requested to the IRS Service
Center where you file your tax returns. See www.irs.gov.
24
ATTACHMENT B
ACKNOWLEDGMENT AND STATEMENT OF DECISION
REGARDING SECTION 83(b) ELECTION
The undersigned has entered into a stock purchase agreement with Coinbase Global, Inc., a Delaware corporation (the “Company”), pursuant to which the
undersigned is purchasing [l] shares of Common Stock of the Company (the “Shares”). In connection with the purchase of the Shares, the undersigned hereby
represents as follows:
1. The undersigned has carefully reviewed the stock purchase agreement pursuant to which the undersigned is purchasing the Shares.
2. The undersigned either [check and complete as applicable]:
(a) ______ has consulted, and has been fully advised by, the undersigned’s own tax advisor, [l], whose business address is [l] regarding the
federal, state and local tax consequences of purchasing the Shares, and particularly regarding the advisability of making elections pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended (the “Code”) and pursuant to the corresponding provisions, if any, of applicable state law; or
(b) ______ has knowingly chosen not to consult such a tax advisor.
3. The undersigned hereby states that the undersigned has decided [check as applicable]:
(a) ______ to make an election pursuant to Section 83(b) of the Code, and is submitting to the Company, together with the undersigned’s
executed stock purchase agreement, an executed form entitled “Election Under Section 83(b) of the Internal Revenue Code of 1986;” or
(b) ______ not to make an election pursuant to Section 83(b) of the Code.
4. Neither the Company nor any subsidiary or representative of the Company has made any warranty or representation to the undersigned with respect
to the tax consequences of the undersigned’s purchase of the Shares or of the making or failure to make an election pursuant to Section 83(b) of the Code or the
corresponding provisions, if any, of applicable state law.
Dated: PURCHASER:
(PRINT NAME)
(Signature)
Spouse of Purchaser (if applicable)
25
ATTACHMENT C
ELECTION UNDER SECTION 83(B)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code, to include in taxpayer’s gross income or alternative
minimum taxable income, as applicable, for the current taxable year, the amount of any income that may be taxable to taxpayer in connection with taxpayer’s
receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of the undersigned are as follows:
NAME OF TAXPAYER: NAME OF SPOUSE:
ADDRESS:
United States
IDENTIFICATION NO. OF TAXPAYER:
IDENTIFICATION NO. OF SPOUSE:
TAXABLE YEAR:
2. The property with respect to which the election is made is described as follows:
_________________ shares of the Common Stock of Coinbase Global, Inc., a Delaware corporation (the “Company”).
3. The date on which the property was transferred is:
4. The property is subject to the following restrictions:
Repurchase option at cost in favor of the Company upon termination of taxpayer’s employment or consulting relationship.
5. The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of
such property is:
$_________
6. The amount (if any) paid for such property: $_______
26
The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned’s receipt of the
above described property. The transferee of such property is the person performing the services in connection with the transfer of said property.
The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.
Dated: PURCHASER:
(Signature)
Spouse of Purchaser (if applicable)
27
EXHIBIT B
COINBASE GLOBAL, INC.
2013 STOCK PLAN
EXERCISE AGREEMENT
This Exercise Agreement (this “Agreement”) is made as of [l], by and between Coinbase Global, Inc., a Delaware corporation (the “Company”), and [l]
(“Purchaser”). To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Company’s 2013
Stock Plan (the “Plan”) and the Option Agreement (as defined below).
1. Exercise of Option. Subject to the terms and conditions hereof, Purchaser hereby elects to exercise his or her option to purchase [l] shares of the
Common Stock (the “Shares”) of the Company under and pursuant to the Plan, the Notice of Stock Option Grant and the Stock Option Agreement granted [l] (the
“Option Agreement”). The purchase price for the Shares shall be $[l] per Share for a total purchase price of $[l]. The term “Shares” refers to the purchased
Shares and all securities received in connection with the Shares pursuant to stock dividends or splits, all securities received in replacement of the Shares in a
recapitalization, merger, reorganization, exchange or the like, and all new, substituted or additional securities or other property to which Purchaser is entitled by
reason of Purchaser’s ownership of the Shares.
2. Time and Place of Exercise. The purchase and sale of the Shares under this Agreement shall occur at the principal office of the Company
simultaneously with the execution and delivery of this Agreement, the payment of the aggregate exercise price by any method listed in Section 4 of the Option
Agreement, and the satisfaction of any applicable tax, withholding, required deductions or other payments, all in accordance with the provisions of Section 3(b) of
the Option Agreement. The Company shall issue the Shares to Purchaser by entering such Shares in Purchaser’s name as of such date in the books and records of
the Company or, if applicable, a duly authorized transfer agent of the Company, against payment of the exercise price therefor by Purchaser. The Company will
deliver to Purchaser a stock certificate or, in the case of uncertificated securities, notice of issuance, for the Shares as soon as practicable following such date.
3. Limitations on Transfer. Purchaser acknowledges and agrees that the Shares purchased under this Agreement are subject to (i) the transfer
restrictions set forth in Section 12 of the Plan, (ii) the terms and conditions that apply to the Company’s Common Stock, as set forth in the Company’s Amended
and Restated Bylaws, including (without limitation) certain transfer restrictions set forth in Section 8.9 of the Company’s Amended and Restated Bylaws, as in
effect at the time of any proposed transfer (the “Bylaw Restrictions”), and (iii) any other limitation or restriction on transfer created by Applicable Laws. Purchaser
shall not assign, encumber or dispose of any interest in the Shares except to the extent permitted by, and in
28
compliance with, Section 12 of the Plan, the Bylaw Restrictions, Applicable Laws, and the provisions below.
(a) Transfer Restrictions; Right of First Refusal. Before any Shares held by Purchaser or any transferee of Purchaser (either being sometimes
referred to herein as the “Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law), the Company shall first have the right to
approve such sale or transfer, in full or in part, and shall then have the right to purchase all or any part of the Shares proposed to be sold or transferred, in each case,
in its sole and absolute discretion (the “Right of First Refusal”). If the Holder would like to sell or transfer any Shares, the Holder must provide the Company or its
assignee(s) with a Notice (as defined below) requesting approval to sell or transfer the Shares and offering the Company or its assignee(s) a Right of First Refusal
on the terms and conditions set forth in this Section 3(a). The Company may either (1) exercise its Right of First Refusal in full or in part and purchase such Shares
pursuant to this Section 3(a), (2) decline to exercise its Right of First Refusal in full or in part and permit the sale or transfer of such Shares to the Proposed
Transferee (as defined below) in full or in part, or (3) decline to exercise its Right of First Refusal in full or in part and decline the request to sell or transfer the
Shares in full or in part.
(i) Notice of Proposed Transfer. The Holder of the Shares shall deliver to the Company a written notice (the “Notice”) stating: (A) the
Holder’s desire to sell or otherwise transfer such Shares; (B) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (C) the number of
Shares to be sold or transferred to each Proposed Transferee; (D) the terms and conditions of each proposed sale or transfer, including (without limitation) the
purchase price for such Shares (the “Purchase Price”); and (E) the Holder’s offer to the Company or its assignee(s) to purchase the Shares at the Purchase Price and
upon the same terms (or terms that are no less favorable to the Company).
(ii) Exercise of Right of First Refusal. At any time within 30 days after receipt of the Notice, the Company and/or its assignee(s) shall
deliver a written notice to the Holder indicating whether the Company and/or its assignee(s) elect to permit or reject the proposed sale or transfer, in full or in part,
and/or elect to accept or decline the offer to purchase any or all of the Shares proposed to be sold or transferred to any one or more of the Proposed Transferees, at
the Purchase Price, provided that if the Purchase Price consists of no legal consideration (as, for example, in the case of a transfer by gift), the purchase price will
be the fair market value of the Shares as determined in good faith by the Company. If the Purchase Price includes consideration other than cash, the cash equivalent
value of the non-cash consideration shall be determined by the Company in good faith.
(iii) Payment. Payment of the Purchase Price shall be made, at the election of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness, or by any combination thereof within 60 days after receipt of the Notice or in the manner and at the
times set forth in the Notice.
(iv) Holder’s Right to Transfer. If any of the Shares proposed in the Notice to be sold or transferred to a given Proposed Transferee are
both (A) not purchased by the Company and/or its assignee(s) as provided in this Section 3(a) and (B) approved by the
29
Company to be sold or transferred, then the Holder may sell or otherwise transfer any such Shares to the applicable Proposed Transferee at the Purchase Price or at
a higher price, provided that such sale or other transfer is consummated within 120 days after the date of the Notice; provided that any such sale or other transfer is
also effected in accordance with the Bylaw Restrictions, the transfer restrictions set forth in the Plan and any Applicable Laws and the Proposed Transferee agrees
in writing that the Plan, the Bylaw Restrictions, and the provisions of the Option Agreement and this Agreement, including this Section 3 and the waiver of
statutory information rights in Section 8, shall continue to apply to the Shares in the hands of such Proposed Transferee. The Company, in consultation with its
legal counsel, may require the Holder to provide an opinion of counsel evidencing compliance with Applicable Laws. If the Shares described in the Notice are not
transferred to the Proposed Transferee within such period, or if the Holder proposes to change the price or other terms to make them more favorable to the
Proposed Transferee, a new Notice shall be given to the Company, and the Company and/or its assignees shall again have the right to approve such transfer and be
offered the Right of First Refusal.
(v) Exception for Certain Family Transfers. Anything to the contrary contained in this Section 3(a) notwithstanding, the transfer of
any or all of the Shares during Holder’s lifetime or on Holder’s death by will or intestacy to Holder’s Immediate Family or a trust for the benefit of Holder’s
Immediate Family shall be exempt from the provisions of this Section 3(a). “Immediate Family” as used herein shall mean lineal descendant or antecedent, spouse
(or spouse’s antecedents), father, mother, brother or sister (or their descendants), stepchild (or their antecedents or descendants), aunt or uncle (or their antecedents
or descendants), brother-in-law or sister-in-law (or their antecedents or descendants) and shall include adoptive relationships. In such case, the transferee or other
recipient shall receive and hold the Shares so transferred subject to the provisions of the Plan, the Bylaw Restrictions, and the provisions of the Option Agreement
and this Agreement, including this Section 3 and Section 8, and there shall be no further transfer of such Shares except in accordance with the terms of this Section
3, the Plan and the Bylaw Restrictions.
(b) Company’s Right to Purchase upon Involuntary Transfer. In the event of any transfer by operation of law or other involuntary transfer
(including death or divorce, but excluding a transfer to Immediate Family as set forth in Section 3(a)(v) above) of all or a portion of the Shares by the record holder
thereof, the Company shall have an option to purchase any or all of the Shares transferred at the Fair Market Value of the Shares on the date of transfer (as
determined by the Company in its sole discretion). Upon such a transfer, the Holder shall promptly notify the Secretary of the Company of such transfer. The right
to purchase such Shares shall be provided to the Company for a period of 30 days following receipt by the Company of written notice from the Holder.
(c) Assignment. The right of the Company to purchase any part of the Shares may be assigned in whole or in part to any holder or holders of
capital stock of the Company or other persons or organizations.
30
(d) Restrictions Binding on Transferees. All transferees of Shares or any interest therein will receive and hold such Shares or interest subject
to the Plan, the Bylaw Restrictions, and the provisions of the Option Agreement and this Agreement, including, without limitation, Section 7 of the Option
Agreement, Sections 3 and 8 of this Agreement and Section 12 of the Plan. Any sale or transfer of the Shares shall be void unless the provisions of this Agreement
are satisfied.
(e) Termination of Rights. The transfer restrictions set forth in Section 3(a) above and Section 12 of the Plan, the Right of First Refusal granted
the Company by Section 3(a) above and the option to repurchase the Shares in the event of an involuntary transfer granted the Company by Section 3(b) above
shall terminate upon the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by
the Securities and Exchange Commission under the Securities Act (other than a registration statement relating solely to the issuance of Common Stock pursuant to
a business combination or an employee incentive or benefit plan) or any transfer or conversion of Shares made pursuant to a statutory merger or statutory
consolidation of the Company with or into another corporation or corporations if the common stock of the surviving corporation or any direct or indirect parent
corporation thereof is registered under the Exchange Act. Upon termination of such transfer restrictions, the Company will remove any stop-transfer notices
referred to in Section 6(b) below and related to the restrictions in this Section 3 and a new stock certificate or, in the case of uncertificated securities, notice of
issuance, for the Shares not repurchased shall be issued, on request, without the legend referred to in Section 6(a)(ii) below and delivered to Holder.
(f) Lock-Up Agreement. The lock-up provisions set forth in Section 7 of the Option Agreement shall apply to the Shares issued upon exercise
of the Option hereunder and Purchaser reaffirms Purchaser’s obligations set forth therein.
4. Investment and Taxation Representations. In connection with the purchase of the Shares, Purchaser represents to the Company the following:
(a) Purchaser is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Shares. Purchaser is purchasing the Shares for investment for Purchaser’s own account only and not
with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act or under any applicable provision of state law.
Purchaser does not have any present intention to transfer the Shares to any other person or entity.
(b) Purchaser understands that the Shares have not been registered under the Securities Act by reason of a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Purchaser’s investment intent as expressed herein.
(c) Purchaser further acknowledges and understands that the securities must be held indefinitely unless they are subsequently registered under
the Securities Act or an
31
exemption from such registration is available. Purchaser further acknowledges and understands that the Company is under no obligation to register the securities.
(d) Purchaser is familiar with the provisions of Rule 144, promulgated under the Securities Act, which, in substance, permits limited public
resale of “restricted securities” acquired, directly or indirectly, from the issuer of the securities (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions. Purchaser understands that the Company provides no assurances as to whether he or she will be able to resell any or all of
the Shares pursuant to Rule 144, which rule requires, among other things, that the Company be subject to the reporting requirements of the Exchange Act, that
resales of securities take place only after the holder of the Shares has held the Shares for certain specified time periods, and under certain circumstances, that
resales of securities be limited in volume and take place only pursuant to brokered transactions. Notwithstanding this Section 4(d), Purchaser acknowledges and
agrees to the restrictions set forth in Section 4(e) below.
(e) Purchaser further understands that in the event all of the applicable requirements of Rule 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not
exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available
for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.
(f) Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase or disposition of the Shares.
Purchaser represents that Purchaser has consulted any tax consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and
that Purchaser is not relying on the Company for any tax advice.
5. Voting Provisions. As a condition precedent to entering into this Agreement, at the request of the Company, Purchaser shall become a party to any
voting agreement to which the Company is a party at the time of Purchaser’s execution and delivery of this Agreement, as such voting agreement may be thereafter
amended from time to time (the “Voting Agreement”), by executing an adoption agreement or counterpart signature page agreeing to be bound by and subject to
the terms of the Voting Agreement and to vote the Shares in the capacity of a “Common Holder” and a “Stockholder,” as such terms may be defined in the Voting
Agreement.
32
6. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. Any stock certificate or, in the case of uncertificated securities, notice of issuance, for the Shares shall bear the following legends
(as well as any legends required by the Company or applicable state and federal corporate and securities laws):
(i) “THE SECURITIES REFERENCED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933.”
(ii) “THE SECURITIES REFERENCED HEREIN MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF
AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH AND MAY BE OBTAINED FROM
THE SECRETARY OF THE COMPANY AT NO CHARGE.”
(iii) “THE TRANSFER OF THE SECURITIES IS SUBJECT TO CERTAIN TRANSFER RESTRICTIONS SET FORTH IN THE
COMPANY’S AMENDED AND RESTATED BYLAWS (AS AMENDED FROM TIME TO TIME) AND THE COMPANY’S STOCK PLAN, COPIES OF
WHICH MAY BE OBTAINED UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS. THE COMPANY SHALL
NOT REGISTER OR OTHERWISE RECOGNIZE OR GIVE EFFECT TO ANY PURPORTED TRANSFER OF SECURITIES THAT DOES NOT COMPLY
WITH SUCH TRANSFER RESTRICTIONS.”
(iv) Any legend required by the Voting Agreement, as applicable.
(b) Stop-Transfer Notices. Purchaser agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue
appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the
same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Agreement or the Plan or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so transferred.
(d) Required Notices. Purchaser acknowledges that the Shares are issued and shall be held subject to all the provisions of this Section 6, the
Certificate of Incorporation and the Bylaws of the Company and any amendments thereto, copies of which are on file at the
33
principal office of the Company. A statement of all of the rights, preferences, privileges and restrictions granted to or imposed upon the respective classes and/or
series of shares of stock of the Company and upon the holders thereof may be obtained by any stockholder upon request and without charge, at the principal office
of the Company, and the Company will furnish any stockholder, upon request and without charge, a copy of such statement. Purchaser acknowledges that the
provisions of this Section 6 shall constitute the notices required by Sections 151(f) and 202(a) of the Delaware General Corporation Law and the Purchaser hereby
expressly waives the requirement of Section 151(f) of the Delaware General Corporation Law that it receive the written notice provided for in Sections 151(f) and
202(a) of the Delaware General Corporation Law within a reasonable time after the issuance of the Shares.
7. No Employment Rights. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a parent,
subsidiary or affiliate of the Company, to terminate Purchaser’s employment or consulting relationship, for any reason, with or without cause.
8. Waiver of Statutory Information Rights. Purchaser acknowledges and understands that, but for the waiver made herein, Purchaser would be
entitled, upon written demand under oath stating the purpose thereof, to inspect for any proper purpose, and to make copies and extracts from, the Company’s stock
ledger, a list of its stockholders, and its other books and records, and the books and records of subsidiaries of the Company, if any, under the circumstances and in
the manner provided in Section 220 of the General Corporation Law of Delaware (any and all such rights, and any and all such other rights of Purchaser as may be
provided for in Section 220, the “Inspection Rights”). In light of the foregoing, until the first sale of Common Stock of the Company to the general public pursuant
to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended, Purchaser
hereby unconditionally and irrevocably waives the Inspection Rights, whether such Inspection Rights would be exercised or pursued directly or indirectly pursuant
to Section 220 or otherwise, and covenants and agrees never to directly or indirectly commence, voluntarily aid in any way, prosecute, assign, transfer, or cause to
be commenced any claim, action, cause of action, or other proceeding to pursue or exercise the Inspection Rights. The foregoing waiver applies to the Inspection
Rights of Purchaser in Purchaser’s capacity as a stockholder and shall not affect any rights of a director, in his or her capacity as such, under Section 220. The
foregoing waiver shall not apply to any contractual inspection rights of Purchaser under any written agreement with the Company.
9. Miscellaneous.
(a) Governing Law. The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto
and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of California, without
giving effect to principles of conflicts of law. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby
submit and consent to the exclusive jurisdiction of the state of California and
34
agree that any such litigation shall be conducted only in the courts of California or the federal courts of the United States located in California and no other courts.
(b) Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and
supersedes all prior or contemporaneous discussions, understandings and agreements, whether oral or written, between them relating to the subject matter hereof.
(c) Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall
be effective unless in writing signed by the parties to this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute
a waiver of that provision as to that or any other instance.
(d) Successors and Assigns. Except as otherwise provided in this Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The
Company may assign any of its rights and obligations under this Agreement. No other party to this Agreement may assign, whether voluntarily or by operation of
law, any of its rights and obligations under this Agreement, except with the prior written consent of the Company.
(e) Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed
sufficient when delivered personally or by overnight courier or sent by email, or 48 hours after being deposited in the U.S. mail as certified or registered mail with
postage prepaid, addressed to the party to be notified at such party’s address as set forth on the signature page, as subsequently modified by written notice, or if no
address is specified on the signature page, at the most recent address set forth in the Company’s books and records.
(f) Severability. If one or more provisions of this Agreement are held to be unenforceable under Applicable Law, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i)
such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the
balance of the Agreement shall be enforceable in accordance with its terms.
(g) Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against
any one of the parties hereto.
(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be
deemed an original, and all of which together shall constitute one and the same agreement. Execution of a facsimile copy
35
will have the same force and effect as execution of an original, and a facsimile signature will be deemed an original and valid signature.
(i) Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to this Agreement or any notices
required by applicable law or the Company’s Certificate of Incorporation or Bylaws by email or any other electronic means. Purchaser hereby consents to (i)
conduct business electronically (ii) receive such documents and notices by such electronic delivery and (iii) sign documents electronically and agrees to participate
through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
(j) California Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS
UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION
BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
[Signature Page Follows]
36
The parties have executed this Exercise Agreement as of the date first set forth above.
THE COMPANY:
COINBASE GLOBAL, INC.
By:
(Signature)
Name:
Title:
Address:
PURCHASER:
(PRINT NAME)
(Signature) Address:
Email:
37
I, [l], spouse of [l] (“Purchaser”), have read and hereby approve the foregoing Agreement. In consideration of the Company’s granting my spouse the right to
purchase the Shares as set forth in the Agreement, I hereby agree to be bound irrevocably by the Agreement and further agree that any community property or other
such interest that I may have in the Shares shall hereby be similarly bound by the Agreement. I hereby appoint my spouse as my attorney-in-fact with respect to any
amendment or exercise of any rights under the Agreement.
Spouse of Purchaser (if applicable)
38
COINBASE GLOBAL, INC.
2013 STOCK PLAN
NOTICE OF STOCK OPTION GRANT
[Optionee Name]
[Optionee Address Line 1]
[Optionee Address Line 2]
You have been granted an option to purchase Common Stock of Coinbase Global, Inc., a Delaware corporation (the “Company”), as follows:
Date of Grant: [l]
Exercise Price Per Share: $[l]
Total Number of Shares: [l]
Total Exercise Price: $[l]
Type of Option: [l] Incentive Stock Option
[l] Nonstatutory Stock Option
Expiration Date: [l]
Vesting Commencement Date: [l]
Vesting/Exercise
Schedule:
The Option is immediately exercisable. So long as your Continuous Service
Status does not terminate, the Shares underlying this Option shall vest in
accordance with the following schedule: [l] of the Total Number of Shares
shall vest on the [l] anniversary of the Vesting Commencement Date and [l]
of the Total Number of Shares shall vest on the corresponding day of each
month thereafter (and if there is no corresponding day, the last day of the
month).
Termination Period: Except as set forth in Section 5 of the Stock Option Agreement, you may
exercise this Option for 3 months after termination of your Continuous Service
Status, provided that if on your termination date, you have completed a
minimum of 2 years of Continuous Service Status (as determined by the
Company), then you may exercise this Option for 7 years after termination of
your Continuous Service Status; provided, however, in no event may the Option
be exercised later than the Expiration Date. Notwithstanding the foregoing, this
Option may terminate earlier pursuant to the Coinbase Global, Inc. 2013 Stock
Plan (the “Plan”), including (without limitation) upon a dissolution, liquidation
or Corporate Transaction (as defined in the Plan) of the Company. You are
responsible for keeping track of these exercise periods following the termination
of your Continuous Service Status for any reason. The Company will not
provide further notice of such periods.
Transferability: You may not transfer this Option except as set out in Section 6 of the Stock
Option Agreement. You must obtain Board approval prior to any transfer of the
Shares received upon exercise of this Option.
2
By your signature and the signature of the Company’s representative below, you and the Company agree that this Option is granted under and governed by
the terms and conditions of this Notice and the Coinbase Global, Inc. 2013 Stock Plan and Stock Option Agreement, both of which are attached to and made a part
of this Notice. In addition, this Option and any Shares subject to the Option as well as any Shares issued after February 12, 2016 (regardless of how you acquired
the Shares) shall be subject to the Company’s Second Amended and Restated Bylaws (the “Bylaws”), including, but not limited to, certain transfer restrictions as
summarized in Section 6 of the Stock Option Agreement below, as in effect at the time of any proposed transfer (the “Bylaw Restrictions”). By your signature
below, you agree that the Bylaw Restrictions, including the transfer restrictions set forth in Section 6 of the Stock Option Agreement, shall also apply to any Shares
or other stock options or equity awards that you have acquired or been granted in the past (including, without limitation, any Shares, options or other equity awards
that you acquired or were granted prior to the Date of Grant of this Option).
In addition, you agree and acknowledge that your rights to any Shares underlying this Option will be earned only as you provide services to the Company
over time, that the grant of this Option is not as consideration for services you rendered to the Company prior to your date of hire, and that nothing in this Notice or
the attached documents confers upon you any right to continue your employment or consulting relationship with the Company for any period of time, nor does it
interfere in any way with your right or the Company’s right to terminate that relationship at any time, for any reason, with or without cause. Also, to the extent
applicable, the Exercise Price Per Share has been set in good faith compliance with the applicable guidance issued by the IRS under Section 409A of the Code.
However, there is no guarantee that the IRS will agree with the valuation, and by signing below, you agree and acknowledge that the Company, its Board, officers,
employees, agents and stockholders shall not be held liable for any applicable costs, taxes, or penalties associated with this Option if, in fact, the IRS or any other
person (including, without limitation, a successor corporation or an acquirer in a Change of Control) were to determine that this Option constitutes deferred
compensation under Section 409A of the Code. You should consult with your own tax advisor concerning the tax consequences of such a determination by the IRS.
For purposes of this paragraph, the term “Company” will be interpreted to include any Parent, Subsidiary or Affiliate.
THE COMPANY: OPTIONEE:
COINBASE GLOBAL, INC. [OPTIONEE NAME]
By:
(Signature) (PRINT NAME)
Name:
Title: (Signature)
Address:
3
COINBASE GLOBAL, INC.
2013 STOCK PLAN
STOCK OPTION AGREEMENT
1. Grant of Option. Coinbase Global, Inc., a Delaware corporation (the “Company”), hereby grants to the person (“Optionee”) named in the Notice of
Stock Option Grant (the “Notice”), an option (the “Option”) to purchase the total number of shares of Common Stock (the “Shares”) set forth in the Notice, at the
exercise price per Share set forth in the Notice (the “Exercise Price”), subject to the terms, definitions and provisions of the Coinbase Global, Inc. 2013 Stock Plan
(the “Plan”) adopted by the Company, which is incorporated in this Stock Option Agreement (this “Agreement”) by reference. Unless otherwise defined in this
Agreement, the terms used in this Agreement or the Notice shall have the meanings defined in the Plan.
2. Designation of Option. This Option is intended to be an Incentive Stock Option as defined in Section 422 of the Code only to the extent so
designated in the Notice, and to the extent it is not so designated or to the extent this Option does not qualify as an Incentive Stock Option, it is intended to be a
Nonstatutory Stock Option.
Notwithstanding the above, if designated as an Incentive Stock Option, in the event that the Shares subject to this Option (and all other incentive stock
options granted to Optionee by the Company or any Parent or Subsidiary, including under other plans) that first become exercisable in any calendar year have an
aggregate fair market value (determined for each Share as of the date of grant of the option covering such Share) in excess of $100,000, the Shares in excess of
$100,000 shall be treated as subject to a nonstatutory stock option, in accordance with Section 5(c) of the Plan.
3. Exercise of Option. This Option shall be exercisable during its term in accordance with the Vesting/Exercise Schedule set out in the Notice and
with the provisions of Section 7(c) of the Plan as follows:
(a) Right to Exercise.
(i) This Option may not be exercised for a fraction of a share.
(ii) In the event of Optionee’s death, Disability or other termination of Continuous Service Status, the exercisability of this Option is
governed by Section 5 below, subject to the limitations contained in this Section 3.
(iii) In no event may this Option be exercised after the Expiration Date set forth in the Notice.
(b) Method of Exercise.
(i) This Option shall be exercisable by execution and delivery of the Early Exercise Notice and Restricted Stock Purchase Agreement
attached hereto as Exhibit A, the Exercise Agreement attached hereto as Exhibit B or of any other form of written notice approved for such purpose by the
Company which shall state Optionee’s election to exercise this Option, the number of Shares in respect of which this Option is being exercised, and such other
representations and agreements as to the holder’s investment intent with respect to such Shares as may be required by the Company pursuant to the provisions of
the Plan. Such written notice shall be signed by Optionee and shall be delivered to the Company by such means as are determined by the Company in its discretion
to constitute adequate delivery. The written notice shall be accompanied by payment of the aggregate Exercise Price for the purchased Shares.
(ii) As a condition to the exercise of this Option and as further set forth in Section 9 of the Plan, Optionee agrees to make adequate
provision for federal, state or other applicable tax, withholding, required deductions or other payments, if any, which arise upon the grant, vesting or exercise of
this Option, or disposition of Shares, whether by withholding, direct payment to the Company, or otherwise, as determined by the Company in its sole discretion.
(iii) The Company is not obligated, and will have no liability for failure, to issue or deliver any Shares upon exercise of this Option unless
such issuance or delivery would comply with the Applicable Laws, with such compliance determined by the Company in consultation with its legal counsel. This
Option may not be exercised until such time as the Plan has been approved by the holders of capital stock of the Company, or if the issuance of such Shares upon
such exercise or the method of payment of consideration for such Shares would constitute a violation of any Applicable Laws, including any applicable U.S.
federal or state securities laws or any other law or regulation, including any rule under Part 221 of Title 12 of the Code of Federal Regulations as promulgated by
the Federal Reserve Board. As a condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the
Company as may be required by the Applicable Laws. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to Optionee
on the date on which this Option is exercised with respect to such Shares.
(iv) Subject to compliance with Applicable Laws, this Option shall be deemed to be exercised upon receipt by the Company of the
appropriate written notice of exercise accompanied by the Exercise Price and the satisfaction of any applicable obligations described in Section 3(b)(ii) above.
4. Method of Payment. Payment of the Exercise Price shall be by cash or check or, following the initial public offering of the Company’s Common
Stock, by Cashless Exercise pursuant to which the Optionee delivers an irrevocable direction to a securities broker (on a form prescribed by the Company and
according to a procedure established by the Company).
5. Termination of Relationship. Following the date of termination of Optionee’s Continuous Service Status for any reason (the “Termination Date”),
Optionee may exercise this Option only as set forth in the Notice and this Section 5. If Optionee does not exercise this
2
Option within the Termination Period set forth in the Notice or the termination periods set forth below, this Option shall terminate in its entirety. In no event, may
any Option be exercised after the Expiration Date of this Option as set forth in the Notice.
(a) Termination Prior to 2 Years of Continuous Service Status. If Optionee’s Continuous Service Status terminates prior to Optionee’s
completion of 2 years of Continuous Service Status (as determined by the Company), then Optionee may, to the extent Optionee is vested in the Optioned Stock,
exercise this Option as follows:
(i) General Termination. In the event of termination of Optionee’s Continuous Service Status other than as a result of Optionee’s
Disability or death or Optionee’s termination for Cause, Optionee may, to the extent Optionee is vested in the Optioned Stock, exercise this Option during the
Termination Period set forth in the Notice.
(ii) Termination upon Disability of Optionee. In the event of termination of Optionee’s Continuous Service Status as a result of
Optionee’s Disability, Optionee may, but only within 12 months following the Termination Date, exercise this Option to the extent Optionee is vested in the
Optioned Stock.
(iii) Death of Optionee. In the event of termination of Optionee’s Continuous Service Status as a result of Optionee’s death, or in the
event of Optionee’s death within 3 months following Optionee’s Termination Date, this Option may be exercised at any time within 12 months following the
Termination Date, or if later, 12 months following the date of death by any beneficiaries designated in accordance with Section 16 of the Plan or, if there are no
such beneficiaries, by the Optionee’s estate, or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent Optionee
is vested in the Optioned Stock.
(b) Termination On or After 2 Years of Continuous Service Status. If Optionee’s Continuous Service Status terminates (other than a
termination for Cause) on or after the date on which Optionee has completed 2 years of Continuous Service Status (as determined by the Company), Optionee may,
to the extent Optionee is vested in the Optioned Stock, exercise this Option during the Termination Period set forth in the Notice and this Option shall terminate
with respect to the unvested Shares subject to the Option on the date that is 3 months following Optionee’s termination of Continuous Service Status. In the event
that Optionee’s Continuous Service Status terminates as a result of Optionee’s death, this Option may be exercised by any beneficiaries designated in accordance
with Section 16 of the Plan or, if there are no such beneficiaries, by the Optionee’s estate, or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent Optionee is vested in the Optioned Stock.
(c) Termination for Cause. In the event of termination of Optionee’s Continuous Service Status for Cause at any time, this Option (including
any vested portion thereof) shall immediately terminate in its entirety upon first notification to Optionee of such termination for Cause. If Optionee’s Continuous
Service Status is suspended pending an investigation of whether Optionee’s Continuous Service Status will be terminated for Cause, all
3
Optionee’s rights under this Option, including the right to exercise this Option, shall be suspended during the investigation period.
6. Non-Transferability of Option.
This Option (or any rights of or interests in the Option) may not be Transferred (as defined below) in any manner otherwise than by will or by the
laws of descent or distribution and may be exercised during the lifetime of Optionee only by him or her. The terms of this Option shall be binding upon the
executors, administrators, heirs, successors and assigns of Optionee.
In addition, any Shares issued to you, including any Shares received upon exercise of this Option (or any rights of or interests in such Shares) may
not be Transferred to any person unless such Transfer is approved by the Board prior to such Transfer, which approval may be granted or withheld in the Board’s
sole and absolute discretion.
“Transferred” or “Transfer” shall mean, with respect to any Option and the Shares underlying the Option or any other Company security, the direct or
indirect assignment, sale, transfer, tender, pledge, hypothecation, or the grant, creation or suffrage of a lien or encumbrance in or upon, or the gift, placement in
trust, or the Constructive Sale (as such term is defined below) or other disposition of such security (including transfer by testamentary or intestate succession,
merger or otherwise by operation of law) or any right, title or interest therein (including, but not limited to, any right or power to vote to which the holder thereof
may be entitled, whether such right or power is granted by proxy or otherwise), or the record or beneficial ownership thereof, the offer to make such a sale, transfer,
Constructive Sale or other disposition, and each agreement, arrangement or understanding, whether or not in writing, to effect any of the foregoing. “Constructive
Sale” shall mean, with respect to any security, a short sale with respect to such security, entering into or acquiring an offsetting derivative contract with respect to
such security, entering into or acquiring a futures or forward contract to deliver such security, or entering into any other hedging or other derivative transaction that
has the effect of materially changing the economic benefits and risks of ownership. Any purported Transfer of any shares of the Company’s stock effected in
violation of these transfer restrictions shall be null and void and shall have no force or effect and the Company shall not register any such purported Transfer.
Any stockholder seeking the approval of the Board of a Transfer of some or all of its shares shall give written notice thereof to the Secretary of the
Company that shall include: (a) the name of the stockholder; (b) the proposed transferee; (c) the number of shares of the Transfer of which approval is thereby
requested; and (d) the purchase price (if any) of the Shares proposed for Transfer. The Company may require the stockholder to supplement its notice with such
additional information as the Company may request.
Notwithstanding the foregoing, in the event of a conflict between the terms and provisions of the Bylaws and the terms and provisions of the Notice and this
Agreement, the terms and provisions in the Bylaws shall prevail.
4
7. Lock-Up Agreement. If so requested by the Company or the underwriters in connection with the initial public offering of the Company’s securities
registered under the Securities Act of 1933, as amended, Optionee shall not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise
dispose of any securities of the Company however or whenever acquired (except for those being registered) without the prior written consent of the Company or
such underwriters, as the case may be, for 180 days from the effective date of the registration statement, plus such additional period, to the extent required by
FINRA rules, up to a maximum of 216 days from the effective date of the registration statement, and Optionee shall execute an agreement reflecting the foregoing
as may be requested by the underwriters at the time of such offering.
8. Effect of Agreement. Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions
thereof (and has had an opportunity to consult counsel regarding the Option terms), and hereby accepts this Option and agrees to be bound by its contractual terms
as set forth herein and in the Plan. Optionee hereby agrees to accept as binding, conclusive and final all decisions and interpretations of the Administrator regarding
any questions relating to this Option. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of the Notice and this
Agreement, the Plan terms and provisions shall prevail.
9. Imposition of Other Requirements. The Company reserves the right to impose other requirements on Optionee’s participation in the Plan, on this
Option and the Shares subject to this Option and on any other Award or Shares acquired under the Plan, to the extent the Company determines it is necessary or
advisable in order to comply with Applicable Laws or facilitate the administration of the Plan. Optionee agrees to sign any additional agreements or undertakings
that may be necessary to accomplish the foregoing. Furthermore, Optionee acknowledges that the Applicable Laws of the country in which Optionee is residing or
working at the time of grant, holding, vesting, and exercise of the Option or the holding or sale of Shares received pursuant to the Option (including any rules or
regulations governing securities, foreign exchange, tax, labor, or other matters) may subject Optionee to additional procedural or regulatory requirements that
Optionee is and will be solely responsible for and must fulfill.
10. Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to Optionee’s current or future participation
in the Plan, this Option, the Shares subject to this Option, any other Company Securities or any other Company-related documents, by electronic means. By
accepting this Option, whether electronically or otherwise, Optionee hereby (i) consents to receive such documents by electronic means, (ii) consents to the use of
electronic signatures, and (iii) if applicable, agrees to participate in the Plan and/or receive any such documents through an on-line or electronic system established
and maintained by the Company or a third party designated by the Company, including but not limited to the use of electronic signatures or click-through electronic
acceptance of terms and conditions.
11. Miscellaneous.
(a) Governing Law. The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto
and the rights and
5
obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of California, without giving effect to
principles of conflicts of law. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby submit and consent
to the exclusive jurisdiction of the state of California and agree that any such litigation shall be conducted only in the courts of California or the federal courts of
the United States located in California and no other courts.
(b) Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and
supersedes all prior or contemporaneous discussions, understandings and agreements, whether oral or written, between them relating to the subject matter hereof.
(c) Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall
be effective unless in writing signed by the parties to this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute
a waiver of that provision as to that or any other instance.
(d) Successors and Assigns. Except as otherwise provided in this Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The
Company may assign any of its rights and obligations under this Agreement. No other party to this Agreement may assign, whether voluntarily or by operation of
law, any of its rights and obligations under this Agreement, except with the prior written consent of the Company.
(e) Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed
sufficient when delivered personally or by overnight courier or sent by email, or 48 hours after being deposited in the U.S. mail as certified or registered mail with
postage prepaid, addressed to the party to be notified at such party’s address as set forth on the signature page, as subsequently modified by written notice, or if no
address is specified on the signature page, at the most recent address set forth in the Company’s books and records.
(f) Severability. If one or more provisions of this Agreement are held to be unenforceable under Applicable Laws, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i)
such provision shall be excluded from this Agreement, the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance
of the Agreement shall be enforceable in accordance with its terms.
(g) Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against
any one of the parties hereto.
6
(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be
deemed an original, and all of which together shall constitute one and the same agreement. Execution of a facsimile copy will have the same force and effect as
execution of an original, and a facsimile signature will be deemed an original and valid signature.
7
EXHIBIT A
COINBASE GLOBAL, INC.
2013 STOCK PLAN
EARLY EXERCISE NOTICE AND RESTRICTED STOCK PURCHASE AGREEMENT
This Agreement (“Agreement”) is made as of ________________ by and between Coinbase Global, Inc., a Delaware corporation (the “Company”), and
_______________________ (“Purchaser”). To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to
them in the Company’s 2013 Stock Plan (the “Plan”) and the Option Agreement (as defined below).
1. Exercise of Option. Subject to the terms and conditions hereof, Purchaser hereby elects to exercise his or her option to purchase
________________ shares of the Common Stock (the “Shares”) of the Company under and pursuant to the Plan, the Notice of Stock Option Grant and the Stock
Option Agreement granted ________________ (the “Option Agreement”). Of these Shares, Purchaser has elected to purchase ________________ of those Shares
which have become vested as of the date hereof under the Vesting/Exercise Schedule set forth in the Notice of Stock Option Grant (the “Vested Shares”) and
________________ Shares which have not yet vested under such Vesting/Exercise Schedule (the “Unvested Shares”). The purchase price for the Shares shall be
$____ per Share for a total purchase price of $____. The term “Shares” refers to the purchased Shares and all securities received in connection with the Shares
pursuant to stock dividends or splits, all securities received in replacement of the Shares in a recapitalization, merger, reorganization, exchange or the like, and all
new, substituted or additional securities or other property to which Purchaser is entitled by reason of Purchaser’s ownership of the Shares.
2. Time and Place of Exercise. The purchase and sale of the Shares under this Agreement shall occur at the principal office of the Company
simultaneously with the execution and delivery of this Agreement, the payment of the aggregate exercise price by any method listed in Section 4 of the Option
Agreement, and the satisfaction of any applicable tax, withholding, required deductions or other payments, all in accordance with the provisions of Section 3(b) of
the Option Agreement. The Company shall issue the Shares to Purchaser by entering such Shares in Purchaser’s name as of such date in the books and records of
the Company or, if applicable, a duly authorized transfer agent of the Company, against payment of the exercise price therefor by Purchaser. The Company will
deliver to Purchaser a stock certificate or, in the case of uncertificated securities, notice of issuance, for the Shares as soon as practicable following such date.
3. Limitations on Transfer. Purchaser acknowledges and agrees that the Shares purchased under this Agreement are subject to (i) the transfer
restrictions set forth in Section 12 of the Plan, (ii) the terms and conditions that apply to the Company’s Common Stock, as set forth in the Company’s Amended
and Restated Bylaws, including (without limitation) certain transfer restrictions set forth in Section 8.9 of the Company’s Second Amended and Restated
Bylaws (as summarized in Section 6 of the Option Agreement), as in effect at the time of any proposed transfer (the “Bylaw Restrictions”), and (iii) any other
limitation or restriction on transfer created by Applicable Laws. In addition to the foregoing limitations on transfer, Purchaser shall not assign, encumber or dispose
of any interest in the Shares while the Shares are subject to the Company’s Repurchase Option (as defined below). After any Shares have been released from such
Repurchase Option, Purchaser shall not assign, encumber or dispose of any interest in the Shares except to the extent permitted by, and in compliance with, Section
12 of the Plan, the Bylaw Restrictions, Applicable Laws, and the provisions below.
(a) Repurchase Option.
(i) In the event of the voluntary or involuntary termination of Purchaser’s Continuous Service Status with the Company for any reason
(including, without limitation, resignation, death or Disability), with or without Cause, the Company shall upon the date of such termination (the “Termination
Date”) have an irrevocable, exclusive option (the “Repurchase Option”) for a period of 3 months from such date to repurchase all or any portion of the Unvested
Shares (as defined below) held by Purchaser as of the Termination Date at the original purchase price per Share (adjusted for any stock splits, stock dividends and
the like) specified in Section 1. As used herein, “Unvested Shares” means Shares that have not yet been released from the Repurchase Option.
(ii) Unless the Company notifies Purchaser within 3 months from the Termination Date that it does not intend to exercise its Repurchase
Option with respect to some or all of the Unvested Shares, the Repurchase Option shall be deemed automatically exercised by the Company as of the end of such 3-
month period following the Termination Date, provided that the Company may notify Purchaser that it is exercising its Repurchase Option as of a date prior to the
end of such 3-month period. Unless Purchaser is otherwise notified by the Company pursuant to the preceding sentence that the Company does not intend to
exercise its Repurchase Option as to some or all of the Unvested Shares to which it applies at the time of termination, execution of this Agreement by Purchaser
constitutes written notice to Purchaser of the Company’s intention to exercise its Repurchase Option with respect to all Unvested Shares to which such Repurchase
Option applies. The Company, at its choice, may satisfy its payment obligation to Purchaser with respect to exercise of the Repurchase Option by either
(A) delivering a check to Purchaser in the amount of the purchase price for the Unvested Shares being repurchased, or (B) in the event Purchaser is indebted to the
Company, canceling an amount of such indebtedness equal to the purchase price for the Unvested Shares being repurchased, or (C) by a combination of (A) and
(B) so that the combined payment and cancellation of indebtedness equals such purchase price. In the event of any deemed automatic exercise of the Repurchase
Option pursuant to this Section 3(a)(ii) in which Purchaser is indebted to the Company, such indebtedness equal to the purchase price of the Unvested Shares being
repurchased shall be deemed automatically canceled as of the end of such 3-month period following the Termination Date unless the Company otherwise satisfies
its payment obligations. As a result of any repurchase of Unvested Shares pursuant to this Section 3, the Company shall become the legal and beneficial owner of
the Unvested Shares being repurchased and shall have all rights and interest therein or related thereto, and the Company shall have the right to transfer
2
to its own name the number of Unvested Shares being repurchased by the Company, without further action by Purchaser.
(iii) One hundred percent (100%) of the Shares shall initially be subject to the Repurchase Option. The Unvested Shares shall be released
from the Repurchase Option in accordance with the Vesting/Exercise Schedule set forth in the Notice of Stock Option Grant until all Shares are released from the
Repurchase Option; provided, however, that such scheduled releases from the Repurchase Option shall immediately cease as of the Termination Date. Fractional
shares shall be rounded to the nearest whole share.
(b) Transfer Restrictions; Right of First Refusal. Before any Shares held by Purchaser or any transferee of Purchaser (either being sometimes
referred to herein as the “Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law), the Company shall first have the right to
approve such sale or transfer, in full or in part, and shall then have the right to purchase all or any part of the Shares proposed to be sold or transferred, in each case,
in its sole and absolute discretion (the “Right of First Refusal”). If the Holder would like to sell or transfer any Shares, the Holder must provide the Company or its
assignee(s) with a Notice (as defined below) requesting approval to sell or transfer the Shares and offering the Company or its assignee(s) a Right of First Refusal
on the same terms and conditions set forth in this Section 3(b). The Company may either (1) exercise its Right of First Refusal in full or in part and purchase such
Shares pursuant to this Section 3(b), (2) decline to exercise its Right of First Refusal in full or in part and permit the sale or transfer of such Shares to the Proposed
Transferee (as defined below) in full or in part, or (3) decline to exercise its Right of First Refusal in full or in part and decline the request to sell or transfer the
Shares in full or in part.
(i) Notice of Proposed Transfer. The Holder of the Shares shall deliver to the Company a written notice (the “Notice”) stating: (A) the
Holder’s intention to sell or otherwise transfer such Shares; (B) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (C) the number
of Shares to be sold or transferred to each Proposed Transferee; (D) the terms and conditions of each proposed sale or transfer, including (without limitation) the
purchase price for such Shares (the “Purchase Price”); and (E) the Holder’s offer to the Company or its assignee(s) to purchase the Shares at the Purchase Price and
upon the same terms (or terms that are no less favorable to the Company).
(ii) Exercise of Right of First Refusal. At any time within 30 days after receipt of the Notice, the Company and/or its assignee(s) shall
deliver a written notice to the Holder indicating whether the Company and/or its assignee(s) elect to permit or reject the proposed sale or transfer, in full or in part,
and/or elect to accept or decline the offer to purchase any or all of the Shares proposed to be sold or transferred to any one or more of the Proposed Transferees, at
the Purchase Price, provided that if the Purchase Price consists of no legal consideration (as, for example, in the case of a transfer by gift), the purchase price will
be the fair market value of the Shares as determined in good faith by the Company. If the Purchase Price includes consideration other than cash, the cash equivalent
value of the non-cash consideration shall be determined by the Company in good faith.
3
(iii) Payment. Payment of the Purchase Price shall be made, at the election of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness, or by any combination thereof within 60 days after receipt of the Notice or in the manner and at the
times set forth in the Notice.
(iv) Holder’s Right to Transfer. If any of the Shares proposed in the Notice to be sold or transferred to a given Proposed Transferee are
both (A) not purchased by the Company and/or its assignee(s) as provided in this Section 3(b) and (B) approved by the Company to be sold or transferred, then the
Holder may sell or otherwise transfer any such Shares to the applicable Proposed Transferee at the Purchase Price or at a higher price, provided that such sale or
other transfer is consummated within 120 days after the date of the Notice; provided that any such sale or other transfer is also effected in accordance with the
Bylaw Restrictions, the transfer restrictions set forth in the Plan and any Applicable Laws and the Proposed Transferee agrees in writing that the Plan, the Bylaw
Restrictions, and the provisions of the Option Agreement and this Agreement, including this Section 3 and the waiver of statutory information rights in Section 10,
shall continue to apply to the Shares in the hands of such Proposed Transferee. The Company, in consultation with its legal counsel, may require the Holder to
provide an opinion of counsel evidencing compliance with Applicable Laws. If the Shares described in the Notice are not transferred to the Proposed Transferee
within such period, or if the Holder proposes to change the price or other terms to make them more favorable to the Proposed Transferee, a new Notice shall be
given to the Company, and the Company and/or its assignees shall again have the right to approve such transfer and be offered the Right of First Refusal.
(v) Exception for Certain Family Transfers. Anything to the contrary contained in this Section 3(b) notwithstanding, the transfer of
any or all of the Shares during Holder’s lifetime or on Holder’s death by will or intestacy to Holder’s Immediate Family or a trust for the benefit of Holder’s
Immediate Family shall be exempt from the provisions of this Section 3(b). “Immediate Family” as used herein shall mean lineal descendant or antecedent, spouse
(or spouse’s antecedents), father, mother, brother or sister (or their descendants), stepchild (or their antecedents or descendants), aunt or uncle (or their antecedents
or descendants), brother-in-law or sister-in-law (or their antecedents or descendants) and shall include adoptive relationships. In such case, the transferee or other
recipient shall receive and hold the Shares so transferred subject to the provisions of the Plan, the Bylaw Restrictions, and the provisions of the Option Agreement
and this Agreement, including this Section 3 and Section 10, and there shall be no further transfer of such Shares except in accordance with the terms of this
Section 3, the Plan and the Bylaw Restrictions.
(c) Company’s Right to Purchase upon Involuntary Transfer. In the event of any transfer by operation of law or other involuntary transfer
(including death or divorce, but excluding a transfer to Immediate Family as set forth in Section 3(b)(v) above) of all or a portion of the Shares by the record holder
thereof, the Company shall have an option to purchase any or all of the Shares transferred at the Fair Market Value of the Shares on the date of transfer (as
determined by the Company in its sole discretion). Upon such a transfer, the Holder shall promptly notify the Secretary of the Company of such transfer. The right
to purchase such
4
Shares shall be provided to the Company for a period of 30 days following receipt by the Company of written notice from the Holder.
(d) Assignment. The right of the Company to purchase any part of the Shares may be assigned in whole or in part to any holder or holders of
capital stock of the Company or other persons or organizations.
(e) Restrictions Binding on Transferees. All transferees of Shares or any interest therein will receive and hold such Shares or interest subject
to the Plan, the Bylaw Restrictions, and the provisions of the Option Agreement and this Agreement, including, without limitation, Section 7 of the Option
Agreement, Sections 3 and 10 of this Agreement and Section 12 of the Plan and, including, insofar as applicable, the Repurchase Option. In the event of any
purchase by the Company hereunder where the Shares or interest are held by a transferee, the transferee shall be obligated, if requested by the Company, to transfer
the Shares or interest to the Purchaser for consideration equal to the amount to be paid by the Company hereunder. In the event the Repurchase Option is deemed
exercised by the Company pursuant to Section 3(a)(ii) hereof, the Company may deem any transferee to have transferred the Shares or interest to Purchaser prior to
their purchase by the Company, and payment of the purchase price by the Company to such transferee shall be deemed to satisfy Purchaser’s obligation to pay such
transferee for such Shares or interest, and also to satisfy the Company’s obligation to pay Purchaser for such Shares or interest. Any sale or transfer of the Shares
shall be void unless the provisions of this Agreement are satisfied.
(f) Termination of Rights. The transfer restrictions set forth in Section 3(b) above and Section 12 of the Plan, the Right of First Refusal
granted the Company by Section 3(b) above and the right to repurchase the Shares in the event of an involuntary transfer granted the Company by Section 3(c)
above shall terminate upon the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission under the Securities Act (other than a registration statement relating solely to the issuance of Common Stock
pursuant to a business combination or an employee incentive or benefit plan) or any transfer or conversion of Shares made pursuant to a statutory merger or
statutory consolidation of the Company with or into another corporation or corporations if the common stock of the surviving corporation or any direct or indirect
parent corporation thereof is registered under the Exchange Act. Upon termination of such transfer restrictions, the Company will remove any stop-transfer notices
referred to in Section 7(b) below and related to the restrictions in this Section 3 and a new stock certificate or, in the case of uncertificated securities, notice of
issuance, for the Shares not repurchased shall be issued, on request, without the legend referred to in Section 7(a)(ii) below and delivered to Holder.
(g) Lock-Up Agreement. The lock-up provisions set forth in Section 7 of the Option Agreement shall apply to the Shares issued upon exercise
of the Option hereunder and Purchaser reaffirms Purchaser’s obligations set forth therein.
4. Escrow of Unvested Shares. For purposes of facilitating the enforcement of the provisions of Section 3(a) above, Purchaser agrees, immediately
upon receipt of the stock
5
certificate(s) or, in the case of uncertificated securities, notice of issuance, for the Shares subject to the Repurchase Option, to deliver any such stock certificate(s),
as well as a Stock Power in the form attached to this Agreement as Attachment A executed by Purchaser and by Purchaser’s spouse (if required for transfer), in
blank, to the Secretary of the Company, or the Secretary’s designee, to hold such Shares (and such stock certificate(s), if any) and Stock Power in escrow and to
take all such actions and to effectuate all such transfers and/or releases as are required in accordance with the terms of this Agreement. Purchaser hereby
acknowledges that the Secretary of the Company, or the Secretary’s designee, is so appointed as the escrow holder with the foregoing authorities as a material
inducement to make this Agreement and that said appointment is coupled with an interest and is accordingly irrevocable. Purchaser agrees that said escrow holder
shall not be liable to any party hereof (or to any other party). The escrow holder may rely upon any letter, notice or other document executed by any signature
purported to be genuine and may resign at any time. Purchaser agrees that if the Secretary of the Company, or the Secretary’s designee, resigns as escrow holder
for any or no reason, the Board shall have the power to appoint a successor to serve as escrow holder pursuant to the terms of this Agreement.
5. Investment and Taxation Representations. In connection with the purchase of the Shares, Purchaser represents to the Company the following:
(a) Purchaser is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Shares. Purchaser is purchasing the Shares for investment for Purchaser’s own account only and not
with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act or under any applicable provision of state law.
Purchaser does not have any present intention to transfer the Shares to any other person or entity.
(b) Purchaser understands that the Shares have not been registered under the Securities Act by reason of a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Purchaser’s investment intent as expressed herein.
(c) Purchaser further acknowledges and understands that the securities must be held indefinitely unless they are subsequently registered under
the Securities Act or an exemption from such registration is available. Purchaser further acknowledges and understands that the Company is under no obligation to
register the securities.
(d) Purchaser is familiar with the provisions of Rule 144, promulgated under the Securities Act, which, in substance, permits limited public
resale of “restricted securities” acquired, directly or indirectly, from the issuer of the securities (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions. Purchaser understands that the Company provides no assurances as to whether he or she will be able to resell any or all of
the Shares pursuant to Rule 144, which rule requires, among other things, that the Company be subject to the reporting requirements of the Exchange Act, that
resales of securities take place only after the holder of the Shares has held the Shares for certain specified time periods, and under certain circumstances, that
resales of securities be limited in volume and
6
take place only pursuant to brokered transactions. Notwithstanding this Section 5(d), Purchaser acknowledges and agrees to the restrictions set forth in Section 5(e)
below.
(e) Purchaser further understands that in the event all of the applicable requirements of Rule 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not
exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available
for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.
(f) Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase or disposition of the Shares.
Purchaser represents that Purchaser has consulted any tax consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and
that Purchaser is not relying on the Company for any tax advice.
6. Voting Provisions. As a condition precedent to entering into this Agreement, at the request of the Company, Purchaser shall become a party to any
voting agreement to which the Company is a party at the time of Purchaser’s execution and delivery of this Agreement, as such voting agreement may be thereafter
amended from time to time (the “Voting Agreement”), by executing an adoption agreement or counterpart signature page agreeing to be bound by and subject to
the terms of the Voting Agreement and to vote the Shares in the capacity of a “Common Holder” and a “Stockholder,” as such terms may be defined in the Voting
Agreement.
7. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. Any stock certificate or, in the case of uncertificated securities, any notice of issuance, for the Shares shall bear the following
legends (as well as any legends required by the Company or applicable state and federal corporate and securities laws):
(i) “THE SECURITIES REFERENCED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933.”
(ii) “THE SECURITIES REFERENCED HEREIN MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF
AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE
7
WITH AND MAY BE OBTAINED FROM THE SECRETARY OF THE COMPANY AT NO CHARGE.”
(iii) “THE TRANSFER OF THE SECURITIES REFERENCED HEREIN IS SUBJECT TO CERTAIN TRANSFER RESTRICTIONS
SET FORTH IN THE COMPANY’S AMENDED AND RESTATED BYLAWS (AS AMENDED FROM TIME TO TIME) AND THE COMPANY’S STOCK
PLAN, COPIES OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS. THE
COMPANY SHALL NOT REGISTER OR OTHERWISE RECOGNIZE OR GIVE EFFECT TO ANY PURPORTED TRANSFER OF SECURITIES THAT
DOES NOT COMPLY WITH SUCH TRANSFER RESTRICTIONS.”
(iv) Any legend required by the Voting Agreement, if applicable.
(b) Stop-Transfer Notices. Purchaser agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue
appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the
same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Agreement or the Plan or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so transferred.
(d) Required Notices. Purchaser acknowledges that the Shares are issued and shall be held subject to all the provisions of this Section 7, the
Certificate of Incorporation and the Bylaws of the Company and any amendments thereto, copies of which are on file at the principal office of the Company. A
statement of all of the rights, preferences, privileges and restrictions granted to or imposed upon the respective classes and/or series of shares of stock of the
Company and upon the holders thereof may be obtained by any stockholder upon request and without charge, at the principal office of the Company, and the
Company will furnish any stockholder, upon request and without charge, a copy of such statement. Purchaser acknowledges that the provisions of this Section 7
shall constitute the notices required by Sections 151(f) and 202(a) of the Delaware General Corporation Law and the Purchaser hereby expressly waives the
requirement of Section 151(f) of the Delaware General Corporation Law that it receive the written notice provided for in Sections 151(f) and 202(a) of the
Delaware General Corporation Law within a reasonable time after the issuance of the Shares.
8. No Employment Rights. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a parent,
subsidiary or affiliate of the Company, to terminate Purchaser’s employment or consulting relationship, for any reason, with or without cause.
8
9. Section 83(b) Election.
(a) Purchaser understands that Section 83(a) of the Internal Revenue Code of 1986, as amended (the “Code”), taxes as ordinary income for a
Nonstatutory Stock Option and as alternative minimum taxable income for an Incentive Stock Option the difference between the amount paid for the Shares and
the Fair Market Value of the Shares as of the date any restrictions on the Shares lapse. In this context, “restriction” means the right of the Company to buy back the
Shares pursuant to the Repurchase Option set forth in Section 3(a) of this Agreement. Purchaser understands that Purchaser may elect to be taxed at the time the
Shares are purchased, rather than when and as the Repurchase Option expires, by filing an election under Section 83(b) (an “83(b) Election”) of the Code with the
Internal Revenue Service within 30 days from the date of purchase. Even if the Fair Market Value of the Shares at the time of the execution of this Agreement
equals the amount paid for the Shares, the election must be made to avoid income and alternative minimum tax treatment under Section 83(a) in the future.
Purchaser understands that failure to file such an election in a timely manner may result in adverse tax consequences for Purchaser. Purchaser further understands
that an additional copy of such election form should be filed with his or her federal income tax return for the calendar year in which the date of this Agreement
falls. Purchaser acknowledges that the foregoing is only a summary of the effect of United States federal income taxation with respect to purchase of the Shares
hereunder, does not purport to be complete, and is not intended or written to be used, and cannot be used, for the purposes of avoiding taxpayer penalties. Purchaser
further acknowledges that the Company has directed Purchaser to seek independent advice regarding the applicable provisions of the Code, the income tax laws of
any municipality, state or foreign country in which Purchaser may reside, and the tax consequences of Purchaser’s death, and Purchaser has consulted, and has
been fully advised by, Purchaser’s own tax advisor regarding such tax laws and tax consequences or has knowingly chosen not to consult such a tax advisor.
Purchaser further acknowledges that neither the Company nor any subsidiary or representative of the Company has made any warranty or representation to
Purchaser with respect to the tax consequences of Purchaser’s purchase of the Shares or of the making or failure to make an 83(b) Election. PURCHASER (AND
NOT THE COMPANY, ITS AGENTS OR ANY OTHER PERSON) SHALL BE SOLELY RESPONSIBLE FOR APPROPRIATELY FILING SUCH FORM
WITH THE IRS, EVEN IF PURCHASER REQUESTS THE COMPANY, ITS AGENTS OR ANY OTHER PERSON MAKE THIS FILING ON
PURCHASER’S BEHALF.
(b) Purchaser agrees that he or she will execute and deliver to the Company with this executed Agreement a copy of the Acknowledgment and
Statement of Decision Regarding Section 83(b) Election (the “Acknowledgment”) attached hereto as Attachment B. Purchaser further agrees that he or she will
execute and submit with the Acknowledgment a copy of the 83(b) Election attached hereto as Attachment C (for tax purposes in connection with the early exercise
of an option) if Purchaser has indicated in the Acknowledgment his or her decision to make such an election.
10. Waiver of Statutory Information Rights. Purchaser acknowledges and understands that, but for the waiver made herein, Purchaser would be
entitled, upon written demand under oath stating the purpose thereof, to inspect for any proper purpose, and to make
9
copies and extracts from, the Company’s stock ledger, a list of its stockholders, and its other books and records, and the books and records of subsidiaries of the
Company, if any, under the circumstances and in the manner provided in Section 220 of the General Corporation Law of Delaware (any and all such rights, and any
and all such other rights of Purchaser as may be provided for in Section 220, the “Inspection Rights”). In light of the foregoing, until the first sale of Common
Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under
the Securities Act of 1933, as amended, Purchaser hereby unconditionally and irrevocably waives the Inspection Rights, whether such Inspection Rights would be
exercised or pursued directly or indirectly pursuant to Section 220 or otherwise, and covenants and agrees never to directly or indirectly commence, voluntarily aid
in any way, prosecute, assign, transfer, or cause to be commenced any claim, action, cause of action, or other proceeding to pursue or exercise the Inspection
Rights. The foregoing waiver applies to the Inspection Rights of Purchaser in Purchaser’s capacity as a stockholder and shall not affect any rights of a director, in
his or her capacity as such, under Section 220. The foregoing waiver shall not apply to any contractual inspection rights of Purchaser under any written agreement
with the Company.
11. Miscellaneous.
(a) Governing Law. The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto
and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of California, without
giving effect to principles of conflicts of law. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby
submit and consent to the exclusive jurisdiction of the state of California and agree that any such litigation shall be conducted only in the courts of California or the
federal courts of the United States located in California and no other courts.
(b) Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and
supersedes all prior or contemporaneous discussions, understandings and agreements, whether oral or written, between them relating to the subject matter hereof.
Notwithstanding the foregoing, in the event of a conflict between the terms and provisions of the Bylaws and the terms and provisions of this Agreement, the terms
and provisions in the Bylaws shall prevail.
(c) Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall
be effective unless in writing signed by the parties to this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute
a waiver of that provision as to that or any other instance.
(d) Successors and Assigns. Except as otherwise provided in this Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The
Company may assign any of its rights and obligations under this Agreement. No other party to this Agreement may assign, whether
10
voluntarily or by operation of law, any of its rights and obligations under this Agreement, except with the prior written consent of the Company.
(e) Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed
sufficient when delivered personally or by overnight courier or sent by email, or 48 hours after being deposited in the U.S. mail as certified or registered mail with
postage prepaid, addressed to the party to be notified at such party’s address as set forth on the signature page, as subsequently modified by written notice, or if no
address is specified on the signature page, at the most recent address set forth in the Company’s books and records.
(f) Severability. If one or more provisions of this Agreement are held to be unenforceable under Applicable Law, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i)
such provision shall be excluded from this Agreement, the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance
of the Agreement shall be enforceable in accordance with its terms.
(g) Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against
any one of the parties hereto.
(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be
deemed an original, and all of which together shall constitute one and the same agreement. Execution of a facsimile copy will have the same force and effect as
execution of an original, and a facsimile signature will be deemed an original and valid signature.
(i) Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to this Agreement or any notices
required by applicable law or the Company’s Certificate of Incorporation or Bylaws by email or any other electronic means. Purchaser hereby consents to (i)
conduct business electronically (ii) receive such documents and notices by such electronic delivery and (iii) sign documents electronically and agrees to participate
through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
(j) California Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS
UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
11
EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
[Signature Page Follows]
12
The parties have executed this Early Exercise Notice and Restricted Stock Purchase Agreement as of the date first set forth above.
THE COMPANY:
COINBASE GLOBAL, INC.
By:
(Signature)
Name:
Title:
Address:
PURCHASER:
(PRINT NAME)
(Signature)
Address:
Email:
I, _______________________, spouse of _______________________ (“Purchaser”), have read and hereby approve the foregoing Agreement. In
consideration of the Company’s granting my spouse the right to purchase the Shares as set forth in the Agreement, I hereby agree to be bound irrevocably by the
Agreement and further agree that any community property or other such interest that I may have in the Shares shall hereby be similarly bound by the Agreement. I
hereby appoint my spouse as my attorney-in-fact with respect to any amendment or exercise or waiver of any rights under the Agreement.
Spouse of Purchaser (if applicable)
ATTACHMENT A
STOCK POWER
FOR VALUE RECEIVED, the undersigned (“Holder”), hereby sells, assigns and transfers unto ____________________________________________
(“Transferee”) _________________ shares of the Common Stock of Coinbase Global, Inc., a Delaware corporation (the “Company”), standing in Holder’s name
on the Company’s books as Certificate No. CS-____ whether held in certificated or uncertificated form, and does hereby irrevocably constitute and appoint
____________________________ to transfer said stock on the books of the Company with full power of substitution in the premises.
Dated: HOLDER:
(PRINT NAME)
(Signature)
Spouse of Holder (if applicable)
This Stock Power may only be used as authorized by the Early Exercise Notice and Restricted Stock Purchase Agreement between the Holder and the
Company, dated ________________ and the exhibits thereto.
Instructions: Please do not fill in any blanks other than the signature line. The purpose of this assignment is to enable the Company to exercise its
repurchase option set forth in the Agreement without requiring additional signatures on the part of Holder.
IF YOU WISH TO MAKE A SECTION 83(B) ELECTION, THE FILING OF SUCH
ELECTION IS YOUR RESPONSIBILITY.
THE FORM FOR MAKING THIS SECTION 83(B) ELECTION IS ATTACHED TO
THIS AGREEMENT.
YOU MUST FILE THIS FORM WITHIN 30 DAYS OF PURCHASING THE SHARES.
YOU (AND NOT THE COMPANY, ANY OF ITS AGENTS OR ANY OTHER
PERSON) SHALL BE SOLELY RESPONSIBLE FOR FILING SUCH FORM WITH
THE IRS, EVEN IF YOU REQUEST THE COMPANY, ITS AGENTS OR ANY
OTHER PERSON TO MAKE THIS FILING ON YOUR BEHALF AND EVEN IF THE
COMPANY, ANY OF ITS AGENTS OR ANY OTHER PERSON HAS PREVIOUSLY
MADE THIS FILING ON YOUR BEHALF.
The election should be filed by mailing a signed election form by certified mail, return receipt requested to the IRS Service
Center where you file your tax returns. See www.irs.gov.
ATTACHMENT B
ACKNOWLEDGMENT AND STATEMENT OF DECISION
REGARDING SECTION 83(B) ELECTION
The undersigned has entered into a stock purchase agreement with Coinbase Global, Inc., a Delaware corporation (the “Company”), pursuant to which the
undersigned is purchasing _______________ shares of Common Stock of the Company (the “Shares”). In connection with the purchase of the Shares, the
undersigned hereby represents as follows:
The undersigned has carefully reviewed the stock purchase agreement pursuant to which the undersigned is purchasing the Shares.
1. The undersigned either [check and complete as applicable]:
(a) _____ has consulted, and has been fully advised by, the undersigned’s own tax advisor, _____________________, whose business address is
_____________________, regarding the federal, state and local tax consequences of purchasing the Shares, and particularly regarding the advisability of making
elections pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”) and pursuant to the corresponding provisions, if any, of
applicable state law; or
(b) _____ has knowingly chosen not to consult such a tax advisor.
The undersigned hereby states that the undersigned has decided [check as applicable]:
(a) _____ to make an election pursuant to Section 83(b) of the Code, and is submitting to the Company, together with the undersigned’s
executed stock purchase agreement, an executed form entitled “Election Under Section 83(b) of the Internal Revenue Code of 1986;” or
(b) ______ not to make an election pursuant to Section 83(b) of the Code.
Neither the Company nor any subsidiary or representative of the Company has made any warranty or representation to the undersigned with respect to the
tax consequences of the undersigned’s purchase of the Shares or of the making or failure to make an election pursuant to Section 83(b) of the Code or the
corresponding provisions, if any, of applicable state law.
Dated: PURCHASER:
(PRINT NAME)
(Signature)
Spouse of Purchaser (if applicable)
ATTACHMENT C
ELECTION UNDER SECTION 83(B)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code, to include in taxpayer’s gross income or alternative
minimum taxable income, as applicable, for the current taxable year, the amount of any income that may be taxable to taxpayer in connection with taxpayer’s
receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of the undersigned are as follows:
NAME OF TAXPAYER: NAME OF SPOUSE:
ADDRESS:
United States
IDENTIFICATION NO. OF TAXPAYER:
IDENTIFICATION NO. OF SPOUSE:
TAXABLE YEAR:
2. The property with respect to which the election is made is described as follows:
_________________ shares of the Common Stock of Coinbase Global, Inc., a Delaware corporation (the “Company”).
3. The date on which the property was transferred is: _______________________
4. The property is subject to the following restrictions:
Repurchase option at cost in favor of the Company upon termination of taxpayer’s employment or consulting relationship.
5. The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of
such property is: $________________.
6. The amount (if any) paid for such property: $________________.
The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned’s receipt of the
above described property. The transferee of such property is the person performing the services in connection with the transfer of said property.
The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.
Dated: PURCHASER:
(Signature)
Spouse of Purchaser (if applicable)
2
EXHIBIT B
COINBASE GLOBAL, INC.
2013 STOCK PLAN
EXERCISE AGREEMENT
This Exercise Agreement (this “Agreement”) is made as of ________________, by and between Coinbase Global, Inc., a Delaware corporation (the
“Company”), and __________________ (“Purchaser”). To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning
ascribed to them in the Company’s 2013 Stock Plan (the “Plan”) and the Option Agreement (as defined below).
1. Exercise of Option. Subject to the terms and conditions hereof, Purchaser hereby elects to exercise his or her option to purchase ______________
shares of the Common Stock (the “Shares”) of the Company under and pursuant to the Plan, the Notice of Stock Option Grant and the Stock Option Agreement
granted ______________ (the “Option Agreement”). The purchase price for the Shares shall be $______ per Share for a total purchase price of $______. The term
“Shares” refers to the purchased Shares and all securities received in connection with the Shares pursuant to stock dividends or splits, all securities received in
replacement of the Shares in a recapitalization, merger, reorganization, exchange or the like, and all new, substituted or additional securities or other property to
which Purchaser is entitled by reason of Purchaser’s ownership of the Shares.
2. Time and Place of Exercise. The purchase and sale of the Shares under this Agreement shall occur at the principal office of the Company
simultaneously with the execution and delivery of this Agreement, the payment of the aggregate exercise price by any method listed in Section 4 of the Option
Agreement, and the satisfaction of any applicable tax, withholding, required deductions or other payments, all in accordance with the provisions of Section 3(b) of
the Option Agreement. The Company shall issue the Shares to Purchaser by entering such Shares in Purchaser’s name as of such date in the books and records of
the Company or, if applicable, a duly authorized transfer agent of the Company, against payment of the exercise price therefor by Purchaser. The Company will
deliver to Purchaser a stock certificate or, in the case of uncertificated securities, notice of issuance, for the Shares as soon as practicable following such date.
3. Limitations on Transfer. Purchaser acknowledges and agrees that the Shares purchased under this Agreement are subject to (i) the transfer
restrictions set forth in Section 12 of the Plan, (ii) the terms and conditions that apply to the Company’s Common Stock, as set forth in the Company’s Amended
and Restated Bylaws, including (without limitation) certain transfer restrictions set forth in Section 8.9 of the Company’s Second Amended and Restated Bylaws
(as summarized in Section 6 of the Option Agreement), as in effect at the time of any proposed transfer (the “Bylaw Restrictions”), and (iii) any other limitation or
restriction on transfer created by Applicable Laws. Purchaser shall not assign, encumber or dispose of any
interest in the Shares except to the extent permitted by, and in compliance with, Section 12 of the Plan, the Bylaw Restrictions, Applicable Laws, and the
provisions below.
(a) Transfer Restrictions; Right of First Refusal. Before any Shares held by Purchaser or any transferee of Purchaser (either being sometimes
referred to herein as the “Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law), the Company shall first have the right to
approve such sale or transfer, in full or in part, and shall then have the right to purchase all or any part of the Shares proposed to be sold or transferred, in each case,
in its sole and absolute discretion (the “Right of First Refusal”). If the Holder would like to sell or transfer any Shares, the Holder must provide the Company or its
assignee(s) with a Notice (as defined below) requesting approval to sell or transfer the Shares and offering the Company or its assignee(s) a Right of First Refusal
on the terms and conditions set forth in this Section 3(a). The Company may either (1) exercise its Right of First Refusal in full or in part and purchase such Shares
pursuant to this Section 3(a), (2) decline to exercise its Right of First Refusal in full or in part and permit the sale or transfer of such Shares to the Proposed
Transferee (as defined below) in full or in part, or (3) decline to exercise its Right of First Refusal in full or in part and decline the request to sell or transfer the
Shares in full or in part.
(i) Notice of Proposed Transfer. The Holder of the Shares shall deliver to the Company a written notice (the “Notice”) stating: (A) the
Holder’s desire to sell or otherwise transfer such Shares; (B) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (C) the number of
Shares to be sold or transferred to each Proposed Transferee; (D) the terms and conditions of each proposed sale or transfer, including (without limitation) the
purchase price for such Shares (the “Purchase Price”); and (E) the Holder’s offer to the Company or its assignee(s) to purchase the Shares at the Purchase Price and
upon the same terms (or terms that are no less favorable to the Company).
(ii) Exercise of Right of First Refusal. At any time within 30 days after receipt of the Notice, the Company and/or its assignee(s) shall
deliver a written notice to the Holder indicating whether the Company and/or its assignee(s) elect to permit or reject the proposed sale or transfer, in full or in part,
and/or elect to accept or decline the offer to purchase any or all of the Shares proposed to be sold or transferred to any one or more of the Proposed Transferees, at
the Purchase Price, provided that if the Purchase Price consists of no legal consideration (as, for example, in the case of a transfer by gift), the purchase price will
be the fair market value of the Shares as determined in good faith by the Company. If the Purchase Price includes consideration other than cash, the cash equivalent
value of the non-cash consideration shall be determined by the Company in good faith.
(iii) Payment. Payment of the Purchase Price shall be made, at the election of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness, or by any combination thereof within 60 days after receipt of the Notice or in the manner and at the
times set forth in the Notice.
(iv) Holder’s Right to Transfer. If any of the Shares proposed in the Notice to be sold or transferred to a given Proposed Transferee are
both (A) not purchased by the Company and/or its assignee(s) as provided in this Section 3(a) and (B) approved by the
2
Company to be sold or transferred, then the Holder may sell or otherwise transfer any such Shares to the applicable Proposed Transferee at the Purchase Price or at
a higher price, provided that such sale or other transfer is consummated within 120 days after the date of the Notice; provided that any such sale or other transfer is
also effected in accordance with the Bylaw Restrictions, the transfer restrictions set forth in the Plan and any Applicable Laws and the Proposed Transferee agrees
in writing that the Plan, the Bylaw Restrictions, and the provisions of the Option Agreement and this Agreement, including this Section 3 and the waiver of
statutory information rights in Section 8, shall continue to apply to the Shares in the hands of such Proposed Transferee. The Company, in consultation with its
legal counsel, may require the Holder to provide an opinion of counsel evidencing compliance with Applicable Laws. If the Shares described in the Notice are not
transferred to the Proposed Transferee within such period, or if the Holder proposes to change the price or other terms to make them more favorable to the
Proposed Transferee, a new Notice shall be given to the Company, and the Company and/or its assignees shall again have the right to approve such transfer and be
offered the Right of First Refusal.
(v) Exception for Certain Family Transfers. Anything to the contrary contained in this Section 3(a) notwithstanding, the transfer of
any or all of the Shares during Holder’s lifetime or on Holder’s death by will or intestacy to Holder’s Immediate Family or a trust for the benefit of Holder’s
Immediate Family shall be exempt from the provisions of this Section 3(a). “Immediate Family” as used herein shall mean lineal descendant or antecedent, spouse
(or spouse’s antecedents), father, mother, brother or sister (or their descendants), stepchild (or their antecedents or descendants), aunt or uncle (or their antecedents
or descendants), brother-in-law or sister-in-law (or their antecedents or descendants) and shall include adoptive relationships. In such case, the transferee or other
recipient shall receive and hold the Shares so transferred subject to the provisions of the Plan, the Bylaw Restrictions, and the provisions of the Option Agreement
and this Agreement, including this Section 3 and Section 8, and there shall be no further transfer of such Shares except in accordance with the terms of this Section
3, the Plan and the Bylaw Restrictions.
(b) Company’s Right to Purchase upon Involuntary Transfer. In the event of any transfer by operation of law or other involuntary transfer
(including death or divorce, but excluding a transfer to Immediate Family as set forth in Section 3(a)(v) above) of all or a portion of the Shares by the record holder
thereof, the Company shall have an option to purchase any or all of the Shares transferred at the Fair Market Value of the Shares on the date of transfer (as
determined by the Company in its sole discretion). Upon such a transfer, the Holder shall promptly notify the Secretary of the Company of such transfer. The right
to purchase such Shares shall be provided to the Company for a period of 30 days following receipt by the Company of written notice from the Holder.
(c) Assignment. The right of the Company to purchase any part of the Shares may be assigned in whole or in part to any holder or holders of
capital stock of the Company or other persons or organizations.
3
(d) Restrictions Binding on Transferees. All transferees of Shares or any interest therein will receive and hold such Shares or interest subject
to the Plan, the Bylaw Restrictions, and the provisions of the Option Agreement and this Agreement, including, without limitation, Section 7 of the Option
Agreement, Sections 3 and 8 of this Agreement and Section 12 of the Plan. Any sale or transfer of the Shares shall be void unless the provisions of this Agreement
are satisfied.
(e) Termination of Rights. The transfer restrictions set forth in Section 3(a) above and Section 12 of the Plan, the Right of First Refusal granted
the Company by Section 3(a) above and the option to repurchase the Shares in the event of an involuntary transfer granted the Company by Section 3(b) above
shall terminate upon the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by
the Securities and Exchange Commission under the Securities Act (other than a registration statement relating solely to the issuance of Common Stock pursuant to
a business combination or an employee incentive or benefit plan) or any transfer or conversion of Shares made pursuant to a statutory merger or statutory
consolidation of the Company with or into another corporation or corporations if the common stock of the surviving corporation or any direct or indirect parent
corporation thereof is registered under the Exchange Act. Upon termination of such transfer restrictions, the Company will remove any stop-transfer notices
referred to in Section 6(b) below and related to the restrictions in this Section 3 and a new stock certificate or, in the case of uncertificated securities, notice of
issuance, for the Shares not repurchased shall be issued, on request, without the legend referred to in Section 6(a)(ii) below and delivered to Holder.
(f) Lock-Up Agreement. The lock-up provisions set forth in Section 7 of the Option Agreement shall apply to the Shares issued upon exercise
of the Option hereunder and Purchaser reaffirms Purchaser’s obligations set forth therein.
4. Investment and Taxation Representations. In connection with the purchase of the Shares, Purchaser represents to the Company the following:
(a) Purchaser is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Shares. Purchaser is purchasing the Shares for investment for Purchaser’s own account only and not
with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act or under any applicable provision of state law.
Purchaser does not have any present intention to transfer the Shares to any other person or entity.
(b) Purchaser understands that the Shares have not been registered under the Securities Act by reason of a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Purchaser’s investment intent as expressed herein.
(c) Purchaser further acknowledges and understands that the securities must be held indefinitely unless they are subsequently registered under
the Securities Act or an
4
exemption from such registration is available. Purchaser further acknowledges and understands that the Company is under no obligation to register the securities.
(d) Purchaser is familiar with the provisions of Rule 144, promulgated under the Securities Act, which, in substance, permits limited public
resale of “restricted securities” acquired, directly or indirectly, from the issuer of the securities (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions. Purchaser understands that the Company provides no assurances as to whether he or she will be able to resell any or all of
the Shares pursuant to Rule 144, which rule requires, among other things, that the Company be subject to the reporting requirements of the Exchange Act, that
resales of securities take place only after the holder of the Shares has held the Shares for certain specified time periods, and under certain circumstances, that
resales of securities be limited in volume and take place only pursuant to brokered transactions. Notwithstanding this Section 4(d), Purchaser acknowledges and
agrees to the restrictions set forth in Section 4(e) below.
(e) Purchaser further understands that in the event all of the applicable requirements of Rule 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not
exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available
for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.
(f) Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase or disposition of the Shares.
Purchaser represents that Purchaser has consulted any tax consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and
that Purchaser is not relying on the Company for any tax advice.
5. Voting Provisions. As a condition precedent to entering into this Agreement, at the request of the Company, Purchaser shall become a party to any
voting agreement to which the Company is a party at the time of Purchaser’s execution and delivery of this Agreement, as such voting agreement may be thereafter
amended from time to time (the “Voting Agreement”), by executing an adoption agreement or counterpart signature page agreeing to be bound by and subject to
the terms of the Voting Agreement and to vote the Shares in the capacity of a “Common Holder” and a “Stockholder,” as such terms may be defined in the Voting
Agreement.
5
6. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. Any stock certificate or, in the case of uncertificated securities, notice of issuance, for the Shares shall bear the following legends
(as well as any legends required by the Company or applicable state and federal corporate and securities laws):
(i) “THE SECURITIES REFERENCED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933.”
(ii) “THE SECURITIES REFERENCED HEREIN MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF
AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH AND MAY BE OBTAINED FROM
THE SECRETARY OF THE COMPANY AT NO CHARGE.”
(iii) “THE TRANSFER OF THE SECURITIES IS SUBJECT TO CERTAIN TRANSFER RESTRICTIONS SET FORTH IN THE
COMPANY’S AMENDED AND RESTATED BYLAWS (AS AMENDED FROM TIME TO TIME) AND THE COMPANY’S STOCK PLAN, COPIES OF
WHICH MAY BE OBTAINED UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS. THE COMPANY SHALL
NOT REGISTER OR OTHERWISE RECOGNIZE OR GIVE EFFECT TO ANY PURPORTED TRANSFER OF SECURITIES THAT DOES NOT COMPLY
WITH SUCH TRANSFER RESTRICTIONS.”
(iv) Any legend required by the Voting Agreement, as applicable.
(b) Stop-Transfer Notices. Purchaser agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue
appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the
same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Agreement or the Plan or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so transferred.
(d) Required Notices. Purchaser acknowledges that the Shares are issued and shall be held subject to all the provisions of this Section 6, the
Certificate of Incorporation and the Bylaws of the Company and any amendments thereto, copies of which are on file at the
6
principal office of the Company. A statement of all of the rights, preferences, privileges and restrictions granted to or imposed upon the respective classes and/or
series of shares of stock of the Company and upon the holders thereof may be obtained by any stockholder upon request and without charge, at the principal office
of the Company, and the Company will furnish any stockholder, upon request and without charge, a copy of such statement. Purchaser acknowledges that the
provisions of this Section 6 shall constitute the notices required by Sections 151(f) and 202(a) of the Delaware General Corporation Law and the Purchaser hereby
expressly waives the requirement of Section 151(f) of the Delaware General Corporation Law that it receive the written notice provided for in Sections 151(f) and
202(a) of the Delaware General Corporation Law within a reasonable time after the issuance of the Shares.
7. No Employment Rights. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a parent,
subsidiary or affiliate of the Company, to terminate Purchaser’s employment or consulting relationship, for any reason, with or without cause.
8. Waiver of Statutory Information Rights. Purchaser acknowledges and understands that, but for the waiver made herein, Purchaser would be
entitled, upon written demand under oath stating the purpose thereof, to inspect for any proper purpose, and to make copies and extracts from, the Company’s stock
ledger, a list of its stockholders, and its other books and records, and the books and records of subsidiaries of the Company, if any, under the circumstances and in
the manner provided in Section 220 of the General Corporation Law of Delaware (any and all such rights, and any and all such other rights of Purchaser as may be
provided for in Section 220, the “Inspection Rights”). In light of the foregoing, until the first sale of Common Stock of the Company to the general public pursuant
to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended, Purchaser
hereby unconditionally and irrevocably waives the Inspection Rights, whether such Inspection Rights would be exercised or pursued directly or indirectly pursuant
to Section 220 or otherwise, and covenants and agrees never to directly or indirectly commence, voluntarily aid in any way, prosecute, assign, transfer, or cause to
be commenced any claim, action, cause of action, or other proceeding to pursue or exercise the Inspection Rights. The foregoing waiver applies to the Inspection
Rights of Purchaser in Purchaser’s capacity as a stockholder and shall not affect any rights of a director, in his or her capacity as such, under Section 220. The
foregoing waiver shall not apply to any contractual inspection rights of Purchaser under any written agreement with the Company.
9. Miscellaneous.
(a) Governing Law. The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto
and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of California, without
giving effect to principles of conflicts of law. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby
submit and consent to the exclusive jurisdiction of the state of California and
7
agree that any such litigation shall be conducted only in the courts of California or the federal courts of the United States located in California and no other courts.
(b) Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and
supersedes all prior or contemporaneous discussions, understandings and agreements, whether oral or written, between them relating to the subject matter hereof.
Notwithstanding the foregoing, in the event of a conflict between the terms and provisions of the Bylaws and the terms and provisions of this Agreement, the terms
and provisions in the Bylaws shall prevail.
(c) Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall
be effective unless in writing signed by the parties to this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute
a waiver of that provision as to that or any other instance.
(d) Successors and Assigns. Except as otherwise provided in this Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The
Company may assign any of its rights and obligations under this Agreement. No other party to this Agreement may assign, whether voluntarily or by operation of
law, any of its rights and obligations under this Agreement, except with the prior written consent of the Company.
(e) Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed
sufficient when delivered personally or by overnight courier or sent by email, or 48 hours after being deposited in the U.S. mail as certified or registered mail with
postage prepaid, addressed to the party to be notified at such party’s address as set forth on the signature page, as subsequently modified by written notice, or if no
address is specified on the signature page, at the most recent address set forth in the Company’s books and records.
(f) Severability. If one or more provisions of this Agreement are held to be unenforceable under Applicable Law, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i)
such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the
balance of the Agreement shall be enforceable in accordance with its terms.
(g) Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against
any one of the parties hereto.
(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be
deemed an original, and all
8
of which together shall constitute one and the same agreement. Execution of a facsimile copy will have the same force and effect as execution of an original, and a
facsimile signature will be deemed an original and valid signature.
(i) Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to this Agreement or any notices
required by applicable law or the Company’s Certificate of Incorporation or Bylaws by email or any other electronic means. Purchaser hereby consents to (i)
conduct business electronically (ii) receive such documents and notices by such electronic delivery and (iii) sign documents electronically and agrees to participate
through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
(j) California Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS
UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION
BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
[Signature Page Follows]
9
The parties have executed this Exercise Agreement as of the date first set forth above.
THE COMPANY:
COINBASE GLOBAL, INC.
By:
(Signature)
Name:
Title:
PURCHASER:
(PRINT NAME)
(Signature)
Address:
Email:
I,_____, spouse of_____(“Purchaser”), have read and hereby approve the foregoing Agreement. In consideration of the Company’s granting my spouse the
right to purchase the Shares as set forth in the Agreement, I hereby agree to be bound irrevocably by the Agreement and further agree that any community property
or other such interest that I may have in the Shares shall hereby be similarly bound by the Agreement. I hereby appoint my spouse as my attorney-in-fact with
respect to any amendment or exercise of any rights under the Agreement.
Spouse of Purchaser (if applicable)
Exhibit 10.3
COINBASE GLOBAL, INC.
2019 EQUITY INCENTIVE PLAN
As Adopted on July 17, 2019
As Amended on February 5, 2020
As Amended on August 11, 2020
1. PURPOSE. The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are
important to the success of the Company, its Parent and Subsidiaries by offering eligible persons an opportunity to participate in the Company’s future performance through
the grant of Awards covering Shares. Capitalized terms not defined in the text are defined in Section 14 hereof. Although this Plan is intended to be a written compensatory
benefit plan within the meaning of Rule 701, grants may be made pursuant to this Plan that do not qualify for exemption under Rule 701 or Section 25102(o). Any
requirement of this Plan that is required in law only because of Section 25102(o) need not apply if the Committee so provides.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2 and 11 hereof, the total number of Shares reserved and available for grant and issuance pursuant to this Plan
will be 20,000,000 Shares , plus (a) any authorized shares not issued or subject to outstanding grants under the Company’s Amended and Restated 2013 Stock Plan (the
“Prior Plan”) on the Effective Date (as defined in Section 13.1 hereof); (b) shares that are subject to issuance pursuant to an award under the Prior Plan but cease to be subject
to such award for any reason other than exercise or settlement of such award, as applicable, after the Effective Date, including because such award expires or is cancelled,
forfeited, or terminated; (c) shares that were previously issued under the Prior Plan which are reacquired by the Company after the Effective Date pursuant to a forfeiture
provision, right of first refusal, or repurchase by the Company; (d) shares that are subject to issuance pursuant to an award under the Prior Plan to the extent such award is
settled in cash after the Effective Date; and (e) shares that are subject to issuance pursuant to an award under the Prior Plan to the extent such shares are withheld by the
Company in payment of the purchase price of restricted stock, the exercise price of an option or withholding obligations after the Effective Date. Subject to Sections 2.2 and
11 hereof, (A) in the event that Shares previously issued under the Plan are reacquired by the Company pursuant to a forfeiture provision, right of first refusal, or repurchase
by the Company, such Shares shall be added to the number of Shares then available for issuance under the Plan; (B) in the event that Shares that otherwise would have been
issuable under the Plan are withheld by the Company in payment of the Purchase Price, Exercise Price or withholding obligations, such Shares shall remain available for
issuance under the Plan; and (C) in the event that an outstanding Option, Restricted Stock Unit or SAR for any reason expires or is cancelled, forfeited or terminated, the
Shares allocable to the unexercised or unsettled portion of such Option, Restricted Stock Unit or SAR, as applicable, shall remain available for issuance under the Plan. To the
extent an Award is settled in cash, the cash settlement shall not reduce the number of Shares remaining available for issuance under the Plan. Notwithstanding anything to the
contrary herein, (i) each share (including, without limitation, each share of the Company’s Class B Common Stock (the “Class B Common Stock”)) that becomes available
for grant and issuance pursuant to this Plan on or after the Effective Date by virtue of the first or second
Represents 15,000,000 Shares added to the reserve on February 5, 2020 and 5,000,000 Shares added on August 11, 2020.
1
1
Coinbase Global, Inc.
2019 Equity Incentive Plan 1
sentence of this Section 2.1 shall be deemed a share of Common Stock upon so becoming available under this Plan, regardless of the type or class of Company capital stock
previously attributed to such share, (ii) all shares subject to Awards awarded on and after the Effective Date shall be shares of Common Stock, and (iii) all shares reserved and
available for grant and issuance pursuant to this Plan on and after the Effective Date shall be shares of Common Stock. For clarity: The foregoing sentence does not alter
awards outstanding under the Prior Plan with respect to the Class B Common Stock. At all times the Company will reserve and keep available a sufficient number of Shares as
will be required to satisfy the requirements of all Awards granted and outstanding under this Plan. In no event shall the total number of Shares issued (counting each
reissuance of a Share that was previously issued and then reacquired by the Company pursuant to a forfeiture provision, right of first refusal, or repurchase by the Company as
a separate issuance) under the Plan upon exercise of ISOs (as defined in Section 4 hereof) exceed 60,000,000 Shares (adjusted in proportion to any adjustments under
Section 2.2 hereof) over the term of the Plan.
2.2 Adjustment of Shares. In the event that the Common Stock is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination,
reclassification or other change in the capital structure of the Company affecting Shares without consideration, then in order to prevent diminution or enlargement of the
benefits or potential benefits intended to be made available under the Plan (a) the number and class of Shares reserved for issuance under this Plan, (b) the Exercise Prices of
and number and class of Shares subject to outstanding Options and SARs, and (c) the Purchase Prices of and/or number and class of Shares subject to other outstanding
Awards will (to the extent appropriate) be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and compliance with
applicable securities or other laws; provided, however, that fractions of a Share will not be issued but will either be paid in cash at the Fair Market Value of such fraction of a
Share or will be rounded down to the nearest whole Share, as determined by the Committee.
3. PLAN FOR BENEFIT OF SERVICE PROVIDERS.
3.1 Eligibility. The Committee will have the authority to select persons to receive Awards. ISOs may be granted only to employees (including officers and directors who
are also employees) of the Company or of a Subsidiary or Parent of the Company. NQSOs (as defined in Section 4 hereof) and all other types of Awards may be granted to
employees, officers, directors and consultants of the Company or any Subsidiary or Parent or Affiliate of the Company; provided such consultants render bona fide services
not in connection with the offer and sale of securities in a capital-raising transaction when Rule 701 is to apply to the Award granted for such services. A person may be
granted more than one Award under this Plan.
3.2 No Obligation to Employ. Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in
the employ of, or to continue any other relationship with, the Company or any Subsidiary or Parent or Affiliate of the Company or limit in any way the right of the Company
or any Subsidiary or Parent or Affiliate of the Company to terminate Participant’s employment or other relationship at any time, with or without Cause.
4. OPTIONS. The Committee may grant Options to eligible persons described in Section 3 hereof and will determine whether such Options will be Incentive
Stock Options within the meaning of the Code (“ISOs”) or Nonqualified Stock Options (“NQSOs”), the number of Shares subject to the Option, the Exercise Price of the
Option, the period during which the Option may be exercised, and all other terms and conditions of the Option, subject to the following.
Coinbase Global, Inc.
2019 Equity Incentive Plan 2
4.1 Form of Option Grant. Each Option granted under this Plan will be evidenced by an Award Agreement which will expressly identify the Option as an ISO or an
NQSO (“Stock Option Agreement”), and will be in such form and contain such provisions (which need not be the same for each Participant) as the Committee may from time
to time approve, and which will comply with and be subject to the terms and conditions of this Plan.
4.2 Date of Grant. The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, unless a later date is otherwise
specified by the Committee. The Stock Option Agreement and a copy of this Plan will be delivered to the Participant within a reasonable time after the granting of the Option.
4.3 Exercise Period. Options may be exercisable within the times or upon the events determined by the Committee or may be awarded as immediately exercisable but
subject to repurchase pursuant to Section 10 hereof as set forth in the Stock Option Agreement governing such Option; provided, however, that (a) no Option will be
exercisable after the expiration of ten (10) years from the date the Option is granted, and (b) no ISO granted to a person who directly or by attribution owns more than ten
percent (10%) of the total combined voting power of all classes of stock of the Company or of any Subsidiary or Parent of the Company (“Ten Percent Stockholder”) will be
exercisable after the expiration of five (5) years from the date the ISO is granted. In no event shall an Option granted to an employee who is a non-exempt employee for
purposes of overtime pay under the U.S. Fair Labor Standards Act of 1938 be exercisable earlier than six (6) months after its date of grant. The Committee may provide for
Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines.
4.4 Exercise Price. The Exercise Price of an Option will be determined by the Committee when the Option is granted and shall not be less than the Fair Market Value per
Share on the date of grant unless expressly determined in writing by the Committee; provided that the Exercise Price of an ISO granted to a Ten Percent Stockholder will not
be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant. Payment for the Shares purchased must be made in accordance with
Section 8 hereof.
4.5 Method of Exercise. Options may be exercised only by delivery to the Company of a stock option exercise agreement (accepted via written, electronic or other
means) (the “Exercise Agreement”) in a form approved by the Committee (which need not be the same for each Participant). The Exercise Agreement will state (a) the
number of Shares being purchased, (b) the restrictions imposed on the Shares purchased under such Exercise Agreement, if any, and (c) such representations and agreements
regarding Participant’s investment intent and access to information and other matters, if any, as may be required or desirable by the Company to comply with applicable
securities or other laws. Each Participant’s Exercise Agreement may be modified by (i) agreement of Participant and the Company or (ii) substitution by the Company, upon
becoming a public company, in order to add the payment terms set forth in Section 8.1 that apply to a public company and such other terms as shall be necessary or advisable
in order to exercise a public company option. Upon exercise of an Option, Participant shall execute and deliver to the Company the Exercise Agreement then in effect,
together with payment in full of the Exercise Price for the number of Shares being purchased and satisfaction of any applicable Tax-Related Items (as defined in Section 8.3
hereof). No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 2.2 of the
Plan. Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number
of Shares as to which the Option is exercised.
Coinbase Global, Inc.
2019 Equity Incentive Plan 3
4.6 Termination. Subject to earlier termination pursuant to Sections 11 and 13 hereof, exercise of an Option will always be subject to the following terms and conditions,
except for any longer exercise period(s) approved by the Committee and set forth in the Stock Option Agreement.
4.6.1 Other than Death or Disability or for Cause. If the Participant is Terminated for any reason other than death, Disability or for Cause, then the
Participant may exercise such Participant’s Options only to the extent that such Options are exercisable as to Vested Shares upon the Termination Date, except as otherwise
determined by the Committee or required by applicable law. Such Options must be exercised by the Participant, if at all, as to all or some of the Vested Shares calculated as of
the Termination Date or such other date determined by the Committee, within three (3) months after the Termination Date (or within such shorter time period, not less than
thirty (30) days, or within such longer time period after the Termination Date as may be determined by the Committee or required by applicable law, with any exercise beyond
three (3) months after the date Participant ceases to be an employee deemed to be an NQSO), but in any event no later than the expiration date of the Options.
4.6.2 Death or Disability. If the Participant is Terminated because of Participant’s death or Disability (or the Participant dies within three (3) months
after a Termination other than for Cause), then Participant’s Options may be exercised only to the extent that such Options are exercisable as to Vested Shares on the
Termination Date, except as otherwise determined by the Committee or required by applicable law. Such Options must be exercised by Participant (or Participant’s legal
representative, in the case of Participant’s incapacity, or Participant’s executor, administrator, heir or legatee, in the case of Participant’s death, as the case may be), if at all, as
to all or some of the Vested Shares calculated as of the Termination Date or such other date determined by the Committee, within twelve (12) months after the Termination
Date (or within such shorter time period, not less than six (6) months, or within such longer time period, after the Termination Date as may be determined by the Committee
or required by applicable law, with any exercise beyond (a) three (3) months after the date Participant ceases to be an employee when the Termination is for any reason other
than the Participant’s death or disability, within the meaning of Section 22(e)(3) of the Code, or (b) twelve (12) months after the date Participant ceases to be an employee
when the Termination is for Participant’s disability, within the meaning of Section 22(e)(3) of the Code, deemed to be an NQSO), but in any event no later than the expiration
date of the Options.
4.6.3 For Cause. If the Participant is Terminated for Cause, any outstanding Option (including any vested portion thereof) held by such Participant
shall immediately terminate in its entirety upon the first notification to the Participant of such Termination. If a Participant’s service is suspended pending an investigation of
whether the Participant will be Terminated for Cause, all the Participant’s rights under any Option, including the right to exercise the Option, shall be suspended during the
investigation period. Nothing in this Section 4.6.3 shall in any way limit the Company’s right to purchase unvested Shares issued upon exercise of an Option as set forth in the
applicable Stock Option Agreement.
4.7 Limitations on Exercise. The Committee may specify a reasonable minimum number of Shares that may be purchased on any exercise of an Option, provided that
such minimum number will not prevent Participant from exercising the Option for the full number of Shares for which it is then exercisable.
4.8 Limitations on ISOs. The aggregate Fair Market Value (determined as of the date of grant) of Shares with respect to which ISOs are exercisable for the first time by a
Participant during any calendar year (under this Plan or under any other incentive stock option plan of the Company or any Subsidiary or
Coinbase Global, Inc.
2019 Equity Incentive Plan 4
Parent of the Company) will not exceed One Hundred Thousand Dollars ($100,000). If the Fair Market Value of Shares on the date of grant with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year exceeds One Hundred Thousand Dollars ($100,000), then the Options for the first One Hundred
Thousand Dollars ($100,000) worth of Shares to become exercisable in such calendar year will be ISOs and the Options for the amount in excess of One Hundred Thousand
Dollars ($100,000) that become exercisable in that calendar year will be NQSOs. In the event that the Code or the regulations promulgated thereunder are amended after the
Effective Date to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, then such different limit will be automatically incorporated
herein and will apply to any Options granted after the effective date of such amendment.
4.9 Modification, Extension or Renewal. The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution
therefor, provided that any such action may not, without the written consent of a Participant, impair any of such Participant’s rights under any Option previously granted,
unless for the purpose of complying with applicable laws and regulations. Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in
accordance with Section 424(h) of the Code. Subject to Section 4.10 hereof, the Committee may reduce the Exercise Price of outstanding Options without the consent of
Participants by a written notice to them; provided, however, that the Exercise Price may not be reduced below the minimum Exercise Price that would be permitted under
Section 4.4 hereof for Options granted on the date the action is taken to reduce the Exercise Price.
4.10 No Disqualification. Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any
discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant, to disqualify
any Participant’s ISO under Section 422 of the Code.
5. RESTRICTED STOCK. A Restricted Stock Award is an offer by the Company to sell to an eligible person Shares that are subject to certain specified
restrictions. The Committee will determine to whom an offer will be made, the number of Shares the person may purchase, the Purchase Price, the restrictions to which the
Shares will be subject, and all other terms and conditions of the Restricted Stock Award, subject to the following terms and conditions.
5.1 Form of Restricted Stock Award. All purchases under a Restricted Stock Award made pursuant to this Plan will be evidenced by an Award Agreement (“Restricted
Stock Purchase Agreement”) that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and will comply
with and be subject to the terms and conditions of this Plan. The Restricted Stock Award will be accepted by the Participant’s execution and delivery of the Restricted Stock
Purchase Agreement (accepted via written, electronic or other means) and full payment for the Shares to the Company within thirty (30) days from the date the Restricted
Stock Purchase Agreement is delivered to the person. If such person does not execute and deliver the Restricted Stock Purchase Agreement along with full payment for the
Shares to the Company within such thirty (30) days, then the offer will terminate, unless otherwise determined by the Committee.
5.2 Purchase Price. The Purchase Price of Shares sold pursuant to a Restricted Stock Award will be determined by the Committee on the date the Restricted Stock
Award is granted. Payment of the Purchase Price must be made in accordance with Section 8 hereof.
Coinbase Global, Inc.
2019 Equity Incentive Plan 5
5.3 Dividends and Other Distributions. Participants holding Restricted Stock Awards will be entitled to receive all dividends and other distributions paid with respect to
such Shares, unless the Committee provides otherwise at the time the Award is granted. If any such dividends or distributions are paid in Shares, the Shares will be subject to
the same restrictions on transferability and forfeitability as the Restricted Stock Awards with respect to which they were paid.
5.4 Restrictions. Restricted Stock Awards may be subject to the restrictions set forth in Sections 9 and 10 hereof or, with respect to a Restricted Stock Award to which
Section 25102(o) is to apply, such other restrictions not inconsistent with Section 25102(o).
6. RESTRICTED STOCK UNITS.
6.1 Awards of Restricted Stock Units. A Restricted Stock Unit (“RSU”) is an Award covering a number of Shares that may be settled in cash, by issuance of those
Shares at a date in the future, or by a combination of cash and Shares. No Purchase Price shall apply to an RSU settled in Shares. All grants of RSUs will be evidenced by an
Award Agreement (the “RSU Agreement”) that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and
will comply with and be subject to the terms and conditions of this Plan. No RSU will have a term longer than ten (10) years from the date the RSU is granted.
6.2 Form and Timing of Settlement. To the extent permissible under applicable law, the Committee may permit a Participant to defer payment (including settlement)
under an RSU to a date or dates after the RSU has vested, provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the Code and any
regulations or rulings promulgated thereunder, to the extent the Participant is subject to Section 409A of the Code. Payment may be made in the form of cash or whole Shares
or a combination thereof, all as the Committee determines.
6.3 Dividend Equivalent Payments. The Board may permit Participants holding RSUs to receive dividend equivalent payments on outstanding RSUs if and when
dividends are paid to stockholders on Shares. In the discretion of the Board, such dividend equivalent payments may be paid in cash or Shares and they may either be paid at
the same time as dividend payments are made to stockholders or delayed until Shares are issued pursuant to the RSU grants and may be subject to the same vesting or
performance requirements as the RSUs. If the Board permits dividend equivalent payments to be made on RSUs, the terms and conditions for such dividend equivalent
payments will be set forth in the RSU Agreement.
7. STOCK APPRECIATION RIGHTS.
7.1 Awards of SARs. Stock Appreciation Rights (“SARs”) may be settled in cash or Shares (which may consist of Restricted Stock or RSUs) or a combination thereof,
having a value equal to the value determined by multiplying (i) the difference between the Fair Market Value on the date of exercise over the Exercise Price and (ii) the
number of Shares with respect to which the SAR is being exercised. All grants of SARs made pursuant to this Plan will be evidenced by an Award Agreement (the “SAR
Agreement”) that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and will comply with and be
subject to the terms and conditions of this Plan.
7.2 Exercise Period and Expiration Date. A SAR will be exercisable within the times or upon the occurrence of events determined by the Committee and set forth in the
SAR Agreement. The SAR Agreement shall set forth the expiration date; provided that no SAR will be exercisable after the expiration of ten (10) years from the date the SAR
is granted.
Coinbase Global, Inc.
2019 Equity Incentive Plan 6
7.3 Exercise Price. The Committee will determine the Exercise Price of the SAR when the SAR is granted, which may not be less than the Fair Market Value on the date
of grant.
7.4 Termination. Subject to earlier termination pursuant to Sections 11 and 13 hereof, exercise of SARs will always be subject to the following terms and conditions,
except for any longer exercise period(s) approved by the Committee and set forth in the SAR Agreement.
7.4.1 Other than Death or Disability or for Cause. If the Participant is Terminated for any reason other than death, Disability or for Cause, then the
Participant may exercise such Participant’s SARs only to the extent that such SARs are exercisable as to Vested Shares upon the Termination Date or as otherwise determined
by the Committee or required by applicable law. SARs must be exercised by the Participant, if at all, as to all or some of the Vested Shares calculated as of the Termination
Date or such other date determined by the Committee, within three (3) months after the Termination Date (or within such shorter time period, not less than thirty (30) days, or
within such longer time period after the Termination Date as may be determined by the Committee or required by applicable law), but in any event no later than the expiration
date of the SARs.
7.4.2 Death or Disability. If the Participant is Terminated because of Participant’s death or Disability (or the Participant dies within three (3) months
after a Termination other than for Cause), then Participant’s SARs may be exercised only to the extent that such SARs are exercisable as to Vested Shares on the Termination
Date or as otherwise determined by the Committee or required by applicable law. Such SARs must be exercised by Participant (or Participant’s legal representative, in the
case of Participant’s incapacity, or Participant’s executor, administrator, heir or legatee, in the case of Participant’s death, as the case may be), if at all, as to all or some of the
Vested Shares calculated as of the Termination Date or such other date determined by the Committee, within twelve (12) months after the Termination Date (or within such
shorter time period, not less than six (6) months, or within such longer time period after the Termination Date as may be determined by the Committee or required by
applicable law), but in any event no later than the expiration date of the SARs.
7.4.3 For Cause. If the Participant is Terminated for Cause, the Participant may exercise such Participant’s SARs, but not to an extent greater than
such SARs are exercisable as to Vested Shares upon the Termination Date and Participant’s SARs shall expire on such Participant’s Termination Date, or at such later time
and on such conditions as are determined by the Committee.
8. PAYMENT FOR PURCHASES AND EXERCISES.
8.1 Payment in General. Payment for Shares acquired pursuant to this Plan may be made in cash (by check or wire transfer), by or Automated Clearing House (“ACH”)
transfer or, where expressly approved for the Participant by the Committee and subject to compliance with applicable law:
(a) by cancellation of indebtedness of the Company owed to the Participant;
(b) by surrender of shares of the Company that are clear of all liens, claims, encumbrances or security interests and: (i) for which the Company
has received “full payment of the purchase price” within the meaning of SEC Rule 144 (and, if such shares were purchased from the Company by use of a promissory note,
such note has been fully paid with respect to such shares) or (ii) that were obtained by Participant in the public market;
(c) by tender of a full recourse promissory note having such terms as may be approved by the Committee and bearing interest at a rate sufficient
to avoid (i) imputation of income
Coinbase Global, Inc.
2019 Equity Incentive Plan 7
under Sections 483 and 1274 of the Code and (ii) unfavorable accounting treatment as determined by the Committee; provided, however, that Participants who are not
employees or directors of the Company will not be entitled to purchase Shares with a promissory note unless the note is adequately secured by collateral other than the Shares;
provided, further, that, if required by applicable law, the portion of the Exercise Price or Purchase Price, as the case may be, equal to the par value (if any) of the Shares must
be paid in cash or other legal consideration permitted by the laws under which the Company is then incorporated or organized;
(d) by waiver of compensation due or accrued to the Participant from the Company for services rendered;
(e) by participating in a formal cashless exercise program implemented by the Committee in connection with the Plan;
(f) provided that a public market for the Common Stock exists, by exercising through a “same day sale” commitment from the Participant and a
broker-dealer whereby the Participant irrevocably elects to exercise the Award and to sell a portion of the Shares so purchased sufficient to pay the total Exercise Price or
Purchase Price, and whereby the broker-dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price or Purchase Price directly to the Company;
or
(g) by any combination of the foregoing or any other method of payment approved by the Committee.
For avoidance of uncertainty: ACH transfers that have been received by the Company into its bank account designated for receipt of such transfers under this Section 8.1 shall
be deemed to have been received for all purposes under this Plan as of the date on which such transfers were initiated from the transferor’s account and made irrevocable by
the transferor.
8.2 Loan Guarantees. The Committee may, in its sole discretion, elect to assist the Participant in paying for Shares purchased under the Plan by authorizing a guarantee
by the Company of a third-party loan to the Participant.
8.3 Withholding Taxes.
8.3.1 Withholding Generally. Prior to any relevant taxable or tax withholding events in connection with the Awards under this Plan, the Company
may require the Participant to pay or make adequate arrangements satisfactory to the Company with respect to any or all income tax, social insurance, payroll tax, fringe
benefits tax, payment on account, withholding and other tax-related items related to the Participant’s participation in this Plan and legally applicable to the Participant
(collectively, “Tax-Related Items”). The Committee may, in its sole discretion and pursuant to such procedures as it may specify from time to time, require or permit a
Participant to satisfy withholding obligations for such Tax-Related Items, in whole or in part by (without limitation) (a) paying cash, (b) having the Company withhold
otherwise deliverable cash or Shares having a value equal to the Tax-Related Items to be withheld or an amount of cash from the Participant’s wages or other cash
compensation which would otherwise be payable to Participant, (c) delivering to the Company already-owned Shares having a value equal to the Tax-Related Items to be
withheld, or (d) withholding from proceeds of the sale of Shares issued pursuant to an Award either through a voluntary sale or through a mandatory sale arranged by the
Company, provided that, in all instances, the satisfaction of the Tax-Related Items will not result in any
Coinbase Global, Inc.
2019 Equity Incentive Plan 8
adverse accounting consequence to the Company, as the Committee may determine in its sole discretion. The Company may withhold or account for these Tax-Related Items
by considering applicable statutory withholding rates or other applicable withholding rates, including maximum rates for the applicable tax jurisdiction to the extent consistent
with applicable laws.
8.3.2 Elections Under Section 83(i) of the Code. A Participant will not make an election under Section 83(i) of the Code if the Company determines
that the Participant is then ineligible to make such an election under applicable law or without the Company’s prior written consent (which will not be unreasonably withheld
or delayed, but may be conditioned upon the Participant’s entry into additional commitments as determined by the Company).
9. RESTRICTIONS ON AWARDS.
9.1 Transferability. Except as permitted by the Committee, Awards granted under this Plan, and any interest therein, will not be transferable or assignable by Participant,
other than by will or by the laws of descent and distribution, and, with respect to NQSOs for Participants in the U.S., by instrument to an inter vivos or testamentary trust in
which the NQSOs are to be passed to beneficiaries upon the death of the trustor (settlor), or by gift to “family member” as that term is defined in Rule 701, and may not be
made subject to execution, attachment or similar process. For the avoidance of doubt, the prohibition against assignment and transfer applies to Awards and any Shares
underlying the Awards prior to the issuance of the Shares, and pursuant to the foregoing sentence shall be understood to include, without limitation, a prohibition against any
pledge, hypothecation, or other transfer, including any short position, any “put equivalent position” or any “call equivalent position” (in each case, as defined in Rule 16a-1
promulgated under the Exchange Act). Unless an Award is transferred pursuant to the terms of this Section, during the lifetime of the Participant an Award will be exercisable
only by the Participant or Participant’s legal representative and any elections with respect to an Award may be made only by the Participant or Participant’s legal
representative. The terms of an Award shall be binding upon the executor, administrator, successors and assigns of the Participant who is a party thereto.
9.2 Securities Law and Other Regulatory Compliance. Although this Plan is intended to be a written compensatory benefit plan within the meaning of Rule 701
promulgated under the Securities Act, Awards may be made pursuant to this Plan that do not qualify for exemption under Rule 701 or Section 25102(o). Any requirement of
this Plan which is required in law only because of Section 25102(o) need not apply with respect to a particular Award to which Section 25102(o) will not apply. An Award
will not be effective unless such Award is in compliance with all applicable foreign, federal, state and local securities laws, rules and regulations of any governmental body,
and the requirements of any stock exchange or automated quotation system upon which the Company’s equity securities may then be listed or quoted, as they are in effect on
the date of grant of the Award and also on the date of exercise, settlement or other issuance. Notwithstanding any other provision in this Plan, the Company will have no
obligation to issue Shares or deliver certificates for Shares under this Plan prior to (a) obtaining any approvals from governmental agencies that the Company determines are
necessary or advisable, and/or (b) compliance with any exemption, completion of any registration or other qualification of such Shares under any foreign, federal, state and
local law or ruling of any governmental body that the Company determines to be necessary or advisable. The Company will be under no obligation to register the Shares with
the SEC or to effect compliance with the exemption, registration, qualification or listing requirements of any securities laws, stock exchange or automated quotation system,
and the Company will have no liability for any inability or failure to do so.
Coinbase Global, Inc.
2019 Equity Incentive Plan 9
9.3 Exchange and Buyout of Awards. The Committee may, at any time or from time to time, authorize the Company, with the consent of the respective Participants, to
issue new Awards in exchange for the surrender and cancellation of any or all outstanding Awards. Without prior stockholder approval the Committee may reprice Options or
SARs (and where such repricing is a reduction in the Exercise Price of outstanding Options or SARs, the consent of the affected Participants is not required provided written
notice is provided to them). The Committee may at any time buy from a Participant an Award previously granted with payment in cash, Shares (including Restricted Stock) or
other consideration, based on such terms and conditions as the Committee and the Participant may agree.
10. RESTRICTIONS ON SHARES.
10.1 Privileges of Stock Ownership. No Participant will have any of the rights of a stockholder with respect to any Shares until such Shares are issued to the Participant.
After Shares are issued to the Participant, the Participant will be a stockholder and have all the rights of a stockholder with respect to such Shares, including the right to vote
and receive all dividends or other distributions made or paid with respect to such Shares; provided that if such Shares are Restricted Stock, then any new, additional or
different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the Restricted Stock. The Participant will have no right to retain such stock dividends or stock
distributions with respect to Unvested Shares that are repurchased as described in this Section 10.
10.2 Rights of First Refusal and Repurchase. At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) in the Award Agreement (a) a
right of first refusal to purchase all Shares that a Participant (or a subsequent transferee) may propose to transfer to a third party, provided that such right of first refusal
terminates upon (i) subject to any applicable market standoff restrictions, the effective date of the first sale of Common Stock to the general public pursuant to a registration
statement filed with and declared effective by the SEC under the Securities Act (other than a registration statement relating solely to the issuance of Common Stock pursuant
to a business combination or an employee incentive or benefit plan); (ii) any transfer or conversion of Shares made pursuant to a statutory merger or statutory consolidation of
the Company with or into another corporation or corporations if the common stock of the surviving corporation or any direct or indirect Parent thereof is registered under the
Exchange Act; or (iii) any transfer or conversion of Shares made pursuant to a statutory conversion of the Company into another form of legal entity if the common equity (or
comparable equity security) of entity resulting from such conversion is registered under the Exchange Act; and (b) a right to repurchase Unvested Shares held by a Participant
for cash and/or cancellation of purchase money indebtedness owed to the Company by the Participant following such Participant’s Termination at any time.
10.3 Agreement to Vote Shares. At the discretion of the Committee, the Company may require that, as a condition to the receipt of the Shares upon issuance of an Award,
exercise of an Option or SAR or settlement of an RSU, the Participant and any transferee of the Shares agree to vote such Shares pursuant to the terms of a Voting Agreement
by and between the Company and certain of its stockholders.
10.4 Escrow; Pledge of Shares. To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to deposit all written or electronic
certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company
or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated. The Committee may cause a legend or legends referencing such
restrictions to be placed on the written or electronic certificate. Any Participant who is permitted to execute a
Coinbase Global, Inc.
2019 Equity Incentive Plan 10
promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant’s obligation to the Company under the promissory note; provided, however, that the Committee may require or
accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the
promissory note notwithstanding any pledge of the Participant’s Shares or other collateral. In connection with any pledge of the Shares, Participant will be required to execute
and deliver a written pledge agreement in such form as the Committee will from time to time approve. The Shares purchased with the promissory note may be released from
the pledge on a pro rata basis as the promissory note is paid.
10.5 Securities Law Restrictions. All written or electronic certificates for Shares or other securities delivered under this Plan will be subject to such stock transfer orders,
legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable foreign, federal, state and local securities law, or
any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Company’s equity securities may be listed or
quoted.
10.6 Transfer Restrictions. All Shares or other securities delivered under this Plan will be subject to any restrictions on transfers of securities as set forth in the
Company’s Bylaws, as may be amended from time to time.
11. CORPORATE TRANSACTIONS.
11.1 Acquisitions or Other Combinations. In the event that the Company is subject to an Acquisition or Other Combination, outstanding Awards acquired under the Plan
shall be subject to the agreement evidencing the Acquisition or Other Combination, which need not treat all outstanding Awards in an identical manner. Such agreement,
without the Participant’s consent, shall provide for one or more of the following with respect to all outstanding Awards as of the effective date of such Acquisition or Other
Combination:
(a) The continuation of such outstanding Awards by the Company (if the Company is the successor entity).
(b) The assumption of outstanding Awards by the successor or acquiring entity (if any) in such Acquisition or Other Combination (or by any of its
Parents, if any), which assumption will be binding on all Participants; provided that the exercise price and the number and nature of shares issuable upon exercise of any such
option or stock appreciation right, or upon the settlement of any award that is subject to Section 409A of the Code, will be adjusted appropriately pursuant to Section 424(a)
and Section 409A of the Code. For the purposes of this Section 11, an Award will be considered assumed if, following the Acquisition or Other Combination, the Award
confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Acquisition or Other Combination, the consideration (whether stock,
cash, or other securities or property) received in the Acquisition or Other Combination by holders of Shares for each Share held on the effective date of the transaction (and if
holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such
consideration received in the Acquisition or Other Combination is not solely common stock of the successor corporation or its Parent, the Committee may, with the consent of
the successor corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the settlement of an RSU, for each
Share subject to such Award, to be solely common stock of the successor corporation or its
Coinbase Global, Inc.
2019 Equity Incentive Plan 11
Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Acquisition or Other Combination.
(c) The substitution by the successor or acquiring entity in such Acquisition or Other Combination (or by any of its Parents, if any) of equivalent
awards with substantially the same terms for such outstanding Awards (except that the exercise price and the number and nature of shares issuable upon exercise of any such
option or stock appreciation right, or any award that is subject to Section 409A of the Code, will be adjusted appropriately pursuant to Section 424(a) and Section 409A of the
Code).
(d) The full or partial exercisability or vesting and accelerated expiration of outstanding Awards.
(e) The settlement of the Fair Market Value of such outstanding Award (whether or not then vested or exercisable) in cash, cash equivalents, or
securities of the successor entity (or its Parent, if any), followed by the cancellation of such Awards; provided, however, that such Award may be cancelled without
consideration if such Award has no value, as determined by the Committee, in its discretion. Subject to Section 409A of the Code, such payment may be made in installments
and may be deferred until the date or dates when the Award would have become exercisable or vested. Such payment may be subject to vesting based on the Participant’s
continued service, provided that without the Participant’s consent, the vesting schedule shall not be less favorable to the Participant than the schedule under which the Award
would have become vested or exercisable. For purposes of this Section 11.1(d), the Fair Market Value of any security shall be determined without regard to any vesting
conditions that may apply to such security.
(f) The termination in its entirety of any outstanding Award, without payment of any consideration, that is not exercised in accordance with its
terms upon or prior to consummation of the transactions contemplated by the Acquisition or Other Combination within a time specified by the Committee, in its discretion, for
such exercise, whether or not such Award is then fully exercisable.
Immediately following an Acquisition or Other Combination, outstanding Awards shall terminate and cease to be outstanding, except to the extent such Awards have
been continued, assumed or substituted, as described in Sections 11.1(a), (b) and/or (c).
11.2 Substitution or Assumption of Awards by the Company. The Company, from time to time, also may substitute or assume outstanding awards granted by another
entity, whether in connection with an acquisition of such other entity or otherwise, by either (a) granting an Award under this Plan in substitution of such other entity’s award
or (b) assuming and/or converting such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this
Plan. Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if
the other entity had applied the rules of this Plan to such grant. In the event the Company assumes an award granted by another entity, the terms and conditions of such award
will remain unchanged (except that the exercise price and the number and nature of shares issuable upon exercise of any such option or stock appreciation right, or any award
that is subject to Section 409A of the Code, will be adjusted appropriately pursuant to Section 424(a) and Section 409A of the Code). In the event the Company elects to grant
a new Option or SAR in substitution for and rather than assuming an existing option or stock appreciation right, such new
Coinbase Global, Inc.
2019 Equity Incentive Plan 12
Option or SAR may be granted with a similarly adjusted Exercise Price and number of underlying Shares and such other changes approved by the Committee, subject to the
consent of the Participant.
12. ADMINISTRATION.
12.1 Committee Authority. This Plan will be administered by the Committee. Subject to the general purposes, terms and conditions of this Plan, and to the direction of the
Board, the Committee will have full power to implement and carry out this Plan. Without limitation, the Committee will have the authority to:
(a) construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan;
(b) prescribe, amend, expand, modify and rescind or terminate rules and regulations relating to this Plan;
(c) approve persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration subject to Awards granted under this Plan;
(f) determine the Fair Market Value in good faith and interpret the applicable provisions of this Plan and the definition of Fair Market Value in
connection with circumstances that impact the Fair Market Value, if necessary;
(g) determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of, or as alternatives to, other Awards
under this Plan or awards under any other incentive or compensation plan of the Company or any Subsidiary or Parent or Affiliate of the Company;
(h) grant waivers of any conditions of this Plan or any Award;
(i) determine the terms of vesting, exercisability and payment (including settlement) of Awards to be granted pursuant to this Plan;
(j) correct any defect, supply any omission, or reconcile any inconsistency in this Plan, any Award, any Award Agreement or any Exercise
Agreement;
(k) determine whether an Award has vested or become exercisable;
(l) extend the vesting period beyond a Participant’s Termination Date;
(m) adopt rules and/or procedures (including the adoption of any subplan under this Plan or any annex or addendum to an Award Agreement)
relating to the operation and administration of the Plan to accommodate or facilitate requirements of local law and procedures outside of the United States;
Coinbase Global, Inc.
2019 Equity Incentive Plan 13
(n) change the vesting schedule of Awards under the Plan prospectively in the event that the Participant’s service status changes between full and
part time status in accordance with Company policies relating to work schedules and vesting of Awards;
(o) delegate any of the foregoing to a subcommittee consisting of one or more directors or executive officers pursuant to a specific delegation as
may otherwise be permitted by applicable law; and
(p) make all other determinations necessary or advisable in connection with the administration of this Plan.
12.2 Indemnification. To the maximum extent permitted by applicable law, each member of the Committee (including officers of the Company, if applicable), or of the
Board, as applicable, shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by
reason of any action taken or failure to act under the Plan or pursuant to the terms and conditions of any Award except for actions taken in bad faith or failures to act in bad
faith, and (ii) any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such
claim, action, suit, or proceeding against him or her, provided that such member shall give the Company an opportunity, at its own expense, to handle and defend any such
claim, action, suit or proceeding before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of
any other rights of indemnification to which such persons may be entitled under the Company’s Certificate of Incorporation or Bylaws, by contract, as a matter of law, or
otherwise, or under any other power that the Company may have to indemnify or hold harmless each such person.
12.3 Standalone, Tandem and Substitute Awards. Awards granted under the Plan may, in the sole discretion of the Committee, be granted either alone or in addition to,
in tandem with, or in substitution for, any other Award granted under the Plan. Awards granted in addition to or in tandem with other Awards may be granted either at the
same time as or at a different time from the grant of such other Awards.
12.4 Committee Composition and Discretion. The Board may delegate full administrative authority over the Plan and Awards to a Committee consisting of at least one
member of the Board (or such greater number as may then be required by applicable law). Unless in contravention of any express terms of this Plan or Award, any
determination made by the Committee with respect to any Award will be made in its sole discretion either (a) at the time of grant of the Award, or (b) subject to Section 4.9
hereof, at any later time. Any such determination will be final and binding on the Company and on all persons having an interest in any Award under this Plan. To the extent
permitted by applicable law, the Committee may delegate to one or more directors or officers of the Company the authority to grant an Award under this Plan.
12.5 Nonexclusivity of the Plan. Neither the adoption of this Plan by the Board, the submission of this Plan to the stockholders of the Company for approval, nor any
provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable,
including, without limitation, the granting of stock options and other equity awards otherwise than under this Plan, and such arrangements may be either generally applicable
or applicable only in specific cases.
Coinbase Global, Inc.
2019 Equity Incentive Plan 14
12.6 Governing Law. This Plan and all agreements hereunder shall be governed by and construed in accordance with the laws of the State of Delaware, without giving
effect to that body of laws pertaining to conflict of laws.
13. EFFECTIVENESS, AMENDMENT AND TERMINATION OF THE PLAN.
13.1 Adoption and Stockholder Approval. This Plan will become effective on the date that it is adopted by the Board (the “Effective Date”). This Plan will be approved
by the stockholders of the Company (excluding Shares issued pursuant to this Plan), consistent with applicable laws, within twelve (12) months before or after the Effective
Date. Upon the Effective Date, the Committee may grant Awards pursuant to this Plan; provided, however, that: (a) no Option or SAR may be exercised prior to initial
stockholder approval of this Plan; (b) no Option or SAR granted pursuant to an increase in the number of Shares approved by the Board shall be exercised prior to the time
such increase has been approved by the stockholders of the Company; (c) in the event that initial stockholder approval is not obtained within the time period provided herein,
all Awards for which only the exemption from California’s securities qualification requirements provided by Section 25102(o) can apply shall be canceled, any Shares issued
pursuant to any such Award shall be canceled and any purchase of such Shares issued hereunder shall be rescinded; and (d) Awards (to which only the exemption from
California’s securities qualification requirements provided by Section 25102(o) can apply) granted pursuant to an increase in the number of Shares approved by the Board
which increase is not approved by stockholders within the time then required under Section 25102(o) shall be canceled, any Shares issued pursuant to any such Awards shall
be canceled, and any purchase of Shares subject to any such Award shall be rescinded.
13.2 Term of Plan. Unless earlier terminated as provided herein, this Plan will automatically terminate ten (10) years after the Effective Date.
13.3 Amendment or Termination of Plan. Subject to Section 4.9 hereof, the Board may at any time (a) terminate or amend this Plan in any respect, including without
limitation amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan and (b) terminate any and all outstanding Options, SARs or RSUs
upon a dissolution or liquidation of the Company, followed by the payment of creditors and the distribution of any remaining funds to the Company’s stockholders; provided,
however, that the Board will not, without the approval of the stockholders of the Company, amend this Plan in any manner that requires such stockholder approval pursuant to
Section 25102(o) or pursuant to the Code or the regulations promulgated under the Code as such provisions apply to ISO plans. The termination of the Plan, or any
amendment thereof, shall not affect any Share previously issued or any Award previously granted under the Plan.
14. DEFINITIONS. For all purposes of this Plan, the following terms will have the following meanings.
“Acquisition,” for purposes of Section 11, means:
(a) any consolidation or merger in which the Company is a constituent entity or is a party in which the voting stock and other voting securities of
the Company that are outstanding immediately prior to the consummation of such consolidation or merger represent, or are converted into, securities of the surviving entity of
such consolidation or merger (or of any Parent of such surviving entity) that, immediately after the consummation of such consolidation or merger, together possess less than
fifty percent (50%) of the total voting power of all voting securities of such surviving entity (or of
Coinbase Global, Inc.
2019 Equity Incentive Plan 15
any of its Parents, if any) that are outstanding immediately after the consummation of such consolidation or merger;
(b) a sale or other transfer by the holders thereof of outstanding voting stock and/or other voting securities of the Company possessing more than
fifty percent (50%) of the total voting power of all outstanding voting securities of the Company, whether in one transaction or in a series of related transactions, pursuant to
an agreement or agreements to which the Company is a party and that has been approved by the Board, and pursuant to which such outstanding voting securities are sold or
transferred to a single person or entity, to one or more persons or entities who are Affiliates of each other, or to one or more persons or entities acting in concert; or
(c) the sale, lease, transfer or other disposition, in a single transaction or series of related transactions, by the Company and/or any Subsidiary or
Subsidiaries of the Company, of all or substantially all the assets of the Company and its Subsidiaries taken as a whole (or, if substantially all of the assets of the Company
and its Subsidiaries taken as a whole are held by one or more Subsidiaries, the sale or disposition (whether by consolidation, merger, conversion or otherwise) of such
Subsidiaries of the Company), except where such sale, lease, transfer or other disposition is made to the Company or one or more wholly owned Subsidiaries of the Company.
Notwithstanding the foregoing, the following transactions shall not constitute an “Acquisition”: (1) the closing of the Company’s first public offering pursuant to an effective
registration statement filed under the Securities Act or (2) any transaction the sole purpose of which is to change the state of incorporation of the Company or to create a
holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.
“Affiliate” of a specified person means a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under
common control with, the person specified (where, for purposes of this definition, the term “control” (including the terms “controlling,” “controlled by” and “under common
control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the
ownership of voting securities, by contract, or otherwise.
“Award” means any award pursuant to the terms and conditions of this Plan, including any Option, Restricted Stock Unit, Stock Appreciation Right or
Restricted Stock Award.
“Award Agreement” means, with respect to each Award, the executed written or electronic agreement between the Company and the Participant setting forth
the terms and conditions of the Award as approved by the Committee. For purposes of the Plan, the Award Agreement may be accepted by a Participant via written, electronic
or other means, subject to requirements under applicable law.
“Board” means the Board of Directors of the Company.
“Cause” means, unless another definition is provided in an applicable Award Agreement, employment agreement or other applicable written agreement,
Termination because of: (i) any material breach by Participant of any material written agreement between Participant and the Company and Participant’s failure to cure such
breach within 30 days after receiving written notice thereof; (ii) any failure by Participant to comply with the Company’s material written policies or rules as they may be in
effect from time to time; (iii) neglect or persistent unsatisfactory performance of Participant’s duties and Participant’s failure to cure such condition within 30 days after
receiving written notice thereof; (iv)
Coinbase Global, Inc.
2019 Equity Incentive Plan 16
Participant’s repeated failure to follow reasonable and lawful instructions from the Board or Chief Executive Officer and Participant’s failure to cure such condition within 30
days after receiving written notice thereof; (v) Participant’s conviction of, or plea of guilty or nolo contendre to, any felony or crime that results in, or is reasonably expected
to result in, a material adverse effect on the business or reputation of the Company; (vi) Participant’s commission of or participation in an act of fraud against the Company;
(vii) Participant’s intentional material damage to the Company’s business, property or reputation; or (viii) Participant’s unauthorized use or disclosure of any proprietary
information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the
Company. For purposes of clarity, a termination without “Cause” does not include any termination that occurs as a result of Participant’s death or Disability. The
determination as to whether a Participant has been Terminated for Cause shall be made in good faith by the Company and shall be final and binding on the Participant. The
foregoing definition does not in any way limit the Company’s ability to terminate a Participant’s employment or consulting relationship at any time, and the term “Company”
will be interpreted to include any Subsidiary, Parent, Affiliate, or any successor thereto, if appropriate.
“Code” means the U.S. Internal Revenue Code of 1986, as amended.
“Committee” means the committee created and appointed by the Board to administer this Plan, or if no committee is created and appointed, the Board.
“Common Stock” means the Company’s Class A Common Stock, $0.00001 par value per share (“Class A Common Stock”).
“Company” means Coinbase Global, Inc., a Delaware corporation, or any successor corporation.
“Disability” means a Participant is unable to perform the duties of his or her customary position of employment by reason of any medically determinable
physical or mental impairment that can be expected to result in death or that can be expected to last for a continuous period of not less than twelve (12) months. The
Committee may require such medical or other evidence as it deems necessary to judge the nature and permanency of the Participant’s condition.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Exercise Price” means the price per Share at which a holder of an Option or a SAR may purchase Shares issuable upon exercise of the Option or the SAR.
“Fair Market Value” means, as of any date, the value of a Share determined as follows:
(a) if such Share is then publicly traded on a national securities exchange, its closing price on the date of determination on the principal national
securities exchange on which the Share is listed or admitted to trading as reported in The Wall Street Journal;
(b) if such Share is publicly traded but is not listed or admitted to trading on a national securities exchange, the average of the closing bid and ask
prices on the date of determination as reported by The Wall Street Journal (or as otherwise reported by any newspaper or other source as the Committee may determine); or
Coinbase Global, Inc.
2019 Equity Incentive Plan 17
(c) if none of the foregoing is applicable to the valuation in question, by the Committee in good faith.
“Option” means an award of an option to purchase Shares pursuant to Section 4 of this Plan.
“Other Combination” for purposes of Section 11 means any (a) consolidation or merger in which the Company is a constituent entity and is not the surviving
entity of such consolidation or merger or (b) any conversion of the Company into another form of entity; provided that such consolidation, merger or conversion does not
constitute an Acquisition.
“Parent” of a specified entity means, any entity that, either directly or indirectly, owns or controls such specified entity, where for this purpose, “control”
means the ownership of stock, securities or other interests that possess at least a majority of the voting power of such specified entity (including indirect ownership or control
of such stock, securities or other interests).
“Participant” means a person who receives an Award under this Plan.
“Plan” means this 2019 Equity Incentive Plan, as amended from time to time.
“Purchase Price” means the price at which a Participant may purchase Restricted Stock pursuant to this Plan.
“Restricted Stock” means Shares purchased pursuant to a Restricted Stock Award under this Plan.
“Restricted Stock Award” means an award of Shares pursuant to Section 5 hereof.
“Restricted Stock Unit” or “RSU” means an award made pursuant to Section 6 hereof.
“Rule 701” means Rule 701 et seq. promulgated by the SEC under the Securities Act.
“SEC” means the U.S. Securities and Exchange Commission.
“Section 25102(o)” means Section 25102(o) of the California Corporations Code.
“Securities Act” means the U.S. Securities Act of 1933, as amended.
“Shares” means shares of Common Stock reserved for issuance under this Plan, as adjusted pursuant to Sections 2.2 and 11 hereof, and any successor
security.
“Stock Appreciation Right” or “SAR” means an award granted pursuant to Section 7 hereof.
“Subsidiary” means any entity (other than the Company) in an unbroken chain of entities beginning with the Company if each of the entities other than the
last entity in the unbroken chain owns stock or other equity securities representing fifty percent (50%) or more of the total combined voting power of all classes of stock or
other equity securities in one of the other entities in such chain.
Coinbase Global, Inc.
2019 Equity Incentive Plan 18
“Termination” or “Terminated” means, for purposes of this Plan with respect to a Participant, that the Participant has for any reason ceased to provide
services as an employee, officer, director or consultant to the Company or a Subsidiary or Parent or Affiliate of the Company. A Participant will not be deemed to have ceased
to provide services while the Participant is on a bona fide leave of absence, if such leave was approved by the Company or the applicable Subsidiary or Parent or Affiliate of
the Company in writing. In the case of an approved leave of absence, the Committee may make such provisions respecting crediting of service, including suspension of
vesting of the Award (including pursuant to a formal policy adopted from time to time by the Company) it may deem appropriate. The Committee will have sole discretion to
determine whether a Participant has ceased to provide services and the effective date on which the Participant ceased to provide services (the “Termination Date”).
“Unvested Shares” means “Unvested Shares” as defined in the Award Agreement for an Award.
“Vested Shares” means “Vested Shares” as defined in the Award Agreement for an Award.
* * * * * * * * * * *
Coinbase Global, Inc.
2019 Equity Incentive Plan 19
GLOBAL NOTICE OF STOCK OPTION GRANT
COINBASE GLOBAL, INC.
2019 EQUITY INCENTIVE PLAN
The Optionee named below (“Optionee”) has been granted an option (this “Option”) to purchase Shares of Coinbase Global, Inc. (the “Company”), pursuant to the
Company’s 2019 Equity Incentive Plan (the “Plan”) on the terms, and subject to the conditions, described below and in the Global Stock Option Agreement attached hereto as
Exhibit A including, if Optionee is a citizen of, or resident of or works outside of the United States, any special terms and conditions in the addendum attached thereto (the
“Addendum” and together with the Global Stock Option Agreement, the “Agreement”).
Optionee [l]
Maximum Number of Shares Subject to this Option [l]
Exercise Price per Share (USD) [l]
Date of Grant [l]
Vesting Start Date [l]
Exercise Schedule This Option will become exercisable during its term with respect to portions of the Shares in
accordance with the Vesting Schedule set forth below.
Expiration Date: The date ten (10) years after the Date of Grant set forth above, subject to earlier expiration as provided
in the Agreement or the Plan.
U.S. Tax Status of Option (Check Only One Box): ❑ Incentive Stock Option (To the fullest extent permitted by the Code)
❑ Nonqualified Stock Option.
(If neither box is checked, this Option is a Nonqualified Stock Option).
Vesting Schedule: [l]
Transferability: Optionee may not transfer this Option except as set out in the Agreement. You must obtain Board
approval prior to any transfer of the Shares received upon exercise of this Option.
General; Agreement: By Optionee’s acceptance hereof (whether written, electronic or otherwise), Optionee and the Company agree that this Option is granted under and
governed by this Global Notice of Stock Option Grant (this “Grant Notice”) and by the provisions of the Plan and the Agreement. The Plan and the Agreement are
incorporated herein by reference. Capitalized terms used but not defined herein shall have the meanings given to them in the Plan or in the Agreement, as applicable. By
Optionee’s acceptance hereof (whether written, electronic or otherwise), Optionee acknowledges receipt of a copy of this Grant Notice, the Plan and the Agreement,
represents that Optionee has carefully read and is familiar with their provisions, and hereby accepts this Option subject to all of their respective terms and conditions. The
Option grant shall be subject to any additional or replacement terms and conditions set forth in the Addendum, which is attached to and made a part of this Grant Notice.
Optionee acknowledges that there may be adverse tax consequences as a result of the Option (including upon grant or exercise of the Option or disposition of the Shares) and
that Optionee should consult a tax adviser generally about the taxation of the Option. Optionee agrees and acknowledges that the Vesting Schedule may change
prospectively in the event that Optionee’s service status changes between full and part-time status in accordance with Company policies relating to work schedules and
vesting of equity awards. This Option and any Shares subject to the Option as well as any Shares issued after February 12, 2016 (regardless of how Optionee acquired the
Shares) shall be subject to the Company’s Second Amended and Restated Bylaws (the “Bylaws”), including, but not limited to, certain transfer restrictions as summarized in
the Agreement below, as in effect at the time of any proposed transfer (the “Bylaw Restrictions”). By Optionee’s signature below, Optionee agrees that the Bylaw
Restrictions, including the transfer restrictions set forth in the Agreement, shall also apply to any Shares or other stock options or equity awards that Optionee has acquired or
been granted in the past (including, without limitation, any Shares, options or other equity awards that you acquired or were granted prior to the Date of Grant of this Option).
Execution and Delivery: This Grant Notice may be executed and delivered electronically whether via the Company’s intranet or the Internet site of a third party or via email
or any other means of electronic delivery specified by the Company. Optionee hereby consents to receive such documents by electronic delivery and agrees to participate in
the Plan through an online or electronic system established and maintained by the Company or any third party involved in administering the Plan which the Company may
designate. By Optionee’s acceptance hereof (whether written, electronic or otherwise), Optionee agrees, to the fullest extent permitted by law, that in lieu of receiving
documents in paper format, Optionee accepts the electronic delivery of any documents that the Company (or any third party the Company may designate) may deliver in
connection with this Option (including the Plan, this Grant Notice, the Agreement, the information described in Rules 701(e)(2), (3), (4) and (5) under the Securities Act,
account statements, or other communications or information) whether via the Company’s intranet or the Internet site of such third party or via email or such other means of
electronic delivery specified by the Company.
Restrictions on Transfer: This Option is subject to restrictions on transfer and generally may not be transferred, except as set forth in the Agreement (see Sections 6 and 7
and the Addendum) and the Plan.
2
COINBASE GLOBAL, INC.
By/Signature: Optionee Signature:
Typed Name: Optionee Name:
Title:
ATTACHMENT:
Exhibit A – Global Stock Option Agreement
3
EXHIBIT A
GLOBAL STOCK OPTION AGREEMENT
GLOBAL STOCK OPTION AGREEMENT
COINBASE GLOBAL, INC.
2019 EQUITY INCENTIVE PLAN
This Global Stock Option Agreement, including, if Optionee is a citizen of, or resident of or works outside of the United States, any special terms and conditions in the
addendum attached thereto (the “Addendum” and, together with the Global Stock Option Agreement, this “Agreement”), is made and entered into as of the date of grant (the
“Date of Grant”) set forth on the Global Notice of Stock Option Grant attached as the facing page to this Agreement (the “Grant Notice”) by and between Coinbase Global,
Inc. (the “Company”) and the optionee named on the Grant Notice (“Optionee”). Capitalized terms not defined in this Agreement shall have the meaning ascribed to them in
the Company’s 2019 Equity Incentive Plan (the “Plan”), or in the Grant Notice, as applicable.
1. GRANT OF OPTION. The Company hereby grants to Optionee an option (this “Option”) to purchase up to the total number of Shares set forth in the Grant
Notice at the Exercise Price Per Share set forth in the Grant Notice (the “Exercise Price”), subject to all of the terms and conditions of the Grant Notice, this Agreement and
the Plan. If designated as an Incentive Stock Option for United States tax purposes in the Grant Notice, this Option is intended to qualify as an incentive stock option (the
“ISO”) within the meaning of Section 422 of the United States Internal Revenue Code of 1986, as amended (the “Code”).
2. EXERCISE PERIOD.
(a) Vesting of Option Shares. Shares with respect to which this Option is vested and exercisable at a given time pursuant to the Vesting Schedule set
forth in the Grant Notice are “Vested Shares.” Shares with respect to which this Option is not vested and exercisable at a given time pursuant to the Vesting Schedule set forth
in the Grant Notice are “Unvested Shares.”
(b) Exercise Period of Option. This Option is considered to be “vested” with respect to any particular Shares when this Option is exercisable with
respect to such Shares. This Option will become vested during its term as to portions of the Shares in accordance with the Vesting Schedule set forth in the Grant Notice.
Notwithstanding any provision in the Plan or this Agreement to the contrary, on or after Optionee’s Termination Date, this Option shall expire immediately with respect to
any Unvested Shares and may not be exercised with respect to any Unvested Shares on or after Optionee’s Termination Date.
(c) Expiration. The Option shall expire on the Expiration Date set forth in the Grant Notice or earlier as provided in this Agreement or the Plan.
3. TERMINATION.
(a) Termination for Any Reason Except Death, Disability or Cause (and without Death Following Termination).
(i) Except as provided in Section 3(b)(i) below in the event of Optionee’s death following Termination for any reason other than for Cause, if
Optionee is Terminated for any reason (other than Optionee’s death or Disability or for Cause) and Section 3(a)(ii) below does not apply, then (a) on Optionee’s Termination
Date, this Option shall expire immediately with respect to any Shares
that are Unvested Shares as of Optionee’s Termination Date and may not be exercised with respect to any such Unvested Shares, and (b) this Option, to the extent that it is
exercisable with respect to Vested Shares on Optionee’s Termination Date, may be exercised by Optionee no later than three (3) months after Optionee’s Termination Date
(but in no event may this Option be exercised after the Expiration Date).
(ii) Notwithstanding the foregoing, if Optionee has remained in continuous service with the Company or any Subsidiary or Parent or Affiliate of
the Company as an employee, officer, director or consultant for at least two (2) years as of Optionee’s Termination Date, and Optionee is Terminated for any reason (other
than Optionee’s death or Disability or for Cause), then this Option, to the extent that it is exercisable with respect to Vested Shares on Optionee’s Termination Date, may be
exercised by Optionee no later than the earliest to occur of (i) the seven (7)-year anniversary of the Termination Date and (ii) the Expiration Date (the earliest to occur of
clauses (i) and (ii), the “Extended Exercise Period”), subject to the Company’s ability to take any of the actions set forth in Section 11.1 of the Plan.
(b) Termination Because of Death or Disability (or in the Event of Death Following Termination).
(i) If Optionee is Terminated because of Optionee’s death or Disability (or in the event Optionee dies within three (3) months of the date of
Optionee’s Termination for any reason other than for Cause and Section 3(a)(i) above would otherwise apply) and Section 3(b)(ii) below does not apply, then (a) on
Optionee’s Termination Date, this Option shall expire immediately with respect to any Shares that are Unvested Shares as of Optionee’s Termination Date and may not be
exercised with respect to any such Unvested Shares, and (b) this Option, to the extent that it is exercisable with respect to Vested Shares on Optionee’s Termination Date, may
be exercised by Optionee (or Optionee’s legal representative, in the case of Optionee’s incapacity, or Optionee’s executor, administrator, heir or legatee, in the case of
Optionee’s death, as the case may be) no later than twelve (12) months after Optionee’s Termination Date, but in any event no later than the Expiration Date.
(ii) Notwithstanding the foregoing, if Optionee has remained in continuous service with the Company or any Subsidiary or Parent or Affiliate of
the Company as an employee, officer, director or consultant for at least two (2) years as of Optionee’s Termination Date, and Optionee is Terminated because of Optionee’s
death or Disability, then this Option, to the extent that it is exercisable with respect to Vested Shares on Optionee’s Termination Date, may be exercised by Optionee during
the Extended Exercise Period, subject to the Company’s ability to take any of the actions set forth in Section 11.1 of the Plan.
(c) Termination for Cause. If Optionee is Terminated for Cause, then this Option shall expire immediately upon the first notification to Optionee of such
Termination for Cause. If Optionee’s service with the Company or any Subsidiary or Parent or Affiliate of the Company is suspended pending an investigation of whether
Optionee will be Terminated for Cause, all Optionee’s rights under this Option, including the right to exercise this Option, shall be suspended during the investigation period.
(d) Impact on ISOs. Any exercise of this Option beyond (i) three (3) months after the date Optionee ceases to be an employee when Optionee’s
Termination is for any reason other than Optionee’s death or disability, within the meaning of Section 22(e)(3) of the Code; or (ii) twelve (12)
2
months after the date Optionee ceases to be an employee when the termination is for Optionee’s disability, within the meaning of Section 22(e)(3) of the Code, is deemed to
be an NQSO.
(e) No Obligation to Employ. Nothing in the Plan or this Agreement shall confer on Optionee any right to continue in the employ of, or other
relationship with, the Company (or any Subsidiary or Parent or Affiliate of the Company), or limit in any way the right of the Company (or, if different, the Subsidiary or
Parent or Affiliate of the Company for which Optionee is rendering services (the “Employer”)) to terminate Optionee’s employment or other relationship at any time, with or
without Cause, subject to applicable laws.
4. MANNER OF EXERCISE.
(a) Stock Option Exercise Notice and Agreement. To exercise this Option, Optionee (or in the case of exercise after Optionee’s incapacity, Optionee’s
legal representative, or in the case of exercise after Optionee’s death, Optionee’s executor, administrator, heir or legatee, as the case may be) must deliver to the Company an
executed Stock Option Exercise Notice and Agreement in the form attached hereto as Annex A, or in such other form as may be approved by the Committee from time to
time (the “Exercise Agreement”) and payment for the Shares being purchased in accordance with this Agreement and applicable Tax-Related Items. The Exercise Agreement
shall set forth, among other things, (i) Optionee’s election to exercise this Option, (ii) the number of Shares being purchased, (iii) any representations, warranties and
agreements regarding Optionee’s investment intent and access to information as may be required by the Company to comply with applicable laws in connection with any
exercise of this Option and (iv) any other agreements required by the Company. If someone other than Optionee exercises this Option, then such person must submit
documentation reasonably acceptable to the Company verifying that such person has the legal right to exercise this Option and such person shall be subject to all of the
restrictions contained herein as if such person were Optionee.
(b) Limitations on Exercise. This Option may not be exercised unless such exercise is in compliance with all applicable foreign, federal, state and local
securities and other laws, as they are in effect on the date of exercise.
(c) Payment. The Exercise Agreement shall be accompanied by full payment of the Exercise Price for the Shares being purchased in cash (by check or
wire transfer), Automated Clearing House transfer (in any case, in United States Dollars), or subject to compliance with applicable law:
(i) by cancellation of indebtedness of the Company owed to Optionee;
(ii) if permitted by the Company, by surrender of shares of the Company that are free and clear of all security interests, pledges, liens, claims or
encumbrances and: (i) for which the Company has received “full payment of the purchase price” within the meaning of SEC Rule 144 (and, if such shares were purchased
from the Company by use of a promissory note, such note has been fully paid with respect to such shares) or (ii) that were obtained by Optionee in the public market;
(iii) by participating in a formal cashless exercise program implemented by the Committee in connection with the Plan;
(iv) provided that a public market for the Common Stock exists, by exercising as set forth below, through a “same day sale” commitment from
Optionee and a broker-dealer whereby Optionee irrevocably elects to exercise this Option and to sell a portion of the Shares so
3
purchased sufficient to pay the total Exercise Price, and whereby the broker-dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price
directly to the Company; or
(v) by any combination of the foregoing or any other method of payment approved by the Committee that constitutes legal consideration for the
issuance of Shares.
(d) Tax Withholding. As a condition to the exercise of this Option, Optionee must pay or make adequate provision for all applicable foreign, federal,
state and local income tax, social insurance, payroll tax, fringe benefits tax, payment on account, withholding and other tax-related items related to the Option and Optionee’s
participation in the Plan and legally applicable to Optionee, including, as applicable, obligations of the Company or, if different, Optionee’s employer (the “Employer”) (all
the foregoing tax-related items, “Tax-Related Items”).
(e) Issuance of Shares. Provided that the Exercise Agreement and payment or provision for Tax-Related Items are in form and substance satisfactory to
counsel for the Company, and subject to Section 5 below, the Company shall issue the Shares issuable upon a valid exercise of this Option registered in the name of Optionee
and shall deliver certificates representing the Shares with the appropriate legends affixed thereto.
5. COMPLIANCE WITH LAWS AND REGULATIONS.
(a) General. The Plan and this Agreement are intended to comply with Section 25102(o) and Rule 701. If deemed necessary by the Company, any
provision of this Agreement that is inconsistent with Section 25102(o) or Rule 701 shall, without further act or amendment by the Company or the Committee, be reformed to
comply with the requirements of Section 25102(o) and/or Rule 701. The exercise of this Option and the issuance and transfer of Shares shall be subject to and conditioned
upon compliance by the Company and Optionee (including any written representations, warranties and agreements as the Committee may request of Optionee for compliance
with applicable laws) with all applicable foreign, federal, state and local securities laws or other law, rules and regulations of any governmental body, and the requirements of
any stock exchange or automated quotation system upon which the Company’s equity securities may then be listed or quoted, as they are in effect on the Date of Grant and
also on the date of exercise. Optionee may not be issued any Shares if such issuance would constitute a violation of any applicable foreign, federal, state and local securities
laws or other law or regulations or the requirements of any stock exchange or automated quotation system upon which the Shares or other equity securities of the Company
may then be listed or quoted. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal
counsel to be necessary to the lawful issuance and sale of any Shares shall relieve the Company of any liability in respect of the failure to issue or sell such Shares. Optionee
understands that the Company is under no obligation to register or qualify the Shares with the SEC, any state securities commission or any stock exchange to effect such
compliance.
(b) Non-U.S. Optionees. If Optionee’s country of residence is other than the United States, Optionee makes the following additional representations,
warranties and agreements:
(i) Optionee is not a U.S. Person as defined in Rule 902(k) of Regulation S under the Securities Act. The offer and sale of the Shares to such
Optionee was made in an offshore transaction (as defined in Rule 902(h) of Regulation S), no directed selling efforts (as defined in Rule 902(c) of Regulation S) were made in
the United States, and the Optionee is not acquiring the Shares for the account or benefit of any U.S. Person;
4
(ii) Optionee will not, during the Restricted Period applicable to the Shares included in the legend set forth in Section 12(c)(ii) below (the
“Restricted Period”) and on any certificate representing the Shares, offer or sell any of the foregoing securities (or create or maintain any derivative position equivalent
thereto) in the United States, to or for the account or benefit of a U.S. Person or other than in accordance with Regulation S;
(iii) Optionee will, after the expiration of the applicable Restricted Period, offer, sell, pledge or otherwise transfer the Shares (or create or
maintain any derivative position equivalent thereto) only pursuant to registration under the Securities Act or any available exemption therefrom and, in any case, in
accordance with applicable state securities laws; and
(iv) Optionee acknowledges and agrees that the Company shall not register the transfer of the Shares in violation of this Agreement, the Plan or
any of the restrictions set forth herein or therein.
6. NONTRANSFERABILITY OF OPTION. This Option may not be transferred in any manner other than by will or by the laws of descent and distribution,
and may be exercised during the lifetime of Optionee only by Optionee or, in the event of Optionee’s incapacity, by Optionee’s legal representative. The terms of this Option
shall be binding upon the executors, administrators, successors and assigns of Optionee.
7. RESTRICTIONS ON TRANSFER.
(a) Restriction on Transfer. Optionee shall not transfer, assign, grant a lien or security interest in, pledge, hypothecate, encumber or otherwise dispose of
the Shares or any interest in the Shares issued pursuant to this Agreement (including the Addendum) (including, without limitation, a transfer by gift or operation of law)
except in compliance with the provisions of the Plan, this Agreement (including the Addendum), the Company’s Bylaws, the Company’s then current Insider Trading Policy,
and applicable securities and other laws.
(b) Transfer of Shares. Any Holder (as defined below) seeking to transfer of some or all of its Shares shall give written notice thereof to the Secretary of
the Company that shall include: (i) the name of the Holder; (ii) the proposed transferee; (iii) the number of Shares of the transfer of which approval is thereby requested; (iv)
the purchase price (if any) of the shares proposed for transfer; (v) written assurances, in form and substance satisfactory to counsel for the Company, that (a) the proposed
disposition does not require registration of the Shares under the Securities Act or under any applicable foreign, federal, state and local securities or other laws or (b) all
appropriate actions necessary for compliance with the registration requirements of the Securities Act or of any exemption from registration available under the Securities Act
(including Rule 144) or applicable foreign, federal, state and local securities and other laws have been taken; and (vi) written assurances, in form and substance satisfactory to
the Company, that the proposed disposition will not result in the contravention of any transfer restrictions applicable to the Shares pursuant to the provisions of the regulations
promulgated under Section 25102(o), Rule 701 or under any other applicable securities or other laws or adversely affect the Company’s ability to rely on the exemption(s)
from registration under the Securities Act or under any other applicable securities or other laws for the grant of this Option, the issuance of Shares thereunder or any other
issuance of securities under the Plan. The Company may require the Holder to supplement its notice with such additional information as the Company may request.
5
(c) Transferee Obligations. Each person (other than the Company) to whom the Shares or any interest therein are transferred by means of one of the
permitted transfers specified in this Agreement must, as a condition precedent to the validity of such transfer, acknowledge in writing to the Company that such person is
bound by the provisions of this Agreement and that the transferred Shares are subject to (i) the Company’s Bylaws, (ii) the Company’s Right of First Refusal granted
hereunder, (iii) the market stand-off provisions of Section 8 below and (iv) the other restrictions on transferability contained herein and in the Plan, to the same extent such
Shares would be so subject if retained by Optionee.
(d) Purported Transfers. Any purported transfer of any Shares of the Company’s stock effected in violation of this Section 7 or otherwise in the Plan or
this Agreement (including the Addendum) shall be null and void and shall have no force or effect and the Company shall not register any such purported transfer.
8. MARKET STANDOFF AGREEMENT. Optionee agrees that, subject to any early release provisions that apply pro rata to stockholders of the Company
according to their holdings of Common Stock (determined on an as-converted into Common Stock basis), Optionee will not, if requested by the managing underwriter(s) in
the initial underwritten sale of Common Stock of the Company to the public pursuant to a registration statement filed with, and declared effective by, the SEC under the
Securities Act (the “IPO”), for a period of up to one hundred eighty (180) days following the effective date of the registration statement relating to such IPO (plus up to an
additional period of time to the extent reasonably requested by the Company or such underwriter(s) to accommodate regulatory restrictions on the publication or other
distribution of research reports or earnings releases by the Company, including National Association of Securities Dealers and New York Stock Exchange rules), directly or
indirectly sell, offer to sell, grant any option for the sale of, or otherwise dispose of any Common Stock or securities convertible into Common Stock, except for sales of any
securities to be included in the registration statement for the IPO. For the avoidance of doubt, the provisions of this Section 8 shall only apply to the IPO. In order to enforce
the foregoing covenant, the Company shall have the right to place restrictive legends on the certificates representing the Shares subject to this Section 8 and to impose stop
transfer instructions with respect to the Shares until the end of such period. Optionee further agrees to enter into any agreement reasonably required by the underwriters to
implement the foregoing restrictions on transfer. For the avoidance of doubt, the foregoing provisions of this Section 8 shall not apply to any registration of securities of the
Company (a) under an employee benefit plan or (b) in a merger, consolidation, business combination or similar transaction.
9. COMPANY’S RIGHT OF FIRST REFUSAL. Before any Shares held by Optionee or any transferee of such Shares (either sometimes referred to herein as
the “Holder”) may be sold or otherwise transferred (including, without limitation, a transfer by gift or operation of law), the Company and/or its assignee(s) will have a right
of first refusal to purchase the Shares to be sold or transferred (the “Offered Shares”) on the terms and conditions set forth in this Section 9 (the “Right of First Refusal”).
(a) Notice of Proposed Transfer. The Holder of the Offered Shares will deliver to the Company a written notice (the “Notice”) stating: (i) the Holder’s
bona fide intention to sell or otherwise transfer the Offered Shares; (ii) the name and address of each proposed purchaser or other transferee (the “Proposed Transferee”); (iii)
the number of Offered Shares to be transferred to each Proposed Transferee; (iv) the bona fide cash price or other consideration (in any case, denominated in U.S. dollars) for
which the Holder proposes to transfer the Offered Shares (the “Offered Price”); and (v) that the Holder acknowledges this Notice is an offer to sell the Offered Shares to the
Company and/or its
6
assignee(s) pursuant to the Company’s Right of First Refusal at the Offered Price as provided for in this Agreement.
(b) Exercise of Right of First Refusal. At any time within thirty (30) days after the date of the Notice, the Company and/or its assignee(s) may, by
giving written notice to the Holder, elect to purchase all (or, with the consent of the Holder, less than all) the Offered Shares proposed to be transferred to any one or more of
the Proposed Transferees named in the Notice, at the purchase price determined as specified below.
(c) Purchase Price. The purchase price for the Offered Shares purchased under this Section 9 will be the Offered Price, provided that if the Offered Price
consists of no legal consideration (as, for example, in the case of a transfer by gift) then the purchase price will be the fair market value of the Offered Shares as determined in
good faith by the Committee (and denominated in U.S. dollars). If the Offered Price includes consideration other than cash, then the value of the non-cash consideration, as
determined in good faith by the Committee, will conclusively be deemed to be the cash equivalent value of such non-cash consideration (and denominated in U.S. dollars).
(d) Payment. Payment of the purchase price for the Offered Shares will be payable, at the option of the Company and/or its assignee(s) (as applicable),
by check or by cancellation of all or a portion of any outstanding purchase money indebtedness owed by the Holder to the Company (or to such assignee, in the case of a
purchase of Offered Shares by such assignee) or by any combination thereof. The purchase price will be paid without interest within sixty (60) days after the Company’s
receipt of the Notice, or, at the option of the Company and/or its assignee(s), in the manner and at the time(s) set forth in the Notice.
(e) Holder’s Right to Transfer. If all of the Offered Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by
the Company and/or its assignee(s) as provided in this Section 9, then the Holder may sell or otherwise transfer such Offered Shares to each Proposed Transferee at the
Offered Price or at a higher price, provided that (i) such sale or other transfer is consummated within ninety (90) days after the date of the Notice, (ii) any such sale or other
transfer is effected in compliance with all applicable securities and exchange laws, and (iii) each Proposed Transferee agrees in writing that the provisions of this Section 9
will continue to apply to the Offered Shares in the hands of such Proposed Transferee. If the Offered Shares described in the Notice are not transferred to each Proposed
Transferee within such ninety (90) day period, then a new Notice must be given to the Company pursuant to which the Company will again be offered the Right of First
Refusal before any Shares held by the Holder may be sold or otherwise transferred.
(f) Termination of Right of First Refusal. The Right of First Refusal will terminate as to all Shares: (i) subject to the market standoff restrictions set
forth in Section 8, on the effective date of the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared
effective by the SEC under the Securities Act (other than a registration statement relating solely to the issuance of Common Stock pursuant to a business combination or an
employee incentive or benefit plan); (ii) on any transfer or conversion of Shares made pursuant to a statutory merger or statutory consolidation of the Company with or into
another corporation or corporations if the Common Stock of the surviving corporation or any direct or indirect parent corporation thereof is registered under the Exchange
Act; or (iii) on any transfer or conversion of Shares made pursuant to a statutory conversion of the Company into another form of legal entity if the common equity (or
comparable equity security) of entity resulting from such conversion is registered under the Exchange Act.
7
(g) Effect of Company Co-Sale Agreement. If Optionee is, or at any time hereafter becomes, a party to or otherwise bound by (i) the Company’s
Amended and Restated Right of First Refusal and Co-Sale Agreement dated as of October 26, 2018, among the Company and certain stockholders of the Company, as such
may be amended and/or restated from time to time, and/or (ii) any other agreement that is a successor to or replacement of such agreement (collectively, the “Company Co-
Sale Agreement”), then, in the event of any conflict or inconsistency between the provisions of Section 8 hereof and/or this Section 9 and any provisions in the Company Co-
Sale Agreement granting the Company and/or other security holders of the Company rights of first refusal and/or co-sale rights with respect to any or all of the Shares or
imposing market stand-off restrictions, Optionee agrees with the Company that the terms and conditions of the Company Co-Sale Agreement shall apply, govern, supersede
and prevail over (and in lieu of) the provisions of Section 8 hereof and/or of this Section 9 (as applicable) so long as the Company Co-Sale Agreement is in effect and
Optionee is a party to or bound thereby. If the Company Co-Sale Agreement is no longer in effect or if Optionee is not a party to or bound thereby, then the provisions of this
Section 9 shall apply in full force and effect until termination of the Right of First Refusal and the provisions of Section 8 hereof shall apply in full force and effect in
accordance with its terms. As a material inducement and consideration for the Company to enter into this Agreement, Optionee hereby agrees that if, the Company requests
Optionee to enter into and become a party to (a) the Company Co-Sale Agreement (and to subject the Shares to the rights of first refusal held by the Company and other
Company investors thereunder and the co-sale rights of other investors thereunder) and/or (b) the Company Voting Agreement (as defined below), pursuant to which Optionee
would agree to vote all shares of Company stock held by Optionee for the election of directors and in favor of certain material transactions (such as mergers or sales of the
Company), then Optionee will enter into such agreements and execute and deliver signature pages thereto (as requested by the Company) in such capacities as the Company
requests, at the time of exercising this Option and as a condition to such exercise or at any later time.
10. RIGHTS AS A STOCKHOLDER. Optionee shall not have any of the rights of a stockholder with respect to any Shares unless and until such Shares are
issued to Optionee. Subject to the terms and conditions of this Agreement, Optionee will have all of the rights of a stockholder of the Company with respect to the Shares
from and after the date that Shares are issued to Optionee pursuant to, and in accordance with, the terms of the Exercise Agreement until such time as Optionee disposes of the
Shares or the Company and/or its assignee(s) exercise(s) the Right of First Refusal. Upon an exercise of the Right of First Refusal, Optionee will have no further rights as a
holder of the Shares so purchased upon such exercise, other than the right to receive payment for the Shares so purchased in accordance with the provisions of this Agreement,
and Optionee will promptly surrender the stock certificate(s) evidencing the Shares so purchased to the Company for transfer or cancellation.
11. ESCROW. As security for Optionee’s faithful performance of this Agreement, Optionee agrees, immediately upon issuance of the stock certificate(s)
evidencing the Shares, to consent to the delivery of such certificate(s) to the Secretary of the Company or other designee of the Company (the “Escrow Holder”), who is
hereby appointed to hold such certificate(s) in escrow and to take all such actions and to effectuate all such transfers and/or releases of such Shares as are in accordance with
the terms of this Agreement. Optionee and the Company agree that Escrow Holder will not be liable to any party to this Agreement (or to any other party) for any actions or
omissions unless Escrow Holder is grossly negligent or intentionally fraudulent in carrying out the duties of Escrow Holder under this Agreement. Escrow Holder may rely
upon any letter, notice or other document executed with any signature purported to be genuine and may rely on the advice of counsel and obey any order of any court with
respect to the transactions contemplated by this Agreement and will not be liable for any act or
8
omission taken by Escrow Holder in good faith reliance on such documents, the advice of counsel or a court order. The Shares will be released from escrow upon termination
of the Right of First Refusal.
12. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
(a) General. The certificates representing the Shares issued hereunder shall be subject to such stop transfer orders and other restrictions as the Committee
may deem advisable under the Plan, this Agreement, the Bylaws, or the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock
exchange upon which such shares of the Company’s Common Stock are listed, and any applicable federal, foreign or state laws, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such restrictions. The certificates representing the Shares issued hereunder shall bear the following
legends, in addition to any other legends deemed advisable by the Committee:
(i) THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON RESALE AND
TRANSFER, INCLUDING THE RIGHT OF FIRST REFUSAL HELD BY THE ISSUER AND/OR ITS ASSIGNEE(S) AS SET FORTH IN A STOCK OPTION
AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL
OFFICE OF THE ISSUER. SUCH SALE AND TRANSFER RESTRICTIONS, INCLUDING THE RIGHT OF FIRST REFUSAL, ARE BINDING ON TRANSFEREES OF
THESE SHARES.
(ii) THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A MARKET STANDOFF RESTRICTION AS SET FORTH
IN A CERTAIN STOCK OPTION AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE
OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. AS A RESULT OF SUCH AGREEMENT, THESE SHARES MAY NOT BE TRADED PRIOR TO 180
DAYS (AND POSSIBLY LONGER) AFTER THE EFFECTIVE DATE OF CERTAIN PUBLIC OFFERINGS OF THE COMMON STOCK OF THE ISSUER HEREOF.
SUCH RESTRICTION IS BINDING ON TRANSFEREES OF THESE SHARES.
(iii) THE TRANSFER OF SECURITIES REFERENCED HEREIN IS SUBJECT TO RESTRICTIONS REQUIRING APPROVAL OF THE
COMPANY PURSUANT TO AND IN ACCORDANCE WITH THE COMPANY’S BYLAWS, COPIES OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST
TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS. THE COMPANY SHALL NOT REGISTER OR OTHERWISE RECOGNIZE OR GIVE EFFECT TO
ANY PURPORTED TRANSFER OF SHARES OF STOCK THAT DOES NOT COMPLY WITH THE COMPANY’S BYLAWS.
(b) U.S. Optionees. Optionee understands and agrees that, if Optionee’s country of residence is the United States, then the Company will place the
legends set forth below or similar legends on any stock certificate(s) evidencing the Shares: THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE
SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
9
PERIOD OF TIME. THE ISSUER OF THESE SHARES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
(c) Non-U.S. Optionees; Regulation S. Optionee understands and agrees that, if Optionee’s country of residence is other than the United States, the
certificates evidencing the Shares will bear the legend set forth in below or similar legends:
(i) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “ACT”) WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, AND THE COMPANY DOES NOT INTEND TO
REGISTER THEM.
(ii) PRIOR TO A DATE THAT IS ONE YEAR STARTING FROM THE DATE OF SALE OF THE SHARES, THE SHARES MAY NOT BE
OFFERED OR SOLD (INCLUDING OPENING A SHORT POSITION IN SUCH SECURITIES) IN THE UNITED STATES OR TO U.S. PERSONS AS DEFINED BY
RULE 902(K) ADOPTED UNDER THE ACT, OTHER THAN TO DISTRIBUTORS, UNLESS THE SHARES ARE REGISTERED UNDER THE ACT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE. HOLDERS OF SHARES PRIOR TO ONE YEAR STARTING FROM
THE DATE OF SALE OF THE SHARES MAY RESELL SUCH SHARES ONLY PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT OR
OTHERWISE IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S OF THE ACT, OR IN TRANSACTIONS EFFECTED OUTSIDE OF THE UNITED
STATES, PROVIDED THEY DO NOT SOLICIT (AND NO ONE ACTING ON THEIR BEHALF SOLICITS) PARTICIPANTS IN THE UNITED STATES OR
OTHERWISE ENGAGE(S) IN SELLING EFFORTS IN THE UNITED STATES AND PROVIDED THAT HEDGING TRANSACTIONS INVOLVING THESE SHARES
MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.
(iii) A HOLDER OF THE SHARES WHO IS A DISTRIBUTOR, DEALER, SUB-UNDERWRITER OR OTHER SECURITIES
PROFESSIONAL, IN ADDITION, CANNOT, PRIOR TO ONE YEAR STARTING FROM THE DATE OF SALE OF THE SHARES, RESELL THE SHARES TO A U.S.
PERSON AS DEFINED BY RULE 902(K) OF REGULATION S UNLESS THE SHARES ARE REGISTERED UNDER THE ACT OR AN EXEMPTION FROM
REGISTRATION UNDER THE ACT IS AVAILABLE.
(d) Stop-Transfer Instructions. Optionee agrees that, to ensure compliance with the restrictions imposed by this Agreement, the Company may issue
appropriate “stop-transfer” instructions to its transfer agent, if any, and if the Company transfers its own securities, it may make appropriate notations to the same effect in its
own records.
(e) Refusal to Transfer. The Company will not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation
of any of the provisions of this Agreement or (ii) to treat as owner of such Shares, or to accord the right to vote or pay dividends to any purchaser or other transferee to whom
such Shares have been so transferred.
13. VOTING AGREEMENT. Optionee agrees that if Optionee becomes a party to (i) the Company Co-Sale Agreement or (ii) (A) the Company’s Amended and
Restated Voting Agreement dated
10
as of October 26, 2018, among the Company and certain stockholders of the Company, as such may be amended and/or restated from time to time, and/or (B) any other voting
agreement that is a successor to or replacement of such agreement (collectively, the “Company Voting Agreement”), then Optionee agrees that the stock certificate(s)
evidencing the Shares shall, in addition, bear any legends required under the Company Co-Sale Agreement and/or the Company Voting Agreement, as applicable.
14. CERTAIN TAX CONSEQUENCES AND NO ADVICE REGARDING GRANT. OPTIONEE SHOULD CONSULT A TAX ADVISER
APPROPRIATELY QUALIFIED IN THE COUNTRY OR COUNTRIES IN WHICH OPTIONEE RESIDES OR IS SUBJECT TO TAXATION BEFORE ACCEPTING OR
EXERCISING THIS OPTION OR DISPOSING OF THE SHARES. The Company is not providing any tax, legal, or financial advice, nor is the Company making any
representations or recommendations regarding Optionee’s participation in the Plan, or Optionee’s acquisition or sale of the Shares.
(a) Tax Advice. Optionee has obtained any necessary advice from an appropriate independent professional adviser in relation to the Tax-Related Items in
connection with the grant, exercise, assignment, release, cancellation or any other disposal of this Option pursuant to the Plan and on any subsequent sale of the Shares. In
signing and returning this Agreement, the Optionee is confirming that appropriate advice has been sought from an independent adviser.
(b) Notice of Disqualifying Disposition of ISO Shares. If Optionee sells or otherwise disposes of any of the Shares acquired pursuant to an ISO on or
before the later of (i) two years after the Grant Date and (ii) one year after the exercise date, Optionee will immediately notify the Company in writing of such disposition.
(c) Responsibility for Taxes. Regardless of any action the Company or Employer takes with respect to any or all Tax-Related Items, Optionee
acknowledges that the ultimate liability for all Tax-Related Items legally due from Optionee is and remains Optionee’s responsibility and that the Company and/or the
Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Option, including the grant,
vesting or exercise of this Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends, and (ii) do not commit to structure the
terms of the grant or any aspect of this Option to reduce or eliminate Optionee’s liability for Tax-Related Items or achieve any particular tax result. Optionee acknowledges
that if Optionee is subject to Tax-Related Items in more than one jurisdiction, the Company and/or the Employer may be required to withhold or account for Tax-Related
Items in more than one jurisdiction. Optionee acknowledges that Optionee’s liability for Tax-Related Items may exceed the amount actually withheld by the Company or the
Employer.
(d) Arrangements to Satisfy Tax-Related Items. Prior to any relevant taxable or tax withholding event (“Tax Date”), as applicable, Optionee will pay
or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, Optionee authorizes the Company and/or the
Employer or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following: (i) accept a
cash payment in the amount of Tax-Related Items, (ii) withhold whole Shares which would otherwise be delivered to Optionee having an aggregate Fair Market Value as of
the determination date or withhold an amount from Optionee’s wages or other cash compensation which would otherwise be payable to Optionee by the Company and/or the
Employer, equal to the amount necessary to satisfy any such obligations, (iii) withhold from proceeds of the sale of Shares acquired upon exercise of the Option either through
a voluntary sale or through a mandatory sale arranged by the Company (on Optionee’s behalf
11
pursuant to this authorization), or (iv) accept a cash payment to the Company by a broker-dealer acceptable to the Company to whom Optionee has submitted an irrevocable
notice of exercise; all under such rules as may be established by the Committee and in compliance with the Company’s Insider Trading Policy and 10b5-1 Trading Plan
Policy, if applicable.
(e) Maximum Withholding. The Company and/or the Employer may withhold or account for Tax-Related Items by considering up to applicable
maximum statutory withholding rates. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, Optionee is deemed to have been issued
the full number of Shares subject to the Option, notwithstanding that a number of shares of Common Stock are held back solely for the purpose of paying the Tax-Related
Items. Finally, Optionee shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a
result of Optionee’s participation in the Plan that cannot be satisfied by the means previously described. The Company shall have sole discretion to deliver the Shares if
Optionee fails to comply with Optionee’s obligations in connection with the Tax-Related Items as described in this Section 14 and Optionee unconditionally consents to and
approves any such action taken by the Company. Optionee (or any beneficiary or person entitled to act on Optionee’s behalf) shall provide the Company with any forms,
documents or other information reasonably required by the Company in connection with the Company’s or the Employer’s withholding and/or tax reporting obligations.
15. ACKNOWLEDGEMENT. The Company and Optionee agree that the Option is granted under and governed by the Grant Notice, this Agreement and by the
provisions of the Plan (incorporated herein by reference). Optionee: (i) acknowledges receipt of a copy of each of the foregoing documents, (ii) represents that Optionee has
carefully read and is familiar with their provisions, and (iii) hereby accepts the Option subject to all of the terms and conditions set forth herein and those set forth in the Plan
and the Grant Notice.
16. AWARD SUBJECT TO COMPANY CLAWBACK OR RECOUPMENT. The Option shall be subject to clawback or recoupment pursuant to any
compensation clawback or recoupment policy adopted by the Board or required by law during the term of Optionee’s employment or other service that is applicable to
executive officers, employees, directors or other service providers of the Company, and in addition to any other remedies available under such policy and applicable law may
require the cancellation of the Option (whether vested or unvested) and the recoupment of any gains realized with respect to the Option.
17. NOTICES. Any and all notices required or permitted to be given to a party pursuant to the provisions of this Agreement will be in writing and will be
effective and deemed to provide such party sufficient notice under this Agreement on the earliest of the following: (i) at the time of personal delivery, if delivery is in person;
(ii) at the time an electronic confirmation of receipt is received, if delivery is by email; (iii) at the time of transmission by facsimile, addressed to the other party at its
facsimile number specified herein (or hereafter modified by subsequent notice to the parties hereto), with confirmation of receipt made by both telephone and printed
confirmation sheet verifying successful transmission of the facsimile; (iv) one (1) business day after deposit with an express overnight courier for United States deliveries, or
two (2) business days after such deposit for deliveries outside of the United States, with proof of delivery from the courier requested; or (v) three (3) business days after
deposit in the United States mail by certified mail (return receipt requested) for United States deliveries. Any notice for delivery outside the United States will be sent by
email, facsimile or by express courier. Any notice not delivered personally or by email will be sent with postage and/or other charges prepaid and properly addressed to
Optionee at the last known address or facsimile number on the books of the Company, or at
12
such other address or facsimile number as such other party may designate by one of the indicated means of notice herein to the other parties hereto or, in the case of the
Company, to it at its principal place of business. Notices to the Company will be marked “Attention: General Counsel.” Notices by facsimile shall be machine verified as
received.
18. GOVERNING LAW AND VENUE. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without
giving effect to that body of laws pertaining to conflict of laws. If any provision of this Agreement is determined by a court of law to be illegal or unenforceable, then such
provision will be enforced to the maximum extent possible and the other provisions will remain fully effective and enforceable. For purposes of any action, lawsuit or other
proceedings brought to enforce this Agreement, relating to it, or arising from it, the parties hereby submit to and consent to the sole and exclusive jurisdiction of the courts of
San Francisco, California, or the federal courts for the United States for the Northern District of California, and no other courts, where this grant is made and/or to be
performed.
19. ADDENDUM. Notwithstanding any provisions in this Agreement, the Option grant shall be subject to any special terms and conditions set forth in the
Addendum attached hereto if Optionee’s country of residence is other than the United States, including the special terms and conditions (if any) set forth beneath the name of
such country on the Addendum. Moreover, if Optionee relocates to a country other than the United States, the special terms and conditions set forth in the Addendum,
including the special terms and conditions (if any) set forth beneath the name of such country on the Addendum, will apply to Optionee to the extent the Company determines
that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Addendum constitutes an integral part of this Agreement to
the extent applicable to Optionee from time to time.
20. FURTHER ASSURANCES. The parties agree to execute such further documents and instruments and to take such further actions as may be reasonably
necessary to carry out the purposes and intent of this Agreement. The Company reserves the right to impose other requirements on Optionee’s participation in the Plan, on this
Option and on any Shares acquired upon exercise of this Option, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to
require Optionee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
21. GENERAL PROVISIONS.
(a) Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by Optionee or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and binding on the Company and Optionee.
(b) Entire Agreement. The Plan, the Grant Notice and the Exercise Agreement are each incorporated herein by reference. This Agreement (including the
Addendum and the annexes attached hereto), the Grant Notice, the Plan and the Exercise Agreement constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede all prior undertakings and agreements with respect to such subject matter.
(c) Titles and Headings. The titles, captions and headings of this Agreement are included for ease of reference only and will be disregarded in
interpreting or construing this Agreement. Unless otherwise specifically stated, all references herein to “sections” and “exhibits” will mean “sections” and “exhibits” to this
Agreement.
13
(d) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered will be deemed an
original, and all of which together shall constitute one and the same agreement.
(e) Severability. If any provision of this Agreement is determined by any court or arbitrator of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, such provision will be enforced to the maximum extent possible given the intent of the parties hereto. If such clause or provision cannot be so
enforced, such provision shall be stricken from this Agreement and the remainder of this Agreement shall be enforced as if such invalid, illegal or unenforceable clause or
provision had (to the extent not enforceable) never been contained in this Agreement. Notwithstanding the forgoing, if the value of this Agreement based upon the substantial
benefit of the bargain for any party is materially impaired, which determination as made by the presiding court or arbitrator of competent jurisdiction shall be binding, then
both parties agree to substitute such provision(s) through good faith negotiations.
(f) Waiver. Optionee acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a
waiver of any other provision of this Agreement, or of any subsequent breach by Optionee or any other person who holds an outstanding Option.
(g) Successors and Assigns. The Company may assign any of its rights under this Agreement, including its rights to purchase Shares under the Right of
First Refusal. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth
herein, this Agreement shall be binding upon Optionee and Optionee’s heirs, executors, administrators, legal representatives, successors and assigns.
* * * * *
Attachments:
Addendum to Global Stock Option Agreement
Annex A: Form of Global Stock Option Exercise Notice and Agreement
14
ADDENDUM
TO
GLOBAL STOCK OPTION AGREEMENT
COINBASE GLOBAL, INC.
2019 EQUITY INCENTIVE PLAN
Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Global Notice of Stock Option Grant, the Global Stock Option Agreement to
which this Addendum is attached and/or the Plan, as applicable.
Terms and Conditions
This Addendum includes additional terms and conditions that govern the Option granted to Optionee under the Plan if Optionee resides and/or works outside of the United
States.
If Optionee is a citizen or resident of a country other than the one in which he or she is currently working and/or residing, transfers to another country after the Date of Grant,
is a consultant, changes employment status to a consultant position or is considered a resident of another country for local law purposes, the Company shall, in its discretion,
determine the extent to which the special terms and conditions contained herein shall be applicable to Optionee. References to Optionee’s Employer shall include any entity
that engages Optionee’s services.
In accepting this Option, Optionee acknowledges, understands and agrees to the following:
1. Data Privacy Information and Consent. The Company is located at 548 Market Street, San Francisco, CA, United States, and grants awards to employees
of the Company and its Subsidiaries, Parent and Affiliates, at the Company’s sole discretion. If Optionee would like to participate in the Plan, please review the following
information about the Company’s data processing practices.
1.1 Data Collection and Usage. The Company or, if different, Optionee’s employer (the “Employer”), and its Subsidiaries, Parent or affiliates collect,
process, transfer and use personal data about Plan participants that is necessary for the purpose of implementing, administering and managing the Plan. This personal data may
include Optionee’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality and citizenship, job
title, any shares or directorships held in the Company, details of all awards or other entitlements to Shares, granted, canceled, exercised, vested, unvested or outstanding in
Optionee’s favor and any other personal information that could identify Optionee (collectively, without limitation, “Data”), which the Company receives from Optionee or the
Employer. If the Company offers Optionee an award under the Plan, then the Company will collect Optionee’s Data for purposes of allocating stock and implementing,
administering and managing the Plan and will process such Data in accordance with the Company’s then-current data privacy policies, which are made available to Optionee
upon commencing employment and also available upon request.
1.2 Stock Plan Administration Service Providers. The Company transfers Data to an independent stock plan administrator and other third parties based in
the United States, which assists the Company with the implementation, administration and management of the Plan. In the future, the
Company may select a different service provider and share Optionee’s Data with another company that serves in a similar manner. Optionee understands that the recipients of
the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than
Optionee’s country. The Company’s service provider may open an account for Optionee to receive Shares. Optionee will be asked to agree on separate terms and data
processing practices with the service provider, which is a condition to Optionee’s ability to participate in the Plan. Optionee understands that Optionee may request a list with
the names and addresses of any potential recipients of the Data by contacting Optionee’s local human resources representative, only if permitted by applicable laws and
regulations. Optionee authorizes the Company and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering
and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing
Optionee’s participation in the Plan.
1.3 Data Retention. The Company will use Optionee’s Data only as long as is necessary to implement, administer and manage Optionee’s participation in
the Plan or as required to comply with legal or regulatory obligations, including under tax and security laws. When the Company no longer needs Optionee’s Data, the
Company will remove it from its systems. If the Company keeps Optionee’s Data longer, it would be to satisfy legal or regulatory obligations and the Company’s legal basis
would be relevant laws or regulations. Optionee understands that Optionee may, at any time, view Data, request additional information about the storage and processing of
Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing Optionee’s local human
resources representative.
1.4 Consent; Voluntariness and Consequences of Denial or Withdrawal. Where permitted by applicable local law in the country where Optionee resides,
consent is a requirement for participation in the Plan. In such cases, by accepting this grant, Optionee hereby agrees with the data processing practices as described in this
notice and grants such consent to the processing and transfer of his or her Data as described in this Addendum and as necessary for the purpose of administering the Plan.
Optionee’s participation in the Plan and Optionee’s grant of consent is purely voluntary. Optionee may deny or withdraw his or her consent at any time; provided that if
Optionee does not consent, or if Optionee withdraws his or her consent, Optionee cannot participate in the Plan unless required by applicable law. This would not affect
Optionee’s salary as an employee or his or her career; Optionee would merely forfeit the opportunities associated with the Plan.
1.5 Data Subject Rights. Optionee has a number of rights under data privacy laws in his or her country. Depending on where Optionee is based,
Optionee’s rights may include the right to (i) request access or copies of Optionee’s Data the Company processes, (ii) have the Company rectify Optionee’s incorrect Data
and/or delete Optionee’s Data, (iv) restrict processing of Optionee’s Data, (v) have portability of Optionee’s Data, (vi) lodge complaints with the competent tax authorities in
Optionee’s country and/or (vii) obtain a list with the names and addresses of any potential recipients of Optionee’s Data. To receive clarification regarding Optionee’s rights
or to exercise Optionee’s rights please contact the Company at 548 Market Street, San Francisco, CA, United States, Attn: Stock Administration.
1.6 Special Data Provisions for Optionees Residing and/or Working in Member Countries of the European Union and/or the European Economic Area. If
Optionee resides and/or works
2
in a member country of the European Union and/or the European Economic Area, the following provisions supplement this Section 1:
(a) GDPR Compliance. To the satisfaction and on the direction of the Committee, all operations of the Plan and this Option (at the time of its
grant and as necessary thereafter) shall include or be supported by appropriate agreements, notifications and arrangements in respect of Data and its use and processing under
the Plan, in order to secure (I) the reasonable freedom of the Employer, the Company and any Parent or Subsidiary (together, the “Group”), as appropriate, to operate the Plan
and for connected purposes, and (II) compliance with the data-protection requirements applicable from time to time, including, if applicable, and without limitation,
Regulation EU 2016/679 of the European Parliament and of the Council of 27 April 2016.
(b) Optionee has certain rights under data protection legislation as summarised below:
• Right of access: Optionee has the right to obtain from us confirmation as to whether or not personal data concerning Optionee is being processed, and, where
that is the case, to request access to the personal data, as well as certain information on how we are processing such data.
• Right to rectification: Optionee has the right to obtain from us the rectification of inaccurate personal data concerning Optionee. Considering the purpose of
the processing, Optionee may also, in some cases, be entitled to supplemental information regarding incomplete personal data.
• Right to erasure (right to be forgotten): Optionee may, in certain circumstances, have his or her personal data deleted, for example if Optionee’s personal
information is no longer necessary in relation to the purpose for which it was collected, if Optionee has objected to the processing of personal data and we do
not have a legitimate interest which outweighs Optionee’s interest, if the personal data has been processed unlawfully, or if the personal data must be deleted
to comply with a legal obligation.
• Right to restriction of processing: Optionee may require that the Company restrict the processing of Optionee’s personal data in certain cases, for example
where the Company no longer needs Optionee’s personal data but Optionee needs it to determine, enforce or defend legal claims or Optionee has objected to
processing based on the Company’s legitimate interest in order to enable the Company to check if its interest overrides Optionee’s interest.
• Right to data portability: In some circumstances, Optionee may be entitled to receive the personal data concerning Optionee which Optionee provided to the
Company in a structured, commonly used and machine-readable format and Optionee has the right to transmit those personal data to another controller.
• Right to object: Optionee has the right to object to the processing of Optionee’s personal data in certain circumstances, for example where the processing is
based on the Company’s legitimate interest. If so, in order to continue processing, the Company must be able to show compelling legitimate grounds that
override Optionee’s interests, rights and freedoms.
3
(c) Optionee’s rights will in each case be subject to the restrictions set out in applicable data protection laws. Further information on these rights,
and the circumstances in which they may arise in connection with the Company’s processing of Optionee’s personal data, can be obtained by contacting Optionee’s local
human resources representative. If Optionee wants to review, verify, correct or request erasure of Optionee’s personal information, object to the processing of Optionee’s
personal data, or request that the Company transfer a copy of Optionee’s personal information to another party, please contact Optionee’s local human resources
representative.
(d) The Company agrees to ensure that Data transferred outside the European Economic Area will be done pursuant to a lawful transfer
mechanism (for example, European Commission approved model contract clauses).
(e) The Company will separately provide the Optionee with information in a data privacy notice on the collection, processing and transfer of their
personal data, including the grounds for processing.
(f) If Optionee has any grievance, issue or problem in respect of the handling or processing of Optionee’s personal data in any way, Optionee has
the right to lodge a complaint to the UK Information Commissioner's Office, whose contact details are as follows: Information Commissioner’s Office, Wycliffe House,
Water Lane, Wilmslow Cheshire, SK9 5AF, 0303 123 1113; [email protected]. Alternatively, Optionee can contact the Company’s Data Protection Officer at
[email protected]
2. Insider Trading Restrictions/Market Abuse Laws. Optionee acknowledges that, if and when the Shares are publicly listed on any stock exchange,
depending on his or her country, Optionee may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, which may affect his or her
ability to directly or indirectly, accept, acquire, sell or attempt to sell or otherwise dispose of Shares or rights to the Shares, or rights linked to the value of Shares during such
times as Optionee is considered to have “inside information” regarding the Company (as defined by the laws and/or regulations in applicable jurisdictions or Optionee’s
country). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders placed by Optionee before possessing the inside information.
Furthermore, Optionee may be prohibited from (i) disclosing inside information to any third party, including fellow employees (other than on a “need to know” basis) and (ii)
“tipping” third parties or causing them to otherwise buy or sell securities. Any restrictions under these laws or regulations are separate from and in addition to any restrictions
that may be imposed under any applicable Company insider trading policy. Optionee acknowledges that it is Optionee’s responsibility to comply with any applicable
restrictions, and Optionee is advised to speak to his or her personal advisor on this matter.
3. Language. Optionee acknowledges that he or she is sufficiently proficient in English to understand the terms and conditions of this Agreement. Furthermore,
if Optionee has received this Agreement, or any other document related to the Option and/or the Plan translated into a language other than English and if the meaning of the
translated version is different than the English version, the English version will control.
4. Foreign Asset/Account Reporting Requirements. Optionee acknowledges that there may be certain foreign asset and/or account reporting requirements
which may affect Optionee’s ability to acquire or hold Shares acquired under the Plan or cash received from participating in the Plan in a brokerage account outside his or her
country. Optionee may also be required to repatriate sale proceeds or
4
other funds received as a result of participating in the Plan to his or her country through a designated bank or broker within a certain time after receipt. It is Optionee’s
responsibility to be compliant with such regulations and Optionee should speak with his or her personal advisor on this matter.
5. Extraordinary Compensation. Optionee acknowledges, understands and agrees that the Option and any Shares acquired under the Plan and the income and
value of same, are not part of normal or expected compensation for any purpose and are extraordinary items of compensation outside the scope of Optionee’s employment
contract, if any, and is not to be considered part of his or her normal or expected compensation for any purpose, including, without limitation, calculating severance,
resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension, retirement or welfare benefits or similar payments.
6. Participation Ceases When Employment Ceases. For purposes of the Option, Optionee’s service will be considered Terminated as of the date Optionee is
no longer actively providing services to the Company or any of its Parent, Subsidiaries, the Employer or Affiliates (regardless of the reason for such Termination and whether
or not later found to be invalid or in breach of laws in the jurisdiction where Optionee is employed or the terms of Optionee’s employment agreement, if any), and
employment shall not be extended by any notice period or garden leave mandated by local law, provided however, that a change in status from an employee to a consultant or
advisor shall not terminate the Optionee’s continuous service, unless determined by the Committee, in its discretion. Unless otherwise expressly provided in this Agreement or
determined by the Company, (i) Optionee’s right to vest in the Option under the Plan, if any, will terminate as of such date and will not be extended by any notice period (e.g.,
Optionee’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under laws in the jurisdiction where
Optionee is employed or the terms of Optionee’s employment agreement, if any); and (ii) the period (if any) during which Optionee may exercise the Option after such
Termination of Optionee’s service will commence on the date Optionee ceases to actively provide services and will not be extended by any notice period mandated under laws
in the jurisdiction where Optionee is employed or terms of Optionee’s employment agreement, if any. The Committee shall have the exclusive discretion to determine when
Optionee is no longer actively providing services for purposes of the Option (including whether Optionee may still be considered to be providing services while on a leave of
absence).
7. Additional Acknowledgments and Agreements. In accepting this Option, Optionee also acknowledges, understands and agrees that:
• the Plan is established voluntarily by the Company, it is discretionary in nature, and may be amended, suspended or terminated by the Company at any time, to
the extent permitted by the Plan;
• the grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of options, or benefits in lieu of
options, even if options have been granted in the past;
• all decisions with respect to future options or other grants, if any, will be at the sole discretion of the Company;
• the Option and Optionee’s participation in the Plan shall not create a right to employment or other service or be interpreted as forming or amending an
employment or service contract with the Company, Employer, or any Subsidiary or Parent or Affiliate of the
5
Company and shall not interfere with the ability of the Company, the Employer or any Subsidiary or Parent or Affiliate of the Company, as applicable, to
terminate Optionee’s employment or other service relationship;
• Optionee is voluntarily participating in the Plan;
• the Option and any Shares acquired under the Plan are not intended to replace any pension or retirement rights or compensation;
• the future value of the Shares underlying the Option is unknown, indeterminable, and cannot be predicted with certainty;
• if the underlying Shares do not increase in value, the Option will have no value;
• if Optionee exercises the Option and acquires Shares, the value of such Shares may increase or decrease in value, even below the Exercise Price;
• no claim or entitlement to compensation or damages shall arise from forfeiture of the Option resulting from the Termination of Optionee’s service (for any
reason whatsoever, whether or not later found to be invalid or in breach of laws in the jurisdiction where Optionee is employed or the terms of Optionee’s
employment agreement, if any), and in consideration of the grant of the Option to which Optionee is otherwise not entitled, Optionee irrevocably agrees never
to institute any claim against the Company, any of its Parent, Subsidiaries, Affiliates or the Employer, waives his or her ability, if any, to bring any such claim,
and releases the Company, any of its Parent, Subsidiaries, Affiliates and the Employer from any such claim; if, notwithstanding the foregoing, any such claim
is allowed by a court of competent jurisdiction, then, by participating in the Plan, Optionee shall be deemed irrevocably to have agreed not to pursue such
claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claim;
• unless otherwise provided in the Plan or by the Company in its discretion, the Option and the benefits evidenced by this Agreement do not create any
entitlement to have the Option or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in
connection with any corporate transaction affecting the shares of the Company;
• neither the Company, the Employer nor any Subsidiary, Parent or Affiliate shall be liable for any foreign exchange rate fluctuation between Optionee’s local
currency and the United States Dollar that may affect the value of the Option or of any amounts due to Optionee pursuant to the exercise of the Option or the
subsequent sale of any Shares acquired upon exercise.
Notifications
This Addendum also includes information regarding exchange controls and certain other issues of which Optionee should be aware with respect to Optionee’s participation in
the Plan. The information is provided solely for the convenience of Optionee and is based on the securities, exchange control and other laws in effect in the respective
countries as of December 2018. Such laws are often complex and change frequently. As a result, the Company strongly recommends that Optionee not rely on the information
noted herein as the only source of information relating to the consequences of Optionee’s
6
participation in the Plan because the information may be out of date by the time Optionee vests in or exercises this Option or sells any exercised Shares.
Optionee is responsible for complying with all applicable tax, foreign asset reporting and/or exchange control rules that may apply in connection with participation in the Plan
and/or the transfer of proceeds acquired thereunder. Prior to exercise of the Options or transfer of funds from or into Optionee’s country, Optionee should consult the local
bank and/or Optionee’s exchange control advisor, as interpretations of the applicable regulations may vary; additionally, exchange control rules and regulations are subject to
change without notice.
In addition, the information contained in this Addendum is general in nature and may not apply to Optionee’s particular situation, and the Company is not in a position to
assure Optionee of any particular result. Accordingly, Optionee is advised to seek appropriate professional advice as to how the applicable laws in his or her country may
apply to his or her situation.
Finally, Optionee understands that if he or she is a citizen or resident of a country other than the one in which he or she is currently residing and/or working, transfers to
another country after the Date of Grant, or is considered a resident of another country for local law purposes, the notifications contained herein may not be applicable to
Optionee in the same manner.
Country-Specific Provisions
BRAZIL
Terms and Conditions
Employment Considerations. By accepting the Option, Optionee acknowledge and agree that (i) Optionee is making an investment decision, (ii) Optionee will be entitled to
vest in and exercise the Option only if the vesting conditions are met and all necessary services are provided by Optionee, and (iii) the value of the Shares is not fixed and may
increase or decrease without compensation to Optionee.
Notifications
Exchange Controls. Any remittance of funds abroad should be made through a local bank duly authorized to deal in foreign exchange in Brazil. In addition to the fees that
may be charged by the financial institution for having the foreign exchange transactions liquidated and the corresponding funds remitted abroad, the Brazilian Tax on
Financial Transactions (“IOF”) will be due upon such remittance, at the rate of 0.38%, upon the gross amounts involved on the transaction. Funds remitted into Brazil may
also be subject to this tax. Optionee should consult with his or her personal advisor for any additional details on cross-border transactions that may be subject to the IOF.
Securities Laws. The Plan is not a public offer in Brazil and the offer is only directed at the individuals to whom the offer is specifically addressed. The Plan and the
securities acquired under the Plan have not been, and will not be, publicly issued, placed, distributed, offered or negotiated in the Brazilian capital markets and, as a result,
will not be registered with or supervised by the Brazilian Securities Commission (Comissão de Valores Mobiliários, the “CVM”) or any other any governmental authority in
Brazil. Therefore, any shares acquired under the Plan will only be offered or sold in Brazil in circumstances which do not constitute a public offering, placement, distribution
or negotiation under Brazilian capital markets regulations.
7
Foreign Asset Reporting. Optionee is required to report any cash or share accounts held in a foreign institution where the value of the asset is more than USD 100,000. The
information must be submitted to the Central Bank by April 5. The report must be submitted through the Central Bank online portal, using a valuation for all foreign assets
held as of December 31.
IRELAND
Terms and Conditions
Employment Acknowledgment. By participating in the Plan, Optionee acknowledges and agrees that the benefits received in connection with the Option will not be taken into
account for any redundancy or unfair dismissal claim.
Taxes. The references in the Plan and/or the Agreement to “Tax-Related Items” includes any and all taxes, charges, levies and contributions in Ireland or elsewhere, to
include, in particular, Universal Social Charge (USC) and Pay Related Social Insurance (PRSI). As a condition of participation in the Plan, Optionee authorizes the Company
and/or the Employer to withhold all applicable taxes arising in Ireland at the time of exercise, regardless of whether such withholding may be required by law. Optionee
acknowledges that the withholding may be done by any of the methods permitted in the Global Stock Option Agreement; however, should the Company or the Employer fail
to withhold any or all Tax-Related Items for any reason, it remains Optionee’s obligation to pay Optionee’s tax liability, and neither the Company nor the Employer will be
liable for Optionee’s failure to satisfy Optionee’s tax payment obligations.
Notifications
Director Notification Requirement. Directors and secretaries of the Company’s Irish Parent, Subsidiary or Affiliate and their respective spouses and children under 18 years
of age and family-held companies or trusts who receive an Option or other award under the Plan or sell Shares of acquired under the Plan must notify the Company’s Irish
Parent, Subsidiary or Affiliate, as applicable, in writing within five business days of (i) receiving or disposing of an interest in the Company, (ii) becoming aware of the event
giving rise to the notification requirement, or (iii) becoming a director or secretary if such an interest exists at the time. This notification rule applies as well to a shadow
director of the Company’s Irish Parent, Subsidiary or Affiliate (i.e., an individual who is not on the board of the Company’s Irish Parent, Subsidiary or Affiliate but who has
sufficient control so that the board of directors acts in accordance with the “directions or instructions” of the individual).
JAPAN
Terms and Conditions
Plan Addendum. The terms and conditions of the Japan Addendum to the Plan are incorporated by reference.
Restrictions on Transfer. The Option may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent
and distribution.
8
Notifications
Securities Laws. The Company notifies Optionee, and Optionee acknowledges, that: (i) the solicitation of the Option falls under the category of solicitation towards small
number investors as provided in Article 23-13.4 of the Financial Instruments and Exchange Law of Japan (kinyuu shouhin torihiki hou) (Law No. 25 of 1948, as amended)
and, therefore, no notification under Article 4.1 of the same has been made in respect of the solicitation; and (ii) Optionee is prohibited from transferring the Option, unless
transferred as a whole; and/or (iii) the Option cannot be divided into parts.
Exchange Control. If Optionee remits, from his/her bank account in Japan, an amount to purchase Shares in one transaction that exceeds JPY 30,000,000, Optionee is required
to file a Payment Report with the Japanese Ministry of Finance through (i) the bank through which the payment is executed within 10 days of such remittance or (ii) the Bank
of Japan within 20 days of such remittance if Optionee files the Payment Report on the Foreign Exchange Online System thereof. If Optionee intends to acquire Shares with a
value in excess of JPY 100,000,000 in a single transaction, Optionee must also file an ex post facto Report Concerning Acquisition of Shares with the Japanese Ministry of
Finance through the Bank of Japan within 20 days of acquiring the Shares. The forms to make these reports may be acquired at the Bank of Japan. Note that a Payment Report
is required independently of a Report Concerning Acquisition of Securities, and Optionee must file both Reports if the total amount paid on a one-time basis to purchase
Shares exceeds JPY 100,000,000.
Optionee might not need to report to the Japanese Minister of Finance if the acquisition is made through a bank, securities company or other similar financial institutions, but
purchases directly from the foreign parent company do not fall within this exception. Optionee should verify the limits and reporting requirements as these rules can change.
Foreign Asset Reporting. Details of any assets held outside Japan on an annual basis as of December 31 (including Shares acquired under the Plan) must be reported to the
Japanese tax authorities, to the extent such assets have a total net fair market value exceeding JPY 50,000,000. Such report is due by March 15 of the next year. Optionee
should consult with his or her personal tax advisor to determine if the reporting obligation applies to Optionee and whether Optionee will be required to include details of
Optionee’s outstanding Options, as well as Shares, in the report.
There could be tax upon grant if the Option is transferable or if Optionee could enjoy the benefit of the Option in any manner other than by exercising them. Optionee should
consult with personal tax advisor regarding those issues.
UNITED KINGDOM
Terms and Conditions
Employment Acknowledgment. Optionee acknowledges and agrees that his or her period of employment for purposes of the Plan will be determined without regard to any
period of statutory, contractual, common law, civil law or other notice of termination of employment or any period of salary continuance or deemed employment, regardless
of whether the termination of employment is otherwise lawful.
9
Tax Withholding Obligations. As a condition of the grant of the Option, Optionee unconditionally and irrevocably agrees:
(i) to place the Company in funds and indemnify the Company in respect of (1) all liability to UK income tax which the Company is liable to account for on
Optionee’s behalf directly to Her Majesty’s Revenue and Customs (“HMRC”); (2) all liability to national insurance contributions which the Company is liable to
account for on Optionee’s behalf to HM Revenue & Customs (including secondary class 1 (employer’s) national insurance contributions for which Optionee liable);
and, if so required by the Company, (3) all liability to national insurance contributions for which the Company is liable which arises as a consequence of or in
connection with the Option; or
(ii) to permit the Company to sell at the best price which it can reasonably obtain such number of shares allocated or allotted to Optionee following exercise as
will provide the Company with an amount equal to Optionee’s UK tax liability; and to permit the Company to withhold an amount not exceeding the UK tax liability
from any amount paid or payable to Optionee;
(iii) if so required by the Company, and, to the extent permitted by law, to enter into a joint election or other arrangements under which the liability for all or part
of such the Employer’s national insurance contributions liability is transferred to Optionee;
(iv) if so required by the Company, to enter into a joint election within Section 431 of (UK) Income Tax (Earnings and Pensions) Act 2003 in respect of
computing any tax charge on the acquisition of “restricted securities” (as defined in Section 423 and 424 of that act); and
(v) to sign, promptly, all documents required by the Company to effect the terms of this provision, and references in this provision to “the Company” shall, if
applicable, be construed as also referring to any Affiliate of the Company.
Employment Notification. Optionee waives all rights to compensation or damages in consequence of the termination of Optionee’s office or employment with the Company,
the Employer or any Subsidiary or Parent or Affiliate of the Company for any reason whatsoever (whether lawful or unlawful and including in circumstances giving rise to a
claim for wrongful dismissal) in so far as those rights arise or may arise from Optionee ceasing to hold or being able to exercise the Option, or from the loss on diminution in
value of any rights or entitlements in connection with the Plan.
Notifications
Tax Notification. If payment or withholding of the tax due in connection with the Option and is not made within ninety days after the end of the year in which the tax event
occurs, or such other period specified in the income tax laws, the amount of any uncollected tax will constitute a loan owed by Optionee to the Company or, if different, the
Employer. Optionee agrees that the loan will bear interest at then-current official rate of HMRC.
Notwithstanding the foregoing, if Optionee is a director or executive officer of the Company, Optionee will not be eligible for such a loan to cover the income tax due as
described above. In the event that tax is not timely collected or paid, the amount of any uncollected tax will constitute a benefit to Optionee on which additional income tax
and National Insurance Contributions will be payable. Optionee acknowledges that the Company or, if different, the Employer may recover any such additional taxes
10
from Optionee. Optionee will also be responsible for reporting and paying all taxes due on this additional benefit directly to HMRC under the self-assessment regime.
11
ANNEX A
FORM OF STOCK OPTION EXERCISE NOTICE AND AGREEMENT
GLOBAL STOCK OPTION EXERCISE NOTICE AND AGREEMENT
COINBASE GLOBAL, INC.
2019 EQUITY INCENTIVE PLAN
*NOTE: Optionee must sign or electronically accept this Global Notice of Stock Option Exercise Notice and Agreement (this “Notice”) before submitting it to Coinbase
Global, Inc. (the “Company”).
OPTIONEE INFORMATION: Please provide the following information about yourself (“Optionee”, “I” or “me”):
Name: Employee Number:
Address: Email Address:
OPTION INFORMATION: Please provide this information on the option being exercised (the “Option”):
Grant No.
Date of Grant: Type of Stock Option:
Exercise Price Per Share: $____
☐ Nonqualified (NQSO)
☐ Incentive (ISO)
Total number of Shares subject to the Option:
EXERCISE INFORMATION:
Number of Shares for which the Option is now being exercised [________________]. (These Shares are referred to below as the “Purchased Shares.”)
Total Exercise Price being paid for the Purchased Shares: $_____________
Form of payment enclosed [check all that apply]:
Check for $ ___________, payable to “COINBASE GLOBAL, INC.”
Certificate(s) for __________shares of Class ____ Common Stock of the Company. These shares will be valued as of the date this Notice is received by the Company.
[Requires Company consent.]
AGREEMENTS, REPRESENTATIONS AND ACKNOWLEDGMENTS OF OPTIONEE: By accepting this Notice (whether written, electronic or otherwise), Optionee
hereby agrees with, and represents to, the Company as follows:
1. Terms Governing. I acknowledge and agree with the Company that I am acquiring the Purchased Shares by exercise of this Option subject to all other terms and
conditions of this Notice and the Global Stock Option Agreement that govern the Option, including without limitation the terms of the Company’s 2019 Equity
Incentive Plan, as it may be amended (the “Plan”).
2. Investment Intent; Securities Law Restrictions. I represent and warrant to the Company that I am acquiring and will hold the Purchased Shares for investment for my
account only, and not with a view to, or for resale in connection with, any “distribution” of the Purchased Shares within the meaning of the United States Securities
Act of 1933, as amended (the “Securities Act”). I understand that the Purchased Shares have not been registered under the Securities Act by reason of a specific
exemption from such registration requirement and that the Purchased Shares must be held by me indefinitely, unless they are subsequently registered under the
Securities Act or I obtain an opinion of counsel (in form and substance satisfactory to the Company and its counsel) that registration is not required. I acknowledge
that the Company is under no obligation to register or qualify the Purchased Shares under the Securities Act or under any other securities law.
3. Securities Restrictions on Transfer: Rule 144. I will not sell, transfer or otherwise dispose of the Purchased Shares in violation of the Securities Act, the United
States Securities Exchange Act of 1934, as amended, or the rules promulgated thereunder (including Rule 144 under the Securities Act described below “Rule 144”))
or of any other applicable foreign, federal, state and local securities or other laws. I am aware of Rule 144, which permits limited public resales of securities acquired
in a non-public offering, subject to satisfaction of certain conditions, which include (without limitation) that: (a) certain current public information about the Company
is available; (b) the resale occurs only after the holding period required by Rule 144 has been met; (c) the sale occurs through an unsolicited “broker’s transaction”;
and (d) the amount of securities being sold during any three-month period does not exceed specified limitations. I understand that the conditions for resale set forth in
Rule 144 have not been satisfied and that the Company has no plans to satisfy these conditions in the foreseeable future. In addition to any other limitation on transfer
created by applicable securities and other laws, I will not assign, encumber or dispose of any interest in the Purchased Shares issued pursuant to this Notice except
with the Company’s prior written consent and in compliance with the provisions of the Plan, this Notice, the Global Stock Option Agreement governing the Option,
the Company’s Bylaws, the Company’s then current Insider Trading Policy, and applicable securities and other laws.
4. Access to Information; Understanding of Risk in Investment. I acknowledge that I have received and had access to such information as I consider necessary or
appropriate for deciding whether to invest in the Purchased Shares and that I had an opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the issuance of the Purchased Shares. I am aware that my investment in the Company is a speculative investment that has limited liquidity and
is subject to the risk of complete loss. I am able, without impairing my financial condition, to hold the Purchased Shares for an indefinite period and to suffer a
complete loss of my investment in the Purchased Shares.
2
5. Rights of First Refusal; Market Standoff. I acknowledge that the Purchased Shares remain subject to the Company’s Right of First Refusal and the market standoff
covenants (sometimes referred to as the “lock-up”), all in accordance with the Global Notice of Stock Option Grant and the Global Stock Option Agreement that
govern the Option.
6. Form of Ownership. I acknowledge that the Company has encouraged me to consult my own adviser to determine the form of ownership of the Purchased Shares
that is appropriate for me. In the event that I choose to transfer my Purchased Shares to a trust, I agree to sign a Stock Transfer Agreement.
7. Investigation of Tax Consequences. I acknowledge that the Company has encouraged me to consult my own adviser to determine the tax consequences of acquiring
the Purchased Shares at this time.
8. Other Tax Matters. I agree that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes
my tax liabilities. I will not make any claim against the Company or a Subsidiary or Parent or Affiliate of the Company, or their respective boards (or any committee
thereof), directors, officers or employees, related to tax liabilities arising from the Option or my other compensation. In particular, I acknowledge that the Option is
exempt from Section 409A of the United States Internal Revenue Code of 1986, as amended, only if the exercise price per share is at least equal to the fair market
value per share of the Shares at the time the Option was granted. Since Shares are not traded on an established securities market, the determination of their fair market
value was made by the Committee and/or by an independent valuation firm retained by the Company. I acknowledge that there is no guarantee in either case that the
United States Internal Revenue Service (the “IRS”) will agree with the valuation, and I will not make any claim against the Company or a Subsidiary or Parent of
Affiliate of the Company, or their respective boards (or any committee thereof), directors, officers or employees in the event that the IRS asserts that the valuation was
too low.
9. Agreement to Enter into Company Co-Sale Agreement and/or Company Voting Agreement. Pursuant to the Global Stock Option Agreement, if requested to do
so by the Company, I agree to enter into and execute the then-current Company Co-Sale Agreement and/or Company Voting Agreement concurrently with my
exercise of the Option or at any other time I am requested to do so by the Company. I acknowledge that by entering into the Company Co-Sale Agreement and
Company Voting Agreement I will be subjecting the Purchased Shares to the rights of first refusal and co-sale rights therein and I will be subjected to voting and other
obligations and covenants regarding all Company shares I own, and all other provisions of the Company Co-Sale Agreement and/or Company Voting Agreement, as
applicable
10. Spouse Consent. I agree to seek the consent of my spouse to the extent required by the Company to enforce the foregoing.
11. Tax Withholding. As a condition of exercising this Option, I agree to make adequate provision for all Tax-Related Items (as defined in the Plan), if any, which arise
in relation to this Option, or upon disposition of the Purchased Shares, whether by withholding, direct payment to the Company, or otherwise in accordance with the
Plan and the Global Stock Option Agreement.
3
This Notice may be executed and delivered electronically whether via the Company’s intranet or the Internet site of a third party or via email or any other means of electronic
delivery specified by the Company. By my acceptance hereof (whether written, electronic or otherwise), I agree, to the fullest extent permitted by law, that in lieu of receiving
documents in paper format, I accept the electronic delivery of any documents that the Company (or any third party the Company may designate), may deliver in connection
with this Option (including the Plan, this Notice, the Global Notice of Stock Option Grant, the Global Stock Option Agreement, the information described in Rules 701(e)(2),
(3), (4) and (5) under the Securities Act, account statements, or other communications or information) whether via the Company’s intranet or the Internet site of such third
party or via email or such other means of electronic delivery specified by the Company.
SIGNATURE: DATE:
[Signature Page to Global Stock Option Exercise Notice and Agreement]
OPTION GRANT NO.: [l]
GLOBAL NOTICE OF STOCK OPTION GRANT
COINBASE GLOBAL, INC.
2019 EQUITY INCENTIVE PLAN
The Optionee named below (“Optionee”) has been granted an option (this “Option”) to purchase Shares of Coinbase Global, Inc. (the “Company”), pursuant to the
Company’s 2019 Equity Incentive Plan (the “Plan”) on the terms, and subject to the conditions, described below and in the Global Stock Option Agreement attached hereto as
Exhibit A, including, if Optionee is a citizen of, or resident of or works outside of the United States, any special terms and conditions in the addendum attached thereto (the
“Addendum” and together with the Global Stock Option Agreement, the “Agreement”).
Optionee: [l]
Maximum Number of Shares Subject to this Option: [l]
Exercise Price Per Share (USD): [l]
Date of Grant: []
Vesting Start Date: [l]
Exercise Schedule: This Option is immediately exercisable during its term with respect to all of the Shares.
Expiration Date: The date ten (10) years after the Date of Grant set forth above, subject to earlier expiration as
provided in the Agreement or the Plan.
U.S. Tax Status of Option:
(Check Only One Box):
☐
Incentive Stock Option (To the fullest extent permitted by the Code)
☐ Nonqualified Stock Option.
(If neither box is checked, this Option is a Nonqualified Stock Option).
Vesting Schedule:
[]
Transferability: Optionee may not transfer this Option except as set out in the Agreement. You must obtain Board
approval prior to any transfer of the Shares received upon exercise of this Option.
General; Agreement: By Optionee’s acceptance hereof (whether written, electronic or otherwise), Optionee and the Company agree that this Option is granted under and
governed by this Global Notice of Stock Option Grant (this “Grant Notice”) and by the provisions of the Plan and the Agreement. The Plan and the Agreement are
incorporated herein by reference. Capitalized terms used but not defined herein shall have the meanings given to them in the Plan or in the Agreement, as applicable. By
Optionee’s acceptance hereof (whether written, electronic or otherwise), Optionee acknowledges receipt of a copy of this Grant Notice, the Plan and the Agreement,
represents that Optionee has carefully read and is familiar with their provisions, and hereby accepts this Option subject to all of their respective terms and conditions. The
Option grant shall be subject to any additional or replacement terms and conditions set
Immediately Exercisable Option
forth in the Addendum, which is attached to and made a part of this Grant Notice. Optionee acknowledges that there may be adverse tax consequences as a result of the
Option (including upon grant or exercise of the Option or disposition of the Shares) and that Optionee should consult a tax adviser generally about the taxation of the Option.
Optionee agrees and acknowledges that the Vesting Schedule may change prospectively in the event that Optionee’s service status changes between full and part-time status
in accordance with Company policies relating to work schedules and vesting of equity awards. This Option and any Shares subject to the Option as well as any Shares issued
after February 12, 2016 (regardless of how Optionee acquired the Shares) shall be subject to the Company’s Second Amended and Restated Bylaws (the “Bylaws”), including,
but not limited to, certain transfer restrictions as summarized in the Agreement below, as in effect at the time of any proposed transfer (the “Bylaw Restrictions”). By
Optionee’s signature below, Optionee agrees that the Bylaw Restrictions, including the transfer restrictions set forth in the Agreement, shall also apply to any Shares or other
stock options or equity awards that Optionee has acquired or been granted in the past (including, without limitation, any Shares, options or other equity awards that you
acquired or were granted prior to the Date of Grant of this Option).
Execution and Delivery: This Grant Notice may be executed and delivered electronically whether via the Company’s intranet or the Internet site of a third party or via email
or any other means of electronic delivery specified by the Company. Participant hereby consents to receive such documents by electronic delivery and agrees to participate in
the Plan through an online or electronic system established and maintained by the Company or any third party involved in administering the Plan which the Company may
designate. By Optionee’s acceptance hereof (whether written, electronic or otherwise), Optionee agrees, to the fullest extent permitted by law, that in lieu of receiving
documents in paper format, Optionee accepts the electronic delivery of any documents that the Company (or any third party the Company may designate) may deliver in
connection with this Option (including the Plan, this Grant Notice, the Agreement, the information described in Rules 701(e)(2), (3), (4) and (5) under the Securities Act,
account statements, or other communications or information) whether via the Company’s intranet or the Internet site of such third party or via email or such other means of
electronic delivery specified by the Company.
Restrictions on Transfer: This Option is subject to restrictions on transfer and generally may not be transferred, except as set forth in the Agreement (see Sections 6 and 7
and the Addendum) and the Plan.
COINBASE GLOBAL, INC.
By/Signature: Optionee Signature:
Typed Name: Optionee’s Name:
Title:
ATTACHMENT:
Exhibit A – Global Stock Option Agreement
3
Immediately Exercisable Option
Exhibit A
Global Stock Option Agreement
Immediately Exercisable Option
GLOBAL STOCK OPTION AGREEMENT
COINBASE GLOBAL, INC.
2019 EQUITY INCENTIVE PLAN
This Global Stock Option Agreement, including, if Optionee is a citizen of, or resident of or works outside of the United States, any special terms and conditions in the
addendum attached thereto (the “Addendum” and, together with the Global Stock Option Agreement, this “Agreement”), is made and entered into as of the date of grant (the
“Date of Grant”) set forth on the Global Notice of Stock Option Grant attached as the facing page to this Agreement (the “Grant Notice”) by and between Coinbase Global,
Inc. (the “Company”) and the optionee named on the Grant Notice (“Optionee”). Capitalized terms not defined in this Agreement shall have the meaning ascribed to them in
the Company’s 2019 Equity Incentive Plan (the “Plan”), or in the Grant Notice, as applicable.
1. GRANT OF OPTION. The Company hereby grants to Optionee an option (this “Option”) to purchase up to the total number of Shares set forth in the Grant
Notice at the Exercise Price Per Share set forth in the Grant Notice (the “Exercise Price”), subject to all of the terms and conditions of the Grant Notice, this Agreement and
the Plan. If designated as an Incentive Stock Option for United States tax purposes in the Grant Notice, this Option is intended to qualify as an incentive stock option (the
“ISO”) within the meaning of Section 422 of the United States Internal Revenue Code of 1986, as amended (the “Code”).
2. EXERCISE PERIOD.
(a) Vesting of Option Shares. Shares with respect to which this Option is vested and exercisable at a given time pursuant to the Vesting Schedule set
forth in the Grant Notice are “Vested Shares.” Shares with respect to which this Option is not vested at a given time pursuant to the Vesting Schedule set forth in the Grant
Notice are “Unvested Shares.”
(b) Exercise Period of Option. Subject to the conditions set forth in this Agreement, all or part of this Option may be exercised at any time after the Date
of Grant. Shares purchased by exercising this Option may be subject to the Repurchase Option as set forth in Section 7 below. This Option will become vested during its term
as to portions of the Shares in accordance with the Vesting Schedule set forth in the Grant Notice. Notwithstanding any provision in the Plan or this Agreement to the
contrary, on or after Optionee’s Termination Date, this Option shall expire immediately with respect to any Unvested Shares and may not be exercised with respect to any
Unvested Shares on or after Optionee’s Termination Date.
(c) Expiration. The Option shall expire on the Expiration Date set forth in the Grant Notice or earlier as provided in this Agreement or the Plan.
3. TERMINATION.
(a) Termination for Any Reason Except Death, Disability or Cause (and without Death Following Termination).
(i) Except as provided in Section 3(b)(i) below in the event of Optionee’s death following Termination for any reason other than for Cause, if
Optionee is Terminated for any reason (other than Optionee’s death or Disability or for Cause) and Section 3(a)(ii) below does not apply,
5
Immediately Exercisable Option
then (a) on Optionee's Termination Date, this Option shall expire immediately with respect to any Shares that are Unvested Shares as of Optionee's Termination Date and may
not be exercised with respect to any such Unvested Shares, and (b) this Option, to the extent that it is exercisable with respect to Vested Shares on Optionee’s Termination
Date, may be exercised by Optionee no later than three (3) months after Optionee’s Termination Date (but in no event may this Option be exercised after the Expiration Date).
(ii) Notwithstanding the foregoing, if Optionee has remained in continuous service with the Company or any Subsidiary or Parent or Affiliate of
the Company as an employee, officer, director or consultant for at least two (2) years as of Optionee’s Termination Date, and Optionee is Terminated for any reason (other
than Optionee’s death or Disability or for Cause), then this Option, to the extent that it is exercisable with respect to Vested Shares on Optionee’s Termination Date, may be
exercised by Optionee no later than the earliest to occur of (i) the seven (7)-year anniversary of the Termination Date and (ii) the Expiration Date (the earliest to occur of
clauses (i) and (ii), the “Extended Exercise Period”), subject to the Company’s ability to take any of the actions set forth in Section 11.1 of the Plan.
(b) Termination Because of Death or Disability (or in the Event of Death Following Termination).
(i) If Optionee is Terminated because of Optionee’s death or Disability (or in the event Optionee dies within three (3) months of the date of
Optionee’s Termination for any reason other than for Cause and Section 3(a)(i) above would otherwise apply) and Section 3(b)(ii) below does not apply, then (a) on
Optionee’s Termination Date, this Option shall expire immediately with respect to any Shares that are Unvested Shares as of Optionee's Termination Date and may not be
exercised with respect to any such Unvested Shares, and (b) this Option, to the extent that it is exercisable with respect to Vested Shares on Optionee’s Termination Date, may
be exercised by Optionee (or Optionee’s legal representative, in the case of Optionee’s incapacity, or Optionee’s executor, administrator, heir or legatee, in the case of
Optionee’s death, as the case may be) no later than twelve (12) months after Optionee’s Termination Date, but in any event no later than the Expiration Date.
(ii) Notwithstanding the foregoing, if Optionee has remained in continuous service with the Company or any Subsidiary or Parent or Affiliate of
the Company as an employee, officer, director or consultant for at least two (2) years as of Optionee’s Termination Date, and Optionee is Terminated because of Optionee’s
death or Disability, then this Option, to the extent that it is exercisable with respect to Vested Shares on Optionee’s Termination Date, may be exercised by Optionee during
the Extended Exercise Period, subject to the Company’s ability to take any of the actions set forth in Section 11.1 of the Plan.
(c) Termination for Cause. If Optionee is Terminated for Cause, then this Option shall expire immediately upon the first notification to Optionee of such
Termination for Cause. If Optionee’s service with the Company or any Subsidiary or Parent or Affiliate of the Company is suspended pending an investigation of whether
Optionee will be Terminated for Cause, all Optionee’s rights under this Option, including the right to exercise this Option, shall be suspended during the investigation period.
(d) Impact on ISOs. Any exercise of this Option beyond (i) three (3) months after the date Optionee ceases to be an employee when Optionee’s
Termination is for any reason other than Optionee’s death or disability, within the meaning of Section 22(e)(3) of the Code; or (ii) twelve (12)
6
Immediately Exercisable Option
months after the date Optionee ceases to be an employee when the termination is for Optionee’s disability, within the meaning of Section 22(e)(3) of the Code, is deemed to
be an NQSO
(e) No Obligation to Employ. Nothing in the Plan or this Agreement shall confer on Optionee any right to continue in the employ of, or other
relationship with, the Company (or any Subsidiary or Parent or Affiliate of the Company), or limit in any way the right of the Company (or, if different, the Subsidiary or
Parent or Affiliate of the Company for which Optionee is rendering services (the “Employer”)) to terminate Optionee’s employment or other relationship at any time, with or
without Cause, subject to applicable laws.
4. MANNER OF EXERCISE.
(a) Stock Option Exercise Notice and Agreement. To exercise this Option, Optionee (or in the case of exercise after Optionee’s incapacity, Optionee’s
legal representative, or in the case of exercise after Optionee’s death, Optionee’s executor, administrator, heir or legatee, as the case may be) must deliver to the Company an
executed Stock Option Exercise Notice and Agreement in the form attached hereto as Annex A, or in such other form as may be approved by the Committee from time to
time (the “Exercise Agreement”) and payment for the Shares being purchased in accordance with this Agreement and applicable Tax-Related Items. The Exercise Agreement
shall set forth, among other things, (i) Optionee’s election to exercise this Option, (ii) the number of Shares being purchased, (iii) any representations, warranties and
agreements regarding Optionee’s investment intent and access to information as may be required by the Company to comply with applicable laws in connection with any
exercise of this Option and (iv) any other agreements required by the Company. If someone other than Optionee exercises this Option, then such person must submit
documentation reasonably acceptable to the Company verifying that such person has the legal right to exercise this Option and such person shall be subject to all of the
restrictions contained herein as if such person were Optionee.
(b) Limitations on Exercise. This Option may not be exercised unless such exercise is in compliance with all applicable foreign, federal, state and local
securities and other laws, as they are in effect on the date of exercise.
(c) Payment. The Exercise Agreement shall be accompanied by full payment of the Exercise Price for the Shares being purchased in cash (by check or
wire transfer), Automated Clearing House transfer (in any case, in United States Dollars), or subject to compliance with applicable law:
(i) by cancellation of indebtedness of the Company owed to Optionee;
(ii) if permitted by the Company, by surrender of shares of the Company that are free and clear of all security interests, pledges, liens, claims or
encumbrances and: (i) for which the Company has received “full payment of the purchase price” within the meaning of SEC Rule 144 (and, if such shares were purchased
from the Company by use of a promissory note, such note has been fully paid with respect to such shares) or (ii) that were obtained by Optionee in the public market;
(iii) by participating in a formal cashless exercise program implemented by the Committee in connection with the Plan;
(iv) provided that a public market for the Common Stock exists, by exercising as set forth below, through a “same day sale” commitment from
Optionee and a broker-dealer whereby Optionee irrevocably elects to exercise this Option and to sell a portion of the Shares so
7
Immediately Exercisable Option
purchased sufficient to pay the total Exercise Price, and whereby the broker-dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price
directly to the Company; or
(v) by any combination of the foregoing or any other method of payment approved by the Committee that constitutes legal consideration for the
issuance of Shares.
(d) Tax Withholding. As a condition to the exercise of this Option, Optionee must pay or make adequate provision for all applicable foreign, federal,
state and local income tax, social insurance, payroll tax, fringe benefits tax, payment on account, withholding and other tax-related items related to the Option and Optionee’s
participation in the Plan and legally applicable to Optionee, including, as applicable, obligations of the Company or, if different, Optionee’s employer (the “Employer”) (all
the foregoing tax-related items, “Tax-Related Items”).
(e) Issuance of Shares. Provided that the Exercise Agreement and payment or provision for Tax-Related Items are in form and substance satisfactory to
counsel for the Company, and subject to Section 5 below, the Company shall issue the Shares issuable upon a valid exercise of this Option registered in the name of Optionee
and shall deliver certificates representing the Shares with the appropriate legends affixed thereto.
5. COMPLIANCE WITH LAWS AND REGULATIONS.
(a) General. The Plan and this Agreement are intended to comply with Section 25102(o) and Rule 701. If deemed necessary by the Company, any
provision of this Agreement that is inconsistent with Section 25102(o) or Rule 701 shall, without further act or amendment by the Company or the Committee, be reformed to
comply with the requirements of Section 25102(o) and/or Rule 701. The exercise of this Option and the issuance and transfer of Shares shall be subject to and conditioned
upon compliance by the Company and Optionee (including any written representations, warranties and agreements as the Committee may request of Optionee for compliance
with applicable laws) with all applicable foreign, federal, state and local securities laws or other law, rules and regulations of any governmental body, and the requirements of
any stock exchange or automated quotation system upon which the Company’s equity securities may then be listed or quoted, as they are in effect on the Date of Grant and
also on the date of exercise. Optionee may not be issued any Shares if such issuance would constitute a violation of any applicable foreign, federal, state and local securities
laws or other law or regulations or the requirements of any stock exchange or automated quotation system upon which the Shares or other equity securities of the Company
may then be listed or quoted. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal
counsel to be necessary to the lawful issuance and sale of any Shares shall relieve the Company of any liability in respect of the failure to issue or sell such Shares. Optionee
understands that the Company is under no obligation to register or qualify the Shares with the SEC, any state securities commission or any stock exchange to effect such
compliance.
(b) Non-U.S. Optionees. If Optionee’s country of residence is other than the United States, Optionee makes the following additional representations,
warranties and agreements:
(i) Optionee is not a U.S. Person as defined in Rule 902(k) of Regulation S under the Securities Act. The offer and sale of the Shares to such
Optionee was made in an offshore transaction (as defined in Rule 902(h) of Regulation S), no directed selling efforts (as defined in Rule 902(c) of Regulation S) were made in
the United States, and the Optionee is not acquiring the Shares for the account or benefit of any U.S. Person;
8
Immediately Exercisable Option
(ii) Optionee will not, during the Restricted Period applicable to the Shares included in the legend set forth in Section 13(c)(ii) below (the
“Restricted Period”) and on any certificate representing the Shares, offer or sell any of the foregoing securities (or create or maintain any derivative position equivalent
thereto) in the United States, to or for the account or benefit of a U.S. Person or other than in accordance with Regulation S;
(iii) Optionee will, after the expiration of the applicable Restricted Period, offer, sell, pledge or otherwise transfer the Shares (or create or maintain
any derivative position equivalent thereto) only pursuant to registration under the Securities Act or any available exemption therefrom and, in any case, in accordance with
applicable state securities laws; and
(iv) Optionee acknowledges and agrees that the Company shall not register the transfer of the Shares in violation of this Agreement, the Plan or
any of the restrictions set forth herein or therein.
6. NONTRANSFERABILITY OF OPTION. This Option may not be transferred in any manner other than by will or by the laws of descent and distribution,
and may be exercised during the lifetime of Optionee only by Optionee or, in the event of Optionee’s incapacity, by Optionee’s legal representative. The terms of this Option
shall be binding upon the executors, administrators, successors and assigns of Optionee.
7. COMPANY’S REPURCHASE OPTION FOR UNVESTED SHARES. If Optionee is Terminated for any reason, or no reason, including without
limitation, Optionee’s death, Disability, voluntary resignation or termination by the Company with or without Cause and Optionee has acquired Unvested Shares by exercising
this Option, then the Company and/or its assignee(s) shall have the option to repurchase all or a portion of Optionee’s Unvested Shares (as defined in Section 2(a) of this
Agreement) as of the Termination Date on the terms and conditions set forth in this Section 7 (the “Repurchase Option”).
(a) Termination and Termination Date. In case of any dispute as to whether Optionee is Terminated, the Committee shall have discretion to determine
whether Optionee has been Terminated and the effective date of such Termination (the “Termination Date”).
(b) Exercise of Repurchase Option. Subject to the foregoing provisions of this Section 7, at any time within ninety (90) days after Optionee’s
Termination Date, the Company and/or its assignee(s), may elect to repurchase any or all of Optionee’s Unvested Shares by giving Optionee written notice of exercise of the
Repurchase Option.
(c) Calculation of Repurchase Price for Unvested Shares. The Company or its assignee shall have the option to repurchase from Optionee (or from
Optionee’s personal representative as the case may be) the Unvested Shares at the lower of (a) the Fair Market Value (as defined in the Plan) per Share of such Shares on the
Termination Date or (b) Optionee’s Exercise Price, as such may be proportionately adjusted for any stock split or similar change in the capital structure of the Company as set
forth in Section 2.2 of the Plan (the “Repurchase Price”).
(d) Payment of Repurchase Price. The Repurchase Price shall be payable, at the option of the Company or its assignee, by check or by cancellation of
all or a portion of any outstanding indebtedness owed by Optionee to the Company and/or such assignee, or by any combination thereof. The Repurchase Price shall be paid
without interest within the term of the Repurchase Option as described in Section 7(b).
9
Immediately Exercisable Option
(e) Right of Termination Unaffected. Nothing in this Agreement shall be construed to limit or otherwise affect in any manner whatsoever the right or
power of the Company (or the Employer or any Subsidiary or Parent or Affiliate of the Company) to terminate Optionee’s employment or other relationship with Company
(or the Employer or any Subsidiary or Parent or Affiliate of the Company) at any time, for any reason or no reason, with or without Cause, subject to applicable law.
8. RESTRICTIONS ON TRANSFER.
(a) Restriction on Transfer. Optionee shall not transfer, assign, grant a lien or security interest in, pledge, hypothecate, encumber or otherwise dispose of
the Shares or any interest in the Shares issued pursuant to this Agreement (including the Addendum) (including, without limitation, a transfer by gift or operation of law)
except in compliance with the provisions of the Plan, this Agreement (including the Addendum), the Company’s Bylaws, the Company’s then current Insider Trading Policy,
and applicable securities and other laws.
(b) Transfer of Shares. Any Holder (as defined below) seeking to transfer of some or all of its Shares shall give written notice thereof to the Secretary of
the Company that shall include: (i) the name of the Holder; (ii) the proposed transferee; (iii) the number of Shares of the transfer of which approval is thereby requested; (iv)
the purchase price (if any) of the shares proposed for transfer; (v) written assurances, in form and substance satisfactory to counsel for the Company, that (a) the proposed
disposition does not require registration of the Shares under the Securities Act or under any applicable foreign, federal, state and local securities or other laws or (b) all
appropriate actions necessary for compliance with the registration requirements of the Securities Act or of any exemption from registration available under the Securities Act
(including Rule 144) or applicable foreign, federal, state and local securities and other laws have been taken; and (vi) written assurances, in form and substance satisfactory to
the Company, that the proposed disposition will not result in the contravention of any transfer restrictions applicable to the Shares pursuant to the provisions of the regulations
promulgated under Section 25102(o), Rule 701 or under any other applicable securities or other laws or adversely affect the Company’s ability to rely on the exemption(s)
from registration under the Securities Act or under any other applicable securities or other laws for the grant of this Option, the issuance of Shares thereunder or any other
issuance of securities under the Plan. The Company may require the Holder to supplement its notice with such additional information as the Company may request.
(c) Transferee Obligations. Each person (other than the Company) to whom the Shares or any interest therein are transferred by means of one of the
permitted transfers specified in this Agreement must, as a condition precedent to the validity of such transfer, acknowledge in writing to the Company that such person is
bound by the provisions of this Agreement and that the transferred Shares are subject to (i) the Company’s Bylaws, (ii) the Company’s Repurchase Option and Right of First
Refusal granted hereunder, (iii) the market stand-off provisions of Section 9 below and (iv) the other restrictions on transferability contained herein and in the Plan, to the
same extent such Shares would be so subject if retained by Optionee.
(d) Purported Transfers. Any purported transfer of any Shares of the Company’s stock effected in violation of this Section 8 or otherwise in the Plan or
this Agreement (including the Addendum) shall be null and void and shall have no force or effect and the Company shall not register any such purported transfer.
9. MARKET STANDOFF AGREEMENT. Optionee agrees that, subject to any early release provisions that apply pro rata to stockholders of the Company
according to their holdings of
10
Immediately Exercisable Option
Common Stock (determined on an as-converted into Common Stock basis), Optionee will not, if requested by the managing underwriter(s) in the initial underwritten sale of
Common Stock of the Company to the public pursuant to a registration statement filed with, and declared effective by, the SEC under the Securities Act (the “IPO”), for a
period of up to one hundred eighty (180) days following the effective date of the registration statement relating to such IPO (plus up to an additional period of time to the
extent reasonably requested by the Company or such underwriter(s) to accommodate regulatory restrictions on the publication or other distribution of research reports or
earnings releases by the Company, including National Association of Securities Dealers and New York Stock Exchange rules), directly or indirectly sell, offer to sell, grant
any option for the sale of, or otherwise dispose of any Common Stock or securities convertible into Common Stock, except for sales of any securities to be included in the
registration statement for the IPO. For the avoidance of doubt, the provisions of this Section 9 shall only apply to the IPO. In order to enforce the foregoing covenant, the
Company shall have the right to place restrictive legends on the certificates representing the Shares subject to this Section 9 and to impose stop transfer instructions with
respect to the Shares until the end of such period. Optionee further agrees to enter into any agreement reasonably required by the underwriters to implement the foregoing
restrictions on transfer. For the avoidance of doubt, the foregoing provisions of this Section 9 shall not apply to any registration of securities of the Company (a) under an
employee benefit plan or (b) in a merger, consolidation, business combination or similar transaction.
10. COMPANY’S RIGHT OF FIRST REFUSAL. Unvested Shares may not be sold or otherwise transferred, or pledged by Optionee or made subject to a
security interest, pledge or other lien without the Company’s prior written consent, which may be withheld in the Company’s sole and absolute discretion. Before any Vested
Shares held by Optionee or any transferee of such Vested Shares (either sometimes referred to herein as the “Holder”) may be sold or otherwise transferred (including,
without limitation, a transfer by gift or operation of law), the Company and/or its assignee(s) will have a right of first refusal to purchase the Vested Shares to be sold or
transferred (the “Offered Shares”) on the terms and conditions set forth in this Section 10 (the “Right of First Refusal”).
(a) Notice of Proposed Transfer. The Holder of the Offered Shares will deliver to the Company a written notice (the “Notice”) stating: (i) the Holder’s
bona fide intention to sell or otherwise transfer the Offered Shares; (ii) the name and address of each proposed purchaser or other transferee (the “Proposed Transferee”); (iii)
the number of Offered Shares to be transferred to each Proposed Transferee; (iv) the bona fide cash price or other consideration (in any case, denominated in U.S. dollars) for
which the Holder proposes to transfer the Offered Shares (the “Offered Price”); and (v) that the Holder acknowledges this Notice is an offer to sell the Offered Shares to the
Company and/or its assignee(s) pursuant to the Company’s Right of First Refusal at the Offered Price as provided for in this Agreement.
(b) Exercise of Right of First Refusal. At any time within thirty (30) days after the date of the Notice, the Company and/or its assignee(s) may, by giving
written notice to the Holder, elect to purchase all (or, with the consent of the Holder, less than all) the Offered Shares proposed to be transferred to any one or more of the
Proposed Transferees named in the Notice, at the purchase price determined as specified below.
(c) Purchase Price. The purchase price for the Offered Shares purchased under this Section 10 will be the Offered Price, provided that if the Offered
Price consists of no legal consideration (as, for example, in the case of a transfer by gift) then the purchase price will be the fair market value of the Offered Shares as
determined in good faith by the Committee (and denominated in U.S. dollars). If the Offered Price includes consideration other than cash, then the value of the non-cash
consideration, as
11
Immediately Exercisable Option
determined in good faith by the Committee, will conclusively be deemed to be the cash equivalent value of such non-cash consideration (and denominated in U.S. dollars).
(d) Payment. Payment of the purchase price for the Offered Shares will be payable, at the option of the Company and/or its assignee(s) (as applicable), by
check or by cancellation of all or a portion of any outstanding purchase money indebtedness owed by the Holder to the Company (or to such assignee, in the case of a
purchase of Offered Shares by such assignee) or by any combination thereof. The purchase price will be paid without interest within sixty (60) days after the Company’s
receipt of the Notice, or, at the option of the Company and/or its assignee(s), in the manner and at the time(s) set forth in the Notice.
(e) Holder’s Right to Transfer. If all of the Offered Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by
the Company and/or its assignee(s) as provided in this Section 10, then the Holder may sell or otherwise transfer such Offered Shares to each Proposed Transferee at the
Offered Price or at a higher price, provided that (i) such sale or other transfer is consummated within ninety (90) days after the date of the Notice, (ii) any such sale or other
transfer is effected in compliance with all applicable securities and exchange laws, and (iii) each Proposed Transferee agrees in writing that the provisions of this Section 10
will continue to apply to the Offered Shares in the hands of such Proposed Transferee. If the Offered Shares described in the Notice are not transferred to each Proposed
Transferee within such ninety (90) day period, then a new Notice must be given to the Company pursuant to which the Company will again be offered the Right of First
Refusal before any Shares held by the Holder may be sold or otherwise transferred.
(f) Termination of Right of First Refusal. The Right of First Refusal will terminate as to all Shares: (i) subject to the market standoff restrictions set
forth in Section 10, on the effective date of the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared
effective by the SEC under the Securities Act (other than a registration statement relating solely to the issuance of Common Stock pursuant to a business combination or an
employee incentive or benefit plan); (ii) on any transfer or conversion of Shares made pursuant to a statutory merger or statutory consolidation of the Company with or into
another corporation or corporations if the Common Stock of the surviving corporation or any direct or indirect parent corporation thereof is registered under the Exchange
Act; or (iii) on any transfer or conversion of Shares made pursuant to a statutory conversion of the Company into another form of legal entity if the common equity (or
comparable equity security) of entity resulting from such conversion is registered under the Exchange Act.
(g) Effect of Company Co-Sale Agreement. If Optionee is, or at any time hereafter becomes, a party to or otherwise bound by (i) the Company’s
Amended and Restated Right of First Refusal and Co-Sale Agreement dated as of October 26, 2018, among the Company and certain stockholders of the Company, as such
may be amended and/or restated from time to time, and/or (ii) any other agreement that is a successor to or replacement of such agreement (collectively, the “Company Co-
Sale Agreement”), then, in the event of any conflict or inconsistency between the provisions of Section 9 hereof and/or this Section 10 and any provisions in the Company
Co-Sale Agreement granting the Company and/or other security holders of the Company rights of first refusal and/or co-sale rights with respect to any or all of the Shares or
imposing market stand-off restrictions, Optionee agrees with the Company that the terms and conditions of the Company Co-Sale Agreement shall apply, govern, supersede
and prevail over (and in lieu of) the provisions of Section 9 hereof and/or of this Section 10 (as applicable) so long as the Company Co-Sale Agreement is in effect and
Optionee is a party to or bound thereby. If the Company Co-Sale Agreement is no longer in effect or if Optionee is
12
Immediately Exercisable Option
not a party to or bound thereby, then the provisions of this Section 10 shall apply in full force and effect until termination of the Right of First Refusal and the provisions of
Section 9 hereof shall apply in full force and effect in accordance with its terms. As a material inducement and consideration for the Company to enter into this Agreement,
Optionee hereby agrees that if, the Company requests Optionee to enter into and become a party to (a) the Company Co-Sale Agreement (and to subject the Shares to the
rights of first refusal held by the Company and other Company investors thereunder and the co-sale rights of other investors thereunder) and/or (b) the Company Voting
Agreement (as defined below), pursuant to which Optionee would agree to vote all shares of Company stock held by Optionee for the election of directors and in favor of
certain material transactions (such as mergers or sales of the Company), then Optionee will enter into such agreements and execute and deliver signature pages thereto (as
requested by the Company) in such capacities as the Company requests, at the time of exercising this Option and as a condition to such exercise or at any later time.
11. RIGHTS AS A STOCKHOLDER. Optionee shall not have any of the rights of a stockholder with respect to any Shares unless and until such Shares are
issued to Optionee. Subject to the terms and conditions of this Agreement, Optionee will have all of the rights of a stockholder of the Company with respect to the Shares
from and after the date that Shares are issued to Optionee pursuant to, and in accordance with, the terms of the Exercise Agreement until such time as Optionee disposes of the
Shares or the Company and/or its assignee(s) exercise(s) the Repurchase Option or the Right of First Refusal. Upon an exercise of the Repurchase Option or the Right of First
Refusal, Optionee will have no further rights as a holder of the Shares so purchased upon such exercise, other than the right to receive payment for the Shares so purchased in
accordance with the provisions of this Agreement, and Optionee will promptly surrender the stock certificate(s) evidencing the Shares so purchased to the Company for
transfer or cancellation.
12. ESCROW. As security for Optionee’s faithful performance of this Agreement, Optionee agrees, immediately upon issuance of the stock certificate(s)
evidencing the Shares, to consent to the delivery of such certificate(s) to the Secretary of the Company or other designee of the Company (the “Escrow Holder”), who is
hereby appointed to hold such certificate(s) in escrow and to take all such actions and to effectuate all such transfers and/or releases of such Shares as are in accordance with
the terms of this Agreement. Optionee and the Company agree that Escrow Holder will not be liable to any party to this Agreement (or to any other party) for any actions or
omissions unless Escrow Holder is grossly negligent or intentionally fraudulent in carrying out the duties of Escrow Holder under this Agreement. Escrow Holder may rely
upon any letter, notice or other document executed with any signature purported to be genuine and may rely on the advice of counsel and obey any order of any court with
respect to the transactions contemplated by this Agreement and will not be liable for any act or omission taken by Escrow Holder in good faith reliance on such documents,
the advice of counsel or a court order. The Shares will be released from escrow upon termination of both the Repurchase Option and the Right of First Refusal.
13. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
(a) General. The certificates representing the Shares issued hereunder shall be subject to such stop transfer orders and other restrictions as the Committee
may deem advisable under the Plan, this Agreement, the Bylaws, or the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock
exchange upon which such shares of the Company’s Common Stock are listed, and any applicable federal, foreign or state laws, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such restrictions. The
13
Immediately Exercisable Option
certificates representing the Shares issued hereunder shall bear the following legends, in addition to any other legends deemed advisable by the Committee:
(b) THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON RESALE AND
TRANSFER, INCLUDING THE REPURCHASE OPTION AND RIGHT OF FIRST REFUSAL HELD BY THE ISSUER AND/OR ITS ASSIGNEE(S) AS SET FORTH IN
A STOCK OPTION AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT
THE PRINCIPAL OFFICE OF THE ISSUER. SUCH SALE AND TRANSFER RESTRICTIONS, INCLUDING THE REPURCHASE OPTION AND THE RIGHT OF
FIRST REFUSAL, ARE BINDING ON TRANSFEREES OF THESE SHARES.
(c) THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A MARKET STANDOFF RESTRICTION AS SET FORTH
IN A CERTAIN STOCK OPTION AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE
OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. AS A RESULT OF SUCH AGREEMENT, THESE SHARES MAY NOT BE TRADED PRIOR TO 180
DAYS (AND POSSIBLY LONGER) AFTER THE EFFECTIVE DATE OF CERTAIN PUBLIC OFFERINGS OF THE COMMON STOCK OF THE ISSUER HEREOF.
SUCH RESTRICTION IS BINDING ON TRANSFEREES OF THESE SHARES.
(d) THE TRANSFER OF SECURITIES REFERENCED HEREIN IS SUBJECT TO RESTRICTIONS REQUIRING APPROVAL OF THE
COMPANY PURSUANT TO AND IN ACCORDANCE WITH THE COMPANY’S BYLAWS, COPIES OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST
TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS. THE COMPANY SHALL NOT REGISTER OR OTHERWISE RECOGNIZE OR GIVE EFFECT TO
ANY PURPORTED TRANSFER OF SHARES OF STOCK THAT DOES NOT COMPLY WITH THE COMPANY’S BYLAWS.
(b) U.S. Optionees. Optionee understands and agrees that, if Optionee’s country of residence is the United States, then the Company will place the
legends set forth below or similar legends on any stock certificate(s) evidencing the Shares: THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE
SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME. THE ISSUER OF THESE SHARES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
14
Immediately Exercisable Option
(c) Non-U.S. Optionees; Regulation S. Optionee understands and agrees that, if Optionee’s country of residence is other than the United States, the
certificates evidencing the Shares will bear the legend set forth in below or similar legends:
(i) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “ACT”) WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, AND THE COMPANY DOES NOT INTEND TO
REGISTER THEM.
(ii) PRIOR TO A DATE THAT IS ONE YEAR STARTING FROM THE DATE OF SALE OF THE SHARES, THE SHARES MAY NOT BE
OFFERED OR SOLD (INCLUDING OPENING A SHORT POSITION IN SUCH SECURITIES) IN THE UNITED STATES OR TO U.S. PERSONS AS DEFINED BY
RULE 902(K) ADOPTED UNDER THE ACT, OTHER THAN TO DISTRIBUTORS, UNLESS THE SHARES ARE REGISTERED UNDER THE ACT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE. HOLDERS OF SHARES PRIOR TO ONE YEAR STARTING FROM
THE DATE OF SALE OF THE SHARES MAY RESELL SUCH SHARES ONLY PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT OR
OTHERWISE IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S OF THE ACT, OR IN TRANSACTIONS EFFECTED OUTSIDE OF THE UNITED
STATES, PROVIDED THEY DO NOT SOLICIT (AND NO ONE ACTING ON THEIR BEHALF SOLICITS) PARTICIPANTS IN THE UNITED STATES OR
OTHERWISE ENGAGE(S) IN SELLING EFFORTS IN THE UNITED STATES AND PROVIDED THAT HEDGING TRANSACTIONS INVOLVING THESE SHARES
MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.
(iii) A HOLDER OF THE SHARES WHO IS A DISTRIBUTOR, DEALER, SUB-UNDERWRITER OR OTHER SECURITIES
PROFESSIONAL, IN ADDITION, CANNOT, PRIOR TO ONE YEAR STARTING FROM THE DATE OF SALE OF THE SHARES, RESELL THE SHARES TO A U.S.
PERSON AS DEFINED BY RULE 902(K) OF REGULATION S UNLESS THE SHARES ARE REGISTERED UNDER THE ACT OR AN EXEMPTION FROM
REGISTRATION UNDER THE ACT IS AVAILABLE.
(d) Stop-Transfer Instructions. Optionee agrees that, to ensure compliance with the restrictions imposed by this Agreement, the Company may issue
appropriate “stop-transfer” instructions to its transfer agent, if any, and if the Company transfers its own securities, it may make appropriate notations to the same effect in its
own records.
(e) Refusal to Transfer. The Company will not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation
of any of the provisions of this Agreement or (ii) to treat as owner of such Shares, or to accord the right to vote or pay dividends to any purchaser or other transferee to whom
such Shares have been so transferred.
14. VOTING AGREEMENT. Optionee agrees that if Optionee becomes a party to (i) the Company Co-Sale Agreement or (ii) (A) the Company’s Amended and
Restated Voting Agreement dated as of October 26, 2018, among the Company and certain stockholders of the Company, as such may be amended and/or restated from time
to time, and/or (B) any other voting agreement that is a successor to or replacement of such agreement (collectively, the “Company Voting Agreement”), then Optionee
agrees that the stock certificate(s) evidencing the Shares shall, in addition, bear any legends required under the Company Co-Sale Agreement and/or the Company Voting
Agreement, as applicable.
15
Immediately Exercisable Option
15. CERTAIN TAX CONSEQUENCES AND NO ADVICE REGARDING GRANT. OPTIONEE SHOULD CONSULT A TAX ADVISER
APPROPRIATELY QUALIFIED IN THE COUNTRY OR COUNTRIES IN WHICH OPTIONEE RESIDES OR IS SUBJECT TO TAXATION BEFORE ACCEPTING OR
EXERCISING THIS OPTION OR DISPOSING OF THE SHARES. The Company is not providing any tax, legal, or financial advice, nor is the Company making any
representations or recommendations regarding Optionee’s participation in the Plan, or Optionee’s acquisition or sale of the Shares.
(a) Tax Advice. Optionee has obtained any necessary advice from an appropriate independent professional adviser in relation to the Tax-Related Items in
connection with the grant, exercise, assignment, release, cancellation or any other disposal of this Option pursuant to the Plan and on any subsequent sale of the Shares. In
signing and returning this Agreement, the Optionee is confirming that appropriate advice has been sought from an independent adviser.
(b) Notice of Disqualifying Disposition of ISO Shares. If Optionee sells or otherwise disposes of any of the Shares acquired pursuant to an ISO on or
before the later of (i) two years after the Grant Date and (ii) one year after the exercise date, Optionee will immediately notify the Company in writing of such disposition.
(c) Section 83(b) Election for Unvested Shares. With respect to Unvested Shares (which are subject to the Repurchase Option), unless an election is
filed by Optionee who is subject to United States federal income tax with the Internal Revenue Service (and, if necessary, the proper state taxing authorities), within thirty
(30) days of the purchase of the Unvested Shares, electing pursuant to Section 83(b) of the Code (and similar state tax provisions, if applicable) to be taxed currently on any
difference between the Exercise Price of the Unvested Shares and their Fair Market Value on the date of purchase, there may be a recognition of taxable income (including,
where applicable, alternative minimum taxable income) to Optionee, measured by the excess, if any, of the Fair Market Value of the Unvested Shares at the time they cease to
be Unvested Shares, over the Exercise Price of the Unvested Shares. To the extent Unvested Shares acquired upon exercise of an ISO coincident with the filing of an 83(b)
Election by an Optionee who is subject to United States federal income tax, the amount taxed because of a disqualifying disposition will be based upon the excess, if any, of
the Fair Market Value on the date of vesting over the Exercise Price.
(d) Responsibility for Taxes. Regardless of any action the Company or Employer takes with respect to any or all Tax-Related Items, Optionee
acknowledges that the ultimate liability for all Tax-Related Items legally due from Optionee is and remains Optionee’s responsibility and that the Company and/or the
Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Option, including the grant,
vesting or exercise of this Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends, and (ii) do not commit to structure the
terms of the grant or any aspect of this Option to reduce or eliminate Optionee’s liability for Tax-Related Items or achieve any particular tax result. Optionee acknowledges
that if Optionee is subject to Tax-Related Items in more than one jurisdiction, the Company and/or the Employer may be required to withhold or account for Tax-Related
Items in more than one jurisdiction. Optionee acknowledges that Optionee’s liability for Tax-Related Items may exceed the amount actually withheld by the Company or the
Employer.
(e) Arrangements to Satisfy Tax-Related Items. Prior to any relevant taxable or tax withholding event (“Tax Date”), as applicable, Optionee will pay
or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, Optionee
16
Immediately Exercisable Option
authorizes the Company and/or the Employer or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a
combination of the following: (i) accept a cash payment in the amount of Tax-Related Items, (ii) withhold whole Shares which would otherwise be delivered to Optionee
having an aggregate Fair Market Value as of the determination date or withhold an amount from Optionee’s wages or other cash compensation which would otherwise be
payable to Optionee by the Company and/or the Employer, equal to the amount necessary to satisfy any such obligations, (iii) withhold from proceeds of the sale of Shares
acquired upon exercise of the Option either through a voluntary sale or through a mandatory sale arranged by the Company (on Optionee’s behalf pursuant to this
authorization), or (iv) accept a cash payment to the Company by a broker-dealer acceptable to the Company to whom Optionee has submitted an irrevocable notice of
exercise; all under such rules as may be established by the Committee and in compliance with the Company’s Insider Trading Policy and 10b5-1 Trading Plan Policy, if
applicable.
(f) Maximum Withholding. The Company and/or the Employer may withhold or account for Tax-Related Items by considering up to applicable
maximum statutory withholding rates. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, Optionee is deemed to have been issued
the full number of Shares subject to the Option, notwithstanding that a number of shares of Common Stock are held back solely for the purpose of paying the Tax-Related
Items. Finally, Optionee shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a
result of Optionee’s participation in the Plan that cannot be satisfied by the means previously described. The Company shall have sole discretion to deliver the Shares if
Optionee fails to comply with Optionee’s obligations in connection with the Tax-Related Items as described in this Section 15 and Optionee unconditionally consents to and
approves any such action taken by the Company. Optionee (or any beneficiary or person entitled to act on Optionee’s behalf) shall provide the Company with any forms,
documents or other information reasonably required by the Company in connection with the Company’s or the Employer’s withholding and/or tax reporting obligations.
16. ACKNOWLEDGEMENT. The Company and Optionee agree that the Option is granted under and governed by the Grant Notice, this Agreement and by the
provisions of the Plan (incorporated herein by reference). Optionee: (i) acknowledges receipt of a copy of each of the foregoing documents, (ii) represents that Optionee has
carefully read and is familiar with their provisions, and (iii) hereby accepts the Option subject to all of the terms and conditions set forth herein and those set forth in the Plan
and the Grant Notice.
17. AWARD SUBJECT TO COMPANY CLAWBACK OR RECOUPMENT. The Option shall be subject to clawback or recoupment pursuant to any
compensation clawback or recoupment policy adopted by the Board or required by law during the term of Optionee’s employment or other service that is applicable to
executive officers, employees, directors or other service providers of the Company, and in addition to any other remedies available under such policy and applicable law may
require the cancellation of the Option (whether vested or unvested) and the recoupment of any gains realized with respect to the Option.
18. NOTICES. Any and all notices required or permitted to be given to a party pursuant to the provisions of this Agreement will be in writing and will be
effective and deemed to provide such party sufficient notice under this Agreement on the earliest of the following: (i) at the time of personal delivery, if delivery is in person;
(ii) at the time an electronic confirmation of receipt is received, if delivery is by email; (iii) at the time of transmission by facsimile, addressed to the other party at its
facsimile number specified herein (or hereafter modified by subsequent notice to the parties hereto), with confirmation of
17
Immediately Exercisable Option
receipt made by both telephone and printed confirmation sheet verifying successful transmission of the facsimile; (iv) one (1) business day after deposit with an express
overnight courier for United States deliveries, or two (2) business days after such deposit for deliveries outside of the United States, with proof of delivery from the courier
requested; or (v) three (3) business days after deposit in the United States mail by certified mail (return receipt requested) for United States deliveries. Any notice for delivery
outside the United States will be sent by email, facsimile or by express courier. Any notice not delivered personally or by email will be sent with postage and/or other charges
prepaid and properly addressed to Optionee at the last known address or facsimile number on the books of the Company, or at such other address or facsimile number as such
other party may designate by one of the indicated means of notice herein to the other parties hereto or, in the case of the Company, to it at its principal place of business.
Notices to the Company will be marked “Attention: General Counsel.” Notices by facsimile shall be machine verified as received.
19. GOVERNING LAW AND VENUE. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without
giving effect to that body of laws pertaining to conflict of laws. If any provision of this Agreement is determined by a court of law to be illegal or unenforceable, then such
provision will be enforced to the maximum extent possible and the other provisions will remain fully effective and enforceable. For purposes of any action, lawsuit or other
proceedings brought to enforce this Agreement, relating to it, or arising from it, the parties hereby submit to and consent to the sole and exclusive jurisdiction of the courts of
San Francisco, California, or the federal courts for the United States for the Northern District of California, and no other courts, where this grant is made and/or to be
performed.
20. ADDENDUM. Notwithstanding any provisions in this Agreement, the Option grant shall be subject to any special terms and conditions set forth in the
Addendum attached hereto if Optionee’s country of residence is other than the United States, including the special terms and conditions (if any) set forth beneath the name of
such country on the Addendum. Moreover, if Optionee relocates to a country other than the United States, the special terms and conditions set forth in the Addendum,
including the special terms and conditions (if any) set forth beneath the name of such country on the Addendum, will apply to Optionee to the extent the Company determines
that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Addendum constitutes an integral part of this Agreement to
the extent applicable to Optionee from time to time.
21. FURTHER ASSURANCES. The parties agree to execute such further documents and instruments and to take such further actions as may be reasonably
necessary to carry out the purposes and intent of this Agreement. The Company reserves the right to impose other requirements on Optionee’s participation in the Plan, on this
Option and on any Shares acquired upon exercise of this Option, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to
require Optionee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
22. GENERAL PROVISIONS.
(a) Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by Optionee or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and binding on the Company and Optionee.
(b) Entire Agreement. The Plan, the Grant Notice and the Exercise Agreement are each incorporated herein by reference. This Agreement (including the
Addendum and the annexes
18
Immediately Exercisable Option
attached hereto), the Grant Notice, the Plan and the Exercise Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede
all prior undertakings and agreements with respect to such subject matter.
(c) Titles and Headings. The titles, captions and headings of this Agreement are included for ease of reference only and will be disregarded in
interpreting or construing this Agreement. Unless otherwise specifically stated, all references herein to “sections” and “exhibits” will mean “sections” and “exhibits” to this
Agreement.
(d) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered will be deemed an
original, and all of which together shall constitute one and the same agreement.
(e) Severability. If any provision of this Agreement is determined by any court or arbitrator of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, such provision will be enforced to the maximum extent possible given the intent of the parties hereto. If such clause or provision cannot be so
enforced, such provision shall be stricken from this Agreement and the remainder of this Agreement shall be enforced as if such invalid, illegal or unenforceable clause or
provision had (to the extent not enforceable) never been contained in this Agreement. Notwithstanding the forgoing, if the value of this Agreement based upon the substantial
benefit of the bargain for any party is materially impaired, which determination as made by the presiding court or arbitrator of competent jurisdiction shall be binding, then
both parties agree to substitute such provision(s) through good faith negotiations.
(f) Waiver. Optionee acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a
waiver of any other provision of this Agreement, or of any subsequent breach by Optionee or any other person who holds an outstanding Option.
(g) Successors and Assigns. The Company may assign any of its rights under this Agreement, including its rights to purchase Shares under the both the
Repurchase Option and the Right of First Refusal. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Agreement shall be binding upon Optionee and Optionee’s heirs, executors, administrators, legal representatives, successors and
assigns.
* * * * *
Attachments:
Addendum to Global Stock Option Agreement
Annex A: Form of Global Stock Option Exercise Notice and Agreement
19
Immediately Exercisable Option
ADDENDUM
TO
GLOBAL STOCK OPTION AGREEMENT
COINBASE GLOBAL, INC.
2019 EQUITY INCENTIVE PLAN
Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Global Notice of Stock Option Grant, the Global Stock Option Agreement to
which this Addendum is attached and/or the Plan, as applicable.
Terms and Conditions
This Addendum includes additional terms and conditions that govern the Option granted to Optionee under the Plan if Optionee resides and/or works outside of the United
States.
If Optionee is a citizen or resident of a country other than the one in which he or she is currently working and/or residing, transfers to another country after the Date of Grant,
is a consultant, changes employment status to a consultant position or is considered a resident of another country for local law purposes, the Company shall, in its discretion,
determine the extent to which the special terms and conditions contained herein shall be applicable to Optionee. References to Optionee’s Employer shall include any entity
that engages Optionee’s services.
In accepting this Option, Optionee acknowledges, understands and agrees to the following:
1. Data Privacy Information and Consent. The Company is located at 548 Market Street, San Francisco, CA, United States, and grants awards to employees
of the Company and its Subsidiaries, Parent and Affiliates, at the Company’s sole discretion. If Optionee would like to participate in the Plan, please review the following
information about the Company’s data processing practices.
1.1 Data Collection and Usage. The Company or, if different, Optionee’s employer (the “Employer”), and its Subsidiaries, Parent or affiliates collect,
process, transfer and use personal data about Plan participants that is necessary for the purpose of implementing, administering and managing the Plan. This personal data may
include Optionee’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality and citizenship, job
title, any shares or directorships held in the Company, details of all awards or other entitlements to Shares, granted, canceled, exercised, vested, unvested or outstanding in
Optionee’s favor and any other personal information that could identify Optionee (collectively, without limitation, “Data”), which the Company receives from Optionee or the
Employer. If the Company offers Optionee an award under the Plan, then the Company will collect Optionee’s Data for purposes of allocating stock and implementing,
administering and managing the Plan and will process such Data in accordance with the Company’s then current data privacy policies, which are made available to Optionee
upon commencing employment and also available upon request.
1.2 Stock Plan Administration Service Providers. The Company transfers Data to an independent stock plan administrator and other third parties based in
the United States, which assists the
20
Immediately Exercisable Option
Company with the implementation, administration and management of the Plan. In the future, the Company may select a different service provider and share Optionee’s Data
with another company that serves in a similar manner. Optionee understands that the recipients of the Data may be located in the United States or elsewhere, and that the
recipients’ country (e.g., the United States) may have different data privacy laws and protections than Optionee’s country. The Company’s service provider may open an
account for Optionee to receive Shares. Optionee will be asked to agree on separate terms and data processing practices with the service provider, which is a condition to
Optionee’s ability to participate in the Plan. Optionee understands that Optionee may request a list with the names and addresses of any potential recipients of the Data by
contacting Optionee’s local human resources representative, only if permitted by applicable laws and regulations. Optionee authorizes the Company and any other possible
recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the
Data, in electronic or other form, for the sole purpose of implementing, administering and managing Optionee’s participation in the Plan.
1.3 Data Retention. The Company will use Optionee’s Data only as long as is necessary to implement, administer and manage Optionee’s participation in
the Plan or as required to comply with legal or regulatory obligations, including under tax and security laws. When the Company no longer needs Optionee’s Data, the
Company will remove it from its systems. If the Company keeps Optionee’s Data longer, it would be to satisfy legal or regulatory obligations and the Company’s legal basis
would be relevant laws or regulations. Optionee understands that Optionee may, at any time, view Data, request additional information about the storage and processing of
Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing Optionee’s local human
resources representative.
1.4 Consent; Voluntariness and Consequences of Denial or Withdrawal. Where permitted by applicable local law in the country where Optionee resides,
consent is a requirement for participation in the Plan. In such cases, by accepting this grant, Optionee hereby agrees with the data processing practices as described in this
notice and grants such consent to the processing and transfer of his or her Data as described in this Addendum and as necessary for the purpose of administering the Plan.
Optionee’s participation in the Plan and Optionee’s grant of consent is purely voluntary. Optionee may deny or withdraw his or her consent at any time; provided that if
Optionee does not consent, or if Optionee withdraws his or her consent, Optionee cannot participate in the Plan unless required by applicable law. This would not affect
Optionee’s salary as an employee or his or her career; Optionee would merely forfeit the opportunities associated with the Plan.
1.5 Data Subject Rights. Optionee has a number of rights under data privacy laws in his or her country. Depending on where Optionee is based,
Optionee’s rights may include the right to (i) request access or copies of Optionee’s Data the Company processes, (ii) have the Company rectify Optionee’s incorrect Data
and/or delete Optionee’s Data, (iv) restrict processing of Optionee’s Data, (v) have portability of Optionee’s Data, (vi) lodge complaints with the competent tax authorities in
Optionee’s country and/or (vii) obtain a list with the names and addresses of any potential recipients of Optionee’s Data. To receive clarification regarding Optionee’s rights
or to exercise Optionee’s rights please contact the Company at 548 Market Street, San Francisco, CA, United States, Attn: Stock Administration.
21
Immediately Exercisable Option
1.6 Special Data Provisions for Optionees Residing and/or Working in Member Countries of the European Union and/or the European Economic Area. If
Optionee resides and/or works in a member country of the European Union and/or the European Economic Area, the following provisions supplement this Section 1:
(a) GDPR Compliance. To the satisfaction and on the direction of the Committee, all operations of the Plan and this Option (at the time of its
grant and as necessary thereafter) shall include or be supported by appropriate agreements, notifications and arrangements in respect of Data and its use and processing under
the Plan, in order to secure (I) the reasonable freedom of the Employer, the Company and any Parent or Subsidiary (together, the “Group”), as appropriate, to operate the Plan
and for connected purposes, and (II) compliance with the data-protection requirements applicable from time to time, including, if applicable, and without limitation,
Regulation EU 2016/679 of the European Parliament and of the Council of 27 April 2016.
(b) Optionee has certain rights under data protection legislation as summarised below:
• Right of access: Optionee has the right to obtain from us confirmation as to whether or not personal data concerning Optionee is being processed, and, where that
is the case, to request access to the personal data, as well as certain information on how we are processing such data.
• Right to rectification: Optionee has the right to obtain from us the rectification of inaccurate personal data concerning Optionee. Considering the purpose of the
processing, Optionee may also, in some cases, be entitled to supplemental information regarding incomplete personal data.
• Right to erasure (right to be forgotten): Optionee may, in certain circumstances, have his or her personal data deleted, for example if Optionee’s personal
information is no longer necessary in relation to the purpose for which it was collected, if Optionee has objected to the processing of personal data and we do not
have a legitimate interest which outweighs Optionee’s interest, if the personal data has been processed unlawfully, or if the personal data must be deleted to
comply with a legal obligation.
• Right to restriction of processing: Optionee may require that the Company restrict the processing of Optionee’s personal data in certain cases, for example
where the Company no longer needs Optionee’s personal data but Optionee needs it to determine, enforce or defend legal claims or Optionee has objected to
processing based on the Company’s legitimate interest in order to enable the Company to check if its interest overrides Optionee’s interest.
• Right to data portability: In some circumstances, Optionee may be entitled to receive the personal data concerning Optionee which Optionee provided to the
Company in a structured, commonly used and machine-readable format and Optionee has the right to transmit those personal data to another controller.
• Right to object: Optionee has the right to object to the processing of Optionee’s personal data in certain circumstances, for example where the processing is based
on the Company’s
22
Immediately Exercisable Option
legitimate interest. If so, in order to continue processing, the Company must be able to show compelling legitimate grounds that override Optionee’s interests,
rights and freedoms.
(c) Optionee’s rights will in each case be subject to the restrictions set out in applicable data protection laws. Further information on these rights,
and the circumstances in which they may arise in connection with the Company’s processing of Optionee’s personal data, can be obtained by contacting Optionee’s local
human resources representative. If Optionee wants to review, verify, correct or request erasure of Optionee’s personal information, object to the processing of Optionee’s
personal data, or request that the Company transfer a copy of Optionee’s personal information to another party, please contact Optionee’s local human resources
representative.
(d) The Company agrees to ensure that Data transferred outside the European Economic Area will be done pursuant to a lawful transfer
mechanism (for example, European Commission approved model contract clauses).
(e) The Company will separately provide the Optionee with information in a data privacy notice on the collection, processing and transfer of their
personal data, including the grounds for processing.
(f) If Optionee has any grievance, issue or problem in respect of the handling or processing of Optionee’s personal data in any way, Optionee has
the right to lodge a complaint to the UK Information Commissioner's Office, whose contact details are as follows: Information Commissioner’s Office, Wycliffe House,
Water Lane, Wilmslow Cheshire, SK9 5AF, 0303 123 1113; [email protected]. Alternatively, Optionee can contact the Company’s Data Protection Officer at
[email protected]
2. Insider Trading Restrictions/Market Abuse Laws. Optionee acknowledges that, if and when the Shares are publicly listed on any stock exchange,
depending on his or her country, Optionee may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, which may affect his or her
ability to directly or indirectly, accept, acquire, sell or attempt to sell or otherwise dispose of Shares or rights to the Shares, or rights linked to the value of Shares during such
times as Optionee is considered to have “inside information” regarding the Company (as defined by the laws and/or regulations in applicable jurisdictions or Optionee’s
country). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders placed by Optionee before possessing the inside information.
Furthermore, Optionee may be prohibited from (i) disclosing inside information to any third party, including fellow employees (other than on a “need to know” basis) and (ii)
“tipping” third parties or causing them to otherwise buy or sell securities. Any restrictions under these laws or regulations are separate from and in addition to any restrictions
that may be imposed under any applicable Company insider trading policy. Optionee acknowledges that it is Optionee’s responsibility to comply with any applicable
restrictions, and Optionee is advised to speak to his or her personal advisor on this matter.
3. Language. Optionee acknowledges that he or she is sufficiently proficient in English to understand the terms and conditions of this Agreement. Furthermore,
if Optionee has received this Agreement, or any other document related to the Option and/or the Plan translated into a language other than English and if the meaning of the
translated version is different than the English version, the English version will control.
23
Immediately Exercisable Option
4. Foreign Asset/Account Reporting Requirements. Optionee acknowledges that there may be certain foreign asset and/or account reporting requirements
which may affect Optionee’s ability to acquire or hold Shares acquired under the Plan or cash received from participating in the Plan in a brokerage account outside his or her
country. Optionee may also be required to repatriate sale proceeds or other funds received as a result of participating in the Plan to his or her country through a designated
bank or broker within a certain time after receipt. It is Optionee’s responsibility to be compliant with such regulations and Optionee should speak with his or her personal
advisor on this matter.
5. Extraordinary Compensation. Optionee acknowledges, understands and agrees that the Option and any Shares acquired under the Plan and the income and
value of same, are not part of normal or expected compensation for any purpose and are extraordinary items of compensation outside the scope of Optionee’s employment
contract, if any, and is not to be considered part of his or her normal or expected compensation for any purpose, including, without limitation, calculating severance,
resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension, retirement or welfare benefits or similar payments.
6. Participation Ceases When Employment Ceases. For purposes of the Option, Optionee’s service will be considered Terminated as of the date Optionee is
no longer actively providing services to the Company or any of its Parent, Subsidiaries, the Employer or Affiliates (regardless of the reason for such Termination and whether
or not later found to be invalid or in breach of laws in the jurisdiction where Optionee is employed or the terms of Optionee’s employment agreement, if any), and
employment shall not be extended by any notice period or garden leave mandated by local law, provided however, that a change in status from an employee to a consultant or
advisor shall not terminate the Optionee’s continuous service, unless determined by the Committee, in its discretion. Unless otherwise expressly provided in this Agreement or
determined by the Company, (i) Optionee’s right to vest in the Option under the Plan, if any, will terminate as of such date and will not be extended by any notice period (e.g.,
Optionee’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under laws in the jurisdiction where
Optionee is employed or the terms of Optionee’s employment agreement, if any); and (ii) the period (if any) during which Optionee may exercise the Option after such
Termination of Optionee’s service will commence on the date Optionee ceases to actively provide services and will not be extended by any notice period mandated under laws
in the jurisdiction where Optionee is employed or terms of Optionee’s employment agreement, if any. The Committee shall have the exclusive discretion to determine when
Optionee is no longer actively providing services for purposes of the Option (including whether Optionee may still be considered to be providing services while on a leave of
absence).
7. Additional Acknowledgments and Agreements. In accepting this Option, Optionee also acknowledges, understands and agrees that:
• the Plan is established voluntarily by the Company, it is discretionary in nature, and may be amended, suspended or terminated by the Company at any
time, to the extent permitted by the Plan;
• the grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of options, or benefits in lieu
of options, even if options have been granted in the past;
• all decisions with respect to future options or other grants, if any, will be at the sole discretion of the Company;
24
Immediately Exercisable Option
• the Option and Optionee’s participation in the Plan shall not create a right to employment or other service or be interpreted as forming or amending an
employment or service contract with the Company, Employer, or any Subsidiary or Parent or Affiliate of the Company and shall not interfere with the
ability of the Company, the Employer or any Subsidiary or Parent or Affiliate of the Company, as applicable, to terminate Optionee’s employment or
other service relationship;
• Optionee is voluntarily participating in the Plan;
• the Option and any Shares acquired under the Plan are not intended to replace any pension or retirement rights or compensation;
• the future value of the Shares underlying the Option is unknown, indeterminable, and cannot be predicted with certainty;
• if the underlying Shares do not increase in value, the Option will have no value;
• if Optionee exercises the Option and acquires Shares, the value of such Shares may increase or decrease in value, even below the Exercise Price
• no claim or entitlement to compensation or damages shall arise from forfeiture of the Option resulting from the Termination of Optionee’s service (for any
reason whatsoever, whether or not later found to be invalid or in breach of laws in the jurisdiction where Optionee is employed or the terms of Optionee’s
employment agreement, if any), and in consideration of the grant of the Option to which Optionee is otherwise not entitled, Optionee irrevocably agrees
never to institute any claim against the Company, any of its Parent, Subsidiaries, Affiliates or the Employer, waives his or her ability, if any, to bring any
such claim, and releases the Company, any of its Parent, Subsidiaries, Affiliates and the Employer from any such claim; if, notwithstanding the foregoing,
any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, Optionee shall be deemed irrevocably to have agreed not
to pursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claim;
• unless otherwise provided in the Plan or by the Company in its discretion, the Option and the benefits evidenced by this Agreement do not create any
entitlement to have the Option or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in
connection with any corporate transaction affecting the shares of the Company;
• neither the Company, the Employer nor any Subsidiary, Parent or Affiliate shall be liable for any foreign exchange rate fluctuation between Optionee’s
local currency and the United States Dollar that may affect the value of the Option or of any amounts due to Optionee pursuant to the exercise of the
Option or the subsequent sale of any Shares acquired upon exercise.
25
Immediately Exercisable Option
Notifications
This Addendum also includes information regarding exchange controls and certain other issues of which Optionee should be aware with respect to Optionee’s participation in
the Plan. The information is provided solely for the convenience of Optionee and is based on the securities, exchange control and other laws in effect in the respective
countries as of December 2018. Such laws are often complex and change frequently. As a result, the Company strongly recommends that Optionee not rely on the information
noted herein as the only source of information relating to the consequences of Optionee’s participation in the Plan because the information may be out of date by the time
Optionee vests in or exercises this Option or sells any exercised Shares.
Optionee is responsible for complying with all applicable tax, foreign asset reporting and/or exchange control rules that may apply in connection with participation in the Plan
and/or the transfer of proceeds acquired thereunder. Prior to exercise of the Options or transfer of funds from or into Optionee’s country, Optionee should consult the local
bank and/or Optionee’s exchange control advisor, as interpretations of the applicable regulations may vary; additionally, exchange control rules and regulations are subject to
change without notice.
In addition, the information contained in this Addendum is general in nature and may not apply to Optionee’s particular situation, and the Company is not in a position to
assure Optionee of any particular result. Accordingly, Optionee is advised to seek appropriate professional advice as to how the applicable laws in his or her country may
apply to his or her situation.
Finally, Optionee understands that if he or she is a citizen or resident of a country other than the one in which he or she is currently residing and/or working, transfers to
another country after the Date of Grant, or is considered a resident of another country for local law purposes, the notifications contained herein may not be applicable to
Optionee in the same manner.
Country-Specific Provisions
BRAZIL
Terms and Conditions
Employment Considerations. By accepting the Option, Optionee acknowledge and agree that (i) Optionee is making an investment decision, (ii) Optionee will be entitled to
vest in and exercise the Option only if the vesting conditions are met and all necessary services are provided by Optionee, and (iii) the value of the Shares is not fixed and may
increase or decrease without compensation to Optionee.
Notifications
Exchange Controls. Any remittance of funds abroad should be made through a local bank duly authorized to deal in foreign exchange in Brazil. In addition to the fees that
may be charged by the financial institution for having the foreign exchange transactions liquidated and the corresponding funds remitted abroad, the Brazilian Tax on
Financial Transactions (“IOF”) will be due upon such remittance, at the rate of 0.38%, upon the gross amounts involved on the transaction. Funds remitted into Brazil may
also be subject to this tax. Optionee should consult with his or her personal advisor for any additional details on cross-border transactions that may be subject to the IOF.
26
Immediately Exercisable Option
Securities Laws. The Plan is not a public offer in Brazil and the offer is only directed at the individuals to whom the offer is specifically addressed. The Plan and the
securities acquired under the Plan have not been, and will not be, publicly issued, placed, distributed, offered or negotiated in the Brazilian capital markets and, as a result,
will not be registered with or supervised by the Brazilian Securities Commission (Comissão de Valores Mobiliários, the “CVM”) or any other any governmental authority in
Brazil. Therefore, any shares acquired under the Plan will only be offered or sold in Brazil in circumstances which do not constitute a public offering, placement, distribution
or negotiation under Brazilian capital markets regulations.
Foreign Asset Reporting. Optionee is required to report any cash or share accounts held in a foreign institution where the value of the asset is more than USD 100,000. The
information must be submitted to the Central Bank by April 5. The report must be submitted through the Central Bank online portal, using a valuation for all foreign assets
held as of December 31.
IRELAND
Terms and Conditions
Employment Acknowledgment. By participating in the Plan, Optionee acknowledges and agrees that the benefits received in connection with the Option will not be taken
into account for any redundancy or unfair dismissal claim.
Taxes. The references in the Plan and/or the Agreement to “Tax-Related Items” includes any and all taxes, charges, levies and contributions in Ireland or elsewhere, to
include, in particular, Universal Social Charge (USC) and Pay Related Social Insurance (PRSI). As a condition of participation in the Plan, Optionee authorizes the Company
and/or the Employer to withhold all applicable taxes arising in Ireland at the time of exercise, regardless of whether such withholding may be required by law. Optionee
acknowledges that the withholding may be done by any of the methods permitted in the Global Stock Option Agreement; however, should the Company or the Employer fail
to withhold any or all Tax- Related Items for any reason, it remains Optionee’s obligation to pay Optionee’s tax liability, and neither the Company nor the Employer will be
liable for Optionee’s failure to satisfy Optionee’s tax payment obligations.
Notifications
Director Notification Requirement. Directors and secretaries of the Company’s Irish Parent, Subsidiary or Affiliate and their respective spouses and children under 18 years
of age and family-held companies or trusts who receive an Option or other award under the Plan or sell Shares of acquired under the Plan must notify the Company’s Irish
Parent, Subsidiary or Affiliate, as applicable, in writing within five business days of (i) receiving or disposing of an interest in the Company, (ii) becoming aware of the event
giving rise to the notification requirement, or (iii) becoming a director or secretary if such an interest exists at the time. This notification rule applies as well to a shadow
director of the Company’s Irish Parent, Subsidiary or Affiliate (i.e., an individual who is not on the board of the Company’s Irish Parent, Subsidiary or Affiliate but who has
sufficient control so that the board of directors acts in accordance with the “directions or instructions” of the individual).
27
Immediately Exercisable Option
JAPAN
Terms and Conditions
Plan Addendum. The terms and conditions of the Japan Addendum to the Plan are incorporated by reference.
Restrictions on Transfer. The Option may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent
and distribution.
Notifications
Securities Laws. The Company notifies Optionee, and Optionee acknowledges, that: (i) the solicitation of the Option falls under the category of solicitation towards small
number investors as provided in Article 23-13.4 of the Financial Instruments and Exchange Law of Japan (kinyuu shouhin torihiki hou) (Law No. 25 of 1948, as amended)
and, therefore, no notification under Article 4.1 of the same has been made in respect of the solicitation; and (ii) Optionee is prohibited from transferring the Option, unless
transferred as a whole; and/or (iii) the Option cannot be divided into parts.
Exchange Control. If Optionee remits, from his/her bank account in Japan, an amount to purchase Shares in one transaction that exceeds JPY 30,000,000, Optionee is
required to file a Payment Report with the Japanese Ministry of Finance through (i) the bank through which the payment is executed within 10 days of such remittance or (ii)
the Bank of Japan within 20 days of such remittance if Optionee files the Payment Report on the Foreign Exchange Online System thereof. If Optionee intends to acquire
Shares with a value in excess of JPY 100,000,000 in a single transaction, Optionee must also file an ex post facto Report Concerning Acquisition of Shares with the Japanese
Ministry of Finance through the Bank of Japan within 20 days of acquiring the Shares. The forms to make these reports may be acquired at the Bank of Japan. Note that a
Payment Report is required independently of a Report Concerning Acquisition of Securities, and Optionee must file both Reports if the total amount paid on a one-time basis
to purchase Shares exceeds JPY 100,000,000.
Optionee might not need to report to the Japanese Minister of Finance if the acquisition is made through a bank, securities company or other similar financial institutions, but
purchases directly from the foreign parent company do not fall within this exception. Optionee should verify the limits and reporting requirements as these rules can change.
Foreign Asset Reporting. Details of any assets held outside Japan on an annual basis as of December 31 (including Shares acquired under the Plan) must be reported to the
Japanese tax authorities, to the extent such assets have a total net fair market value exceeding JPY 50,000,000. Such report is due by March 15 of the next year. Optionee
should consult with his or her personal tax advisor to determine if the reporting obligation applies to Optionee and whether Optionee will be required to include details of
Optionee’s outstanding Options, as well as Shares, in the report.
There could be tax upon grant if the Option is transferable or if Optionee could enjoy the benefit of the Option in any manner other than by exercising them. Optionee should
consult with personal tax advisor regarding those issues.
28
Immediately Exercisable Option
UNITED KINGDOM
Terms and Conditions
Employment Acknowledgment. Optionee acknowledges and agrees that his or her period of employment for purposes of the Plan will be determined without regard to any
period of statutory, contractual, common law, civil law or other notice of termination of employment or any period of salary continuance or deemed employment, regardless
of whether the termination of employment is otherwise lawful.
Tax Withholding Obligations. As a condition of the grant of the Option, Optionee unconditionally and irrevocably agrees:
(i) to place the Company in funds and indemnify the Company in respect of (1) all liability to UK income tax which the Company is liable to account for on
Optionee’s behalf directly to Her Majesty’s Revenue and Customs (“HMRC”); (2) all liability to national insurance contributions which the Company is liable to
account for on Optionee’s behalf to HM Revenue & Customs (including secondary class 1 (employer’s) national insurance contributions for which Optionee liable);
and, if so required by the Company, (3) all liability to national insurance contributions for which the Company is liable which arises as a consequence of or in
connection with the Option; or
(ii) to permit the Company to sell at the best price which it can reasonably obtain such number of shares allocated or allotted to Optionee following exercise as
will provide the Company with an amount equal to Optionee’s UK tax liability; and to permit the Company to withhold an amount not exceeding the UK tax liability
from any amount paid or payable to Optionee;
(iii) if so required by the Company, and, to the extent permitted by law, to enter into a joint election or other arrangements under which the liability for all or part
of such the Employer’s national insurance contributions liability is transferred to Optionee;
(iv) if so required by the Company, to enter into a joint election within Section 431 of (UK) Income Tax (Earnings and Pensions) Act 2003 in respect of
computing any tax charge on the acquisition of “restricted securities” (as defined in Section 423 and 424 of that act); and
(v) to sign, promptly, all documents required by the Company to effect the terms of this provision, and references in this provision to “the Company” shall, if
applicable, be construed as also referring to any Affiliate of the Company.
Employment Notification. Optionee waives all rights to compensation or damages in consequence of the termination of Optionee’s office or employment with the Company,
the Employer or any Subsidiary or Parent or Affiliate of the Company for any reason whatsoever (whether lawful or unlawful and including in circumstances giving rise to a
claim for wrongful dismissal) in so far as those rights arise or may arise from Optionee ceasing to hold or being able to exercise the Option, or from the loss on diminution in
value of any rights or entitlements in connection with the Plan.
29
Immediately Exercisable Option
Notifications
Tax Notification. If payment or withholding of the tax due in connection with the Option and is not made within ninety days after the end of the year in which the tax event
occurs, or such other period specified in the income tax laws, the amount of any uncollected tax will constitute a loan owed by Optionee to the Company or, if different, the
Employer. Optionee agrees that the loan will bear interest at then-current official rate of HMRC.
Notwithstanding the foregoing, if Optionee is a director or executive officer of the Company, Optionee will not be eligible for such a loan to cover the income tax due as
described above. In the event that tax is not timely collected or paid, the amount of any uncollected tax will constitute a benefit to Optionee on which additional income tax
and National Insurance Contributions will be payable. Optionee acknowledges that the Company or, if different, the Employer may recover any such additional taxes from
Optionee. Optionee will also be responsible for reporting and paying all taxes due on this additional benefit directly to HMRC under the self-assessment regime.
30
Immediately Exercisable Option
ANNEX A
FORM OF STOCK OPTION EXERCISE NOTICE AND AGREEMENT
Immediately Exercisable Option
GLOBAL STOCK OPTION EXERCISE NOTICE AND AGREEMENT
COINBASE GLOBAL, INC.
2019 EQUITY INCENTIVE PLAN
*NOTE: Optionee must sign or electronically accept this Global Notice of Stock Option Exercise Notice and Agreement (this “Notice”) before submitting it to Coinbase
Global, Inc. (the “Company”).
OPTIONEE INFORMATION: Please provide the following information about yourself (“Optionee”, “I” or “me”):
Name: Employee Number:
Address: Email Address:
Option Information: Please provide this information on the option being exercised (the “Option”):
Grant No.
Date of Grant: Type of Stock Option:
Exercise Price Per Share: $____ ☐ Nonqualified (NQSO)
☐ Incentive (ISO)
Total number of Shares subject to the Option:
EXERCISE INFORMATION:
Number of Shares for which the Option is now being exercised [________________]. (These Shares are referred to below as the “Purchased Shares.”)
Total Exercise Price being paid for the Purchased Shares: $____________
Form of payment enclosed [check all that apply]:
Check for $____________, payable to “COINBASE GLOBAL, INC.”
Certificate(s) for ________________ shares of Class ____ Common Stock of the Company. These shares will be valued as of the date this Notice is received by the
Company. [Requires Company consent.]
AGREEMENTS, REPRESENTATIONS AND ACKNOWLEDGEMENTS OF OPTIONEE: By accepting this Notice (whether written, electronic or otherwise),
Optionee hereby agrees with, and represents to, the Company as follows:
1. Terms Governing. I acknowledge and agree with the Company that I am acquiring the Purchased Shares by exercise of this Option subject to all other terms and
conditions of this Notice and the Global Stock Option Agreement that govern the Option, including without limitation the terms of the Company’s 2019 Equity Incentive Plan,
as it may be amended (the “Plan”).
32
Immediately Exercisable Option
2. Investment Intent; Securities Law Restrictions. I represent and warrant to the Company that I am acquiring and will hold the Purchased Shares for investment for
my account only, and not with a view to, or for resale in connection with, any “distribution” of the Purchased Shares within the meaning of the United States Securities Act of
1933, as amended (the “Securities Act”). I understand that the Purchased Shares have not been registered under the Securities Act by reason of a specific exemption from such
registration requirement and that the Purchased Shares must be held by me indefinitely, unless they are subsequently registered under the Securities Act or I obtain an opinion
of counsel (in form and substance satisfactory to the Company and its counsel) that registration is not required. I acknowledge that the Company is under no obligation to
register or qualify the Purchased Shares under the Securities Act or under any other securities law.
3. Securities Restrictions on Transfer: Rule 144. I will not sell, transfer or otherwise dispose of the Purchased Shares in violation of the Securities Act, the United
States Securities Exchange Act of 1934, as amended, or the rules promulgated thereunder (including Rule 144 under the Securities Act described below “Rule 144”)) or of
any other applicable foreign, federal, state and local securities or other laws. I am aware of Rule 144, which permits limited public resales of securities acquired in a non-
public offering, subject to satisfaction of certain conditions, which include (without limitation) that: (a) certain current public information about the Company is available; (b)
the resale occurs only after the holding period required by Rule 144 has been met; (c) the sale occurs through an unsolicited “broker’s transaction”; and (d) the amount of
securities being sold during any three-month period does not exceed specified limitations. I understand that the conditions for resale set forth in Rule 144 have not been
satisfied and that the Company has no plans to satisfy these conditions in the foreseeable future. In addition to any other limitation on transfer created by applicable securities
and other laws, I will not assign, encumber or dispose of any interest in the Purchased Shares issued pursuant to this Notice except with the Company’s prior written consent
and in compliance with the provisions of the Plan, this Notice, the Global Stock Option Agreement governing the Option, the Company’s Bylaws, the Company’s then current
Insider Trading Policy, and applicable securities and other laws.
4. Access to Information; Understanding of Risk in Investment. I acknowledge that I have received and had access to such information as I consider necessary or
appropriate for deciding whether to invest in the Purchased Shares and that I had an opportunity to ask questions and receive answers from the Company regarding the terms
and conditions of the issuance of the Purchased Shares. I am aware that my investment in the Company is a speculative investment that has limited liquidity and is subject to
the risk of complete loss. I am able, without impairing my financial condition, to hold the Purchased Shares for an indefinite period and to suffer a complete loss of my
investment in the Purchased Shares.
5. Rights of First Refusal; Repurchase Option; Market Standoff. I acknowledge that the Purchased Shares remain subject to the Company’s Right of First Refusal,
the Company’s Repurchase Option, and the market standoff covenants (sometimes referred to as the “lock-up”), all in accordance with the Global Notice of Stock Option
Grant and the Global Stock Option Agreement that govern the Option.
6. Form of Ownership. I acknowledge that the Company has encouraged me to consult my own adviser to determine the form of ownership of the Purchased Shares
that is appropriate for me. In the event that I choose to transfer my Purchased Shares to a trust, I agree to sign a Stock Transfer Agreement.
7. Investigation of Tax Consequences. I acknowledge that the Company has encouraged me to consult my own adviser to determine the tax consequences of acquiring
the Purchased Shares at this time.
33
Immediately Exercisable Option
8. Other Tax Matters. I agree that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes
my tax liabilities. I will not make any claim against the Company or a Subsidiary or Parent or Affiliate of the Company, or their respective boards (or any committee thereof),
directors, officers or employees, related to tax liabilities arising from the Option or my other compensation. In particular, I acknowledge that the Option is exempt from
Section 409A of the United States Internal Revenue Code of 1986, as amended, only if the exercise price per share is at least equal to the fair market value per share of the
Shares at the time the Option was granted. Since Shares are not traded on an established securities market, the determination of their fair market value was made by the
Committee and/or by an independent valuation firm retained by the Company. I acknowledge that there is no guarantee in either case that the United States Internal Revenue
Service (the “IRS”) will agree with the valuation, and I will not make any claim against the Company or a Subsidiary or Parent of Affiliate of the Company, or their
respective boards (or any committee thereof), directors, officers or employees in the event that the IRS asserts that the valuation was too low.
9. Agreement to Enter into Company Co-Sale Agreement and/or Company Voting Agreement. Pursuant to the Global Stock Option Agreement, if requested to do
so by the Company, I agree to enter into and execute the then-current Company Co-Sale Agreement and/or Company Voting Agreement concurrently with my exercise of the
Option or at any other time I am requested to do so by the Company. I acknowledge that by entering into the Company Co-Sale Agreement and Company Voting Agreement I
will be subjecting the Purchased Shares to the rights of first refusal and co-sale rights therein and I will be subjected to voting and other obligations and covenants regarding
all Company shares I own, and all other provisions of the Company Co-Sale Agreement and/or Company Voting Agreement, as applicable.
10. Spouse Consent. I agree to seek the consent of my spouse to the extent required by the Company to enforce the foregoing.
11. Tax Withholding. As a condition of exercising this Option, I agree to make adequate provision for all Tax-Related Items (as defined in the Plan), if any, which arise
in relation to this Option, or upon disposition of the Purchased Shares, whether by withholding, direct payment to the Company, or otherwise in accordance with the Plan and
the Global Stock Option Agreement.
IMPORTANT NOTE FOR OPTIONEES SUBJECT TO UNITED STATES FEDERAL INCOME TAX: UNVESTED PURCHASED SHARES ARE SUBJECT TO
REPURCHASE BY THE COMPANY. PLEASE CONSULT WITH YOUR TAX ADVISER CONCERNING THE ADVISABILITY OF FILING AN 83(b) ELECTION
WITH THE INTERNAL REVENUE SERVICE WHICH MUST BE FILED WITHIN THIRTY (30) DAYS AFTER THE PURCHASE OF SHARES TO BE EFFECTIVE
FOR UNITED STATES FEDERAL INCOME TAX PURPOSES.
A form of Election under Section 83(b) is attached hereto as Exhibit 1 for reference. If you are subject to United States federal income tax, unless an 83(b) election is
timely filed with the Internal Revenue Service (and, if necessary, the proper state taxing authorities), electing pursuant to Section 83(b) of the Internal Revenue
Code (and similar state tax provisions, if applicable) to be taxed, for United States federal income tax purposes, currently on any difference between the purchase
price of the Unvested Purchased Shares and their fair market value on the date of purchase, there may be a recognition of United States federal taxable income
(including, where applicable, alternative minimum taxable income) to you, measured by the excess, if any, of the Fair Market Value of the Unvested Purchased
Shares at the time they cease to be Unvested Purchased Shares, over the purchase price of the Unvested Purchased Shares.
34
Immediately Exercisable Option
This Notice may be executed and delivered electronically whether via the Company’s intranet or the Internet site of a third party or via email or any other means of electronic
delivery specified by the Company. By my acceptance hereof (whether written, electronic or otherwise), I agree, to the fullest extent permitted by law, that in lieu of receiving
documents in paper format, I accept the electronic delivery of any documents that the Company (or any third party the Company may designate), may deliver in connection
with this Option (including the Plan, this Notice, the Global Notice of Stock Option Grant, the Global Stock Option Agreement, the information described in Rules 701(e)(2),
(3), (4) and (5) under the Securities Act, account statements, or other communications or information) whether via the Company’s intranet or the Internet site of such third
party or via email or such other means of electronic delivery specified by the Company.
SIGNATURE: DATE:
[Signature Page to Global Stock Option Exercise Notice and Agreement]
Attachment:
Exhibit 1: – Section 83(b) Election Form
35
EXHIBIT 1
SECTION 83(b) ELECTION
ELECTION UNDER SECTION 83(B) OF THE
INTERNAL REVENUE CODE
The undersigned Taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, to include the excess, if any, of the fair market value of
the property described below at the time of transfer over the amount paid for such property, as compensation for services in the calculation of: (1) regular gross income; (2)
alternative minimum taxable income; or (3) disqualifying disposition gross income, as the case may be.
1. TAXPAYER'S NAME:
TAXPAYER'S ADDRESS:
SOCIAL SECURITY NUMBER:
2. The property with respect to which the election is made is described as follows: _______ shares of Class A Common Stock, par value $0.00001 per share, of Coinbase
Global, Inc., a Delaware corporation (the “Company”), which were transferred upon exercise of an option by the Company, which is Taxpayer’s employer or the
corporation for whom the Taxpayer performs services.
3. The date on which the shares were transferred was pursuant to the exercise of the option was ____________________, _____ and this election is made for calendar
year ____.
4. The shares received upon exercise of the option are subject to the following restrictions: The Company may repurchase all or a portion of the shares at the lower of (a)
Taxpayer’s original purchase price per share or (b) the then fair market value per share of the shares, under certain conditions at the time of Taxpayer’s termination of
employment or services.
5. The fair market value of the shares (without regard to restrictions other than restrictions which by their terms will never lapse) was $_____ per share x _______ shares
= $_______ at the time of exercise of the option.
6. The amount paid for such shares upon exercise of the option was $____ per share x ________ shares = $________.
7. The Taxpayer has submitted a copy of this statement to the Company.
8. The amount to include in gross income is $______________. [The result of the amount reported in Item 5 minus the amount reported in Item 6.]
THIS ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE (“IRS”), AT THE OFFICE WHERE THE TAXPAYER FILES ANNUAL INCOME TAX
RETURNS, WITHIN 30 DAYS AFTER THE DATE OF TRANSFER OF THE SHARES, AND MUST ALSO BE FILED WITH THE TAXPAYER’S INCOME TAX RETURNS
FOR THE CALENDAR YEAR. THE ELECTION CANNOT BE REVOKED WITHOUT THE CONSENT OF THE IRS.
Dated:
Taxpayer's Signature
Exhibit 10.4
COINBASE GLOBAL INC.
2021 EQUITY INCENTIVE PLAN
1. PURPOSE. The purpose of this Plan is to provide incentives to attract, retain, and motivate eligible persons whose present and potential contributions are important
to the success of the Company, and any Parents, Subsidiaries, and Affiliates that exist now or in the future, by offering them an opportunity to participate in the Company’s
future performance through the grant of Awards. Capitalized terms not defined elsewhere in the text are defined in Section 28.
2. SHARES SUBJECT TO THE PLAN.
2.1. Number of Shares Available. Subject to Sections 2.6 and 21 and any other applicable provisions hereof, the total number of Shares reserved and available for
grant and issuance pursuant to this Plan as of the date of adoption of the Plan by the Board, is Thirty One Million Forty-Seven Thousand Eight Hundred and Sixty-Nine
(31,047,869) Shares, plus (a) any reserved Shares not issued or subject to outstanding awards granted under the Company’s 2019 Equity Incentive Plan, as amended (the
“2019 Plan”) on the Effective Date (as defined below), (b) Shares that are subject to awards granted under the 2019 Plan and the Company’s 2013 Amended and Restated
Stock Plan, as amended (collectively with the 2019 Plan, the “Prior Plans”) that cease to be subject to such awards by forfeiture or otherwise after the Effective Date, (c)
Shares issued under the Prior Plans before or after the Effective Date pursuant to the exercise of stock options that are, after the Effective Date, forfeited, (d) Shares issued
under the Prior Plan that are repurchased by the Company at the original purchase price or are otherwise forfeited, and (e) Shares that are subject to stock options or other
awards under the Prior Plans that are used to pay the exercise price of a stock option or withheld to satisfy the tax withholding obligations related to any award.
2.2. Lapsed, Returned Awards. Shares subject to Awards, and Shares issued under the Plan under any Award, will again be available for grant and issuance in
connection with subsequent Awards under this Plan to the extent such Shares: (a) are subject to issuance upon exercise of an Option or SAR granted under this Plan but which
cease to be subject to the Option or SAR for any reason other than exercise of the Option or SAR, (b) are subject to Awards granted under this Plan that are forfeited or are
repurchased by the Company at the original issue price, (c) are subject to Awards granted under this Plan that otherwise terminate without such Shares being issued or (d) are
surrendered pursuant to an Exchange Program. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the
number of Shares available for issuance under the Plan. Shares used to pay the exercise price of an Award or withheld to satisfy the tax withholding obligations related to an
Award will become available for grant and issuance in connection with subsequent Awards under this Plan. For the avoidance of doubt, Shares that otherwise become
available for grant and issuance because of the provisions of this Section 2.2 will not include Shares subject to Awards that initially became available because of the
substitution clause in Section 21.2 hereof.
2.3. Minimum Share Reserve. At all times the Company will reserve and keep available a sufficient number of Shares as will be required to satisfy the
requirements of all outstanding Awards granted under this Plan.
2.4. Automatic Share Reserve Increase. The number of Shares available for grant and issuance under the Plan will be increased on January 1 of each of the first
ten (10) fiscal years during the term of the Plan by the lesser of (a) five percent (5%) of the number of shares of all classes of the Company’s common stock issued and
outstanding (on an as converted to common stock basis) on each December 31 immediately prior to the date of increase or (b) such number of Shares determined by the
Board.
st
st
1
2.5. ISO Limitation. No more than Ninety Million (90,000,000) Shares will be issued pursuant to the exercise of ISOs granted under the Plan.
2.6. Adjustment of Shares. If the number or class of outstanding Shares is changed by a stock dividend, extraordinary dividend or distribution (whether in cash,
shares, or other property, other than a regular cash dividend), recapitalization, stock split, reverse stock split, subdivision, combination, consolidation, reclassification, spin-
off, or similar change in the capital structure of the Company, without consideration, then (a) the number and class of Shares reserved for issuance and future grant under the
Plan set forth in Section 2.1, including Shares reserved under sub-clauses (a)-(e) of Section 2.1, (b) the Exercise Prices of and number and class of Shares subject to
outstanding Options and SARs, (c) the number and class of Shares subject to other outstanding Awards and (d) the maximum number and class of Shares that may be issued
as ISOs set forth in Section 2.5, will be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and in compliance with
applicable securities or other laws, provided that fractions of a Share will not be issued.
If, by reason of an adjustment pursuant to this Section 2.6, a Participant’s Award Agreement or other agreement related to any Award, or the Shares subject to such
Award, covers additional or different shares of stock or securities, then such additional or different shares, and the Award Agreement or such other agreement in respect
thereof, will be subject to all of the terms, conditions, and restrictions which were applicable to the Award or the Shares subject to such Award prior to such adjustment.
3. ELIGIBILITY. ISOs may be granted only to Employees. All other Awards may be granted to Employees, Consultants, Directors, and Non-Employee Directors,
provided that such Consultants, Directors, and Non-Employee Directors render bona fide services not in connection with the offer and sale of securities in a capital-raising
transaction.
4. ADMINISTRATION.
4.1. Committee Composition; Authority. This Plan will be administered by the Committee or by the Board acting as the Committee. Subject to the general
purposes, terms, and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan, except, however, the
Board will establish the terms for the grant of an Award to Non-Employee Directors. The Committee will have the authority to:
(a) construe and interpret this Plan, any Award Agreement, and any other agreement or document executed pursuant to this Plan;
(b) prescribe, amend, and rescind rules and regulations relating to this Plan or any Award;
(c) select persons to receive Awards;
(d) determine the form and terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions
include, but are not limited to, the Exercise Price, the time or times when Awards may vest and be exercised (which may be based on performance criteria) or settled, any
vesting acceleration or waiver of forfeiture restrictions, the method to satisfy tax withholding obligations or any other tax liability legally due, and any restriction or limitation
regarding any Award or the Shares relating thereto, based in each case on such factors as the Committee will determine;
(e) determine the number of Shares or other consideration subject to Awards;
2
(f) determine the Fair Market Value in good faith and interpret the applicable provisions of this Plan and the definition of Fair Market Value in
connection with circumstances that impact the Fair Market Value, if necessary;
(g) determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of, or as alternatives to, other Awards under
this Plan or any other incentive or compensation plan of the Company or any Parent, Subsidiary, or Affiliate;
(h) grant waivers of Plan or Award conditions;
(i) determine the vesting, exercisability, and payment of Awards;
(j) correct any defect, supply any omission or reconcile any inconsistency in this Plan, any Award or any Award Agreement;
(k) determine whether an Award has been vested and/or earned;
(l) determine the terms and conditions of any, and to institute any Exchange Program;
(m) reduce, waive or modify any criteria with respect to Performance Factors;
(n) adjust Performance Factors to take into account changes in law and accounting or tax rules as the Committee deems necessary or appropriate to reflect
the impact of extraordinary or unusual items, events, or circumstances to avoid windfalls or hardships;
(o) adopt terms and conditions, rules, and/or procedures (including the adoption of any subplan under this Plan) relating to the operation and
administration of the Plan to accommodate requirements of local law and procedures outside of the United States or to qualify Awards for special tax treatment under laws of
jurisdictions other than the United States;
(p) exercise discretion with respect to Performance Awards;
(q) make all other determinations necessary or advisable for the administration of this Plan; and
(r) delegate any of the foregoing to a subcommittee or to one or more executive officers pursuant to a specific delegation as permitted by applicable law,
including Section 157(c) of the Delaware General Corporation Law.
4.2. Committee Interpretation and Discretion. Any determination made by the Committee with respect to any Award will be made in its sole discretion at the time
of grant of the Award or, unless in contravention of any express term of the Plan or Award, at any later time, and such determination will be final and binding on the Company
and all persons having an interest in any Award under the Plan. Any dispute regarding the interpretation of the Plan or any Award Agreement will be submitted by the
Participant or Company to the Committee for review. The resolution of such a dispute by the Committee will be final and binding on the Company and the Participant. The
Committee may delegate to one or more executive officers the authority to review and resolve disputes with respect to Awards held by Participants who are not Insiders, and
such resolution will be final and binding on the Company and the Participant.
3
4.3. Section 16 of the Exchange Act. Awards granted to Participants who are subject to Section 16 of the Exchange Act must be approved by two or more “non-
employee directors” (as defined in the regulations promulgated under Section 16 of the Exchange Act).
4.4. Documentation. The Award Agreement for a given Award, the Plan, and any other documents may be delivered to, and accepted by, a Participant or any other
person in any manner (including electronic distribution or posting) that meets applicable legal requirements.
4.5. Foreign Award Recipients. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws and practices in other countries in
which the Company, its Subsidiaries, and Affiliates operate or have Employees or other individuals eligible for Awards, the Committee, in its sole discretion, will have the
power and authority to: (a) determine which Subsidiaries and Affiliates will be covered by the Plan; (b) determine which individuals outside the United States are eligible to
participate in the Plan, which may include individuals who provide services to the Company, Subsidiary or Affiliate under an agreement with a foreign nation or agency; (c)
modify the terms and conditions of any Award granted to individuals outside the United States or foreign nationals to comply with applicable foreign laws, policies, customs,
and practices; (d) establish subplans and modify exercise procedures, vesting conditions, and other terms and procedures to the extent the Committee determines such actions
to be necessary or advisable (and such subplans and/or modifications will be attached to this Plan as appendices, if necessary); and (e) take any action, before or after an
Award is made, that the Committee determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals,
provided, however, that no action taken under this Section 4.5 will increase the Share limitations contained in Section 2.1 hereof. Notwithstanding the foregoing, the
Committee may not take any actions hereunder, and no Awards will be granted, that would violate the Exchange Act or any other applicable United States securities law, the
Code, or any other applicable United States governing statute or law.
5. OPTIONS. An Option is the right but not the obligation to purchase a Share, subject to certain conditions, if applicable. The Committee may grant Options to eligible
Employees, Consultants, and Directors and will determine whether such Options will be Incentive Stock Options within the meaning of the Code (“ISOs”) or Nonqualified
Stock Options (“NSOs”), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may vest and be exercised, and all
other terms and conditions of the Option, subject to the following terms of this section.
5.1. Option Grant. Each Option granted under this Plan will identify the Option as an ISO or an NSO. An Option may be, but need not be, awarded upon
satisfaction of such Performance Factors during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the Option is being
earned upon the satisfaction of Performance Factors, then the Committee will: (a) determine the nature, length, and starting date of any Performance Period for each Option;
and (b) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate
simultaneously with respect to Options that are subject to different performance goals and other criteria.
5.2. Date of Grant. The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, or a specified future
date. The Award Agreement will be delivered to the Participant within a reasonable time after the granting of the Option.
5.3. Exercise Period. Options may be vested and exercisable within the times or upon the conditions as set forth in the Award Agreement governing such Option,
provided, however, that no Option will be exercisable after the expiration of ten (10) years from the date the Option is granted and provided further that no ISO granted to a
person who, at the time the ISO is granted, directly or by
4
attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary (“Ten Percent
Stockholder”) will be exercisable after the expiration of five (5) years from the date the ISO is granted. The Committee also may provide for Options to become exercisable at
one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines.
5.4. Exercise Price. The Exercise Price of an Option will be determined by the Committee when the Option is granted, provided that: (a) the Exercise Price of an
Option will be not less than one hundred percent (100%) of the Fair Market Value of the Shares on the date of grant, and (b) the Exercise Price of any ISO granted to a Ten
Percent Stockholder will not be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant. Payment for the Shares purchased may
be made in accordance with Section 11 and the Award Agreement and in accordance with any procedures established by the Company.
5.5. Method of Exercise. Any Option granted hereunder will be vested and exercisable according to the terms of the Plan and at such times and under such
conditions as determined by the Committee and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. An Option will be deemed
exercised when the Company receives: (a) notice of exercise (in such form as the Committee may specify from time to time) from the person entitled to exercise the Option
(and/or via electronic execution through the authorized third-party administrator), and (b) full payment for the Shares with respect to which the Option is exercised (together
with applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Committee and permitted by the Award
Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant. Until the Shares are issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist
with respect to the Shares, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No
adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 2.6 of the Plan.
Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of
Shares as to which the Option is exercised.
5.6. Termination of Service. Subject to the terms of the Participant’s employment or other agreement with the Company or any Parent, Subsidiary or Affiliate , if
applicable, if the Participant’s Service terminates for any reason except for Cause or the Participant’s death or Disability, then the Participant may exercise such Participant’s
Options only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates no later than three (3) months after the
date Participant’s Service terminates (or such shorter or longer time period as may be determined by the Committee, including as necessary to give effect to any provision in
an employment or other agreement between the Participant and the Company or any Parent, Subsidiary or Affiliate, if applicable, providing for acceleration of the
Participant’s Options in connection with a Corporate Transaction, with any exercise of an ISO beyond three (3) months after the date Participant’s employment terminates
deemed to be the exercise of an NSO), but in any event no later than the expiration date of the Options.
(a) Death. If the Participant’s Service terminates because of the Participant’s death (or the Participant dies within three (3) months after Participant’s
Service terminates other than for Cause or because of the Participant’s Disability), then the Participant’s Options may be exercised only to the extent that such Options would
have been exercisable by the Participant on the date Participant’s Service terminates and must be exercised by the Participant’s legal representative, or authorized assignee, no
later than twelve (12) months after the date Participant’s Service terminates (or such shorter or longer time
5
period as may be determined by the Committee), but in any event no later than the expiration date of the Options.
(b) Disability. If the Participant’s Service terminates because of the Participant’s Disability, then the Participant’s Options may be exercised only to the
extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates and must be exercised by the Participant (or the
Participant’s legal representative or authorized assignee) no later than twelve (12) months after the date Participant’s Service terminates (or such shorter or longer time period
as may be determined by the Committee, with any exercise beyond (a) three (3) months after the date Participant’s employment terminates when the termination of Service is
for a Disability that is not a “permanent and total disability” as defined in Section 22(e)(3) of the Code or (b) twelve (12) months after the date Participant’s employment
terminates when the termination of Service is for a Disability that is a “permanent and total disability” as defined in Section 22(e)(3) of the Code, deemed to be exercise of an
NSO), but in any event no later than the expiration date of the Options.
(c) Cause. Unless otherwise determined by the Committee, if the Participant’s Service terminates for Cause, then Participant’s Options (whether or not
vested) will expire on the date of termination of Participant’s Service if the Committee has reasonably determined in good faith that such cessation of Services has resulted in
connection with an act or failure to act constituting Cause (or such Participant’s Services could have been terminated for Cause (without regard to the lapsing of any required
notice or cure periods in connection therewith) at the time such Participant terminated Service), or at such later time and on such conditions as are determined by the
Committee, but in any event no later than the expiration date of the Options. Unless otherwise provided in an employment agreement, Award Agreement, or other applicable
agreement, Cause will have the meaning set forth in the Plan.
5.7. Limitations on ISOs. With respect to Awards granted as ISOs, to the extent that the aggregate Fair Market Value of the Shares with respect to which such
ISOs are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred
thousand dollars ($100,000), such Options will be treated as NSOs. For purposes of this Section 5.7, ISOs will be taken into account in the order in which they were granted.
The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted. In the event that the Code or the regulations
promulgated thereunder are amended after the Effective Date to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, such different
limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment.
5.8. Modification, Extension or Renewal. The Committee may modify, extend, or renew outstanding Options and authorize the grant of new Options in
substitution therefor, provided that any such action may not, without the written consent of a Participant, impair any of such Participant’s rights under any Option previously
granted. Any outstanding ISO that is modified, extended, renewed, or otherwise altered will be treated in accordance with Section 424(h) of the Code. Subject to Section 18 of
this Plan, by written notice to affected Participants, the Committee may reduce the Exercise Price of outstanding Options without the consent of such Participants, provided,
however, that the Exercise Price may not be reduced below the Fair Market Value on the date the action is taken to reduce the Exercise Price.
5.9. No Disqualification. Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended, or altered, nor will
any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant affected,
to disqualify any ISO under Section 422 of the Code.
6
6. RESTRICTED STOCK UNITS. A Restricted Stock Unit (“RSU”) is an award to an eligible Employee, Consultant, or Director covering a number of Shares that
may be settled by issuance of those Shares (which may consist of Restricted Stock) or in cash. All RSUs will be made pursuant to an Award Agreement.
6.1. Terms of RSUs. The Committee will determine the terms of an RSU including, without limitation: (a) the number of Shares subject to the RSU, (b) the time
or times during which the RSU may be settled, (c) the consideration to be distributed on settlement, and (d) the effect of the Participant’s termination of Service on each RSU,
provided that no RSU will have a term longer than ten (10) years. An RSU may be awarded upon satisfaction of such performance goals based on Performance Factors during
any Performance Period as are set out in advance in the Participant’s Award Agreement. If the RSU is being earned upon satisfaction of Performance Factors, then the
Committee will: (i) determine the nature, length, and starting date of any Performance Period for the RSU; (ii) select from among the Performance Factors to be used to
measure the performance, if any; and (iii) determine the number of Shares deemed subject to the RSU. Performance Periods may overlap and Participants may participate
simultaneously with respect to RSUs that are subject to different Performance Periods and different performance goals and other criteria.
6.2. Form and Timing of Settlement. Payment of earned RSUs will be made as soon as practicable after the date(s) determined by the Committee and set forth in
the Award Agreement. The Committee, in its sole discretion, may settle earned RSUs in cash, Shares, or a combination of both. The Committee may also permit a Participant
to defer payment under a RSU to a date or dates after the RSU is earned, provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the
Code to the extent applicable.
6.3. Termination of Service. Except as may be set forth in the Participant’s Award Agreement or in the Participant’s employment or other agreement with the
Company or any Parent, Subsidiary or Affiliate , if applicable, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee).
7. RESTRICTED STOCK AWARDS. A Restricted Stock Award is an offer by the Company to sell to an eligible Employee, Consultant, or Director Shares that are
subject to restrictions (“Restricted Stock”). The Committee will determine to whom an offer will be made, the number of Shares the Participant may purchase, the
Purchase Price, the restrictions under which the Shares will be subject, and all other terms and conditions of the Restricted Stock Award, subject to the Plan.
7.1. Restricted Stock Purchase Agreement. All purchases under a Restricted Stock Award will be evidenced by an Award Agreement. Except as may otherwise be
provided in an Award Agreement, a Participant accepts a Restricted Stock Award by signing and delivering to the Company an Award Agreement with full payment of the
Purchase Price, within thirty (30) days from the date the Award Agreement was delivered to the Participant. If the Participant does not accept such Award within thirty (30)
days, then the offer to purchase such Restricted Stock Award will terminate, unless the Committee determines otherwise.
7.2. Purchase Price. The Purchase Price for Shares issued pursuant to a Restricted Stock Award will be determined by the Committee and may be less than Fair
Market Value on the date the Restricted Stock Award is granted. Payment of the Purchase Price must be made in accordance with Section 11 of the Plan, and the Award
Agreement and in accordance with any procedures established by the Company.
7
7.3. Terms of Restricted Stock Awards. Restricted Stock Awards will be subject to such restrictions as the Committee may impose or are required by law. These
restrictions may be based on completion of a specified period of Service with the Company or upon completion of Performance Factors, if any, during any Performance
Period as set out in advance in the Participant’s Award Agreement. Prior to the grant of a Restricted Stock Award, the Committee will: (a) determine the nature, length, and
starting date of any Performance Period for the Restricted Stock Award; (b) select from among the Performance Factors to be used to measure performance goals, if any; and
(c) determine the number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to
Restricted Stock Awards that are subject to different Performance Periods and having different performance goals and other criteria.
7.4. Termination of Service. Except as may be set forth in the Participant’s Award Agreement, or in the Participant’s employment or other agreement with the
Company or any Parent, Subsidiary or Affiliate , if applicable, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee).
8. STOCK BONUS AWARDS. A Stock Bonus Award is an award to an eligible Employee, Consultant, or Director of Shares for Services to be rendered or for past
Services already rendered to the Company or any Parent, Subsidiary, or Affiliate. All Stock Bonus Awards will be made pursuant to an Award Agreement. No payment from
the Participant will be required for Shares awarded pursuant to a Stock Bonus Award.
8.1. Terms of Stock Bonus Awards. The Committee will determine the number of Shares to be awarded to the Participant under a Stock Bonus Award and any
restrictions thereon. These restrictions may be based upon completion of a specified period of Service with the Company or upon satisfaction of performance goals based on
Performance Factors during any Performance Period as set out in advance in the Participant’s Stock Bonus Agreement. Prior to the grant of any Stock Bonus Award the
Committee will: (a) determine the restrictions to which the Stock Bonus Award is subject, including the nature, length, and starting date of any Performance Period for the
Stock Bonus Award; (b) select from among the Performance Factors, if any, to be used to measure performance goals; and (c) determine the number of Shares that may be
awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to Stock Bonus Awards that are subject to
different Performance Periods and different performance goals and other criteria.
8.2. Form of Payment to Participant. Payment may be made in the form of cash, whole Shares, or a combination thereof, based on the Fair Market Value of the
Shares earned under a Stock Bonus Award on the date of payment, as determined in the sole discretion of the Committee.
8.3. Termination of Service. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless
determined otherwise by the Committee).
9. STOCK APPRECIATION RIGHTS. A Stock Appreciation Right (“SAR”) is an award to an eligible Employee, Consultant, or Director that may be settled in cash
or Shares (which may consist of Restricted Stock) having a value equal to (a) the difference between the Fair Market Value on the date of exercise over the Exercise Price
multiplied by (b) the number of Shares with respect to which the SAR is being settled (subject to any maximum number of Shares that may be issuable as specified in an
Award Agreement). All SARs will be made pursuant to an Award Agreement.
9.1. Terms of SARs. The Committee will determine the terms of each SAR including, without limitation: (a) the number of Shares subject to the SAR, (b) the
Exercise Price and the time or
8
times during which the SAR may be exercised and settled, (c) the consideration to be distributed on exercise and settlement of the SAR, and (d) the effect of the Participant’s
termination of Service on each SAR. The Exercise Price of the SAR will be determined by the Committee when the SAR is granted and may not be less than Fair Market
Value of the Shares on the date of grant. A SAR may be awarded upon satisfaction of Performance Factors, if any, during any Performance Period as are set out in advance in
the Participant’s individual Award Agreement. If the SAR is being earned upon the satisfaction of Performance Factors, then the Committee will: (i) determine the nature,
length, and starting date of any Performance Period for each SAR; and (ii) select from among the Performance Factors to be used to measure the performance, if any.
Performance Periods may overlap and Participants may participate simultaneously with respect to SARs that are subject to different Performance Factors and other criteria.
9.2. Exercise Period and Expiration Date. A SAR will be exercisable within the times or upon the occurrence of events determined by the Committee and set forth
in the Award Agreement governing such SAR. The SAR Agreement will set forth the expiration date, provided that no SAR will be exercisable after the expiration of ten (10)
years from the date the SAR is granted. The Committee may also provide for SARs to become exercisable at one time or from time to time, periodically or otherwise
(including, without limitation, upon the attainment during a Performance Period of performance goals based on Performance Factors), in such number of Shares or percentage
of the Shares subject to the SAR as the Committee determines. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on the date Participant’s
Service terminates (unless determined otherwise by the Committee). Notwithstanding the foregoing, the rules of Section 5.6 also will apply to SARs.
9.3. Form of Settlement. Upon exercise of a SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying (a)
the difference between the Fair Market Value of a Share on the date of exercise over the Exercise Price, by (b) the number of Shares with respect to which the SAR is
exercised. At the discretion of the Committee, the payment from the Company for the SAR exercise may be in cash, in Shares of equivalent value, or in some combination
thereof. The portion of a SAR being settled may be paid currently or on a deferred basis with such interest, if any, as the Committee determines, provided that the terms of the
SAR and any deferral satisfy the requirements of Section 409A of the Code to the extent applicable.
9.4. Termination of Service. Except as may be set forth in the Participant’s Award Agreement, or in the Participant’s employment or other agreement with the
Company or any Parent, Subsidiary or Affiliate, if applicable, vesting ceases on the date Participant’s Service terminates (unless determined otherwise by the Committee).
10. PERFORMANCE AWARDS.
10.1. Types of Performance Awards. A Performance Award is an award to an eligible Employee, Consultant, or Director that is based upon the attainment of
performance goals, as established by the Committee, and other terms and conditions specified by the Committee, and may be settled in cash, Shares (which may consist of,
without limitation, Restricted Stock), other property, or any combination thereof. Grants of Performance Awards will be made pursuant to an Award Agreement that cites
Section 10 of the Plan.
(a) Performance Shares. The Committee may grant Awards of Performance Shares, designate the Participants to whom Performance Shares are to be
awarded, and determine the number of Performance Shares and the terms and conditions of each such Award. Performance Shares will consist of a unit valued by reference to
a designated number of Shares, the value of which may be paid to the Participant by delivery of Shares or, if set forth in the instrument evidencing the Award, of such
property as the Committee will determine, including, without limitation, cash, Shares, other property, or any
9
combination thereof, upon the attainment of performance goals, as established by the Committee, and other terms and conditions specified by the Committee. The amount to
be paid under an Award of Performance Shares may be adjusted on the basis of such further consideration as the Committee will determine in its sole discretion.
(b) Performance Units. The Committee may grant Awards of Performance Units, designate the Participants to whom Performance Units are to be
awarded, and determine the number of Performance Units and the terms and conditions of each such Award. Performance Units will consist of a unit valued by reference to a
designated amount of property other than Shares, which value may be paid to the Participant by delivery of such property as the Committee will determine, including, without
limitation, cash, Shares, other property, or any combination thereof, upon the attainment of performance goals, as established by the Committee, and other terms and
conditions specified by the Committee.
(c) Cash-Settled Performance Awards. The Committee may also grant cash-settled Performance Awards to Participants under the terms of this Plan. Such
awards will be based on the attainment of performance goals using the Performance Factors within this Plan that are established by the Committee for the relevant
performance period.
10.2. Terms of Performance Awards. The Committee will determine, and each Award Agreement will set forth, the terms of each Performance Award including,
without limitation: (a) the amount of any cash bonus, (b) the number of Shares deemed subject to an award of Performance Shares, (c) the Performance Factors and
Performance Period that will determine the time and extent to which each award of Performance Shares will be settled, (d) the consideration to be distributed on settlement,
and (e) the effect of the Participant’s termination of Service on each Performance Award. In establishing Performance Factors and the Performance Period the Committee
will: (i) determine the nature, length, and starting date of any Performance Period; (ii) select from among the Performance Factors to be used; and (iii) determine the number
of Shares deemed subject to the award of Performance Shares. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of
grant. Prior to settlement the Committee will determine the extent to which Performance Awards have been earned. Performance Periods may overlap and Participants may
participate simultaneously with respect to Performance Awards that are subject to different Performance Periods and different performance goals and other criteria.
10.3. Termination of Service. Except as may be set forth in the Participant’s Award Agreement, or in the Participant’s employment or other agreement with the
Company or any Parent, Subsidiary or Affiliate, if applicable, vesting ceases on the date Participant’s Service terminates (unless determined otherwise by the Committee).
11. PAYMENT FOR SHARE PURCHASES. Payment from a Participant for Shares purchased pursuant to this Plan may be made in cash or by check or, where
expressly approved for the Participant by the Committee and where permitted by law (and to the extent not otherwise set forth in the applicable Award Agreement):
(a) by cancellation of indebtedness of the Company to the Participant;
(b) by surrender of shares of the Company held by the Participant that have a Fair Market Value on the date of surrender equal to the aggregate exercise
price of the Shares as to which said Award will be exercised or settled;
(c) by waiver of compensation due or accrued to the Participant for services rendered or to be rendered to the Company or a Parent or Subsidiary;
10
(d) by consideration received by the Company pursuant to a broker-assisted or other form of cashless exercise program implemented by the Company in
connection with the Plan;
(e) by any combination of the foregoing; or
(f) by any other method of payment as is permitted by applicable law.
The Committee may limit the availability of any method of payment, to the extent the Committee determines, in its discretion, such limitation is necessary or
advisable to comply with applicable law or facilitate the administration of the Plan.
12. GRANTS TO NON-EMPLOYEE DIRECTORS.
12.1. General. Non-Employee Directors are eligible to receive any type of Award offered under this Plan except ISOs. Awards pursuant to this Section 12 may be
automatically made pursuant to policy adopted by the Board, or made from time to time as determined in the discretion of the Board. No Non-Employee Director may receive
Awards under the Plan that, when combined with cash compensation received for service as a Non-Employee Director, exceed One Million Dollars ($1,000,000) in value (as
described below) in any calendar year. The value of Awards for purposes of complying with this maximum will be determined as follows: (a) for Options and SARs, grant
date fair value will be calculated using the Company’s regular valuation methodology for determining the grant date fair value of Options for reporting purposes, and (b) for
all other Awards other than Options and SARs, grant date fair value will be determined by either (i) calculating the product of the Fair Market Value per Share on the date of
grant and the aggregate number of Shares subject to the Award, or (ii) calculating the product using an average of the Fair Market Value over a number of trading days and
the aggregate number of Shares subject to the Award as determined by the Committee. Awards granted to an individual while he or she was serving in the capacity as an
Employee or while he or she was a Consultant but not a Non-Employee Director will not count for purposes of the limitations set forth in this Section 12.1.
12.2. Eligibility. Awards pursuant to this Section 12 will be granted only to Non-Employee Directors. A Non-Employee Director who is elected or re-elected as a
member of the Board will be eligible to receive an Award under this Section 12.
12.3. Vesting, Exercisability and Settlement. Except as set forth in Section 21, Awards will vest, become exercisable, and be settled as determined by the Board.
With respect to Options and SARs, the exercise price granted to Non-Employee Directors will not be less than the Fair Market Value of the Shares at the time that such
Option or SAR is granted.
12.4. Election to Receive Awards in Lieu of Cash. A Non-Employee Director may elect to receive his or her annual retainer payments and/or meeting fees from the
Company in the form of cash or Awards or a combination thereof, if permitted, and as determined, by the Committee. Such Awards will be issued under the Plan. An election
under this Section 12.4 will be filed with the Company on the form prescribed by the Company.
13. WITHHOLDING TAXES.
13.1. Withholding Generally. Whenever Shares are to be issued in satisfaction of Awards granted under this Plan or a tax event occurs, the Company may require
the Participant to remit to the Company, or to the Parent, Subsidiary, or Affiliate, as applicable, employing the Participant an amount sufficient to satisfy applicable
U.S. federal, state, local, and international income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax related items (the “Tax-Related
Items”) legally due from the Participant prior to the delivery of Shares pursuant to exercise or settlement of any
11
Award. Whenever payments in satisfaction of Awards granted under this Plan are to be made in cash, such payment will be net of an amount sufficient to satisfy applicable
withholding obligations for Tax-Related Items. Unless otherwise determined by the Committee, the Fair Market Value of the Shares will be determined as of the date that the
taxes are required to be withheld and such Shares will be valued based on the value of the actual trade or, if there is none, the Fair Market Value of the Shares as of the
previous trading day.
13.2. Stock Withholding. The Committee, or its delegate(s), as permitted by applicable law, in its sole discretion and pursuant to such procedures as it may specify
from time to time and to limitations of local law, may require or permit a Participant to satisfy such Tax Related Items legally due from the Participant, in whole or in part by
(without limitation) (a) paying cash, (b) having the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the Tax-Related Items to be
withheld, (c) delivering to the Company already-owned shares having a Fair Market Value equal to the Tax-Related Items to be withheld, or (d) withholding from the
proceeds of the sale of otherwise deliverable Shares acquired pursuant to an Award either through a voluntary sale or through a mandatory sale arranged by the Company. The
Company may withhold or account for these Tax-Related Items by considering applicable statutory withholding rates or other applicable withholding rates, including up to the
maximum permissible statutory tax rate for the applicable tax jurisdiction, to the extent consistent with applicable laws.
14. TRANSFERABILITY. Unless determined otherwise by the Committee, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in
any manner other than by will or by the laws of descent or distribution. If the Committee makes an Award transferable, including, without limitation, by instrument to an inter
vivos or testamentary trust in which the Awards are to be passed to beneficiaries upon the death of the trustor (settlor) or by gift or by domestic relations order to a Permitted
Transferee, such Award will contain such additional terms and conditions as the Committee deems appropriate. All Awards will be exercisable: (a) during the Participant’s
lifetime only by the Participant or the Participant’s guardian or legal representative; (b) after the Participant’s death, by the legal representative of the Participant’s heirs or
legatees; and (c) in the case of all awards except ISOs, by a Permitted Transferee.
15. PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES.
15.1. Voting and Dividends. No Participant will have any of the rights of a stockholder with respect to any Shares until the Shares are issued to the Participant,
except for any Dividend Equivalent Rights permitted by an applicable Award Agreement. Any Dividend Equivalent Rights will be subject to the same vesting or performance
conditions as the underlying Award. In addition, the Committee may provide that any Dividend Equivalent Rights permitted by an applicable Award Agreement will be
deemed to have been reinvested in additional Shares or otherwise reinvested. After Shares are issued to the Participant, the Participant will be a stockholder and have all the
rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares;
provided, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares
by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted
Stock; provided, further, that the Participant will have no right to such stock dividends or stock distributions with respect to Unvested Shares, and any such dividends or stock
distributions will be accrued and paid only at such time, if any, as such Unvested Shares become vested Shares. The Committee, in its discretion, may provide in the Award
Agreement evidencing any Award that the Participant will be entitled to Dividend Equivalent Rights with respect to the payment of cash dividends on Shares underlying an
Award during the period beginning on the date
12
the Award is granted and ending, with respect to each Share subject to the Award, on the earlier of the date on which the Award is exercised or settled or the date on which it
is forfeited provided, that no Dividend Equivalent Right will be paid with respect to the Unvested Shares, and such dividends or stock distributions will be accrued and paid
only at such time, if any, as such Unvested Shares become vested Shares. Such Dividend Equivalent Rights, if any, will be credited to the Participant in the form of additional
whole Shares as of the date of payment of such cash dividends on Shares.
15.2. Restrictions on Shares. At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) a right to repurchase (a “Right of
Repurchase”) a portion of any or all Unvested Shares held by a Participant following such Participant’s termination of Service at any time within ninety (90) days (or such
longer or shorter time determined by the Committee) after the later of the date Participant’s Service terminates and the date the Participant purchases Shares under this Plan,
for cash and/or cancellation of purchase money indebtedness, at the Participant’s Purchase Price or Exercise Price, as the case may be.
16. CERTIFICATES. All Shares or other securities whether or not certificated, delivered under this Plan will be subject to such stock transfer orders, legends, and other
restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable U.S. federal, state, or foreign securities law, or any rules,
regulations, and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted, and any non-U.S.
exchange controls or securities law restrictions to which the Shares are subject.
17. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to deposit all certificates
representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent
designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions
to be placed on the certificates. Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so purchased as collateral to secure the payment of the Participant’s obligation to the Company
under the promissory note, provided, however, that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and,
in any event, the Company will have full recourse against the Participant under the promissory note notwithstanding any pledge of the Participant’s Shares or other collateral.
In connection with any pledge of the Shares, the Participant will be required to execute and deliver a written pledge agreement in such form as the Committee will from time
to time approve. The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid.
18. REPRICING; EXCHANGE AND BUYOUT OF AWARDS. Without prior stockholder approval the Committee may (a) reprice Options or SARs (and where such
repricing is a reduction in the Exercise Price of outstanding Options or SARs, the consent of the affected Participants is not required provided written notice is provided to
them, notwithstanding any adverse tax consequences to them arising from the repricing), and (b) with the consent of the respective Participants (unless not required pursuant
to Section 5.9 of the Plan), pay cash or issue new Awards in exchange for the surrender and cancellation of any, or all, outstanding Awards.
19. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be effective unless such Award is in compliance with all applicable
U.S. and foreign federal and state securities and exchange control and other laws, rules, and regulations of any governmental body, and the requirements of any stock
exchange or automated quotation system upon which the Shares may then be
13
listed or quoted, as they are in effect on the date of grant of the Award and also on the date of exercise or other issuance. Notwithstanding any other provision in this Plan, the
Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to: (a) obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable and/or (b) completion of any registration or other qualification of such Shares under any state, federal, or foreign law or ruling of any
governmental body that the Company determines to be necessary or advisable. The Company will be under no obligation to register the Shares with the SEC or to effect
compliance with the registration, qualification, or listing requirements of any foreign or state securities laws, exchange control laws, stock exchange, or automated quotation
system, and the Company will have no liability for any inability or failure to do so.
20. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to
continue in the employ of, or to continue any other relationship with, the Company or any Parent, Subsidiary, or Affiliate or limit in any way the right of the Company or any
Parent, Subsidiary, or Affiliate to terminate Participant’s employment or other relationship at any time.
21. CORPORATE TRANSACTIONS.
21.1. Assumption or Replacement of Awards by Successor. In the event that the Company is subject to a Corporate Transaction, outstanding Awards acquired under
the Plan shall be subject to the agreement evidencing the Corporate Transaction, which need not treat all outstanding Awards in an identical manner. Such agreement, without
the Participant’s consent, shall provide for one or more of the following with respect to all outstanding Awards as of the effective date of such Corporate Transaction:
(a) The continuation of an outstanding Award by the Company (if the Company is the successor entity).
(b) The assumption of an outstanding Award by the successor or acquiring entity (if any) of such Corporate Transaction (or by its parents, if any), which
assumption, will be binding on all selected Participants; provided that the exercise price and the number and nature of shares issuable upon exercise of any such option or
stock appreciation right, or any award that is subject to Section 409A of the Code, will be adjusted appropriately pursuant to Section 424(a) of the Code and/or Section 409A
of the Code, as applicable.
(c) The substitution by the successor or acquiring entity in such Corporate Transaction (or by its parents, if any) of equivalent awards with substantially
the same terms for such outstanding Awards (except that the exercise price and the number and nature of shares issuable upon exercise of any such option or stock
appreciation right, or any award that is subject to Section 409A of the Code, will be adjusted appropriately pursuant to Section 424(a) of the Code and/or Section 409A of the
Code, as applicable).
(d) The full or partial acceleration of exercisability or vesting and accelerated expiration of an outstanding Award and lapse of the Company’s right to
repurchase or re-acquire shares acquired under an Award or lapse of forfeiture rights with respect to shares acquired under an Award.
(e) The settlement of the full value of such outstanding Award (whether or not then vested or exercisable) in cash, cash equivalents, or securities of the
successor entity (or its parent, if any) with a fair market value equal to the required amount, followed by the cancellation of such Awards; provided however, that such Award
may be cancelled if such Award has no value, as determined by the Committee, in its discretion. Subject to Section 409A of the Code, such payment may be made in
14
installments and may be deferred until the date or dates the Award would have become exercisable or vested. Such payment may be subject to vesting based on the
Participant’s continued service, provided that the vesting schedule shall not be less favorable to the Participant than the schedule under which the Award would have become
vested or exercisable. For purposes of this Section 21.1(e), the fair market value of any security shall be determined without regard to any vesting conditions that may apply to
such security.
(f) The cancellation of outstanding Awards in exchange for no consideration.
The Board shall have full power and authority to assign the Company’s right to repurchase or re-acquire or forfeiture rights to such successor or acquiring corporation.
In addition, in the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate
Transaction, the Committee will notify the Participant in writing or electronically that such Participant’s Award will, if exercisable, be exercisable for a period of time
determined by the Committee in its sole discretion, and such Award will terminate upon the expiration of such period. Awards need not be treated similarly in a Corporate
Transaction and treatment may vary from Award to Award and/or from Participant to Participant.
21.2. Assumption of Awards by the Company. The Company, from time to time, also may substitute or assume outstanding awards granted by another company,
whether in connection with an acquisition of such other company or otherwise, by either: (a) granting an Award under this Plan in substitution of such other company’s award,
or (b) assuming such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan. Such
substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other
company had applied the rules of this Plan to such grant. In the event the Company assumes an award granted by another company, the terms and conditions of such award
will remain unchanged (except that the Purchase Price or the Exercise Price, as the case may be, and the number and nature of Shares issuable upon exercise or settlement of
any such Award will be adjusted appropriately pursuant to Section 424(a) of the Code). In the event the Company elects to grant a new Option in substitution rather than
assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price. Substitute Awards will not reduce the number of Shares authorized for
grant under the Plan or authorized for grant to a Participant in a calendar year.
21.3. Non-Employee Directors’ Awards. Notwithstanding any provision to the contrary herein, in the event of a Corporate Transaction, the vesting of all Awards
granted to Non-Employee Directors will accelerate and such Awards will become exercisable (as applicable) in full prior to the consummation of such event at such times and
on such conditions as the Committee determines.
22. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will be submitted for the approval of the Company’s stockholders, consistent with applicable laws,
within twelve (12) months before or after the date this Plan is adopted by the Board.
23. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided herein, this Plan will become effective on the Effective Date and will terminate ten
(10) years from the date this Plan is adopted by the Board. This Plan and all Awards granted hereunder will be governed by and construed in accordance with the laws of the
State of Delaware (excluding its conflict of laws rules).
24. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate or amend this Plan in any respect, including, without limitation,
amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan, provided, however, that the Board will not,
15
without the approval of the stockholders of the Company, amend this Plan in any manner that requires such stockholder approval, provided further that a Participant’s Award
will be governed by the version of this Plan then in effect at the time such Award was granted. No termination or amendment of the Plan will affect any then-outstanding
Award unless expressly provided by the Committee. In any event, no termination or amendment of the Plan or any outstanding Award may adversely affect any then
outstanding Award without the consent of the Participant, unless such termination or amendment is necessary to comply with applicable law, regulation, or rule.
25. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the Board, the submission of this Plan to the stockholders of the Company for approval,
nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem
desirable, including, without limitation, the granting of stock awards and bonuses otherwise than under this Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.
26. INSIDER TRADING POLICY. Each Participant who receives an Award will comply with any policy adopted by the Company from time to time covering
transactions in the Company’s securities by Employees, officers, and/or Directors of the Company, as well as with any applicable insider trading or market abuse laws to
which the Participant may be subject.
27. ALL AWARDS SUBJECT TO COMPANY CLAWBACK OR RECOUPMENT POLICY. All Awards, subject to applicable law, will be subject to clawback or
recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or required by law during the term of Participant’s employment or other
service with the Company that is applicable to officers, Employees, Directors or other service providers of the Company, and in addition to any other remedies available under
such policy and applicable law, may require the cancellation of outstanding Awards and the recoupment of any gains realized with respect to Awards.
28. DEFINITIONS. As used in this Plan, and except as elsewhere defined herein, the following terms will have the following meanings:
28.1. “Affiliate” means (a) any entity that, directly or indirectly, is controlled by, controls, or is under common control with, the Company, and (b) any entity in
which the Company has a significant equity interest, in either case as determined by the Committee, whether now or hereafter existing.
28.2. “Award” means any award under the Plan, including any Option, Performance Award, Cash Award, Restricted Stock, Stock Bonus, Stock Appreciation Right,
or Restricted Stock Unit.
28.3. “Award Agreement” means, with respect to each Award, the written or electronic agreement between the Company and the Participant setting forth the terms
and conditions of the Award, and country-specific appendix thereto for grants to non-U.S. Participants, which will be in substantially a form (which need not be the same for
each Participant) that the Committee (or in the case of Award agreements that are not used for Insiders, the Committee’s delegate(s)) has from time to time approved, and will
comply with and be subject to the terms and conditions of this Plan.
28.4. “Board” means the Board of Directors of the Company.
28.5. “Cause” means a determination by the Company that the Participant has committed an act or acts constituting any of the following: (i) dishonesty, fraud,
misconduct or negligence in connection with Participant’s duties to the Company, (ii) unauthorized disclosure or use of the Company’s confidential or proprietary
information, (iii) misappropriation of a business opportunity of the Company, (iv) materially aiding Company competitor, (v) a felony conviction, (vi) failure or refusal to
attend to the
16
duties or obligations of the Participant’s position other where such failure or refusal is due to the Participant’s Disability, (vii) violation or breach of, or failure to comply with,
the Company’s code of ethics or conduct, any of the Company’s rules, policies or procedures applicable to the Participant or any agreement in effect between the Company
and the Participant or (viii) other conduct by such Participant that could be expected to be harmful to the business, interests or reputation of the Company. The determination
as to whether Cause for a Participant’s termination exists will be made in good faith by the Company and will be final and binding on the Participant. This definition does not
in any way limit the Company’s or any Parent’s or Subsidiary’s ability to terminate a Participant’s employment or services at any time as provided in Section 20 above.
Notwithstanding the foregoing, the foregoing definition of “Cause” may, in part or in whole, be modified or replaced in each individual employment agreement, Award
Agreement, or other applicable agreement with any Participant, provided that such document supersedes the definition provided in this Section 28.5.
28.6. “Code” means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.
28.7. “Committee” means the Compensation Committee of the Board or those persons to whom administration of the Plan, or part of the Plan, has been delegated as
permitted by law.
28.8. “Common Stock” means the common stock of the Company.
28.9. “Company” means Coinbase Global, Inc., a Delaware corporation, or any successor corporation.
28.10. “Consultant” means any natural person, including an advisor or independent contractor, engaged by the Company or a Parent, Subsidiary, or Affiliate to
render services to such entity.
28.11. “Corporate Transaction” means the occurrence of any of the following events: (a) any “Person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing more than
fifty percent (50%) of the total voting power represented by the Company’s then-outstanding voting securities, provided, however, that for purposes of this subclause (a) the
acquisition of additional securities by any one Person who is considered to own more than fifty percent (50%) of the total voting power of the securities of the Company will
not be considered a Corporate Transaction; (b) the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; (c) the
consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or
its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding
immediately after such merger or consolidation; (d) any other transaction which qualifies as a “corporate transaction” under Section 424(a) of the Code wherein the
stockholders of the Company give up all of their equity interest in the Company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares
of capital stock of the Company), or (e) a change in the effective control of the Company that occurs on the date that a majority of members of the Board is replaced during
any twelve (12) month period by members of the Board whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the
appointment or election. For purpose of this subclause (e), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the
Company by the same Person will not be considered a Corporate Transaction. For purposes of this definition, Persons will be considered to be acting as a group if they are
owners of a corporation that enters into a merger,
17
consolidation, purchase, or acquisition of stock, or similar business transaction with the Company. Notwithstanding the foregoing, to the extent that any amount constituting
deferred compensation (as defined in Section 409A of the Code) would become payable under this Plan by reason of a Corporate Transaction, such amount will become
payable only if the event constituting a Corporate Transaction would also qualify as a change in ownership or effective control of the Company or a change in the ownership
of a substantial portion of the assets of the Company, each as defined within the meaning of Code Section 409A, as it has been and may be amended from time to time, and
any proposed or final Treasury Regulations and IRS guidance that has been promulgated or may be promulgated thereunder from time to time.
28.12. “Direct Listing Registration Date” means the date on which the Company’s registration statement on Form S-1 in connection with its direct listing of
common stock is declared effective by the SEC under the Securities Act.
28.13. “Director” means a member of the Board.
28.14. “Disability” means in the case of incentive stock options, total and permanent disability as defined in Section 22(e)(3) of the Code and in the case of other
Awards, that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months.
28.15. “Dividend Equivalent Right” means the right of a Participant, granted at the discretion of the Committee or as otherwise provided by the Plan, to receive a
credit for the account of such Participant in an amount equal to the cash, stock, or other property dividends in amounts equal equivalent to cash, stock, or other property
dividends for each Share represented by an Award held by such Participant.
28.16. “Effective Date” means the day immediately prior to the Company’s Direct Listing Registration Date, subject to approval of the Plan by the Company’s
stockholders.
28.17. “Employee” means any person, including officers and Directors, providing services as an employee to the Company or any Parent, Subsidiary, or Affiliate.
Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.
28.18. “Exchange Act” means the United States Securities Exchange Act of 1934, as amended.
28.19. “Exchange Program” means a program pursuant to which (a) outstanding Awards are surrendered, cancelled, or exchanged for cash, the same type of Award,
or a different Award (or combination thereof); or (b) the exercise price of an outstanding Award is increased or reduced.
28.20. “Exercise Price” means, with respect to an Option, the price at which a holder may purchase the Shares issuable upon exercise of an Option and with respect
to a SAR, the price at which the SAR is granted to the holder thereof.
28.21. “Fair Market Value” means, as of any date, the value of a Share, determined as follows:
(a) if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on the
principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal or such other source as the
Committee deems reliable;
18
(b) if such Common Stock is publicly traded but is neither listed nor admitted to trading on a national securities exchange, the average of the closing bid
and asked prices on the date of determination as reported in The Wall Street Journal or such other source as the Committee deems reliable;
(c) in the case of an Option or SAR grant made on the Direct Listing Registration Date, the price per share at which Shares are initially offered for sale to
the public as set forth in the Company’s final prospectus included within the registration statement on Form S-1 filed with the SEC under the Securities Act; or
(d) by the Board or the Committee in good faith.
28.22. “Insider” means an officer or Director of the Company or any other person whose transactions in the Company’s Common Stock are subject to Section 16 of
the Exchange Act.
28.23. “IRS” means the United States Internal Revenue Service.
28.24. “Non-Employee Director” means a Director who is not an Employee of the Company or any Parent, Subsidiary, or Affiliate.
28.25. “Option” means an award of an option to purchase Shares pursuant to Section 5.
28.26. “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of such corporations other
than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
28.27. “Participant” means a person who holds an Award under this Plan.
28.28. “Performance Award” means an Award as defined in Section 10 and granted under the Plan, the payment of which is contingent upon achieving certain
performance goals established by the Committee.
28.29. “Performance Factors” means any of the factors selected by the Committee and specified in an Award Agreement, from among the following measures,
either individually, alternatively or in any combination, applied to the Company as a whole or any business unit or Subsidiary, either individually, alternatively, or in any
combination, on a GAAP or non-GAAP basis, and measured, to the extent applicable on an absolute basis or relative to a pre-established target, to determine whether the
performance goals established by the Committee with respect to applicable Awards have been satisfied:
(a) profit before tax;
(b) billings;
(c) revenue;
(d) net revenue;
(e) earnings (which may include earnings before interest and taxes, earnings before taxes, net earnings, stock-based compensation expenses, depreciation,
and amortization);
(f) operating income;
(g) operating margin;
19
(h) operating profit;
(i) controllable operating profit or net operating profit;
(j) net profit;
(k) gross margin;
(l) operating expenses or operating expenses as a percentage of revenue;
(m) net income;
(n) earnings per share;
(o) total stockholder return;
(p) market share;
(q) return on assets or net assets;
(r) the Company’s stock price;
(s) growth in stockholder value relative to a pre-determined index;
(t) return on equity;
(u) return on invested capital;
(v) cash flow (including free cash flow or operating cash flows);
(w) cash conversion cycle;
(x) economic value added;
(y) individual confidential business objectives;
(z) contract awards or backlog;
(aa) overhead or other expense reduction;
(bb) credit rating;
(cc) strategic plan development and implementation;
(dd) succession plan development and implementation;
(ee) improvement in workforce diversity;
(ff) customer indicators and/or satisfaction;
(gg) new product invention or innovation;
(hh) attainment of research and development milestones;
(ii) improvements in productivity;
(jj) bookings;
20
(kk) attainment of objective operating goals and employee metrics;
(ll) sales;
(mm) expenses;
(nn) balance of cash, cash equivalents, and marketable securities;
(oo) completion of an identified special project;
(pp) completion of a joint venture or other corporate transaction;
(qq) employee satisfaction and/or retention;
(rr) research and development expenses;
(ss) working capital targets and changes in working capital; and
(tt) any other metric that is capable of measurement as determined by the Committee.
The Committee may provide for one or more equitable adjustments to the Performance Factors to preserve the Committee’s original intent regarding the Performance
Factors at the time of the initial award grant, such as but not limited to, adjustments in recognition of unusual or non-recurring items such as acquisition related activities or
changes in applicable accounting rules. It is within the sole discretion of the Committee to make or not make any such equitable adjustments.
28.30. “Performance Period” means one or more periods of time, which may be of varying and overlapping durations, as the Committee may select, over which the
attainment of one or more Performance Factors will be measured for the purpose of determining a Participant’s right to, and the payment of, a Performance Award.
28.31. “Performance Share” means an Award as defined in Section 10 and granted under the Plan, the payment of which is contingent upon achieving certain
performance goals established by the Committee.
28.32. “Performance Unit” means an Award as defined in Section 10 and granted under the Plan, the payment of which is contingent upon achieving certain
performance goals established by the Committee.
28.33. “Permitted Transferee” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships) of the Employee, any person sharing the Employee’s household
(other than a tenant or employee), a trust in which these persons (or the Employee) have more than 50% of the beneficial interest, a foundation in which these persons (or the
Employee) control the management of assets, and any other entity in which these persons (or the Employee) own more than 50% of the voting interests.
28.34. “Plan” means this Coinbase Global, Inc. 2021 Equity Incentive Plan.
28.35. “Purchase Price” means the price to be paid for Shares acquired under the Plan, other than Shares acquired upon exercise of an Option or SAR.
28.36. “Restricted Stock Award” means an Award as defined in Section 6 and granted under the Plan, or issued pursuant to the early exercise of an Option.
21
28.37. “Restricted Stock Unit” means an Award as defined in Section 9 and granted under the Plan.
28.38. “SEC” means the United States Securities and Exchange Commission.
28.39. “Securities Act” means the United States Securities Act of 1933, as amended.
28.40. “Service” will mean service as an Employee, Consultant, Director, or Non-Employee Director, to the Company or a Parent, Subsidiary, or Affiliate, subject to
such further limitations as may be set forth in the Plan or the applicable Award Agreement. An Employee will not be deemed to have ceased to provide Service in the case of
any leave of absence approved by the Company. In the case of any Employee on an approved leave of absence or a reduction in hours worked (for illustrative purposes only, a
change in schedule from that of full-time to part-time), the Committee may make such provisions respecting suspension of or modification to vesting of the Award while on
leave from the employ of the Company or a Parent, Subsidiary or Affiliate or during such change in working hours as it may deem appropriate, except that in no event may an
Award be exercised after the expiration of the term set forth in the applicable Award Agreement. In the event of military or other protected leave, if required by applicable
laws, vesting will continue for the longest period that vesting continues under any other statutory or Company approved leave of absence and, upon a Participant’s returning
from military leave, he or she will be given vesting credit with respect to Awards to the same extent as would have applied had the Participant continued to provide Service to
the Company throughout the leave on the same terms as he or she was providing Service immediately prior to such leave. An employee shall have terminated employment as
of the date he or she ceases to provide Service (regardless of whether the termination is in breach of local employment laws or is later found to be invalid) and employment
shall not be extended by any notice period or garden leave mandated by local law, provided, however, that a change in status between an Employee, Consultant, Director or
Non-Employee Director shall not terminate the Participant’s Service, unless determined by the Committee, in its discretion or to the extent set forth in the applicable Award
Agreement. The Committee will have sole discretion to determine whether a Participant has ceased to provide Service and the effective date on which the Participant ceased
to provide Service. An employee will have terminated employment as of the date he or she ceases to provide Service (regardless of whether the termination is in breach of
local employment laws or is later found to be invalid) and employment will not be extended by any notice period or garden leave mandated by local law, provided, however,
that a change in status from an Employee to a Consultant or Non-Employee Director (or vice versa) will not terminate the Participant’s Service, unless determined by the
Committee, in its discretion. The Committee will have sole discretion to determine whether a Participant has ceased to provide Service and the effective date on which the
Participant ceased to provide Service.
28.41. “Shares” means shares of the Common Stock and the common stock of any successor entity of the Company.
28.42. “Stock Appreciation Right” means an Award defined in Section 8 and granted under the Plan.
28.43. “Stock Bonus” means an Award defined in Section 7 and granted under the Plan.
28.44. “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
22
28.45. “Treasury Regulations” means regulations promulgated by the United States Treasury Department.
28.46. “Unvested Shares” means Shares that have not yet vested or are subject to a right of repurchase in favor of the Company (or any successor thereto).
23
COINBASE GLOBAL, INC.
2021 EQUITY INCENTIVE PLAN
GLOBAL NOTICE OF STOCK OPTION GRANT
You (the “Optionee”) have been granted an option to purchase shares of Common Stock of the Company (the “Option”) under the Coinbase Global, Inc. (the “Company”)
2021 Equity Incentive Plan (the “Plan”), subject to the terms and conditions of the Plan, this Global Notice of Stock Option Grant (the “Notice”), and the attached Global
Stock Option Agreement (the “Option Agreement”), including any applicable country-specific provisions in the appendix attached here (the “Appendix”), which constitutes
part of the Option Agreement.
Unless otherwise defined herein, the terms defined in the Plan will have the same meanings in this Notice and the electronic representation of this Notice established and
maintained by the Company or a third party designated by the Company.
Name:
Address:
Grant Number:
Date of Grant:
Vesting Commencement Date:
Exercise Price per Share:
Total Number of Shares:
Type of Option:
(for U.S. tax purposes)
____ Non-Qualified Stock Option
____ Incentive Stock Option
Expiration Date: ________ __, 20__; the Option expires earlier if Optionee’s Service terminates earlier, as described in the Option
Agreement.
Vesting Schedule: Subject to the limitations set forth in this Notice, the Plan, and the Agreement, the Option will vest in accordance with
the following schedule: [insert applicable vesting schedule, which may include performance metrics]
By accepting (whether in writing, electronically, or otherwise) the Option, Optionee acknowledges and agrees to the following:
1) Optionee understands that Optionee’s Service is for an unspecified duration, can be terminated at any time (i.e., is “at-will”) except where otherwise prohibited by
applicable law, and that nothing in this Notice, the Option Agreement, or the Plan changes the nature of that relationship.
Optionee acknowledges that the vesting of the Option pursuant to this Notice is subject to Optionee’s continuing Service. To the extent permitted by applicable law,
Optionee agrees and acknowledges that the Vesting Schedule may change prospectively in the event that Optionee’s Service status changes between full- and part-
time and/or in the event the Optionee is on a leave of absence, in accordance with Company policies relating to work schedules and vesting of Awards or as
determined by the Committee. Optionee
2) This grant is made under and governed by the Plan, the Agreement, and this Notice, and this Notice is subject to the terms and conditions of the Agreement and the
Plan, both of which are incorporated herein by reference. Optionee has read the Notice, the Option Agreement and, the Plan.
3) Optionee has read the Company’s Insider Trading Policy, and agrees to comply with such policy, as it may be amended from time to time, whenever Optionee
acquires or disposes of the Company’s securities.
4) By accepting the Option, Optionee consents to electronic delivery and participation as set forth in the Option Agreement.
OPTIONEE COINBASE GLOBAL, INC.
Signature: By:
Print Name: Its:
COINBASE GLOBAL, INC.
2021 EQUITY INCENTIVE PLAN
GLOBAL STOCK OPTION AGREEMENT
Unless otherwise defined in this Global Stock Option Agreement (this “Option Agreement”), any capitalized terms used herein will have the same meaning ascribed
to them in the Coinbase Global, Inc. 2021 Equity Incentive Plan (the “Plan”).
Optionee has been granted an option to purchase Shares (the “Option”) of Coinbase Global, Inc. (the “Company”), subject to the terms, restrictions, and conditions of
the Plan, the Notice of Stock Option Grant (the “Notice”), and this Option Agreement, including any applicable country-specific provisions in the appendix attached hereto
(the “Appendix”), which constitutes part of this Option Agreement. In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of the
Notice or this Option Agreement, the terms and conditions of the Plan will prevail.
1. Vesting Rights. Subject to the applicable provisions of the Plan and this Option Agreement, the Option may be exercised, in whole or in part, in accordance
with the Vesting Schedule set forth in the Notice. Optionee acknowledges and agrees that the Vesting Schedule may change prospectively in the event Optionee’s Service
status changes between full and part-time and/or in the event Optionee is on a leave of absence, in accordance with Company policies relating to work schedules and vesting
of Awards or as determined by the Committee. Optionee acknowledges that the vesting of the Option pursuant to this Notice and Agreement is subject to Optionee’s
continuing Service.
2. Grant of Option. Optionee has been granted an Option for the number of Shares set forth in the Notice at the exercise price per Share in U.S. Dollars set forth
in the Notice (the “Exercise Price”). If designated in the Notice as an Incentive Stock Option (“ISO”), the Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if the Option is intended to be an ISO, to the extent that it exceeds the U.S. $100,000 rule of Code Section 422(d) it will be treated as a
Nonqualified Stock Option (“NSO”).
3. Termination Period.
(a) General Rule. If Optionee’s Service terminates for any reason except death or Disability, and other than for Cause, then the Option will expire
at the close of business at Company headquarters on the date three (3) months after Optionee’s Termination Date (as defined below) (with any exercise beyond three (3)
months after the date Optionee’s employment terminates deemed to be the exercise of an NSO). The Company determines when Optionee’s Service terminates for all
purposes under this Option Agreement.
(b) Death; Disability. If Optionee dies before Optionee’s Service terminates (or Optionee dies within three (3) months of Optionee’s termination
of Service other than for Cause), then the Option will expire at the close of business at Company headquarters on the date twelve (12) months after the date of death (subject
to the expiration details in Section 7). If Optionee’s Service terminates because of Optionee’s Disability, then the Option will expire at the close of business at Company
headquarters on the date twelve (12) months after Optionee’s Termination Date (subject to the expiration details in Section 7).
(c) Cause. Unless otherwise determined by the Committee, the Option (whether or not vested) will terminate immediately upon the Optionee’s
cessation of Services if the Company reasonably determines in good faith that such cessation of Services has resulted in connection with an act or failure to act constituting
Cause (or the Optionee’s Services could have been terminated for
Cause (without regard to the lapsing of any required notice or cure periods in connection therewith) at the time the Optionee terminated Services).
(d) No Notification of Exercise Periods. Optionee is responsible for keeping track of these exercise periods following Optionee’s termination of
Service for any reason. The Company will not provide further notice of such periods. In no event will the Option be exercised later than the Expiration Date set forth in the
Notice.
(e) Termination. For purposes of this Option, Optionee’s Service will be considered terminated as of the date Optionee is no longer providing
Service to the Company, its Parent or one of its Subsidiaries or Affiliates (regardless of the reason for such termination and whether or not later found to be invalid or in
breach of employment laws in the jurisdiction where Optionee is employed or the terms of Optionee’s employment agreement, if any) (the “Termination Date”). The
Committee will have the exclusive discretion to determine when Optionee is no longer actively providing services for purposes of Optionee’s Option (including whether
Optionee may still be considered to be providing services while on an approved leave of absence). Unless otherwise provided in this Option Agreement or determined by the
Company, Optionee’s right to vest in this Option under the Plan, if any, will terminate as of the Termination Date and will not be extended by any notice period (e.g.,
Optionee’s period of Service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the
jurisdiction where Optionee is employed or the terms of Optionee’s employment agreement, if any). Following the Termination Date, Optionee may exercise the Option only
as set forth in the Notice and this Section, provided that the period (if any) during which Optionee may exercise the Option after the Termination Date, if any, will commence
on the date Optionee ceases to provide services and will not be extended by any notice period mandated under employment laws in the jurisdiction where Optionee is
employed or terms of Optionee’s employment agreement, if any. If Optionee does not exercise this Option within the termination period set forth in the Notice or the
termination periods set forth above, the Option will terminate in its entirety. In no event, may any Option be exercised after the Expiration Date of the Option as set forth in
the Notice.
4. Exercise of Option.
(a) Right to Exercise. The Option is exercisable during its term in accordance with the Vesting Schedule set forth in the Notice and the applicable
provisions of the Plan and this Option Agreement. In the event of Optionee’s death, Disability, termination for Cause, or other cessation of Service, the exercisability of the
Option is governed by the applicable provisions of the Plan, the Notice, and this Option Agreement. The Option may not be exercised for a fraction of a Share.
(b) Method of Exercise. The Option is exercisable by delivery of an exercise notice in a form specified by the Company (the “Exercise Notice”),
which will state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised (the “Exercised Shares”), and such other
representations and agreements as may be required by the Company pursuant to the provisions of the Plan. The Exercise Notice will be delivered in person, by mail, via
electronic mail or facsimile or by other authorized method to the Secretary of the Company or other person designated by the Company. The Exercise Notice will be
accompanied by payment of the aggregate Exercise Price as to all Exercised Shares together with any applicable Tax-Related Items (as defined in Section 8 below). The
Option will be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by such aggregate Exercise Price and payment of
any applicable Tax-Related Items. No Shares will be issued pursuant to the exercise of the Option unless such issuance and exercise complies with all relevant provisions of
law and the requirements of any stock exchange or quotation service upon which the Shares are then listed and any exchange control
requirements. Assuming such compliance, for United States income tax purposes the Exercised Shares will be considered transferred to Optionee on the date the Option is
exercised with respect to such Exercised Shares.
(c) Exercise by Another. If another person wants to exercise the Option after it has been transferred to him or her in compliance with this Option
Agreement, that person must prove to the Company’s satisfaction that he or she is entitled to exercise the Option. That person must also complete the proper Exercise Notice
form (as described above) and pay the Exercise Price (as described below) and any applicable Tax-Related Items (as described below).
5. Method of Payment. Payment of the aggregate Exercise Price will be by any of the following, or a combination thereof, at the election of Optionee:
(a) Optionee’s personal check (or readily available funds), wire transfer, or a cashier’s check;
(b) certificates for shares of Company stock that Optionee owns, along with any forms needed to effect a transfer of those shares to the Company;
the value of the shares, determined as of the effective date of the Option exercise, will be applied to the Exercise Price. Instead of surrendering shares of Company stock,
Optionee may attest to the ownership of those shares on a form provided by the Company and have the same number of shares subtracted from the Option shares issued to
Optionee. However, Optionee may not surrender, or attest to the ownership of, shares of Company stock in payment of the Exercise Price of Optionee’s Option if Optionee’s
action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to this Option for financial reporting purposes;
(c) cashless exercise through irrevocable directions to a securities broker approved by the Company to sell all or part of the Shares covered by the
Option and to deliver to the Company from the sale proceeds an amount sufficient to pay the Exercise Price and any applicable Tax-Related Items. The balance of the sale
proceeds, if any, will be delivered to Optionee. The directions must be given by signing a special notice of exercise form provided by the Company; or
(d) any other method authorized by the Company;
provided, however, that the Company may restrict the available methods of payment to facilitate compliance with applicable law or administration of the Plan. In particular, if
Optionee is located outside the United States, Optionee should review the applicable provisions of the Appendix for any such restrictions that may currently apply.
6. Non-Transferability of Option. In general, except as provided below, only Optionee may exercise this Option prior to Optionee’s death. Optionee may not
transfer or assign this Option, except as provided below. For instance, Optionee may not sell this Option or use it as security for a loan. If Optionee attempts to do any of these
things, this Option will immediately become invalid. However, if Optionee is a U.S. taxpayer, Optionee may dispose of this Option in Optionee’s will. If Optionee is a U.S.
taxpayer and this Option is designated as a NSO in the Notice of Grant, then the Committee may, in its sole discretion, allow Optionee to transfer this Option as a gift to one
or more family members. For purposes of this Agreement, “family member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in- law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law (including adoptive relationships), any individual sharing
Optionee’s household (other than a tenant or employee), a trust in which one or more of these individuals have more than 50% of the beneficial interest, a foundation in which
Optionee or one or more of these
persons control the management of assets, and any entity in which Optionee or one or more of these persons own more than 50% of the voting interest. In addition, if
Optionee is a U.S. taxpayer and this Option is designated as a NSO in the Notice of Grant, then the Committee may, in its sole discretion, allow Optionee to transfer this
Option to Optionee’s spouse or former spouse pursuant to a domestic relations order in settlement of marital property rights. The Committee will allow Optionee to transfer
this Option only if both Optionee and the transferee(s) execute the forms prescribed by the Committee, which include the consent of the transferee(s) to be bound by this
Agreement. This Option may not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of in any manner other than by will or by the laws of descent or
distribution or court order and may be exercised during Optionee’s lifetime only by Optionee, Optionee’s guardian, or legal representative, as permitted in the Plan and
applicable local laws. The terms of the Plan and this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of Optionee. The Committee
may permit additional transfers on a case-by-case basis to extent permissible under applicable law. The terms of the Plan and this Option Agreement will be binding upon the
executors, administrators, heirs, successors and assigns of Optionee.
7. Term of Option. The Option will in any event expire on the expiration date set forth in the Notice, which date is no more than ten (10) years after the Date of
Grant (five (5) years after the Date of Grant if this option is designated as an ISO in the Notice of Stock Option Grant and Section 5.3 of the Plan applies).
8. Taxes.
(a) Responsibility for Taxes. Optionee acknowledges that, to the extent permitted by applicable law, regardless of any action taken by the
Company or, if different, a Parent, Subsidiary, or Affiliate employing or retaining Optionee (the “Employer”), the ultimate liability for all income tax, social insurance,
payroll tax, fringe benefits tax, payment on account, or other tax related items related to Optionee’s participation in the Plan and legally applicable to Optionee (“Tax-Related
Items”) is and remains Optionee’s responsibility and may exceed the amount actually withheld by the Company or the Employer, if any. Optionee further acknowledges that
the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Option,
including, but not limited to, the grant, vesting, or exercise of this Option; the subsequent sale of Shares acquired pursuant to such exercise; and the receipt of any dividends;
and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of this Option to reduce or eliminate Optionee’s liability for Tax-Related
Items or achieve any particular tax result. Further, if Optionee is subject to Tax-Related Items in more than one jurisdiction, Optionee acknowledges that the Company and/or
the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction. OPTIONEE SHOULD
CONSULT A TAX ADVISER APPROPRIATELY QUALIFIED IN THE COUNTRY OR COUNTRIES IN WHICH OPTIONEE RESIDES OR IS SUBJECT TO TAXATION
PRIOR TO EXERCISING THE OPTION OR DISPOSING OF THE SHARES.
(b) Withholding. Prior to any relevant taxable or tax withholding event, to the extent permitted by applicable law and as applicable, Optionee
agrees to make arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, Optionee authorizes the Company and/or the
Employer, or their respective agents, at their discretion, to satisfy any withholding obligations for Tax-Related Items by one or a combination of the following, all
under such rules as may be established by the Committee and in compliance with the Company’s Insider Trading Policy and 10b5-1 Trading Plan Policy, if applicable:
(i) withholding from Optionee’s wages or other cash compensation paid to Optionee by the Company and/or the Employer; or
(ii) withholding from proceeds of the sale of Shares acquired at exercise of this Option either through a voluntary sale or through a mandatory sale
arranged by the Company (on Optionee’s behalf pursuant to this authorization and without further consent);
(iii) withholding Shares to be issued upon exercise of the Option, provided the Company only withholds the number of Shares necessary to satisfy
no more than applicable statutory withholding amounts;
(iv) Optionee’s payment of a cash amount (including by check representing readily available funds or a wire transfer); or
(v) any other arrangement approved by the Committee and permitted under applicable law;
provided, however, that if Optionee is a Section 16 officer of the Company under the Exchange Act, then the method of withholding shall be a mandatory sale
(unless the Committee as constituted in accordance with Rule 16b-3 of the Exchange Act shall establish an alternate method from alternatives (i) – (v) above prior to the Tax-
Related Items withholding event).
Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable statutory withholding rates or
other applicable withholding rates, including up to the maximum permissible statutory rate for Optionee’s tax jurisdiction(s) in which case Optionee will have no entitlement
to the equivalent amount in Shares and will receive a refund of any over-withheld amount in cash in accordance with applicable law. If the obligation for Tax-Related Items is
satisfied by withholding in Shares, for tax purposes, Optionee is deemed to have been issued the full number of Exercised Shares; notwithstanding that a number of the Shares
are held back solely for the purpose of satisfying the withholding obligation for Tax-Related Items.
Finally, Optionee agrees to pay to the Company and/or the Employer any amount of Tax-Related Items that the Company and/or the Employer may be
required to withhold or account for as a result of Optionee’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to
issue or deliver the Shares or the proceeds of the sale of Shares, if Optionee fails to comply with Optionee’s obligations in connection with the Tax-Related Items.
(c) Notice of Disqualifying Disposition of ISO Shares. If Optionee is subject to Tax-Related Items in the United States and sells or otherwise
disposes of any of the Shares acquired pursuant to an ISO on or before the later of (i) two (2) years after the grant date, or (ii) one (1) year after the exercise date, Optionee
will immediately notify the Company in writing of such disposition. Optionee agrees that he or she may be subject to income tax withholding by the Company on the
compensation income recognized from such early disposition of ISO Shares by payment in cash or out any wages or other cash compensation paid to Optionee by the
Company and/or the Employer.
9. Nature of Grant. By accepting the Option, Optionee acknowledges, understands and agrees that:
(a) the Plan is established voluntarily by the Company, it is discretionary in nature, and it may be modified, amended, suspended or terminated by the
Company at any time, to the extent permitted by the Plan;
(b) the grant of the Option is exceptional, voluntary, and occasional, and does not create any contractual or other right to receive future grants of options,
or benefits in lieu of options, even if options have been granted in the past;
(c) all decisions with respect to future options or other grants, if any, will be at the sole discretion of the Company;
(d) Optionee is voluntarily participating in the Plan;
(e) the Option and Optionee’s participation in the Plan will not create a right to employment or be interpreted as forming or amending an employment or
service contract with the Company or the Employer, and will not interfere with the ability of the Company or the Employer, as applicable, to terminate Optionee’s
employment or service relationship (if any);
(f) the Option and the Shares subject to the Option, and the income and value of same, are not intended to replace any pension rights or compensation;
(g) the Option and the Shares subject to the Option, and the income and value of same, are not part of normal or expected compensation for any purpose,
including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or
retirement, or welfare benefits or similar payments;
(h) unless otherwise agreed with the Company, the Option, and the Shares subject to the Option, and the income and value of same, are not granted as
consideration for, or in connection with, the service Optionee may provide as a director of a Parent, Subsidiary, or Affiliate;
(i) the future value of the Shares underlying the Option is unknown, indeterminable, and cannot be predicted with certainty; if the underlying Shares do
not increase in value, the Option will have no value; if Optionee exercises the Option and acquires Shares, the value of such Shares may increase or decrease, even below the
Exercise Price;
(j) no claim or entitlement to compensation or damages will arise from forfeiture of the Option resulting from Optionee’s termination of Service
(regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Optionee is employed or
the terms of Optionee’s employment agreement, if any), and in consideration of the grant of the Option to which Optionee is otherwise not entitled, Optionee irrevocably
agrees never to institute any claim against the Employer, the Company, and any Parent, Subsidiary, or Affiliate; waives his or her ability, if any, to bring any such claim; and
releases the Employer, the Company, and any Parent, Subsidiary, or Affiliate from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of
competent jurisdiction, then, by participating in the Plan, Optionee will be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all
documents necessary to request dismissal or withdrawal of such claim;
(k) unless otherwise provided in the Plan or by the Company in its discretion, the Option and the benefits evidenced by this Option Agreement do not
create any entitlement to have the
Option or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any Corporate Transaction
affecting the Shares; and
(l) neither the Employer, the Company, or any Parent, Subsidiary or Affiliate will be liable for any foreign exchange rate fluctuation between Optionee’s
local currency and the United States Dollar that may affect the value of the Option or of any amounts due to Optionee pursuant to the exercise of the Option or the subsequent
sale of any Shares acquired upon exercise.
(m) the following provisions apply only if Optionee is providing services outside the United States:
(i) the Option and the Shares subject to the Option are not part of normal or expected compensation or salary for any purpose; and
(ii) Optionee acknowledges and agrees that neither the Company, the Employer nor any Parent or Subsidiary or Affiliate will be liable for any
foreign exchange rate fluctuation between Optionee’s local currency and the United States Dollar that may affect the value of the Option or of
any amounts due to Optionee pursuant to the exercise of the Option or the subsequent sale of any Shares acquired upon exercised
10. No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding
Optionee’s participation in the Plan or Optionee’s acquisition or sale of the underlying Shares. Optionee acknowledges, understands, and agrees that he or she should consult
with his or her own personal tax, legal, and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
11. Data Privacy. Optionee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Optionee’s
personal data as described in this Option Agreement and any other Option grant materials by and among, as applicable, the Employer, the Company and any Parent,
Subsidiary or Affiliate for the exclusive purpose of implementing, administering and managing Optionee’s participation in the Plan.
Optionee understands that the Company and the Employer may hold certain personal information about Optionee, including, but not limited to, Optionee’s name,
home address, email address and telephone number, date of birth, social insurance number, passport number or other identification number (e.g., resident registration
number), salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Options or any other entitlement to shares of stock awarded,
canceled, exercised, vested, unvested or outstanding in Optionee’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.
Optionee understands that Data will be transferred to the Company’s broker, or other third party (“Online Administrator”) and its affiliated companies or such
other stock plan service provider as may be designated by the Company from time to time that is assisting the Company with the implementation, administration and
management of the Plan. Optionee understands that the recipients of Data may be located in the United States or elsewhere, and that the recipients’ country may have
different data privacy laws and protections than Optionee’s country. Optionee understands that if he or she resides outside the United States, he or she may request a list
with the names and addresses of any potential recipients of Data by contacting his or her local human resources representative. Optionee authorizes the Company, the
Company’s broker, or such other stock plan service provider as may be designated by the Company from time to time, and any other possible
recipients that may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer
Data, in electronic or other form, for the sole purpose of implementing, administering and managing his or her participation in the Plan. Optionee understands that Data
will be held only as long as is necessary to implement, administer and manage Optionee’s participation in the Plan. Optionee understands if he or she resides outside the
United States, he or she may, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data or refuse
or withdraw the consents herein, in any case without cost, by contacting his or her local human resources representative. Further, Optionee understands that he or she is
providing the consents herein on a purely voluntary basis. If Optionee does not consent, or if Optionee later seeks to revoke his or her consent, his or her employment
status or service with the Employer will not be affected; the only consequence of refusing or withdrawing Optionee’s consent is that the Company would not be able to
grant Options or other equity awards to Optionee or administer or maintain such awards. Therefore, Optionee understands that refusing or withdrawing his or her
consent may affect Optionee’s ability to participate in the Plan. For more information on the consequences of Optionee’s refusal to consent or withdrawal of consent,
Optionee understands that he or she may contact his or her local human resources representative.
Finally, upon request of the Company or the Employer, Optionee agrees to provide an executed data privacy consent form (or any other agreements or consents)
that the Company or the Employer may deem necessary to obtain from Optionee for the purpose of administering Optionee’s participation in the Plan in compliance with
the data privacy laws in Optionee’s country, either now or in the future. Optionee understands and agrees that Optionee will not be able to participate in the Plan if
Optionee fails to provide any such consent or agreement requested by the Company and/or the Employer.
12. Language. Optionee acknowledges that he or she is sufficiently proficient in English to understand the terms and conditions of this Option Agreement.
Furthermore, if Optionee has received this Option Agreement, or any other document related to the Option and/or the Plan translated into a language other than English and if
the meaning of the translated version is different than the English version, the English version will control.
13. Appendix. Notwithstanding any provisions in this Option Agreement, the Option will be subject to any special terms and conditions set forth in any appendix
to this Option Agreement for Participant’s country. Moreover, if Participant relocates to one of the countries included in the Appendix, the special terms and conditions for
such country will apply to Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or
administrative reasons. The Appendix constitutes part of this Option Agreement.
14. Imposition of Other Requirements. The Company reserves the right to impose other requirements on Optionee’s participation in the Plan, on the Option,
and on any Shares purchased upon exercise of the Option, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require
Optionee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
15. Acknowledgement. The Company and Optionee agree that the Option is granted under and governed by the Notice, this Option Agreement and the Plan
(incorporated herein by reference). Optionee: (a) acknowledges receipt of a copy of the Plan and the Plan prospectus, (b) represents that Optionee has carefully read and is
familiar with their provisions, and (c) hereby accepts the Option subject to all of the terms and conditions set forth herein and those set forth in the Plan and the Notice.
16. Entire Agreement; Enforcement of Rights. This Option Agreement, the Plan, and the Notice constitute the entire agreement and understanding of the
parties relating to the subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments, or negotiations concerning the purchase of
the Shares hereunder are superseded. No adverse modification of, or adverse amendment to, this Option Agreement, nor any waiver of any rights under this Option
Agreement, will be effective unless in writing and signed by the parties to this Option Agreement (which writing and signing may be electronic). The failure by either party to
enforce any rights under this Option Agreement will not be construed as a waiver of any rights of such party.
17. Compliance with Laws and Regulations. The issuance of Shares and the sale of Shares will be subject to and conditioned upon compliance by the Company
and Optionee with all applicable state, federal, local and foreign laws and regulations and with all applicable requirements of any stock exchange or automated quotation
system on which the Company’s Shares may be listed or quoted at the time of such issuance or transfer. Optionee understands that the Company is under no obligation to
register or qualify the Common Stock with any state, federal, or foreign securities commission or to seek approval or clearance from any governmental authority for the
issuance or sale of the Shares. Further, Optionee agrees that the Company will have unilateral authority to amend the Plan and this Option Agreement without Optionee’s
consent to the extent necessary to comply with securities or other laws applicable to issuance of Shares. Finally, the Shares issued pursuant to this Option Agreement will be
endorsed with appropriate legends, if any, determined by the Company.
18. Severability. If one or more provisions of this Option Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision will be
excluded from this Option Agreement, (b) the balance of this Option Agreement will be interpreted as if such provision were so excluded and (c) the balance of this Option
Agreement will be enforceable in accordance with its terms.
19. Governing Law and Venue. This Option Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto will be
governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to such state’s conflict of laws rules.
Any and all disputes relating to, concerning or arising from this Option Agreement, or relating to, concerning or arising from the relationship between the parties
evidenced by the Plan or this Option Agreement, will be brought and heard exclusively in the United States District Court for the District of Northern California or the San
Francisco Superior Court. Each of the parties hereby represents and agrees that such party is subject to the personal jurisdiction of said courts; hereby irrevocably consents to
the jurisdiction of such courts in any legal or equitable proceedings related to, concerning, or arising from such dispute, and waives, to the fullest extent permitted by law, any
objection which such party may now or hereafter have that the laying of the venue of any legal or equitable proceedings related to, concerning, or arising from such dispute
which is brought in such courts is improper or that such proceedings have been brought in an inconvenient forum.
20. No Rights as Employee, Director or Consultant. Nothing in this Option Agreement will affect in any manner whatsoever any right or power of the
Employer or the Company to terminate Optionee’s Service, for any reason, with or without Cause.
21. Consent to Electronic Delivery of All Plan Documents and Disclosures. By Optionee’s acceptance of the Notice (whether in writing or electronically),
Optionee and the Company agree that the Option is granted under and governed by the terms and conditions of the Plan, the Notice,
and this Option Agreement. Optionee has reviewed the Plan, the Notice, and this Option Agreement in their entirety, has had an opportunity to obtain the advice of counsel
prior to executing the Notice and Agreement, and fully understands all provisions of the Plan, the Notice, and this Option Agreement. Optionee hereby agrees to accept as
binding, conclusive, and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice, and this Option Agreement. Optionee
further agrees to notify the Company upon any change in Optionee’s residence address. By acceptance of the Option, Optionee agrees to participate in the Plan through an on-
line or electronic system established and maintained by the Company or a third party designated by the Company and consents to the electronic delivery of the Notice, this
Option Agreement, the Plan, account statements, Plan prospectuses required by the U.S. Securities and Exchange Commission, U.S. financial reports of the Company, and all
other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements), or other communications
or information related to the Option and current or future participation in the Plan. Electronic delivery may include the delivery of a link to the Company intranet or the
internet site of a third party involved in administering the Plan, the delivery of the document via e-mail, or such other delivery determined at the Company’s discretion.
Optionee acknowledges that Optionee may receive from the Company a paper copy of any documents delivered electronically at no cost if Optionee contacts the Company by
telephone, through a postal service, or electronic mail to Stock Administration. Optionee further acknowledges that Optionee will be provided with a paper copy of any
documents delivered electronically if electronic delivery fails; similarly, Optionee understands that Optionee must provide on request to the Company or any designated third
party a paper copy of any documents delivered electronically if electronic delivery fails. Also, Optionee understands that Optionee’s consent may be revoked or changed,
including any change in the electronic mail address to which documents are delivered (if Optionee has provided an electronic mail address), at any time by notifying the
Company of such revised or revoked consent by telephone, postal service, or electronic mail to Stock Administration. Finally, Optionee understands that Optionee is not
required to consent to electronic delivery if local laws prohibit such consent.
22. Insider Trading Restrictions/Market Abuse Laws. Optionee acknowledges that, depending on Optionee’s country, the broker’s country, or the country in
which the Shares are listed, Optionee may be subject to insider trading restrictions and/or market abuse laws, which may affect Optionee’s ability to, directly or indirectly,
acquire or sell the Shares or rights to Shares under the Plan during such times as Optionee is considered to have “inside information” regarding the Company (as defined by
the laws or regulations in the applicable jurisdiction). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders Optionee placed before
possessing the inside information. Furthermore, Optionee may be prohibited from (i) disclosing the inside information to any third party, including fellow employees (other
than on a “need to know” basis) and (ii) “tipping” third parties or causing them to otherwise buy or sell securities. Any restrictions under these laws or regulations are separate
from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. Optionee acknowledges that it is Optionee’s responsibility
to comply with any applicable restrictions and understands that Optionee should consult his or her personal legal advisor on such matters. In addition, Optionee acknowledges
that he or she has read the Company’s Insider Trading Policy, and agrees to comply with such policy, as it may be amended from time to time, whenever Optionee acquires or
disposes of the Company’s securities.
23. Foreign Asset/Account, Exchange Control and Tax Reporting. Optionee may be subject to foreign asset/account, exchange control and/or tax reporting
requirements as a result of the acquisition, holding and/or transfer of Shares or cash resulting from his or her participation in the Plan. Optionee may be required to report such
accounts, assets, the balances therein, the value thereof and/or the transactions related thereto to the applicable authorities in Optionee’s country and/or repatriate funds
received in connection with the Plan within certain time limits or according to specified procedures. Optionee acknowledges that he or she is responsible for ensuring
compliance with any applicable foreign asset/account, exchange control and tax reporting requirements and should consult his or her personal legal and tax advisors on such
matters.
24. Award Subject to Company Clawback or Recoupment. To the extent permitted by applicable law, the Option will be subject to clawback or recoupment
pursuant to any compensation clawback or recoupment policy adopted by the Board or required by law during the term of Optionee’s employment or other Service that is
applicable to Optionee. In addition to any other remedies available under such policy and applicable law, the Company may require the cancellation of Optionee’s Option
(whether vested or unvested) and the recoupment of any gains realized with respect to Optionee’s Option.
BY ACCEPTING THIS OPTION, OPTIONEE AGREES TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.
APPENDIX
COINBASE GLOBAL, INC.
2021 EQUITY INCENTIVE PLAN
GLOBAL STOCK OPTION AWARD AGREEMENT
COUNTRY SPECIFIC PROVISIONS FOR EMPLOYEES OUTSIDE THE U.S.
Terms and Conditions
At such time as the Committee issues an Option under the Plan to an Optionee who resides and/or works outside of the United States, the Committee may adopt and include in
this Appendix additional terms and conditions that govern such Option. This Appendix forms part of the Option Agreement. Any capitalized term used in this Appendix
without definition will have the meaning ascribed to it in the Notice, the Option Agreement or the Plan, as applicable.
If Optionee is a citizen or resident of a country, or is considered resident of a country, other than the one in which Optionee is currently working, or Optionee transfers
employment and/or residency between countries after the Date of Grant, the Company will, in its sole discretion, determine to what extent the additional terms and conditions
included herein will apply to Optionee under these circumstances.
Notifications
This Appendix also includes information relating to exchange control, securities laws, foreign asset/account reporting and other issues of which Optionee should be aware
with respect to Optionee’s participation in the Plan. The information is based on the securities, exchange control, foreign asset/account reporting and other laws in effect in the
respective countries as of [●]. Such laws are complex and change frequently. As a result, Optionee should not rely on the information herein as the only source of information
relating to the consequences of Optionee’s participation in the Plan because the information may be out of date at the time that Optionee exercises the Option, sells Shares
acquired under the Plan or takes any other action in connection with the Plan.
In addition, the information is general in nature and may not apply to Optionee’s particular situation, and the Company is not in a position to assure Optionee of any particular
result. Accordingly, Optionee should seek appropriate professional advice as to how the relevant laws in Optionee’s country may apply to Optionee’s situation.
Finally, if Optionee is a citizen or resident of a country, or is considered resident of a country, other than the one in which Optionee is currently working and/or residing, or
Optionee transfers employment and/or residency after the Date of Grant, the information contained herein may not apply to Optionee in the same manner.
Country-Specific Terms
COINBASE GLOBAL, INC.
2021 EQUITY INCENTIVE PLAN
GLOBAL NOTICE OF RESTRICTED STOCK UNIT AWARD
You (the “Participant”) have been granted an award of Restricted Stock Units (“RSUs”) under the Coinbase Global, Inc. (the “Company”) 2021 Equity Incentive Plan (the
“Plan”) subject to the terms and conditions of the Plan, this Global Notice of Restricted Stock Unit Award (this “Notice”), and the attached Global Restricted Stock Unit
Award Agreement (the “Agreement”), including any applicable country-specific provisions in the appendix attached hereto (the “Appendix”), which constitutes part of the
Agreement.
Unless otherwise defined herein, the terms defined in the Plan will have the same meanings in this Notice and the electronic representation of this Notice established and
maintained by the Company or a third party designated by the Company.
Name:
Address:
Grant Number:
Number of RSUs:
Date of Grant:
Vesting Commencement Date:
Expiration Date: The earlier to occur of: (a) the date on which settlement of all RSUs granted hereunder
occurs, and (b) the tenth anniversary of the Date of Grant. This RSU expires earlier if Participant’s
Service terminates earlier, as described in the Agreement.
Vesting Schedule: Subject to the limitations set forth in this Notice, the Plan, and the Agreement, the RSUs
will vest in accordance with the following schedule: [insert applicable vesting schedule]
By accepting (whether in writing, electronically or otherwise) the RSUs, Participant acknowledges and agrees to the following:
1) Participant understands that Participant’s Service is for an unspecified duration, can be terminated at any time (i.e., is “at-will”), except where otherwise prohibited by
applicable law, and that nothing in this Notice, the Agreement, or the Plan changes the nature of that relationship. Participant acknowledges that the vesting of the
RSUs pursuant to this Notice is subject to Participant’s continuing Service. To the extent permitted by applicable law, Participant agrees and acknowledges that the
Vesting Schedule may change prospectively in the event that Participant’s Service status changes between full- and part-time and/or in the event the Participant is on a
leave of absence, in accordance with Company policies relating to work schedules and vesting of Awards or as determined by the Committee.
2) This grant is made under and governed by the Plan, the Agreement, and this Notice, and this Notice is subject to the terms and conditions of the Agreement and the
Plan, both of which are incorporated herein by reference. Participant has read the Notice, the Agreement, and the Plan.
3) Participant has read the Company’s Insider Trading Policy, and agrees to comply with such policy, as it may be amended from time to time, whenever Participant
acquires or disposes of the Company’s securities.
4) By accepting the RSUs, Participant consents to electronic delivery and participation as set forth in the Agreement.
PARTICIPANT COINBASE GLOBAL, INC.
Signature: By:
Print Name: Its:
COINBASE GLOBAL, INC.
2021 EQUITY INCENTIVE PLAN
GLOBAL RESTRICTED STOCK UNIT AWARD AGREEMENT
Unless otherwise defined in this Global Restricted Stock Unit Award Agreement (this “Agreement”), any capitalized terms used herein will have the same meaning ascribed
to them in the Coinbase Global, Inc. 2021 Equity Incentive Plan (the “Plan”).
Participant has been granted Restricted Stock Units (“RSUs”) subject to the terms, restrictions, and conditions of the Plan, the Notice of Restricted Stock Unit Award (the
“Notice”), and this Agreement, including any applicable country-specific provisions in the appendix attached hereto (the “Appendix”), which constitutes part of this
Agreement. In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of the Notice or this Agreement, the terms and conditions of
the Plan will prevail.
1. Settlement. Settlement of RSUs shall be made in the same calendar year as the applicable date of vesting under the vesting schedule set forth in the Notice; provided,
however, that if a vesting date under the vesting schedule set forth in the Notice occurs in December, then settlement of any RSUs that vest in December shall be made within
30 days of vesting. Settlement of RSUs shall be in Shares. Settlement means the delivery to Participant of the Shares vested under the RSUs. No fractional RSUs or rights for
fractional Shares will be created pursuant to this Agreement.
2. No Stockholder Rights. Unless and until such time as Shares are issued in settlement of vested RSUs, Participant will have no ownership of the Shares allocated to
the RSUs and will have no rights to dividends or to vote such Shares.
3. Dividend Equivalents. Dividend equivalents, if any (whether in cash or Shares), will not be credited to Participant, except as permitted by the Committee.
4. Non-Transferability of RSUs. The RSUs and any interest therein will not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of in any
manner other than by will or by the laws of descent or distribution or court order or unless otherwise permitted by the Committee on a case-by-case basis.
5. Termination; Leave of Absence; Change in Status. If Participant’s Service terminates for any reason, all unvested RSUs will be forfeited to the Company
immediately, and all rights of Participant to such RSUs automatically terminate without payment of any consideration to Participant. Participant’s Service will be considered
terminated as of the date Participant is no longer providing services (regardless of the reason for such termination and whether or not later found to be invalid or in breach of
employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employment agreement, if any) and will not, subject to the laws applicable to
Participant’s Award, be extended by any notice period mandated under local laws (e.g., Service would not include a period of “garden leave” or similar period mandated
under employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employment agreement, if any). Participant acknowledges and agrees
that the Vesting Schedule may change prospectively in the event Participant’s service status changes between full- and part-time status and/or in the event Participant is on an
approved leave of absence in accordance the Company’s policies relating to work schedules and vesting of awards or as determined by the Committee. Participant
acknowledges that the vesting of the Shares pursuant to this Notice and Agreement is subject to Participant’s continued Service. In case of any dispute as to whether
termination of Service has occurred, the Committee will have sole discretion to determine whether such termination
of Service has occurred and the effective date of such termination (including whether Participant may still be considered to be providing services while on an approved leave
of absence).
6. Taxes.
(a) Responsibility for Taxes. Participant acknowledges that, to the extent permitted by applicable law, regardless of any action taken by the Company or, if
different, a Parent, Subsidiary or Affiliate employing or retaining Participant (the “Employer”), the ultimate liability for all income tax, social insurance, payroll tax, fringe
benefits tax, payment on account or other tax-related items related to Participant’s participation in the Plan and legally applicable to Participant (“Tax-Related Items”) is and
remains Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer, if any. Participant further acknowledges that the
Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs,
including, but not limited to, the grant, vesting or settlement of the RSUs and the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any
dividends, and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate Participant’s liability for
Tax-Related Items or achieve any particular tax result. Further, if Participant is subject to Tax-Related Items in more than one jurisdiction, Participant acknowledges that the
Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
PARTICIPANT SHOULD CONSULT A TAX ADVISER APPROPRIATELY QUALIFIED IN THE COUNTRY OR COUNTRIES IN WHICH PARTICIPANT RESIDES OR IS
SUBJECT TO TAXATION.
(b) Withholding. Prior to any relevant taxable or tax withholding event, to the extent permitted by applicable law and as applicable, Participant agrees to make
arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, Participant authorizes the Company and/or the Employer, or
their respective agents, at their discretion, to satisfy any withholding obligations for Tax-Related Items by one or a combination of the following:
(i) withholding from Participant’s wages or other cash compensation paid to Participant by the Company and/or the Employer; or
(ii) withholding from proceeds of the sale of Shares acquired upon settlement of the RSUs either through a voluntary sale or through a mandatory sale arranged
by the Company (on Participant’s behalf pursuant to this authorization and without further consent);
(iii) withholding Shares to be issued upon settlement of the RSUs, provided the Company only withholds the number of Shares necessary to satisfy no more
than the maximum applicable statutory withholding amounts;
(iv) Participant’s payment of a cash amount (including by check representing readily available funds or a wire transfer); or
(v) any other arrangement approved by the Committee and permitted under applicable law;
all under such rules as may be established by the Committee and in compliance with the Company’s Insider Trading Policy and 10b5-1 Trading Plan Policy, if
applicable; provided however, that if Participant is a Section 16 officer of the Company under the Exchange Act, then the method of withholding shall be a mandatory sale
(unless the Committee (as constituted in accordance with Rule 16b-3 under the Exchange Act) shall establish an alternate method prior to the taxable or withholding event).
Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable statutory withholding rates or other
applicable withholding rates, including up to the maximum permissible statutory rate for Participant’s tax jurisdiction(s) in which case Participant will have no entitlement to
the equivalent amount in Shares and will receive a refund of any over-withheld amount in cash in accordance with applicable law. If the obligation for Tax-Related Items is
satisfied by withholding in Shares, for tax purposes, Participant is deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a
number of the Shares are held back solely for the purpose of satisfying the withholding obligation for Tax-Related Items.
Finally, Participant agrees to pay to the Company and/or the Employer any amount of Tax-Related Items that the Company and/or the Employer may be required to
withhold or account for as a result of Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company has no obligation to
deliver Shares or proceeds from the sale of Shares to Participant until Participant has satisfied the obligations in connection with the Tax-Related Items as described in this
Section.
7. Nature of Grant. By accepting the RSUs, Participant acknowledges, understands and agrees that:
(a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at
any time, to the extent permitted by the Plan;
(b) the grant of the RSUs is exceptional, voluntary, and occasional, and does not create any contractual or other right to receive future grants of RSUs, or benefits
in lieu of RSUs, even if RSUs have been granted in the past;
(c) all decisions with respect to future RSUs or other grants, if any, will be at the sole discretion of the Company;
(d) Participant is voluntarily participating in the Plan;
(e) the RSUs and Participant’s participation in the Plan will not create a right to employment or be interpreted as forming or amending an employment or service
contract with the Company or the Employer and will not interfere with the ability of the Company or the Employer, as applicable, to terminate Participant’s employment or
service relationship (if any);
(f) the RSUs and the Shares subject to the RSUs, and the income and value of same, are not intended to replace any pension rights or compensation;
(g) the RSUs and the Shares subject to the RSUs, and the income and value of same, are not part of normal or expected compensation for any purpose, including,
but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement,
or welfare benefits or similar payments;
(h) unless otherwise agreed with the Company, the RSUs, and the Shares subject to the RSUs, and the income and value of same, are not granted as consideration
for, or in connection with, the service Participant may provide as a director of a Parent, Subsidiary, or Affiliate;
(i) the future value of the underlying Shares is unknown, indeterminable, and cannot be predicted with certainty;
(j) no claim or entitlement to compensation or damages will arise from forfeiture of the RSUs resulting from Participant’s termination of Service (regardless of
the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Participant is employed or the terms of
Participant’s employment agreement, if any), and in consideration of the grant of the RSUs to which Participant is otherwise not entitled, Participant irrevocably agrees never
to institute any claim against the Employer, the Company, and any Parent, Subsidiary or Affiliate; waives his or her ability, if any, to bring any such claim; and releases the
Employer, the Company, and any Parent, Subsidiary, or Affiliate from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent
jurisdiction, then, by participating in the Plan, Participant will be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents
necessary to request dismissal or withdrawal of such claim;
(k) unless otherwise provided in the Plan or by the Company in its discretion, the RSUs and the benefits evidenced by this Agreement do not create any
entitlement to have the RSUs or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any
Corporate Transaction affecting the Shares; and
(l) the following provisions apply only if Participant is providing services outside the United States:
(i) the RSUs and the Shares subject to the RSUs are not part of normal or expected compensation or salary for any purpose;
(ii) Participant acknowledges and agrees that neither the Company, the Employer nor any Parent or Subsidiary or Affiliate will be liable for any foreign
exchange rate fluctuation between Participant’s local currency and the United States Dollar that may affect the value of the RSUs or of any amounts due to Participant
pursuant to the settlement of the RSUs or the subsequent sale of any Shares acquired upon settlement.
8. No Advice Regarding Grant. The Company is not providing any tax, legal, or financial advice, nor is the Company making any recommendations regarding
Participant’s participation in the Plan, or Participant’s acquisition or sale of the underlying Shares. Participant acknowledges, understands and agrees he or she should consult
with his or her own personal tax, legal, and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
9. Data Privacy. Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Participant’s personal
data as described in this Agreement and any other RSU grant materials by and among, as applicable, the Employer, the Company and any Parent, Subsidiary or Affiliate
for the exclusive purpose of implementing, administering and managing Participant’s participation in the Plan.
Participant understands that the Company and the Employer may hold certain personal information about Participant, including, but not limited to, Participant’s
name, home address, email address and telephone number, date of birth, social insurance number, passport number or other identification number (e.g., resident
registration number), salary, nationality, job title, any shares of stock or directorships held in the Company, details of all RSUs or any other entitlement to shares of stock
awarded, canceled, exercised, vested, unvested or outstanding in Participant’s favor (“Data”), for the exclusive purpose of implementing, administering and managing
the Plan.
Participant understands that Data will be transferred to the Company’s broker, or other third party (“Online Administrator”) and its affiliated companies or such
other stock plan service provider
as may be designated by the Company from time to time that is assisting the Company with the implementation, administration and management of the Plan. Participant
understands that the recipients of Data may be located in the United States or elsewhere, and that the recipients’ country may have different data privacy laws and
protections than Participant’s country. Participant understands that if he or she resides outside the United States, he or she may request a list with the names and
addresses of any potential recipients of Data by contacting his or her local human resources representative. Participant authorizes the Company, the Company’s broker,
or such other stock plan service provider as may be designated by the Company from time to time, and any other possible recipients that may assist the Company
(presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer Data, in electronic or other form, for the
sole purpose of implementing, administering and managing his or her participation in the Plan. Participant understands that Data will be held only as long as is
necessary to implement, administer and manage Participant’s participation in the Plan. Participant understands if he or she resides outside the United States, he or she
may, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents
herein, in any case without cost, by contacting his or her local human resources representative. Further, Participant understands that he or she is providing the consents
herein on a purely voluntary basis. If Participant does not consent, or if Participant later seeks to revoke his or her consent, his or her employment status or service with
the Employer will not be affected; the only consequence of refusing or withdrawing Participant’s consent is that the Company would not be able to grant RSUs or other
equity awards to Participant or administer or maintain such awards. Therefore, Participant understands that refusing or withdrawing his or her consent may affect
Participant’s ability to participate in the Plan. For more information on the consequences of Participant’s refusal to consent or withdrawal of consent, Participant
understands that he or she may contact his or her local human resources representative.
Finally, upon request of the Company or the Employer, Participant agrees to provide an executed data privacy consent form (or any other agreements or
consents) that the Company or the Employer may deem necessary to obtain from Participant for the purpose of administering Participant’s participation in the Plan in
compliance with the data privacy laws in Participant’s country, either now or in the future. Participant understands and agrees that Participant will not be able to
participate in the Plan if Participant fails to provide any such consent or agreement requested by the Company and/or the Employer.
10. Language. Participant acknowledges that he or she is sufficiently proficient in English to understand the terms and conditions of this Agreement. Furthermore, if
Participant has received this Agreement or any other document related to the RSU and/or the Plan translated into a language other than English and if the meaning of the
translated version is different than the English version, the English version will control.
11. Appendix. Notwithstanding any provisions in this Agreement, the RSUs will be subject to any special terms and conditions set forth in any appendix to this
Agreement for Participant’s country. Moreover, if Participant relocates to one of the countries included in the Appendix, the special terms and conditions for such country will
apply to Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The
Appendix constitutes part of this Agreement.
12. Imposition of Other Requirements. The Company reserves the right to impose other requirements on Participant’s participation in the Plan, on the RSUs and on any
Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative
reasons, and to require Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
13. Acknowledgement. The Company and Participant agree that the RSUs are granted under and governed by the Notice, this Agreement, and the Plan (incorporated
herein by reference). Participant: (a) acknowledges receipt of a copy of the Plan and the Plan prospectus, (b) represents that Participant has carefully read and is familiar with
their provisions, and (c) hereby accepts the RSUs subject to all of the terms and conditions set forth herein and those set forth in the Plan and the Notice.
14. Entire Agreement; Enforcement of Rights. This Agreement, the Plan, and the Notice constitute the entire agreement and understanding of the parties relating to the
subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments, or negotiations concerning the purchase of the Shares hereunder
are superseded. No adverse modification of or adverse amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing
and signed by the parties to this Agreement (which writing and signing may be electronic). The failure by either party to enforce any rights under this Agreement will not be
construed as a waiver of any rights of such party.
15. Compliance with Laws and Regulations. The issuance of Shares and the sale of Shares will be subject to and conditioned upon compliance by the Company and
Participant with all applicable state, federal, local and foreign laws and regulations and with all applicable requirements of any stock exchange or automated quotation system
on which the Company’s Shares may be listed or quoted at the time of such issuance or transfer. Participant understands that the Company is under no obligation to register or
qualify the Common Stock with any state, federal, or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale
of the Shares. Further, Participant agrees that the Company will have unilateral authority to amend the Plan and this RSU Agreement without Participant’s consent to the
extent necessary to comply with securities or other laws applicable to issuance of Shares. Finally, the Shares issued pursuant to this RSU Agreement will be endorsed with
appropriate legends, if any, determined by the Company.
16. Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good
faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision will be excluded from this
Agreement, (b) the balance of this Agreement will be interpreted as if such provision were so excluded and (c) the balance of this Agreement will be enforceable in
accordance with its terms.
17. Governing Law and Venue. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto will be governed,
construed, and interpreted in accordance with the laws of the State of Delaware, without giving effect to such state’s conflict of laws rules.
Any and all disputes relating to, concerning or arising from this Option Agreement, or relating to, concerning or arising from the relationship between the parties
evidenced by the Plan or this Option Agreement, will be brought and heard exclusively in the United States District Court for the District of Northern California or the San
Francisco Superior Court. Each of the parties hereby represents and agrees that such party is subject to the personal jurisdiction of said courts; hereby irrevocably consents to
the jurisdiction of such courts in any legal or equitable proceedings related to, concerning, or arising from such dispute, and waives, to the fullest extent permitted by law, any
objection which such party may now or hereafter have that the laying of the venue of any legal or equitable proceedings related to, concerning, or arising from such dispute
which is brought in such courts is improper or that such proceedings have been brought in an inconvenient forum.
18. No Rights as Employee, Director or Consultant. Nothing in this Agreement shall create a right to employment or other Service or be interpreted as forming or
amending an employment, service contract or relationship with the Company and this Agreement shall not affect in any manner whatsoever any right or power of the
Company, or a Parent, Subsidiary or Affiliate, to terminate Participant’s Service, for any reason, with or without Cause.
19. Consent to Electronic Delivery of All Plan Documents and Disclosures. By Participant’s acceptance of the Notice (whether in writing or electronically),
Participant and the Company agree that the RSUs are granted under and governed by the terms and conditions of the Plan, the Notice, and this Agreement. Participant has
reviewed the Plan, the Notice, and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Notice and Agreement, and
fully understands all provisions of the Plan, the Notice, and this Agreement. Participant hereby agrees to accept as binding, conclusive, and final all decisions or
interpretations of the Committee upon any questions relating to the Plan, the Notice, and this Agreement. Participant further agrees to notify the Company upon any change in
Participant’s residence address. By acceptance of the RSUs, Participant agrees to participate in the Plan through an on-line or electronic system established and maintained by
the Company or a third party designated by the Company and consents to the electronic delivery of the Notice, this Agreement, the Plan, account statements, Plan
prospectuses required by the U.S. Securities and Exchange Commission, U.S. financial reports of the Company, and all other documents that the Company is required to
deliver to its security holders (including, without limitation, annual reports and proxy statements), or other communications or information related to the RSUs and current or
future participation in the Plan. Electronic delivery may include the delivery of a link to the Company intranet or the internet site of a third party involved in administering the
Plan, the delivery of the document via e-mail, or such other delivery determined at the Company’s discretion. Participant acknowledges that Participant may receive from the
Company a paper copy of any documents delivered electronically at no cost if Participant contacts the Company by telephone, through a postal service, or electronic mail to
Stock Administration. Participant further acknowledges that Participant will be provided with a paper copy of any documents delivered electronically if electronic delivery
fails; similarly, Participant understands that Participant must provide on request to the Company or any designated third party a paper copy of any documents delivered
electronically if electronic delivery fails. Also, Participant understands that Participant’s consent may be revoked or changed, including any change in the electronic mail
address to which documents are delivered (if Participant has provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent
by telephone, postal service, or electronic mail to Stock Administration. Finally, Participant understands that Participant is not required to consent to electronic delivery if
local laws prohibit such consent.
20. Insider Trading Restrictions/Market Abuse Laws. Participant acknowledges that, depending on Participant’s country of residence, the broker’s country, or the
country in which the Shares are listed, Participant may be subject to insider trading restrictions and/or market abuse laws, which may affect Participant’s ability to, directly or
indirectly, acquire or sell the Shares or rights to Shares under the Plan during such times as Participant is considered to have “inside information” regarding the Company (as
defined by the laws in or regulations in the applicable jurisdiction). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders
Participant placed before possessing the inside information. Furthermore, Participant may be prohibited from (i) disclosing the inside information to any third party, including
fellow employees (other than on a “need to know” basis) and (ii) “tipping” third parties or causing them to otherwise buy or sell securities. Any restrictions under these laws
or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. Participant acknowledges that it
is Participant’s responsibility to comply with any applicable restrictions and understands that Participant should consult his or her personal legal
advisor on such matters. In addition, Participant acknowledges that he or she read the Company’s Insider Trading Policy, and agrees to comply with such policy, as it may be
amended from time to time, whenever Participant acquires or disposes of the Company’s securities.
21. Foreign Asset/Account, Exchange Control and Tax Reporting. Participant may be subject to foreign asset/account, exchange control and/or tax reporting
requirements as a result of the acquisition, holding and/or transfer of Shares or cash resulting from his or her participation in the Plan. Participant may be required to report
such accounts, assets, the balances therein, the value thereof and/or the transactions related thereto to the applicable authorities in Participant’s country and/or repatriate funds
received in connection with the Plan within certain time limits or according to specified procedures. Participant acknowledges that he or she is responsible for ensuring
compliance with any applicable foreign asset/account, exchange control and tax reporting requirements and should consult his or her personal legal and tax advisors on such
matters.
22. Code Section 409A. For purposes of this Agreement, a termination of employment will be determined consistent with the rules relating to a “separation from service”
as defined in Section 409A of the Internal Revenue Code and the regulations thereunder (“Section 409A”). Notwithstanding anything else provided herein, to the extent any
payments provided under this RSU Agreement in connection with Participant’s termination of employment constitute deferred compensation subject to Section 409A, and
Participant is deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payment will not be made or commence
until the earlier of (a) the expiration of the six (6) month period measured from Participant’s separation from service to the Employer or the Company, or (b) the date of
Participant’s death following such a separation from service; provided, however, that such deferral will only be effected to the extent required to avoid adverse tax treatment
to Participant including, without limitation, the additional tax for which Participant would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral.
To the extent any payment under this RSU Agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment will be deemed a short-
term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A. Payments pursuant to this section are intended to
constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.
23. Award Subject to Company Clawback or Recoupment. To the extent permitted by applicable law, the RSUs will be subject to clawback or recoupment pursuant to
any compensation clawback or recoupment policy adopted by the Board or required by law during the term of Participant’s employment or other Service that is applicable to
Participant. In addition to any other remedies available under such policy and applicable law, the Company may require the cancellation of Participant’s RSUs (whether
vested or unvested) and the recoupment of any gains realized with respect to Participant’s RSUs.
BY ACCEPTING THIS AWARD OF RSUS, PARTICIPANT AGREES TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN
THE PLAN.
APPENDIX
COINBASE GLOBAL, INC.
2021 EQUITY INCENTIVE PLAN
GLOBAL RESTRICTED STOCK UNIT AWARD AGREEMENT
COUNTRY SPECIFIC PROVISIONS FOR EMPLOYEES OUTSIDE THE U.S.
Terms and Conditions
At such time as the Committee issues an RSU under the Plan to a Participant who resides and/or works outside of the United States, the Committee may adopt and include in
this Appendix additional terms and conditions that govern such RSU. This Appendix forms part of the Agreement. Any capitalized term used in this Appendix without
definition will have the meaning ascribed to it in the Notice, the Agreement or the Plan, as applicable.
If Participant is a citizen or resident of a country, or is considered resident of a country, other than the one in which Participant is currently working, or Participant transfers
employment and/or residency between countries after the Date of Grant, the Company will, in its sole discretion, determine to what extent the additional terms and conditions
included herein will apply to Participant under these circumstances.
Notifications
This Appendix also includes information relating to exchange control, securities laws, foreign asset/account reporting and other issues of which Participant should be aware
with respect to Participant’s participation in the Plan. The information is based on the securities, exchange control, foreign asset/account reporting and other laws in effect in
the respective countries as of [●]. Such laws are complex and change frequently. As a result, Participant should not rely on the information herein as the only source of
information relating to the consequences of Participant’s participation in the Plan because the information may be out of date at the time that Participant vests in the RSUs,
sells Shares acquired under the Plan or takes any other action in connection with the Plan.
In addition, the information is general in nature and may not apply to Participant’s particular situation, and the Company is not in a position to assure Participant of any
particular result. Accordingly, Participant should seek appropriate professional advice as to how the relevant laws in Participant’s country may apply to Participant’s situation.
Finally, if Participant is a citizen or resident of a country, or is considered resident of a country, other than the one in which Participant is currently working and/or residing, or
Participant transfers employment and/or residency after the Date of Grant, the information contained herein may not apply to Participant in the same manner.
Country-Specific Terms
COINBASE GLOBAL, INC.
2021 EQUITY INCENTIVE PLAN
GLOBAL NOTICE OF PERFORMANCE STOCK UNIT AWARD
You (the “Participant”) have been granted an award of Performance Stock Units (“PSUs”) under the Coinbase Global, Inc. (the “Company”) 2021 Equity Incentive Plan (the
“Plan”) subject to the terms and conditions of the Plan, this Global Notice of Performance Stock Unit Award (this “Notice”), and the attached Global Performance Stock Unit
Award Agreement (the “Agreement”), including any applicable country-specific provisions in the appendix attached hereto (the “Appendix”), which constitutes part of the
Agreement.
Unless otherwise defined herein, the terms defined in the Plan will have the same meanings in this Notice and the electronic representation of this Notice established and
maintained by the Company or a third party designated by the Company.
Name:
Address:
Grant Number:
Number of PSUs:
Date of Grant:
Vesting Commencement Date:
Expiration Date: The earlier to occur of: (a) the date on which settlement of all PSUs granted hereunder
occurs, and (b) the tenth anniversary of the Date of Grant. This PSU expires earlier if Participant’s
Service terminates earlier, as described in the Agreement.
Vesting Schedule: Subject to the limitations set forth in this Notice, the Plan, and the Agreement, the PSUs
will vest in accordance with the following schedule: [insert applicable performance metrics and
vesting schedule]
By accepting (whether in writing, electronically or otherwise) the PSUs, Participant acknowledges and agrees to the following:
1) Participant understands that Participant’s Service is for an unspecified duration, can be terminated at any time (i.e., is “at-will”), except where otherwise prohibited by
applicable law, and that nothing in this Notice, the Agreement, or the Plan changes the nature of that relationship. Participant acknowledges that the vesting of the
PSUs pursuant to this Notice is subject to Participant’s continuing Service. To the extent permitted by applicable law, Participant agrees and acknowledges that the
Vesting Schedule may change prospectively in the event that Participant’s Service status changes between full- and part-time and/or in the event the Participant is on a
leave of absence, in accordance with Company policies relating to work schedules and vesting of Awards or as determined by the Committee.
2) This grant is made under and governed by the Plan, the Agreement, and this Notice, and this Notice is subject to the terms and conditions of the Agreement and the
Plan, both of which are incorporated herein by reference. Participant has read the Notice, the Agreement, and the Plan.
3) Participant has read the Company’s Insider Trading Policy, and agrees to comply with such policy, as it may be amended from time to time, whenever Participant
acquires or disposes of the Company’s securities.
4) By accepting the PSUs, Participant consents to electronic delivery and participation as set forth in the Agreement.
PARTICIPANT COINBASE GLOBAL, INC.
Signature: By:
Print Name: Its:
COINBASE GLOBAL, INC.
2021 EQUITY INCENTIVE PLAN
GLOBAL PERFORMANCE STOCK UNIT AWARD AGREEMENT
Unless otherwise defined in this Global Performance Stock Unit Award Agreement (this “Agreement”), any capitalized terms used herein will have the same meaning
ascribed to them in the Coinbase Global, Inc. 2021 Equity Incentive Plan (the “Plan”).
Participant has been granted Performance Stock Units (“PSUs”) subject to the terms, restrictions, and conditions of the Plan, the Notice of Performance Stock Unit
Award (the “Notice”), and this Agreement, including any applicable country-specific provisions in the appendix attached hereto (the “Appendix”), which constitutes part of
this Agreement. In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of the Notice or this Agreement, the terms and conditions
of the Plan will prevail.
1. Settlement. Settlement of PSUs shall be made in the same calendar year as the applicable date of vesting under the vesting schedule set forth in the Notice; provided,
however, that if a vesting date under the vesting schedule set forth in the Notice occurs in December, then settlement of any PSUs that vest in December shall be made within
30 days of vesting. Settlement of PSUs shall be in Shares. Settlement means the delivery to Participant of the Shares vested under the PSUs. No fractional PSUs or rights for
fractional Shares will be created pursuant to this Agreement.
2. No Stockholder Rights. Unless and until such time as Shares are issued in settlement of vested PSUs, Participant will have no ownership of the Shares allocated to
the PSUs and will have no rights to dividends or to vote such Shares.
3. Dividend Equivalents. Dividend equivalents, if any (whether in cash or Shares), will not be credited to Participant, except as permitted by the Committee.
4. Non-Transferability of PSUs. The PSUs and any interest therein will not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of in any
manner other than by will or by the laws of descent or distribution or court order or unless otherwise permitted by the Committee on a case-by-case basis.
5. Termination; Leave of Absence; Change in Status. If Participant’s Service terminates for any reason, all unvested PSUs will be forfeited to the Company
immediately, and all rights of Participant to such PSUs automatically terminate without payment of any consideration to Participant. Participant’s Service will be considered
terminated as of the date Participant is no longer providing services (regardless of the reason for such termination and whether or not later found to be invalid or in breach of
employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employment agreement, if any) and will not, subject to the laws applicable to
Participant’s Award, be extended by any notice period mandated under local laws (e.g., Service would not include a period of “garden leave” or similar period mandated
under employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employment agreement, if any). Participant acknowledges and agrees
that the Vesting Schedule may change prospectively in the event Participant’s service status changes between full- and part-time status and/or in the event Participant is on an
approved leave of absence in accordance the Company’s policies relating to work schedules and vesting of awards or as determined by the Committee. Participant
acknowledges that the vesting of the Shares pursuant to this Notice and Agreement is subject to Participant’s continued Service. In case of any dispute as to whether
termination of Service has occurred, the Committee will have sole discretion to determine whether such termination
of Service has occurred and the effective date of such termination (including whether Participant may still be considered to be providing services while on an approved leave
of absence).
6. Taxes.
(a) Responsibility for Taxes. Participant acknowledges that, to the extent permitted by applicable law, regardless of any action taken by the Company or, if
different, a Parent, Subsidiary or Affiliate employing or retaining Participant (the “Employer”), the ultimate liability for all income tax, social insurance, payroll tax, fringe
benefits tax, payment on account or other tax-related items related to Participant’s participation in the Plan and legally applicable to Participant (“Tax-Related Items”) is and
remains Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer, if any. Participant further acknowledges that the
Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the PSUs,
including, but not limited to, the grant, vesting or settlement of the PSUs and the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any
dividends, and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the PSUs to reduce or eliminate Participant’s liability for
Tax-Related Items or achieve any particular tax result. Further, if Participant is subject to Tax-Related Items in more than one jurisdiction, Participant acknowledges that the
Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
PARTICIPANT SHOULD CONSULT A TAX ADVISER APPROPRIATELY QUALIFIED IN THE COUNTRY OR COUNTRIES IN WHICH PARTICIPANT RESIDES OR IS
SUBJECT TO TAXATION.
(b) Withholding. Prior to any relevant taxable or tax withholding event, to the extent permitted by applicable law and as applicable, Participant agrees to make
arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, Participant authorizes the Company and/or the Employer, or
their respective agents, at their discretion, to satisfy any withholding obligations for Tax-Related Items by one or a combination of the following:
(i) withholding from Participant’s wages or other cash compensation paid to Participant by the Company and/or the Employer; or
(ii) withholding from proceeds of the sale of Shares acquired upon settlement of the PSUs either through a voluntary sale or through a mandatory sale arranged
by the Company (on Participant’s behalf pursuant to this authorization and without further consent);
(iii) withholding Shares to be issued upon settlement of the PSUs, provided the Company only withholds the number of Shares necessary to satisfy no more
than the maximum applicable statutory withholding amounts;
(iv) Participant’s payment of a cash amount (including by check representing readily available funds or a wire transfer); or
(v) any other arrangement approved by the Committee and permitted under applicable law;
all under such rules as may be established by the Committee and in compliance with the Company’s Insider Trading Policy and 10b5-1 Trading Plan Policy, if
applicable; provided however, that if Participant is a Section 16 officer of the Company under the Exchange Act, then the method of withholding shall be a mandatory sale
(unless the Committee (as constituted in accordance with Rule 16b-3 under the Exchange Act) shall establish an alternate method prior to the taxable or withholding event).
Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable statutory withholding rates or other
applicable withholding rates, including up to the maximum permissible statutory rate for Participant’s tax jurisdiction(s) in which case Participant will have no entitlement to
the equivalent amount in Shares and will receive a refund of any over-withheld amount in cash in accordance with applicable law. If the obligation for Tax-Related Items is
satisfied by withholding in Shares, for tax purposes, Participant is deemed to have been issued the full number of Shares subject to the vested PSUs, notwithstanding that a
number of the Shares are held back solely for the purpose of satisfying the withholding obligation for Tax-Related Items.
Finally, Participant agrees to pay to the Company and/or the Employer any amount of Tax-Related Items that the Company and/or the Employer may be required to
withhold or account for as a result of Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company has no obligation to
deliver Shares or proceeds from the sale of Shares to Participant until Participant has satisfied the obligations in connection with the Tax-Related Items as described in this
Section.
7. Nature of Grant. By accepting the PSUs, Participant acknowledges, understands and agrees that:
(a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at
any time, to the extent permitted by the Plan;
(b) the grant of the PSUs is exceptional, voluntary, and occasional, and does not create any contractual or other right to receive future grants of PSUs, or benefits
in lieu of PSUs, even if PSUs have been granted in the past;
(c) all decisions with respect to future PSUs or other grants, if any, will be at the sole discretion of the Company;
(d) Participant is voluntarily participating in the Plan;
(e) the PSUs and Participant’s participation in the Plan will not create a right to employment or be interpreted as forming or amending an employment or service
contract with the Company or the Employer and will not interfere with the ability of the Company or the Employer, as applicable, to terminate Participant’s employment or
service relationship (if any);
(f) the PSUs and the Shares subject to the PSUs, and the income and value of same, are not intended to replace any pension rights or compensation;
(g) the PSUs and the Shares subject to the PSUs, and the income and value of same, are not part of normal or expected compensation for any purpose, including,
but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement,
or welfare benefits or similar payments;
(h) unless otherwise agreed with the Company, the PSUs, and the Shares subject to the PSUs, and the income and value of same, are not granted as consideration
for, or in connection with, the service Participant may provide as a director of a Parent, Subsidiary, or Affiliate;
(i) the future value of the underlying Shares is unknown, indeterminable, and cannot be predicted with certainty;
(j) no claim or entitlement to compensation or damages will arise from forfeiture of the PSUs resulting from Participant’s termination of Service (regardless of
the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Participant is employed or the terms of
Participant’s employment agreement, if any), and in consideration of the grant of the PSUs to which Participant is otherwise not entitled, Participant irrevocably agrees never
to institute any claim against the Employer, the Company, and any Parent, Subsidiary or Affiliate; waives his or her ability, if any, to bring any such claim; and releases the
Employer, the Company, and any Parent, Subsidiary, or Affiliate from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent
jurisdiction, then, by participating in the Plan, Participant will be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents
necessary to request dismissal or withdrawal of such claim;
(k) unless otherwise provided in the Plan or by the Company in its discretion, the PSUs and the benefits evidenced by this Agreement do not create any
entitlement to have the PSUs or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any
Corporate Transaction affecting the Shares; and
(l) the following provisions apply only if Participant is providing services outside the United States:
(i) the PSUs and the Shares subject to the PSUs are not part of normal or expected compensation or salary for any purpose;
(ii) Participant acknowledges and agrees that neither the Company, the Employer nor any Parent or Subsidiary or Affiliate will be liable for any foreign
exchange rate fluctuation between Participant’s local currency and the United States Dollar that may affect the value of the PSUs or of any amounts due to Participant
pursuant to the settlement of the PSUs or the subsequent sale of any Shares acquired upon settlement.
8. No Advice Regarding Grant. The Company is not providing any tax, legal, or financial advice, nor is the Company making any recommendations regarding
Participant’s participation in the Plan, or Participant’s acquisition or sale of the underlying Shares. Participant acknowledges, understands and agrees he or she should consult
with his or her own personal tax, legal, and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
9. Data Privacy. Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Participant’s personal
data as described in this Agreement and any other PSU grant materials by and among, as applicable, the Employer, the Company and any Parent, Subsidiary or Affiliate
for the exclusive purpose of implementing, administering and managing Participant’s participation in the Plan.
Participant understands that the Company and the Employer may hold certain personal information about Participant, including, but not limited to, Participant’s
name, home address, email address and telephone number, date of birth, social insurance number, passport number or other identification number (e.g., resident
registration number), salary, nationality, job title, any shares of stock or directorships held in the Company, details of all PSUs or any other entitlement to shares of stock
awarded, canceled, exercised, vested, unvested or outstanding in Participant’s favor (“Data”), for the exclusive purpose of implementing, administering and managing
the Plan.
Participant understands that Data will be transferred to the Company’s broker, or other third party (“Online Administrator”) and its affiliated companies or such
other stock plan service provider
as may be designated by the Company from time to time that is assisting the Company with the implementation, administration and management of the Plan. Participant
understands that the recipients of Data may be located in the United States or elsewhere, and that the recipients’ country may have different data privacy laws and
protections than Participant’s country. Participant understands that if he or she resides outside the United States, he or she may request a list with the names and
addresses of any potential recipients of Data by contacting his or her local human resources representative. Participant authorizes the Company, the Company’s broker,
or such other stock plan service provider as may be designated by the Company from time to time, and any other possible recipients that may assist the Company
(presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer Data, in electronic or other form, for the
sole purpose of implementing, administering and managing his or her participation in the Plan. Participant understands that Data will be held only as long as is
necessary to implement, administer and manage Participant’s participation in the Plan. Participant understands if he or she resides outside the United States, he or she
may, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents
herein, in any case without cost, by contacting his or her local human resources representative. Further, Participant understands that he or she is providing the consents
herein on a purely voluntary basis. If Participant does not consent, or if Participant later seeks to revoke his or her consent, his or her employment status or service with
the Employer will not be affected; the only consequence of refusing or withdrawing Participant’s consent is that the Company would not be able to grant PSUs or other
equity awards to Participant or administer or maintain such awards. Therefore, Participant understands that refusing or withdrawing his or her consent may affect
Participant’s ability to participate in the Plan. For more information on the consequences of Participant’s refusal to consent or withdrawal of consent, Participant
understands that he or she may contact his or her local human resources representative.
Finally, upon request of the Company or the Employer, Participant agrees to provide an executed data privacy consent form (or any other agreements or
consents) that the Company or the Employer may deem necessary to obtain from Participant for the purpose of administering Participant’s participation in the Plan in
compliance with the data privacy laws in Participant’s country, either now or in the future. Participant understands and agrees that Participant will not be able to
participate in the Plan if Participant fails to provide any such consent or agreement requested by the Company and/or the Employer.
10. Language. Participant acknowledges that he or she is sufficiently proficient in English to understand the terms and conditions of this Agreement. Furthermore, if
Participant has received this Agreement or any other document related to the PSU and/or the Plan translated into a language other than English and if the meaning of the
translated version is different than the English version, the English version will control.
11. Appendix. Notwithstanding any provisions in this Agreement, the PSUs will be subject to any special terms and conditions set forth in any appendix to this
Agreement for Participant’s country. Moreover, if Participant relocates to one of the countries included in the Appendix, the special terms and conditions for such country will
apply to Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The
Appendix constitutes part of this Agreement.
12. Imposition of Other Requirements. The Company reserves the right to impose other requirements on Participant’s participation in the Plan, on the PSUs and on any
Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative
reasons, and to require Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
13. Acknowledgement. The Company and Participant agree that the PSUs are granted under and governed by the Notice, this Agreement, and the Plan (incorporated
herein by reference). Participant: (a) acknowledges receipt of a copy of the Plan and the Plan prospectus, (b) represents that Participant has carefully read and is familiar with
their provisions, and (c) hereby accepts the PSUs subject to all of the terms and conditions set forth herein and those set forth in the Plan and the Notice.
14. Entire Agreement; Enforcement of Rights. This Agreement, the Plan, and the Notice constitute the entire agreement and understanding of the parties relating to the
subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments, or negotiations concerning the purchase of the Shares hereunder
are superseded. No adverse modification of or adverse amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing
and signed by the parties to this Agreement (which writing and signing may be electronic). The failure by either party to enforce any rights under this Agreement will not be
construed as a waiver of any rights of such party.
15. Compliance with Laws and Regulations. The issuance of Shares and the sale of Shares will be subject to and conditioned upon compliance by the Company and
Participant with all applicable state, federal, local and foreign laws and regulations and with all applicable requirements of any stock exchange or automated quotation system
on which the Company’s Shares may be listed or quoted at the time of such issuance or transfer. Participant understands that the Company is under no obligation to register or
qualify the Common Stock with any state, federal, or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale
of the Shares. Further, Participant agrees that the Company will have unilateral authority to amend the Plan and this PSU Agreement without Participant’s consent to the
extent necessary to comply with securities or other laws applicable to issuance of Shares. Finally, the Shares issued pursuant to this PSU Agreement will be endorsed with
appropriate legends, if any, determined by the Company.
16. Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good
faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision will be excluded from this
Agreement, (b) the balance of this Agreement will be interpreted as if such provision were so excluded and (c) the balance of this Agreement will be enforceable in
accordance with its terms.
17. Governing Law and Venue. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto will be governed,
construed, and interpreted in accordance with the laws of the State of Delaware, without giving effect to such state’s conflict of laws rules.
Any and all disputes relating to, concerning or arising from this Option Agreement, or relating to, concerning or arising from the relationship between the parties
evidenced by the Plan or this Option Agreement, will be brought and heard exclusively in the United States District Court for the District of Northern California or the San
Francisco Superior Court. Each of the parties hereby represents and agrees that such party is subject to the personal jurisdiction of said courts; hereby irrevocably consents to
the jurisdiction of such courts in any legal or equitable proceedings related to, concerning, or arising from such dispute, and waives, to the fullest extent permitted by law, any
objection which such party may now or hereafter have that the laying of the venue of any legal or equitable proceedings related to, concerning, or arising from such dispute
which is brought in such courts is improper or that such proceedings have been brought in an inconvenient forum.
18. No Rights as Employee, Director or Consultant. Nothing in this Agreement shall create a right to employment or other Service or be interpreted as forming or
amending an employment, service contract or relationship with the Company and this Agreement shall not affect in any manner whatsoever any right or power of the
Company, or a Parent, Subsidiary or Affiliate, to terminate Participant’s Service, for any reason, with or without Cause.
19. Consent to Electronic Delivery of All Plan Documents and Disclosures. By Participant’s acceptance of the Notice (whether in writing or electronically),
Participant and the Company agree that the PSUs are granted under and governed by the terms and conditions of the Plan, the Notice, and this Agreement. Participant has
reviewed the Plan, the Notice, and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Notice and Agreement, and
fully understands all provisions of the Plan, the Notice, and this Agreement. Participant hereby agrees to accept as binding, conclusive, and final all decisions or
interpretations of the Committee upon any questions relating to the Plan, the Notice, and this Agreement. Participant further agrees to notify the Company upon any change in
Participant’s residence address. By acceptance of the PSUs, Participant agrees to participate in the Plan through an on-line or electronic system established and maintained by
the Company or a third party designated by the Company and consents to the electronic delivery of the Notice, this Agreement, the Plan, account statements, Plan
prospectuses required by the U.S. Securities and Exchange Commission, U.S. financial reports of the Company, and all other documents that the Company is required to
deliver to its security holders (including, without limitation, annual reports and proxy statements), or other communications or information related to the PSUs and current or
future participation in the Plan. Electronic delivery may include the delivery of a link to the Company intranet or the internet site of a third party involved in administering the
Plan, the delivery of the document via e-mail, or such other delivery determined at the Company’s discretion. Participant acknowledges that Participant may receive from the
Company a paper copy of any documents delivered electronically at no cost if Participant contacts the Company by telephone, through a postal service, or electronic mail to
Stock Administration. Participant further acknowledges that Participant will be provided with a paper copy of any documents delivered electronically if electronic delivery
fails; similarly, Participant understands that Participant must provide on request to the Company or any designated third party a paper copy of any documents delivered
electronically if electronic delivery fails. Also, Participant understands that Participant’s consent may be revoked or changed, including any change in the electronic mail
address to which documents are delivered (if Participant has provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent
by telephone, postal service, or electronic mail to Stock Administration. Finally, Participant understands that Participant is not required to consent to electronic delivery if
local laws prohibit such consent.
20. Insider Trading Restrictions/Market Abuse Laws. Participant acknowledges that, depending on Participant’s country of residence, the broker’s country, or the
country in which the Shares are listed, Participant may be subject to insider trading restrictions and/or market abuse laws, which may affect Participant’s ability to, directly or
indirectly, acquire or sell the Shares or rights to Shares under the Plan during such times as Participant is considered to have “inside information” regarding the Company (as
defined by the laws in or regulations in the applicable jurisdiction). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders
Participant placed before possessing the inside information. Furthermore, Participant may be prohibited from (i) disclosing the inside information to any third party, including
fellow employees (other than on a “need to know” basis) and (ii) “tipping” third parties or causing them to otherwise buy or sell securities. Any restrictions under these laws
or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. Participant acknowledges that it
is Participant’s responsibility to comply with any applicable restrictions and understands that Participant should consult his or her personal legal
advisor on such matters. In addition, Participant acknowledges that he or she read the Company’s Insider Trading Policy, and agrees to comply with such policy, as it may be
amended from time to time, whenever Participant acquires or disposes of the Company’s securities.
21. Foreign Asset/Account, Exchange Control and Tax Reporting. Participant may be subject to foreign asset/account, exchange control and/or tax reporting
requirements as a result of the acquisition, holding and/or transfer of Shares or cash resulting from his or her participation in the Plan. Participant may be required to report
such accounts, assets, the balances therein, the value thereof and/or the transactions related thereto to the applicable authorities in Participant’s country and/or repatriate funds
received in connection with the Plan within certain time limits or according to specified procedures. Participant acknowledges that he or she is responsible for ensuring
compliance with any applicable foreign asset/account, exchange control and tax reporting requirements and should consult his or her personal legal and tax advisors on such
matters.
22. Code Section 409A. For purposes of this Agreement, a termination of employment will be determined consistent with the rules relating to a “separation from service”
as defined in Section 409A of the Internal Revenue Code and the regulations thereunder (“Section 409A”). Notwithstanding anything else provided herein, to the extent any
payments provided under this PSU Agreement in connection with Participant’s termination of employment constitute deferred compensation subject to Section 409A, and
Participant is deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payment will not be made or commence
until the earlier of (a) the expiration of the six (6) month period measured from Participant’s separation from service to the Employer or the Company, or (b) the date of
Participant’s death following such a separation from service; provided, however, that such deferral will only be effected to the extent required to avoid adverse tax treatment
to Participant including, without limitation, the additional tax for which Participant would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral.
To the extent any payment under this PSU Agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment will be deemed a short-
term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A. Payments pursuant to this section are intended to
constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.
23. Award Subject to Company Clawback or Recoupment. To the extent permitted by applicable law, the PSUs will be subject to clawback or recoupment pursuant to
any compensation clawback or recoupment policy adopted by the Board or required by law during the term of Participant’s employment or other Service that is applicable to
Participant. In addition to any other remedies available under such policy and applicable law, the Company may require the cancellation of Participant’s PSUs (whether vested
or unvested) and the recoupment of any gains realized with respect to Participant’s PSUs.
BY ACCEPTING THIS AWARD OF PSUS, PARTICIPANT AGREES TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN
THE PLAN.
APPENDIX
COINBASE GLOBAL, INC.
2021 EQUITY INCENTIVE PLAN
GLOBAL PERFORMANCE STOCK UNIT AWARD AGREEMENT
COUNTRY SPECIFIC PROVISIONS FOR EMPLOYEES OUTSIDE THE U.S.
Terms and Conditions
At such time as the Committee issues an PSU under the Plan to a Participant who resides and/or works outside of the United States, the Committee may adopt and include in
this Appendix additional terms and conditions that govern such PSU. This Appendix forms part of the Agreement. Any capitalized term used in this Appendix without
definition will have the meaning ascribed to it in the Notice, the Agreement or the Plan, as applicable.
If Participant is a citizen or resident of a country, or is considered resident of a country, other than the one in which Participant is currently working, or Participant transfers
employment and/or residency between countries after the Date of Grant, the Company will, in its sole discretion, determine to what extent the additional terms and conditions
included herein will apply to Participant under these circumstances.
Notifications
This Appendix also includes information relating to exchange control, securities laws, foreign asset/account reporting and other issues of which Participant should be aware
with respect to Participant’s participation in the Plan. The information is based on the securities, exchange control, foreign asset/account reporting and other laws in effect in
the respective countries as of [●]. Such laws are complex and change frequently. As a result, Participant should not rely on the information herein as the only source of
information relating to the consequences of Participant’s participation in the Plan because the information may be out of date at the time that Participant vests in the PSUs,
sells Shares acquired under the Plan or takes any other action in connection with the Plan.
In addition, the information is general in nature and may not apply to Participant’s particular situation, and the Company is not in a position to assure Participant of any
particular result. Accordingly, Participant should seek appropriate professional advice as to how the relevant laws in Participant’s country may apply to Participant’s situation.
Finally, if Participant is a citizen or resident of a country, or is considered resident of a country, other than the one in which Participant is currently working and/or residing, or
Participant transfers employment and/or residency after the Date of Grant, the information contained herein may not apply to Participant in the same manner.
Country-Specific Terms
NOTICE OF RESTRICTED STOCK AWARD
COINBASE GLOBAL, INC.
2021 EQUITY INCENTIVE PLAN
Unless otherwise defined herein, the terms defined in the Coinbase Global, Inc. (the “Company”) 2021 Equity Incentive Plan (the “Plan”) shall have the same meanings in
this Notice of Restricted Stock Award (the “Notice”) and the attached Restricted Stock Agreement (the “Restricted Stock Agreement”).
You have been granted the opportunity to purchase Shares that are subject to restrictions (the “Restricted Shares”) and the terms and conditions of the Plan, this Notice and
the attached Restricted Stock Agreement.
Name of Purchaser:
Total Number of Restricted Shares Awarded:
Fair Market Value per Restricted Share:
$
Total Fair Market Value of Award:
$
Purchase Price per Restricted Share:
$
Total Purchase Price for all Restricted Shares:
$
Date of Grant:
Vesting Commencement Date:
Vesting Schedule:
[Sample vesting language:] [Subject to the limitations set forth in this Notice, the Plan
and the Restricted Stock Agreement, 25% of the total number of Restricted Shares will
vest when you complete 12 months of continuous Service from the Vesting
Commencement Date. Thereafter, an additional 1/16 of the total number of Restricted
Shares will vest when you complete each quarter of Service.] [Note: actual vesting
language to match vesting schedule approved by the Board or Committee]
This Notice may be executed and delivered electronically, whether via the Company’s intranet or the Internet site of a third party or via email or any other means of electronic
delivery specified by the Company. By purchasing the Restricted Shares, you consent to the electronic delivery and acceptance as further set forth in the Restricted Stock
Agreement. You acknowledge that the vesting of the Restricted Shares pursuant to this Notice is earned only by continuing Service, but you understand that your employment
or consulting relationship with the Company or a Parent or Subsidiary is for an unspecified duration and can be terminated at any time, and that nothing in this Notice, the
Restricted Stock Agreement or the Plan changes the nature of that relationship. By accepting the Restricted Shares, you and the Company agree that the Restricted Shares are
granted under and governed by the terms and conditions of the Plan, this Notice and the Restricted Stock Agreement. If the Restricted Stock
th
Agreement is not executed by you within thirty (30) days of the Company’s delivery of this Agreement to you, then this award shall be void.
PARTICIPANT: COINBASE GLOBAL, INC.
Signature By:
Date: Its:
RESTRICTED STOCK AGREEMENT
COINBASE GLOBAL, INC.
2021 EQUITY INCENTIVE PLAN
THIS RESTRICTED STOCK AGREEMENT (this “Agreement”) is made by and between Coinbase Global, Inc., a Delaware corporation (the “Company”), and the
purchaser (“you”) named on the Notice of Restricted Stock Award (the “Notice”) pursuant to the Company’s 2021 Equity Incentive Plan (the “Plan”) as of the date you have
executed the Notice. Unless otherwise defined herein, the terms defined in the Plan shall have the same meanings in this Agreement.
1. Sale of Stock. Subject to the terms and conditions of this Agreement, on the Purchase Date (as defined below) the Company will issue and sell to you, and you
agree to purchase from the Company, the number of Restricted Shares shown on the Notice at the Purchase Price per Restricted Share set forth on the Notice. The term
“Restricted Shares” refers to the purchased Restricted Shares and all securities received in replacement of or in connection with the Restricted Shares pursuant to stock
dividends or splits, all securities received in replacement of the Restricted Shares in a recapitalization, merger, reorganization, exchange or the like, and all new, substituted or
additional securities or other properties to which you are entitled by reason of your ownership of the Restricted Shares.
2. Time and Place of Purchase. The purchase and sale of the Restricted Shares under this Agreement shall occur at the principal office of the Company
simultaneously with the execution of this Agreement by the parties, or on such other date as the Company and you shall agree (the “Purchase Date”). On the Purchase Date,
the Company will issue a stock certificate registered in your name, or uncertificated shares designated for you in book entry form on the records of the Company’s transfer
agent, representing the Restricted Shares to be purchased by you against payment of the purchase price therefor by you by (a) check or wire transfer made payable to the
Company, (b) cancellation of indebtedness of the Company to you, (c) your personal Services that the Committee has determined have already been or will be rendered to the
Company, or (d) a combination of the foregoing.
3. Restrictions on Resale. By signing this Agreement, you agree not to sell any Restricted Shares acquired pursuant to the Plan and this Agreement at a time
when applicable laws, regulations or Company or underwriter trading policies prohibit exercise or sale. This restriction will apply as long as you are providing Service to the
Company or a Subsidiary of the Company.
4. Company’s Repurchase Right for Unvested Shares. The Company, or (subject to Section 4.4) its assignee, shall have the right (but not the obligation) to
repurchase a portion of the Restricted Shares that are Unvested Shares (as defined below) at the times and on the terms and conditions set forth in this Section (the
“Repurchase Right”) if your Service terminates for any reason, or no reason, including with-out limitation, death, Disability (as defined in the Plan), voluntary resignation or
termination by the Company with or without Cause.
4.1 Termination of Service. In case of any dispute as to whether your Service has terminated, the Committee shall have discretion to determine in good
faith whether your Service has been terminated and the effective date of your termination of Service.
4.2 Vested and Unvested Shares. Restricted Shares that are vested pursuant to the Vesting Schedule set forth in the Notice are “Vested Shares.”
Restricted Shares that are not vested pursuant to the Vesting Schedule set forth in the Notice are “Unvested Shares.” On the Date of Grant, all of the Restricted Shares will be
Unvested Shares. No fractional Restricted Shares shall be issued. No Restricted Shares will become Vested Shares after your termination of Service unless as set forth in the
Vesting Schedule in the Notice of Grant. The number of the Restricted Shares that are Vested Shares or Unvested Shares will be proportionally adjusted to reflect any stock
split, reverse stock split or similar change in the capital structure of the Company as set forth in Section 2.6 of the Plan occurring after the Date of Grant.
4.3 Exercise of Repurchase Right. Unless the Company provides written notice to you within 90 days from the date of termination of your Service to the
Company that the Company does not intend to exercise its Repurchase Right with respect to some or all of the Unvested Shares, the Repurchase Right shall be deemed
automatically exercised by the Company as of the 90th day following such termination, provided that the Company may notify you that it is exercising its Repurchase Right
as of a date prior to such 90th day. Unless you are otherwise notified by the Company pursuant to the preceding sentence that the Company does not intend to exercise its
Repurchase Right as to some or all of the Unvested Shares, execution of this Agreement by you constitutes written notice to you of the Company’s intention to exercise its
Repurchase Right with respect to all Unvested Shares to which such Repurchase Right applies at the time of your termination of Service. The Company, at its choice, may
satisfy its payment obligation to you with respect to exercise of the Repurchase Right by either (A) delivering a check to you or wiring funds in the amount of the purchase
price for the Unvested Shares being repurchased, or (B) in the event you are indebted to the Company, canceling an amount of such indebtedness equal to the purchase price
for the Unvested Shares being repurchased, or (C) by a combination of (A) and (B) so that the combined payment and cancellation of indebtedness equals such purchase price.
In the event of any deemed automatic exercise of the Repurchase Right by canceling an amount of such indebtedness equal to the purchase price for the Unvested Shares
being repurchased, such cancellation of indebtedness shall be deemed automatically to occur as of the date of termination of your Service unless the Company otherwise
satisfies its payment obligations. As a result of any repurchase of Unvested Shares pursuant to the Repurchase Right, the Company shall become the legal and beneficial
owner of the Unvested Shares being repurchased and shall have all rights and interest therein or related thereto, and the Company shall have the right to transfer to its own
name the number of Unvested Shares being repurchased by the Company, without further action by you.
4.4 Assignment. The Repurchase Right may be assigned by the Company in whole or in part to any persons or organization.
4.5 Additional or Exchanged Securities and Property. Subject to the provisions of Section 4.2 above, in the event of a merger or consolidation of the
Company with or into another entity, any other corporate reorganization, a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination,
reclassification or similar change in the capital structure of the Company, without consideration, any securities or other property (including cash or cash equivalents) that are
by reason of such transaction exchanged for, or distributed or issued with respect to, any Unvested Shares shall immediately be subject to the Repurchase Right. Appropriate
adjustments shall be made to the price per share to be paid for Unvested Shares upon the exercise of the Repurchase Right (by allocating such price among the Unvested
Shares and such other securities or property), provided that the aggregate purchase price payable for the Unvested Shares and all such other securities and property shall
remain the same price that was original payable under the Repurchase Right to repurchase such Unvested Shares. Subject to the provisions of Section 4.2 above, in the event
of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, the Repurchase Right may be exercised by the Company’s
successor.
5. Non-Transferability of Unvested Shares. In addition to any other limitation on transfer created by applicable securities laws or any other agreement between
the Company and you, you may not transfer any Unvested Shares, or any interest therein, unless consented to in writing by a duly authorized representative of the Company.
Any purported transfer is void and of no effect, and no purported transferee thereof will be recognized as a holder of the Unvested Shares for any purpose whatsoever. Should
such a transfer purport to occur, the Company may refuse to carry out the transfer on its books, set aside the transfer, or exercise any other legal or equitable remedy. In the
event the Company consents to a transfer of Unvested Shares, all transferees of Restricted Shares or any interest therein will receive and hold such Restricted Shares or
interest subject to the provisions of this Agreement, including, insofar as applicable, the Repurchase Right. In the event of any purchase by the Company hereunder where the
Restricted Shares or interest are held by a transferee, the transferee shall be obligated, if requested by the Company, to transfer the Restricted Shares or interest you for
consideration equal to the amount to be paid by the Company hereunder. In the event the Repurchase Right is deemed exercised by the Company, the Company may deem
any transferee to have transferred the Restricted Shares or interest to you prior to their purchase by the Company, and payment of the purchase price by the Company to such
transferee shall be deemed to satisfy your obligation to pay such transferee for such Restricted Shares or interest, and also to satisfy the Company’s obligation to pay you for
such Restricted Shares or interest.
6. Acceptance of Restrictions. Purchase of the Restricted Shares shall constitute your agreement to such restrictions and the legending of your certificates or the
notation in the Company’s direct registration system for stock issuance and transfer of such restrictions and accompanying legends set forth in Section 7.1 with respect
thereto. Notwithstanding such restrictions, however, so long as you are the holder of the Restricted Shares, or any portion thereof, he or she shall be entitled to receive all
dividends declared on and to vote the Restricted Shares and to all other rights of a stockholder with respect thereto.
7. Stop Transfer Orders.
7.1 Stop-Transfer Notices. You agree that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop
transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.
7.2 Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Restricted Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Agreement or (ii) to treat as the owner or to accord the right to vote or pay dividends to any purchaser or other transferee to whom
such Restricted Shares shall have been so transferred.
8. No Rights as Employee, Director or Consultant. You understand that your employment or consulting relationship with the Company is for an unspecified
duration, can be terminated at any time (i.e., is “at-will”), and that nothing in this Agreement changes the at-will nature of that relationship. Nothing in this Agreement shall
affect in any manner whatsoever the right or power of the Company, or a Parent, Subsidiary or Affiliate of the Company, to terminate your Service, for any reason, with or
without Cause.
9. Miscellaneous.
9.1 Acknowledgement. The Company and you agree that the Restricted Shares are granted under and governed by the Notice, this Agreement and the
provisions of the Plan (incorporated herein by reference). You: (i) acknowledge receipt of a copy of the Plan and the Plan prospectus, (ii) represent that you have carefully
read and are familiar with their provisions and the provisions of the Notice and this Agreement, and (iii) hereby accept the Restricted Shares subject to all of the terms and
conditions set forth herein and those set forth in the Plan and the Notice. You hereby agree to accept as binding, conclusive and final all decisions or interpretations of the
Committee upon any questions relating to the Plan, the Notice and the Restricted Stock Agreement.
9.2 Entire Agreement; Enforcement of Rights. This Agreement, the Plan and the Notice constitute the entire agreement and understanding of the parties
relating to the subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments or negotiations concerning the purchase of the
Restricted Shares hereunder are superseded. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless
in writing and signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights
of such party.
9.3 Compliance with Laws and Regulations. The issuance of Restricted Shares will be subject to and conditioned upon compliance by the Company and
you with all applicable state, federal and foreign laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the
Company’s common stock may be listed or quoted at the time of such issuance or transfer. The Restricted Shares issued pursuant to this Agreement shall be endorsed with
appropriate legends, if any, determined by the Company.
9.4 Governing Law; Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision
shall be excluded from this Agreement, (ii) the balance of this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of this Agreement
shall be enforceable in accordance with its terms. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law. For purposes of litigating any
dispute that may arise directly or indirectly from the Plan, the Notice and this Agreement, the parties hereby submit and consent to litigation in the exclusive jurisdiction of the
State of California and agree that any such litigation shall be conducted only in the courts of California in San Francisco County, California or the federal courts of the United
States for the Northern District of California and no other courts.
9.5 Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective counsel, if
any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against any one of the
parties hereto.
9.6 Notices. Any notice to be given under the terms of the Plan shall be addressed to the Company in care of its principal office, and any notice to be
given to you shall be addressed to you at the address maintained by the Company for such person or at such other address as you may specify in writing to the Company. Any
and all notices required or permitted to be given to a party pursuant to the provisions of this Agreement will be in writing and will be effective and deemed to provide such
party sufficient notice under this Agreement on the earliest of the following: (a) at the time of personal
delivery, if delivery is in person; (b) at the time of transmission by facsimile, addressed to the other party at its facsimile number specified herein (or hereafter modified by
subsequent notice to the parties hereto), with confirmation of receipt made by both telephone and printed confirmation sheet verifying successful transmission of the
facsimile; (c) one (1) business day after deposit with an express overnight courier for United States deliveries, or two (2) business days after such deposit for deliveries outside
of the United States, with proof of delivery from the courier requested; or (d) three (3) business days after deposit in the United States mail by certified mail (return receipt
requested) for United States deliveries. All notices for delivery outside the United States will be sent by facsimile or by express courier. All notices not delivered personally or
by facsimile will be sent with postage and/or other charges prepaid and properly addressed to the party to be notified at the address or facsimile number set forth below the
signature lines of this Agreement, or at such other address or facsimile number as such other party may designate by one of the indicated means of notice herein to the other
parties hereto. Notices to the Company will be marked “Attention: .
9.7 U.S. Tax Consequences. Unless an Election (defined below) is made, upon vesting of Restricted Shares, you will include in taxable income the
difference between the fair market value of the vesting Restricted Shares, as determined on the date of their vesting, and the price paid for the Restricted Shares. This will be
treated as ordinary income by you and will be subject to withholding by the Company when required by applicable law. In the absence of an Election, the Company shall
satisfy the withholding requirements as set forth in Section 10 below. If you make an Election, then you must, prior to making the Election, pay in cash (or cash equivalent) to
the Company an amount equal to the amount the Company is required to withhold for income and employment taxes.
10. Responsibility for Taxes. Regardless of any action the Company or, if different, your employer (the “Employer”) takes with respect to any or all income tax,
social insurance, payroll tax, fringe benefits tax, payment on account and other tax-related items related to your participation in the Plan and legally applicable to you (“Tax-
Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items is and remains your responsibility and may exceed the amount actually withheld by the
Company or the Employer. You further acknowledge that the Company and the Employer (a) make no representations or undertakings regarding the treatment of any Tax-
Related Items in connection with any aspect of the Restricted Shares purchased under this award, including the issuance of the Restricted Shares or vesting of such Restricted
Shares, the subsequent sale of Restricted Shares and the receipt of any dividends; and (b) do not commit to and are under no obligation to structure the terms of the award or
any aspect of the Restricted Shares to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result. You acknowledge that if you are subject to
Tax-Related Items in more than one jurisdiction, the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-
Related Items in more than one jurisdiction.
The Company will only recognize you as a record holder of Restricted Shares if you have paid or made, prior to any relevant taxable or tax withholding event, as
applicable, adequate arrangements satisfactory to the Company and/or the Employer to satisfy any withholding obligation the Company and/or the Employer may have for
Tax-Related Items. In this regard, you authorize the Company and/or the Employer, and their respective agents, at their discretion, to withhold all applicable Tax-Related
Items from your wages or other cash compensation paid to you by the Company and/or the Employer or by one or a combination of the following methods: (a) payment by
you to the Company or the Employer of an amount equal to the Tax-Related Items in cash, (b) having the Company withhold otherwise deliverable Restricted Shares that
would otherwise be released from the Repurchase Right when they vest having a value equal to the Tax-Related Items to be withheld, (c) delivering to the Company already-
owned Shares having a value equal to the Tax-Related Items to be withheld, (d) withholding from proceeds of the sale of the Restricted Shares either through a voluntary sale
or through a mandatory sale arranged by the
Company (on your behalf and you hereby authorize such sale pursuant to this authorization), or (e) any other arrangement approved by the Company and permissible under
applicable law; in all cases, under such rules as may be established by the Committee and in compliance with the Company’s Insider Trading Policy and 10b5-1 Trading Plan
Policy, if applicable; provided, however, that if you are a Section 16 officer of the Company under the Exchange Act, then the method of withholding shall be a mandatory
sale under (d) above (unless the Committee shall establish an alternate method prior to the taxable or withholding event). You shall pay to the Company or the Employer any
amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of your Participation in the Plan or your purchase of Restricted Shares
that cannot be satisfied by the means previously described.
Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable statutory withholding rates or other
applicable withholding rates, including up to the maximum applicable rate in which case you may receive a refund of any over-withheld amount in cash and will have no
entitlement to the Restricted Shares that would otherwise be released from the Repurchase Right when they vest. If the obligation for Tax-Related Items is satisfied by
withholding in Restricted Shares that would otherwise be released from the Repurchase Right when they vest, for tax purposes, you are deemed to have been issued the full
number of Restricted Shares, notwithstanding that a number of the Restricted Shares are held back solely for the purpose of paying the Tax-Related Items.
Finally, you acknowledge that the Company has no obligation to deliver Restricted Shares or proceeds from the sale of Restricted Shares to you or to release
Restricted Shares from the Repurchase Right when they vest until you have satisfied the obligations in connection with the Tax-Related Items as described in this Section.
11. Section 83(b) Election. You hereby acknowledge that you have been informed that, with respect to the purchase of the Restricted Shares, an election may be
filed by you with the Internal Revenue Service, within 30 days of the purchase of the Restricted Shares, electing for United States tax purposes pursuant to Section 83(b) of
the Code to be taxed currently on any difference between the purchase price of the Restricted Shares and their Fair Market Value on the date of purchase (the “Election”).
Making the Election will result in recognition of taxable income to you on the date of purchase, measured by the excess, if any, of the Fair Market Value of the Restricted
Shares over the purchase price for the Restricted Shares. Absent such an Election, taxable income will be measured and recognized by you at the time or times on which the
Company’s Repurchase Right lapses. You are strongly encouraged to seek the advice of your own tax advisors in connection with the purchase of the Restricted Shares and
the advisability of filing of the Election. YOU ACKNOWLEDGE THAT IT IS SOLELY YOUR RESPONSIBILITY, AND NOT THE COMPANY’S RESPONSIBILITY,
TO TIMELY FILE THE ELECTION UNDER SECTION 83(b) OF THE CODE, EVEN IF YOU REQUEST THE COMPANY, OR ITS REPRESENTATIVE, TO MAKE
THIS FILING ON YOUR BEHALF.
12. Consent to Electronic Delivery and Acceptance of All Plan Documents and Disclosures. By acceptance of this Restricted Stock Award, you consent to the
electronic delivery of the Notice, this Agreement, the Plan, account statements, Plan prospectuses required by the Securities and Exchange Commission, U.S. financial reports
of the Company, and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements) or
other communications or information related to the Restricted Stock Award. Electronic delivery may include the delivery of a link to a Company intranet or the internet site of
a third party involved in administering the Plan, the delivery of the document via e-mail or such other delivery determined at the Company’s discretion. You acknowledge that
you may receive from the Company a paper copy of any documents delivered electronically at no cost if you contact the Company by telephone,
through a postal service or electronic mail at [insert email]. You further acknowledge that you will be provided with a paper copy of any documents delivered electronically if
electronic delivery fails; similarly, you understand that you must provide on request to the Company or any designated third party a paper copy of any documents delivered
electronically if electronic delivery fails. You agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third
party designated by the Company. Also, you understand that your consent may be revoked or changed, including any change in the electronic mail address to which
documents are delivered (if you have provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent by telephone, postal
service or electronic mail at [insert email]. Finally, you understand that you are not required to consent to electronic delivery.
13. Award Subject to Company Clawback or Recoupment. To the extent permitted by applicable law, the Restricted Shares shall be subject to clawback or
recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or the Committee or required by law during the term of your employment or
other Service that is applicable to you. In addition to any other remedies available under such policy, applicable law may require the cancellation of your Restricted Shares
(whether vested or unvested) and the recoupment of any gains realized with respect to your Restricted Shares.
BY ACCEPTING THIS RESTRICTED STOCK AWARD, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE
PLAN.
RECEIPT
Coinbase Global, Inc. hereby acknowledges receipt of (check as applicable):
☐ A check or wire transfer in the amount of $_______________
☐ The cancellation of indebtedness in the amount of $_______________
☐ Given by _____________________ as consideration for the book entry in your name or Certificate No. -__ for ____________ shares of Common Stock of Coinbase
Global, Inc.
☐ Other method as permitted by the Plan and specifically approved by the Board or Committee, and described here:
Dated:
COINBASE GLOBAL, INC.
By:
Its:
NOTICE OF PERFORMANCE SHARES AWARD
COINBASE GLOBAL, INC.
2021 EQUITY INCENTIVE PLAN
Unless otherwise defined herein, the terms defined in the Coinbase Global, Inc. (the “Company”) 2021 Equity Incentive Plan (the “Plan”) shall have the same meanings in
this Notice of Performance Shares Award (the “Notice”) and the attached Performance Shares Award Agreement (the “Performance Shares Agreement”). You have been
granted an award of Shares (the “Performance Shares Award”) under the Plan subject to the terms and conditions of the Plan, this Notice and the attached Performance
Shares Agreement.
Name:
Address:
Number of Shares:
Date of Grant:
Fair Market Value on Date of Grant:
Vesting Commencement Date:
Vesting Schedule:
Subject to the limitations set forth in this Notice, the Plan and the
Performance Shares Agreement, the Shares will vest in accordance with the
following schedule: [INSERT VESTING SCHEDULE]
This Notice may be executed and delivered electronically, whether via the Company’s intranet or the Internet site of a third party or via email or any other means of electronic
delivery specified by the Company. By accepting the Performance Shares Award, you consent to the electronic delivery and acceptance as further set forth in the Performance
Shares Agreement. You acknowledge that the vesting of the Shares subject to the Performance Shares Award pursuant to this Notice is earned only by continuing Service and
meeting the performance factors enumerated under the Vesting Schedule above, but you understand that your employment or consulting relationship with the Company or a
Parent or Subsidiary is for an unspecified duration and can be terminated at any time, and that nothing in this Notice, the Performance Shares Agreement or the Plan changes
the nature of that relationship. By accepting the Performance Shares Award, you and the Company agree that the Performance Shares Award is granted under and governed
by the terms and conditions of the Plan, the Notice and the Performance Shares Agreement
PARTICIPANT COINBASE GLOBAL, INC.
By:
Its:
PERFORMANCE SHARES AGREEMENT
COINBASE GLOBAL, INC.
2021 EQUITY INCENTIVE PLAN
You have been granted a Performance Shares Award (“Performance Shares Award”) by Coinbase Global, Inc. (the “Company”), subject to the terms, restrictions and
conditions of the Company’s 2021 Equity Incentive Plan (the “Plan”), the Notice of Performance Shares Award (“Notice”) and this Performance Shares Agreement (this
“Agreement”).
1. Settlement. Your Performance Shares Award shall be settled in Shares and the Company’s transfer agent shall record ownership of such Shares in your name as soon
as reasonably practicable after achievement of the performance factors enumerated under the Vesting Schedule in the Notice.
2. No Stockholder Rights. Unless and until you are recorded as the holder of such Shares on the stock records of the Company and its transfer agent, you shall have no
right to dividends or to vote Shares.
3. No-Transfer. Your interest in this Performance Shares Award shall not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of by you or any
person whose interest derives from your interest.
4. Restrictions on Resale. By signing this Agreement, you agree not to sell any Shares acquired pursuant to the Plan and this Agreement at a time when applicable laws,
regulations or Company or underwriter trading policies prohibit exercise or sale. This restriction will apply as long as you are providing Service to the Company or a
Subsidiary of the Company.
5. Termination. If your Service terminates for any reason, all of your rights under the Plan, this Agreement and the Notice in respect of this Award shall immediately
terminate. In case of any dispute as to whether a termination of Service has occurred, the Committee shall have sole discretion to determine whether such termination has
occurred and the effective date of such termination.
6. Tax Consequences. YOU SHOULD CONSULT A TAX ADVISER BEFORE ACQUIRING THE SHARES IN THE JURISDICTION IN WHICH YOU ARE
SUBJECT TO TAX. Shares shall not be issued under this Agreement unless you make arrangements acceptable to the Company to pay any withholding taxes that may be due
as a result of the acquisition or vesting of Shares.
7. Responsibility for Taxes. Regardless of any action the Company or, if different, your employer (the “Employer”) takes with respect to any or all income tax, social
insurance, payroll tax, fringe benefits tax, payment on account and other tax-related items related to your participation in the Plan and legally applicable to you (“Tax-Related
Items”), you acknowledge that the ultimate liability for all Tax-Related Items is and remains your responsibility and may exceed the amount actually withheld by the
Company or the Employer. You further acknowledge that the Company and the Employer (a) make no representations or undertakings regarding the treatment of any Tax-
Related Items in connection with any aspect of the Performance Shares Award, including the grant of the Performance Shares Award, the issuance of the Shares subject to the
Performance Shares Award, the vesting of such Shares, the subsequent sale of such Shares and the receipt of any dividends; and (b) do not commit to and are under no
obligation to structure the terms of the Performance Shares Award to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result. You
acknowledge that if you are subject to Tax-Related Items in more than one jurisdiction, the Company and/or the Employer (or former employer, as applicable) may be
required to withhold or account for Tax-Related Items in more than one jurisdiction.
The Company will only recognize you as a record holder of Shares subject to the Performance Shares Award if you have paid or made, prior to any relevant taxable or
tax withholding event, as applicable, adequate arrangements satisfactory to the Company and/or the Employer to satisfy any withholding obligation the Company and/or the
Employer may have for Tax-Related Items. In this regard, you authorize the Company and/or the Employer, and their respective agents, at their discretion, to withhold all
applicable Tax-Related Items from your wages or other cash compensation paid to you by the Company and/or the Employer or by withholding from proceeds of the sale of
the Shares subject to the Performance Shares Award either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf and you hereby
authorize such sale pursuant to this authorization). The Committee may also authorize one or a combination of the following methods to satisfy Tax-Related Items: (a)
payment by you to the Company or the Employer of an amount equal to the Tax-Related Items in cash, (b) having the Company withhold Shares subject to the Performance
Shares Award that would otherwise be issued to you when they vest having a value equal to the Tax-Related Items to be withheld, (c) delivering to the Company already-
owned Shares having a value equal to the Tax-Related Items to be withheld, or (d) any other arrangement approved by the Company and permissible under applicable law; in
all cases, under such rules as may be established by the Committee and in compliance with the Company’s Insider Trading Policy and 10b5-1 Trading Plan Policy, if
applicable; provided, however, that if you are a Section 16 officer of the Company under the Exchange Act, then the method of withholding shall be a mandatory sale (unless
the Committee shall establish an alternate method prior to the taxable or withholding event). You shall pay to the Company or the Employer any amount of Tax-Related Items
that the Company or the Employer may be required to withhold as a result of your participation in the Plan or the issuance of Shares subject to this Performance Shares Award
or vesting thereof that cannot be satisfied by the means previously described.
Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable statutory withholding rates or other
applicable withholding rates, including up to the maximum applicable rate in which case you may receive a refund of any over-withheld amount in cash and will have no
entitlement to the Shares subject to the Performance Shares Award that would otherwise be released when they vest. If the obligation for Tax-Related Items is satisfied by
withholding in Shares that would otherwise be subject to release when they vest, for tax purposes, you are deemed to have been issued the full number of such Shares,
notwithstanding that a number of the such Shares are held back solely for the purpose of paying the Tax-Related Items.
Finally, you acknowledge that the Company has no obligation to deliver Shares subject to the Performance Shares Award to you until you have satisfied the
obligations in connection with the Tax-Related Items as described in this Section.
8. Acknowledgement. The Company and you agree that the Performance Shares Award is granted under and governed by the Notice, this Agreement and the provisions
of the Plan (incorporated herein by reference). You: (i) acknowledge receipt of a copy of the Plan and the Plan prospectus, (ii) represent that you have carefully read and are
familiar with their provisions and the provisions of the Notice and this Agreement, and (iii) hereby accept the Performance Shares Award subject to all of the terms and
conditions set forth herein and those set forth in the Plan and the Notice. You hereby agree to accept as binding, conclusive and final all decisions or interpretations of the
Committee upon any questions relating to the Plan, the Notice and this Agreement.
9. Entire Agreement; Enforcement of Rights. This Agreement, the Plan and the Notice constitute the entire agreement and understanding of the parties relating to the
subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments or negotiations concerning the purchase of the Shares hereunder
are superseded. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing and signed by the
parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.
10. Stop Transfer Orders.
(a) Stop-Transfer Notices. You agree that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop
transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.
(b) Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any
of the provisions of this Agreement or (ii) to treat as the owner or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall
have been so transferred.
11. Compliance with Laws and Regulations. The issuance of Shares will be subject to and conditioned upon compliance by the Company and you with all applicable
state, federal and foreign laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s common
stock may be listed or quoted at the time of such issuance or transfer. The Shares issued pursuant to this Agreement shall be endorsed with appropriate legends, if any,
determined by the Company.
12. Governing Law; Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of this Agreement shall be
enforceable in accordance with its terms. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law. For purposes of litigating any dispute
that may arise directly or indirectly from the Plan, the Notice and this Agreement, the parties hereby submit and consent to litigation in the exclusive jurisdiction of the State
of California and agree that any such litigation shall be conducted only in the courts of California in San Francisco County, California or the federal courts of the United
States for the Northern District of California and no other courts.
13. No Rights as Employee, Director or Consultant. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent,
Subsidiary or Affiliate of the Company, to terminate your Service, for any reason, with or without Cause.
14. Consent to Electronic Delivery of All Plan Documents and Disclosures. By acceptance of this Performance Shares Award, you consent to the electronic delivery of
the Notice, this Agreement, the Plan, account statements, Plan prospectuses required by the Securities and Exchange Commission, U.S. financial reports of the Company, and
all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements) or other
communications or information related to the Performance Shares Award. Electronic delivery may
include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such
other delivery determined at the Company’s discretion. You acknowledge that you may receive from the Company a paper copy of any documents delivered electronically at
no cost if you contact the Company by telephone, through a postal service or electronic mail at [insert email]. You further acknowledge that you will be provided with a paper
copy of any documents delivered electronically if electronic delivery fails; similarly, you understand that you must provide on request to the Company or any designated third
party a paper copy of any documents delivered electronically if electronic delivery fails. You agree to participate in the Plan through an on-line or electronic system
established and maintained by the Company or a third party designated by the Company. Also, you understand that your consent may be revoked or changed, including any
change in the electronic mail address to which documents are delivered (if you have provided an electronic mail address), at any time by notifying the Company of such
revised or revoked consent by telephone, postal service or electronic mail at [insert email]. Finally, you understand that you are not required to consent to electronic delivery.
15. Award Subject to Company Clawback or Recoupment. To the extent permitted by applicable law, Performance Shares Award shall be subject to clawback or
recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or the Committee or required by law during the term of your employment or
other Service that is applicable to you. In addition to any other remedies available under such policy, applicable law may require the cancellation of your Performance Shares
Award (whether vested or unvested) and the recoupment of any gains realized with respect to your Performance Shares Award.
BY ACCEPTING THE PERFORMANCE SHARES AWARD, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE
PLAN.
NOTICE OF STOCK APPRECIATION RIGHT AWARD
COINBASE GLOBAL, INC.
2021 EQUITY INCENTIVE PLAN
Unless otherwise defined herein, the terms defined in the Coinbase Global, Inc. (the “Company”) 2021 Equity Incentive Plan (the “Plan”) shall have the same meanings in
this Notice of Stock Appreciation Right Award (the “Notice of Grant”) and the attached Stock Appreciation Right Agreement (the “SAR Agreement”).
You have been granted an award of Stock Appreciation Rights (the “SAR”) of the Company under the Plan subject to the terms and conditions of the Plan, this Notice of
Grant and the SAR Agreement.
Name:
Address:
Date of Grant:
Vesting Commencement Date:
Exercise Price:
Total Number of Shares:
Expiration Date:
Vesting Schedule: [Sample vesting language:] [The SAR becomes vested and exercisable with respect to the first 25% of the Shares subject to the
SAR when you complete 12 months of continuous Service from the Vesting Commencement Date. Thereafter, the SAR becomes
vested and exercisable with respect to an additional 1/16 of the Shares subject to the SAR when you complete each quarter of
Service.] [Note: actual vesting language to match vesting schedule approved by the Board or Committee]
This Notice of Grant may be executed and delivered electronically, whether via the Company’s intranet or the Internet site of a third party or via email or any other means of
electronic delivery specified by the Company. By accepting the SAR, you consent to the electronic delivery and acceptance as further set forth in the SAR Agreement. You
acknowledge that the vesting of the SAR pursuant to this Notice of Grant is earned only by continuing Service, but you understand that your employment or consulting
relationship with the Company or a Parent or Subsidiary is for an unspecified duration and can be terminated at any time and that nothing in this Notice of Grant, the SAR
Agreement or the Plan changes the nature of that relationship. By accepting the SAR, you and the Company agree that the SAR is granted under and governed by the terms
and conditions of the Plan, the Notice of Grant and the SAR Agreement.
th
PARTICIPANT: COINBASE GLOBAL, INC.
By:
Its:
STOCK APPRECIATION RIGHT AWARD AGREEMENT
COINBASE GLOBAL, INC.
2021 EQUITY INCENTIVE PLAN
You have been granted an award of Stock Appreciation Rights (the “SAR”) by Coinbase Global, Inc. (the “Company”) under the Company’s 2021 Equity Incentive Plan (the
“Plan”), subject to the terms and conditions of the Plan, the Notice of Stock Appreciation Right Award (the “Notice of Grant”), and this Stock Appreciation Right Agreement
(the “Agreement”).
1. Grant of SAR. You have been granted a SAR for the number of Shares set forth in the Notice of Grant with the Exercise Price set forth in the Notice of
Grant. In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of the Plan shall
prevail.
2. Termination Period.
(a) General Rule. If your Service terminates for any reason except death or Disability, and other than for Cause, then this SAR will expire at the close of
business at Company headquarters on the date three months after your termination of Service (subject to the expiration detailed in Section 5 or as provided in the Plan). In no
event shall this SAR be exercised later than the Expiration Date set forth in the Notice of Grant. If your Service is terminated for Cause, this SAR will expire upon the date of
such termination. The Company determines when your Service terminates for all purposes under this Agreement.
You acknowledge and agree that the vesting schedule set forth in the Notice of Grant may change prospectively in the event that your service status changes
between full and part-time status in accordance with Company policies relating to work schedules and vesting of awards. You acknowledge that the vesting of the SARs
pursuant to this Agreement is earned only by continuing Service.
(b) Death; Disability. If you die before your Service terminates (or you die within three months of your termination of Service other than for Cause), then
this SAR will expire at the close of business at Company headquarters on the date 12 months after the date of death (subject to the expiration detailed in Section 5 or as
provided in the Plan). If your Service terminates because of your Disability, then this SAR will expire at the close of business at Company headquarters on the date 12 months
after your termination date (subject to the expiration detailed in Section 5 or as provided in the Plan).
(c) No Notice. You are responsible for keeping track of these exercise periods following your termination of Service for any reason. The Company will
not provide further notice of such periods. In no event shall this SAR be exercised later than the Expiration Date set forth in the Notice of Grant.
3. Exercise of SAR.
(a) Right to Exercise. Subject to the applicable provisions of the Plan and this Agreement, this SAR is exercisable during its term in accordance with the
Vesting Schedule set forth in the Notice of Grant and the applicable provisions of the Plan and this Agreement. In the event of your death, Disability, or other cessation of
Service, the exercisability of the SAR is governed by the applicable provisions of the Plan, the Notice of Grant and this Agreement. This SAR may not be exercised for a
fraction of a Share.
(b) Method of Exercise. This SAR is exercisable by delivery of an exercise notice in a form specified by the Company (the “Exercise Notice”), which
shall state the election to exercise the SAR, the number of Shares in respect of which the SAR is being exercised, and such other representations and agreements as may be
required by the Company pursuant to the provisions of the Plan. The Exercise Notice shall be delivered in person, by mail, via electronic mail or facsimile or by other
authorized method to the Secretary of the Company or other person designated by the Company. This SAR shall be deemed to be exercised upon receipt by the Company of a
fully executed Exercise Notice and any applicable withholding of Tax-Related Items that are required to be withheld as detailed in Section 7 below.
(c) No Shares shall be issued pursuant to the exercise of this SAR unless such issuance and exercise complies with all relevant provisions of law and the
requirements of any stock exchange or quotation service upon which the Shares are then listed. Assuming such compliance, for income tax purposes the exercised Shares shall
be considered transferred to you on the date the SAR is exercised with respect to such exercised Shares.
4. Non-Transferability of SAR. This SAR may not be transferred in any manner other than by will or by the laws of descent or distribution or court order and
may be exercised during your lifetime only by you unless otherwise permitted by the Committee on a case-by-case basis. The terms of the Plan and this Agreement shall be
binding upon your executors, administrators, heirs, successors and assigns.
5. Term of SAR. This SAR shall in any event expire on the Expiration Date set forth in the Notice of Grant, which date is ten years after the Date of Grant. You
are responsible for keeping track of the Expiration Date. The Company is not obligated to provide notice of the Expiration Date and you should not depend on the Company
providing any such notice (even if such notices have been provided in the past or are provided in some but not all circumstances).
6. Tax Consequences. You should consult a tax adviser for tax consequences relating to this SAR in the jurisdiction in which you are subject to tax. YOU
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS SAR OR DISPOSING OF THE SHARES. You will not be allowed to exercise this SAR unless you
make arrangements acceptable to the Company to pay Tax-Related Items that are required to be withheld as further described in Section 7 below.
7. Responsibility for Taxes. Regardless of any action the Company or, if different, your employer (the “Employer”) takes with respect to any or all income tax,
social insurance, payroll tax, fringe benefits tax, payment on account and other tax-related items related to your participation in the Plan and legally applicable to you (“Tax-
Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items is and remains your responsibility and may exceed the amount actually withheld by the
Company or the Employer. You further acknowledge that the Company and the Employer (a) make no representations or undertakings regarding the treatment of any Tax-
Related Items in connection with any aspect of this SAR, including the grant, vesting or exercise of this SAR, the subsequent sale of Shares
acquired pursuant to such exercise and the receipt of any dividends; and (b) do not commit to and are under no obligation to structure the terms of the grant or any aspect of
the SAR to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result. You acknowledge that if you are subject to Tax-Related Items in more
than one jurisdiction, the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one
jurisdiction.
Prior to any relevant taxable or tax withholding event, as applicable, you shall pay or make adequate arrangements satisfactory to the Company and/or the Employer
to satisfy any withholding obligation the Company and/or the Employer may have for Tax-Related Items. In this regard, you authorize the Company and/or the Employer, and
their respective agents, at their discretion, to withhold all applicable Tax-Related Items from your wages or other cash compensation paid to you by the Company and/or the
Employer or by one or a combination of the following methods: (a) payment by you to the Company or the Employer of an amount equal to the Tax-Related Items in cash, (b)
having the Company withhold otherwise deliverable cash or Shares having a value equal to the Tax-Related Items to be withheld, (c) delivering to the Company already-
owned Shares having a value equal to the Tax-Related Items to be withheld, (d) withholding from proceeds of the sale of the Shares either through a voluntary sale or through
a mandatory sale arranged by the Company (on your behalf and you hereby authorize such sale pursuant to this authorization), or (e) any other arrangement approved by the
Company and permissible under applicable law; in all cases, under such rules as may be established by the Committee and in compliance with the Company’s Insider Trading
Policy and 10b5-1 Trading Plan Policy, if applicable; provided, however, that if you are a Section 16 officer of the Company under the Exchange Act, then the method of
withholding shall be a mandatory sale under (d) above (unless the Committee shall establish an alternate method prior to the taxable or withholding event). You shall pay to
the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of your participation in the Plan or
your issuance of Shares upon exercise of the SARs that cannot be satisfied by the means previously described.
Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable statutory withholding rates or other
applicable withholding rates, including up to the maximum applicable rate in which case you may receive a refund of any over-withheld amount in cash and will have no
entitlement to the equivalent in Shares. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, you are deemed to have been issued the
full number of Shares subject to the vested SARs, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items.
Finally, you acknowledge that the Company has no obligation to deliver Shares or proceeds from the sale of Shares to you until you have satisfied the obligations in
connection with the Tax-Related Items as described in this Section.
8. Acknowledgement. The Company and you agree that the SAR is granted under and governed by the Notice of Grant, this Agreement and the provisions of
the Plan (incorporated herein by reference). You: (i) acknowledge receipt of a copy of the Plan and the Plan prospectus, (ii) represent that you have carefully read and are
familiar with their provisions and the provisions of the Notice of Grant and this Agreement, and (iii) hereby accept the SAR subject to all of the terms and conditions set forth
in this SAR Agreement and those set forth in the Plan and the Notice of Grant. You hereby agree to accept as binding, conclusive and final all decisions or interpretations of
the Committee upon any questions relating to the Plan, the Notice of Grant and the SAR Agreement.
9. Entire Agreement; Enforcement of Rights. This Agreement, the Plan and the Notice of Grant constitute the entire agreement and understanding of the
parties relating to the subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments or negotiations concerning this SAR are
superseded. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing and signed by the
parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.
10. Compliance with Laws and Regulations. The issuance of Shares will be subject to and conditioned upon compliance by the Company and you with all
applicable state, federal and foreign laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s
common stock may be listed or quoted at the time of such issuance or transfer. The Shares issued pursuant to this Agreement shall be endorsed with appropriate legends, if
any, determined by the Company.
11. Governing Law; Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of this Agreement shall be
enforceable in accordance with its terms. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law. For purposes of litigating any dispute
that may arise directly or indirectly from the Plan, the Notice of Grant and this Agreement, the parties hereby submit and consent to litigation in the exclusive jurisdiction of
the State of California and agree that any such litigation shall be conducted only in the courts of California in San Francisco County, California or the federal courts of the
United States for the Northern District of California and no other courts.
12. No Rights as Employee, Director or Consultant. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a
Parent, Subsidiary or Affiliate of the Company, to terminate your Service, for any reason, with or without Cause.
13. Consent to Electronic Delivery and Acceptance of All Plan Documents and Disclosures. By your acceptance of this SAR, you consent to the electronic
delivery of the Notice of Grant, this Agreement, the Plan, account statements, Plan prospectuses required by the U.S. Securities and Exchange Commission, U.S. financial
reports of the Company, and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy
statements) or other communications or information related to the SAR. Electronic delivery may include the delivery of a link to a Company intranet or the internet site of a
third party involved in administering the Plan, the delivery of the document via e-mail or such other delivery determined at the Company’s discretion. You acknowledge that
you may receive from the Company a paper copy of any documents delivered electronically at no cost if you contact the Company by telephone, through a postal service or
electronic mail at [insert email]. You further acknowledge that you will be provided with a paper copy of any documents delivered electronically if electronic delivery fails;
similarly, you understand that you must provide on request to the Company or any designated third party a paper copy of any documents delivered electronically if electronic
delivery fails. You agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the
Company. Also, you understand that your consent may be revoked or changed, including any change in the electronic mail address to which documents are delivered (if you
have
provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent by telephone, postal service or electronic mail at [insert email].
Finally, you understand that you are not required to consent to electronic delivery.
14. Award Subject to Company Clawback or Recoupment. To the extent permitted by applicable law, the SAR shall be subject to clawback or recoupment
pursuant to any compensation clawback or recoupment policy adopted by the Board or the Committee or required by law during the term of your employment or other Service
that is applicable to you. In addition to any other remedies available under such policy, applicable law may require the cancellation of your SAR (whether vested or unvested)
and the recoupment of any gains realized with respect to your SAR.
BY ACCEPTING THIS SAR, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.
NOTICE OF STOCK BONUS AWARD
COINBASE GLOBAL, INC.
2021 EQUITY INCENTIVE PLAN
Unless otherwise defined herein, the terms defined in the Coinbase Global, Inc. (the “Company”) 2021 Equity Incentive Plan (the “Plan”) shall have the same meanings in
this Notice of Stock Bonus Award (the “Notice”) and the attached Stock Bonus Award Agreement (the “Stock Bonus Agreement”).
You have been granted an award of Shares under the Plan (the “Stock Bonus Award”) subject to the terms and conditions of the Plan, this Notice and the attached Stock
Bonus Agreement.
Name:
Address:
Number of Shares:
Date of Grant:
Fair Market Value on Date of Grant:
This Notice may be executed and delivered electronically, whether via the Company’s intranet or the Internet site of a third party or via email or any other means of electronic
delivery specified by the Company. By accepting the Stock Bonus Award, you consent to the electronic delivery and acceptance as further set forth in the Stock Bonus
Agreement. You understand that your employment or consulting relationship with the Company or a Parent or Subsidiary is for an unspecified duration and can be terminated
at any time, and that nothing in this Notice, the Stock Bonus Agreement or the Plan changes the nature of that relationship. By accepting this Stock Bonus Award, you and the
Company agree that this Stock Bonus Award is granted under and governed by the terms and conditions of the Plan, the Notice and the Stock Bonus Agreement.
PARTICIPANT COINBASE GLOBAL, INC.
Signature: By:
Date: Its:
STOCK BONUS AWARD AGREEMENT
COINBASE GLOBAL, INC.
2021 EQUITY INCENTIVE PLAN
You have been granted a Stock Bonus Award (“Stock Bonus Award”) by Coinbase Global,f Inc. (the “Company”), subject to the terms, restrictions and conditions of the
Company’s 2021 Equity Incentive Plan (the “Plan”), the Notice of Stock Bonus Award (the “Notice”) and this Stock Bonus Award Agreement (this “Agreement”).
1. Issuance. Your Stock Bonus Award shall be issued in Shares, and the Company’s transfer agent shall record ownership of such Shares in your name as soon as
reasonably practicable.
2. No Stockholder Rights. Unless and until you are recorded as the holder of such Shares on the stock records of the Company and its transfer agent, you shall have no
right to dividends or to vote Shares.
3. Restrictions on Resale. By signing this Agreement, you agree not to sell any Shares acquired pursuant to the Plan and this Agreement at a time when applicable laws,
regulations or Company or underwriter trading policies prohibit exercise or sale. This restriction will apply as long as you are providing Service to the Company or a
Subsidiary of the Company.
4. Tax Consequences. YOU SHOULD CONSULT A TAX ADVISER BEFORE ACQUIRING THE SHARES IN THE JURISDICTION IN WHICH YOU ARE
SUBJECT TO TAX. Shares shall not be issued under this Agreement unless you make arrangements acceptable to the Company to pay any withholding taxes that may be due
as a result of the acquisition of Shares.
5. Responsibility for Taxes. Regardless of any action the Company or, if different, your employer (the “Employer”) takes with respect to any or all income tax, social
insurance, payroll tax, fringe benefits tax, payment on account and other tax-related items related to your participation in the Plan and legally applicable to you (“Tax-Related
Items”), you acknowledge that the ultimate liability for all Tax-Related Items is and remains your responsibility and may exceed the amount actually withheld by the
Company or the Employer. You further acknowledge that the Company and the Employer (a) make no representations or undertakings regarding the treatment of any Tax-
Related Items in connection with any aspect of the Stock Bonus Award, including the grant of the Stock Bonus Award, the issuance of the Shares subject to the Stock Bonus
Award, the subsequent sale of such Shares and the receipt of any dividends; and (b) do not commit to and are under no obligation to structure the terms of the Stock Bonus
Award to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result. You acknowledge that if you are subject to Tax-Related Items in more
than one jurisdiction, the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one
jurisdiction.
The Company will only recognize you as a record holder of Shares subject to the Stock Bonus Award if you have paid or made, prior to any relevant taxable or tax
withholding event, as applicable, adequate arrangements satisfactory to the Company and/or the Employer to satisfy any withholding obligation the Company and/or the
Employer may have for Tax-Related Items. In this regard, you authorize the Company and/or the Employer, and their respective agents, at their discretion, to withhold all
applicable Tax-Related Items from your wages or other cash compensation paid to you by the Company and/or the Employer or by one or a combination of the following
methods: (a) payment by you
to the Company or the Employer of an amount equal to the Tax-Related Items in cash, (b) having the Company withhold Shares subject to the Stock Bonus Award having a
value equal to the Tax-Related Items to be withheld, (c) delivering to the Company already-owned Shares having a value equal to the Tax-Related Items to be withheld, (d)
withholding from proceeds of the sale of the Shares subject to the Stock Bonus Award either through a voluntary sale or through a mandatory sale arranged by the Company
(on your behalf and you hereby authorize such sale pursuant to this authorization), or (e) any other arrangement approved by the Company and permissible under applicable
law; in all cases, under such rules as may be established by the Committee and in compliance with the Company’s Insider Trading Policy and 10b5-1 Trading Plan Policy, if
applicable; provided, however, that if you are a Section 16 officer of the Company under the Exchange Act, then the method of withholding shall be a mandatory sale under
(d) above (unless the Committee shall establish an alternate method prior to the taxable or withholding event). You shall pay to the Company or the Employer any amount of
Tax-Related Items that the Company or the Employer may be required to withhold as a result of your participation in the Plan or the issuance of Shares subject to this Stock
Bonus Award that cannot be satisfied by the means previously described.
Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable statutory withholding rates or other
applicable withholding rates, including up to the maximum applicable rate in which case you may receive a refund of any over-withheld amount in cash and will have no
entitlement to the Shares subject to the Stock Bonus Award that would otherwise be issued to you. If the obligation for Tax-Related Items is satisfied by withholding in Shares
subject to the Stock Bonus Award that would otherwise be issued to you, for tax purposes, you are deemed to have been issued the full number of such Shares,
notwithstanding that a number of the such Shares are held back solely for the purpose of paying the Tax-Related Items.
Finally, you acknowledge that the Company has no obligation to deliver Shares subject to the Stock Bonus Award to you until you have satisfied the obligations in
connection with the Tax-Related Items as described in this Section.
6. Acknowledgement. The Company and you agree that the Stock Bonus Award is granted under and governed by the Notice, this Agreement and the provisions of the
Plan (incorporated herein by reference). You: (i) acknowledge receipt of a copy of the Plan and the Plan prospectus, (ii) represent that you have carefully read and are familiar
with their provisions and the provisions of the Notice and this Agreement, and (iii) hereby accept the Stock Bonus Award subject to all of the terms and conditions set forth
herein and those set forth in the Plan and the Notice. You hereby agree to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any
questions relating to the Plan, the Notice and the Stock Bonus Award.
7. Entire Agreement; Enforcement of Rights. This Agreement, the Plan and the Notice constitute the entire agreement and understanding of the parties relating to the
subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments or negotiations concerning the purchase of the Shares hereunder
are superseded. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing and signed by the
parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.
8. Compliance with Laws and Regulations. The issuance of Shares will be subject to and conditioned upon compliance by the Company and you with all applicable
state, federal and foreign laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s common
stock may be listed or quoted at the time of such issuance or transfer. The Shares issued pursuant to this Agreement shall be endorsed with appropriate legends, if any,
determined by the Company.
9. Stop Transfer Orders.
(a) Stop-Transfer Notices. You agree that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop
transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.
(b) Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any
of the provisions of this Agreement or (ii) to treat as the owner or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall
have been so transferred.
10. Governing Law; Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of this Agreement shall be
enforceable in accordance with its terms. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law. For purposes of litigating any dispute
that may arise directly or indirectly from the Plan, the Notice and this Agreement, the parties hereby submit and consent to litigation in the exclusive jurisdiction of the State
of California and agree that any such litigation shall be conducted only in the courts of California in San Francisco County, California or the federal courts of the United
States for the Northern District of California and no other courts.
11. No Rights as Employee, Director or Consultant. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent,
Subsidiary or Affiliate of the Company, to terminate your Service, for any reason, with or without Cause.
12. Consent to Electronic Delivery and Acceptance of All Plan Documents and Disclosures. By acceptance of this Stock Bonus Award, you consent to the electronic
delivery of the Notice, this Agreement, the Plan, account statements, Plan prospectuses required by the Securities and Exchange Commission, U.S. financial reports of the
Company, and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements) or other
communications or information related to the Stock Bonus Award. Electronic delivery may include the delivery of a link to a Company intranet or the internet site of a third
party involved in administering the Plan, the delivery of the document via e-mail or such other delivery determined at the Company’s discretion. You acknowledge that you
may receive from the Company a paper copy of any documents delivered electronically at no cost if you contact the Company by telephone, through a postal service or
electronic mail at [insert email]. You further acknowledge that you will be
provided with a paper copy of any documents delivered electronically if electronic delivery fails; similarly, you understand that you must provide on request to the Company
or any designated third party a paper copy of any documents delivered electronically if electronic delivery fails. You agree to participate in the Plan through an on-line or
electronic system established and maintained by the Company or a third party designated by the Company. Also, you understand that your consent may be revoked or
changed, including any change in the electronic mail address to which documents are delivered (if you have provided an electronic mail address), at any time by notifying the
Company of such revised or revoked consent by telephone, postal service or electronic mail at [insert email]. Finally, you understand that you are not required to consent to
electronic delivery.
13. Award Subject to Company Clawback or Recoupment. To the extent permitted by applicable law, the Stock Bonus Award shall be subject to clawback or
recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or the Committee or required by law during the term of your employment or
other Service that is applicable to you. In addition to any other remedies available under such policy, applicable law may require the cancellation of your Stock Bonus Award
and the recoupment of any gains realized with respect to your Stock Bonus Award.
BY ACCEPTING THE STOCK BONUS AWARD, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.
Exhibit 10.5
COINBASE GLOBAL INC.
2021 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE. Coinbase Global, Inc. adopted the Plan effective as of the Effective Date. The purpose of this Plan is to provide eligible employees of the
Company and the Participating Corporations with a means of acquiring an equity interest in the Company, to enhance such employees’ sense of participation in the affairs of
the Company. Capitalized terms not defined elsewhere in the text are defined in Section 28.
2. ESTABLISHMENT OF PLAN. The Company proposes to grant rights to purchase shares of Common Stock to eligible employees of the Company and its
Participating Corporations pursuant to this Plan. The Company intends this Plan to qualify as an “employee stock purchase plan” under Section 423 of the Code (including
any amendments to or replacements of such Section), and this Plan shall be so construed, although the Company makes no undertaking or representation to maintain such
qualification. Any term not expressly defined in this Plan but defined for purposes of Section 423 of the Code shall have the same definition herein. In addition, with regard to
offers of options to purchase shares of Common Stock under the Plan to employees working for a Subsidiary or an Affiliate outside the United States, this Plan authorizes the
grant of options under a Non- Section 423 Component that is not intended to meet Section 423 requirements, provided, to the extent necessary under Section 423 of the Code,
the other terms and conditions of the Plan are met.
Subject to Section 14, a total Five Million One Hundred Seventy-Four Thousand Six Hundred Forty Four (5,174,644) shares of Common Stock is reserved for
issuance under this Plan. In addition, on each January 1 of each fiscal year, the aggregate number of shares of Common Stock reserved for issuance under the Plan shall be
increased automatically by the number of shares equal to one percent (1%) of the total number of outstanding shares of Common Stock of the Company outstanding (on an as
converted to common stock basis) on the immediately preceding December 31 (rounded down to the nearest whole share); provided, that the Board or the Committee may in
its sole discretion reduce the amount of the increase in any particular year. Subject to Section 14, no more than Fifty-Two Million (52,000,000) shares of Common Stock may
be issued over the term of this Plan. The number of shares initially reserved for issuance under this Plan and the maximum number of shares that may be issued under this
Plan shall be subject to adjustments effected in accordance with Section 14. Any or all such shares may be granted under the Section 423 Component.
3. ADMINISTRATION. The Plan will be administered by the Committee. Subject to the provisions of this Plan and the limitations of Section 423 of the Code
or any successor provision in the Code, all questions of interpretation or application of this Plan shall be determined by the Committee and its decisions shall be final and
binding upon all eligible employees and Participants. The Committee will have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan,
to determine eligibility, to designate the Participating Corporations, to determine whether Participating Corporations shall participate in the Section 423 Component or Non-
Section 423 Component and to decide upon any and all claims filed under the Plan. Every finding, decision and determination made by the Committee will, to the full extent
permitted by law, be final and binding upon all parties. Notwithstanding any provision to the contrary in this Plan, the Committee may adopt rules, sub-plans, and/or
procedures relating to the operation and administration of the Plan designed to comply with local laws, regulations or customs or to achieve tax, securities law or other
objectives for eligible employees outside of the United States. The Committee will have the authority to determine the Fair Market Value of the Common Stock (which
determination shall be final, binding and conclusive for all purposes) in accordance with Section 8 below and to interpret Section 8 of the Plan in connection with
circumstances
st
st
1
that impact the Fair Market Value. Members of the Committee shall receive no compensation for their services in connection with the administration of this Plan, other than
standard fees as established from time to time by the Board for services rendered by Board members serving on Board committees. All expenses incurred in connection with
the administration of this Plan shall be paid by the Company. For purposes of this Plan, the Committee may designate separate offerings under the Plan (the terms of which
need not be identical) in which eligible employees of one or more Participating Corporations will participate, and the provisions of the Plan will separately apply to each such
separate offering even if the dates of the applicable Offering Periods of each such offering are identical. To the extent permitted by Section 423 of the Code, the terms of each
separate offering under the Plan need not be identical, provided that the rights and privileges established with respect to a particular offering are applied in an identical manner
to all employees of every Participating Corporation whose employees are granted options under that particular offering. The Committee may establish rules to govern the
terms of the Plan and the offering that will apply to Participants who transfer employment between the Company and Participating Corporations or between Participating
Corporations, in accordance with requirements under Section 423 of the Code to the extent applicable.
4. ELIGIBILITY.
(a) Any employee of the Company or the Participating Corporations is eligible to participate in an Offering Period under this Plan, except that one or
more of the following categories of employees may be excluded from coverage under the Plan if determined by the Committee (other than where such exclusion is prohibited
by applicable law):
(i) employees who do not meet eligibility requirements that the Committee may choose to impose (within the limits permitted by the Code);
(ii) employees who are not employed by the Company or a Participating Corporation prior to the beginning of such Offering Period or prior to
such other time period as specified by the Committee;
(iii) employees who are customarily employed for twenty (20) or less hours per week;
(iv) employees who are customarily employed for five (5) months or less in a calendar year;
(v) (a) employees who are “highly compensated employees” of the Company or any Participating Corporation (within the meaning of Section
414(q) of the Code), or (b) any employees who are “highly compensated employees” with compensation above a specified level, who is an officer and/or is subject to the
disclosure requirements of Section 16(a) of the Exchange Act;
(vi) employees who are citizens or residents of a foreign jurisdiction (without regard to whether they are also a citizen of the United States or a
resident alien (within the meaning of Section 7701(b)(1)(A) of the Code)) if either (i) such employee’s participation is prohibited under the laws of the jurisdiction governing
such employee, or (ii) compliance with the laws of the foreign jurisdiction would violate the requirements of Section 423 of the Code; and
(vii) individuals who provide services to the Company or any of its Participating Corporations who are reclassified as common law employees for
any reason except for federal income and employment tax purposes.
2
The foregoing notwithstanding, an individual shall not be eligible if his or her participation in the Plan is prohibited by the law of any country that has jurisdiction over him or
her, if complying with the laws of the applicable country would cause the Plan to violate Section 423 of the Code, or if he or she is subject to a collective bargaining
agreement that does not provide for participation in the Plan.
(b) No employee who, together with any other person whose stock would be attributed to such employee pursuant to Section 424(d) of the Code, owns
stock or holds options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or its Parent
or Subsidiary or who, as a result of being granted an option under this Plan with respect to such Offering Period, would own stock or hold options to purchase stock
possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or its Parent or Subsidiary shall be granted an option
to purchase Common Stock under the Plan. Notwithstanding the foregoing, the rules of Section 424(d) of the Code shall apply in determining share ownership and the extent
to which shares held under outstanding equity awards are to be treated as owned by the employee.
5. OFFERING DATES.
(a) Each Offering Period of this Plan may be of up to twenty-seven (27) months duration and shall commence and end at the times designated by the
Committee. Each Offering Period shall consist of one or more Purchase Periods during which Contributions made by Participants are accumulated under this Plan.
(b) The initial Offering Period shall commence on the Effective Date and shall end with the Purchase Date that occurs on April 30, 2023 which is no more
than twenty-seven (27) months after the commencement of the initial Offering period. The initial Offering Period shall consist of four Purchase Periods, with purchases on
October 31, 2021, April 30, 2022, October 31, 2022, and April 30, 2023. A twenty-four (24) month Offering Period shall commence on each May 1 and November 1 after the
start of the Initial Offering Period, with each such Offering Period also consisting of four separate six (6)-month Purchase Periods, except as otherwise provided by an
applicable sub-plan, or on such other date determined by the Committee. The Committee may at any time establish a different duration for an Offering Period or Purchase
Period to be effective after the next scheduled Purchase Date, up to a maximum duration of twenty-seven (27) months.
6. PARTICIPATION IN THIS PLAN.
(a) Any employee who is an eligible employee determined in accordance with Section 4 will be eligible to participate in this Plan, subject to the
requirement of Section 6(b) hereof and the other terms and provisions of this Plan.
(b) A Participant may elect to participate in this Plan by submitting an enrollment agreement prior to the commencement of the Offering Period (or such
earlier date as the Committee may determine) to which such agreement relates.
(c) Once an employee becomes a Participant in an Offering Period, then such Participant will automatically participate in each subsequent Offering
Period commencing immediately following the last day of the prior Offering Period unless the Participant withdraws or is deemed to withdraw from this Plan or terminates
further participation in an Offering Period as set forth in Section 11 below. A Participant who is continuing participation pursuant to the preceding sentence is not required to
file any additional enrollment agreement in order to continue participation in this Plan; a Participant who is not continuing participation pursuant to the preceding sentence is
required to file an enrollment
3
agreement prior to the commencement of the Offering Period (or such earlier date as the Committee may determine) to which such agreement relates.
7. GRANT OF OPTION ON ENROLLMENT. Becoming a Participant with respect to an Offering Period will constitute the grant (as of the Offering Date) by
the Company to such Participant of an option to purchase on the Purchase Date up to that number of shares of Common Stock determined by a fraction, the numerator of
which is the amount accumulated in such Participant’s Contribution account during such Purchase Period and the denominator of which is the lower of (i) eighty-five percent
(85%) of the Fair Market Value of a share of Common Stock on the Offering Date (but in no event less than the par value of a share of the Common Stock), or (ii) eighty-five
percent (85%) of the Fair Market Value of a share of the Common Stock on the Purchase Date; provided, however, that for the Purchase Period within the initial Offering
Period the numerator shall be fifteen percent (15%) of the Participant’s compensation for such Purchase Period, or such lower percentage as determined by the Committee
prior to the start of the Offering Period, and provided, further, that the number of shares of Common Stock subject to any option granted pursuant to this Plan shall not exceed
the lesser of (x) the maximum number of shares set by the Committee pursuant to Section 10(b) below with respect to the applicable Purchase Date, or (y) the maximum
number of shares which may be purchased pursuant to Section 10(a) below with respect to the applicable Purchase Date.
8. PURCHASE PRICE. The Purchase Price per share at which a share of Common Stock will be sold in any Offering Period shall be eighty-five percent (85%)
of the lesser of:
(a) The Fair Market Value on the Offering Date; or
(b) The Fair Market Value on the Purchase Date.
9. PAYMENT OF PURCHASE PRICE; CONTRIBUTION CHANGES; SHARE ISSUANCES.
(a) The Purchase Price shall be accumulated by regular payroll deductions made during each Offering Period, unless the Committee determines that
contributions may be made in another form (including but not limited to with respect to categories of Participants outside the United States that Contributions may be made in
another form due to local legal requirements). The Contributions are made as a percentage of the Participant’s Compensation in one percent (1%) increments not less than one
percent (1%), nor greater than fifteen percent (15%) or such lower limit set by the Committee. “Compensation” shall mean base salary or regular hourly wages; however, the
Committee shall have discretion to adopt a definition of Compensation from time to time of all cash compensation reported on the employee's Form W-2 or corresponding
local country tax return, including without limitation base salary or regular hourly wages, bonuses, incentive compensation, commissions, overtime, shift premiums, pay
during leaves of absence, and draws against commissions (or in foreign jurisdictions, equivalent cash compensation). For purposes of determining a Participant’s
Compensation, any election by such Participant to reduce his or her regular cash remuneration under Sections 125 or 401(k) of the Code (or in foreign jurisdictions, equivalent
deductions) shall be treated as if the Participant did not make such election. Contributions shall commence on the first payday following the last Purchase Date (with respect
to the initial Offering Period, as soon as practicable following the effective date of filing with the U.S. Securities and Exchange Commission a securities registration statement
for the Plan) and shall continue to the end of the Offering Period unless sooner altered or terminated as provided in this Plan. Notwithstanding the foregoing, the terms of any
sub-plan may permit matching shares without the payment of any purchase price.
4
(b) A Participant may decrease the rate of Contributions during an Offering Period by filing with the Company or a third party designated by the
Company a new authorization for Contributions, with the new rate to become effective no later than the second payroll period commencing after the Company’s receipt of the
authorization and continuing for the remainder of the Offering Period unless changed as described below. A decrease in the rate of Contributions may be made twice during
the initial Offering Period and once during any subsequent Offering Periods, or more frequently under rules determined by the Committee. A Participant may increase or
decrease the rate of Contributions for any subsequent Offering Period by filing with the Company or a third party designated by the Company a new authorization for
Contributions prior to the beginning of such Offering Period, or such other time period as specified by the Committee.
(c) A Participant may reduce his or her Contribution percentage to zero during an Offering Period by filing with the Company or a third party designated
by the Company a request for cessation of Contributions. Such reduction shall be effective beginning no later than the second payroll period after the Company’s receipt of
the request and no further Contributions will be made for the duration of the Offering Period. Contributions credited to the Participant’s account prior to the effective date of
the request shall be used to purchase shares of Common Stock in accordance with Subsection (e) below. A reduction of the Contribution percentage to zero shall be treated as
such Participant’s withdrawal from such Offering Period and the Plan, effective as of the day after the next Purchase Date following the filing date of such request with the
Company.
(d) All Contributions made for a Participant are credited to his or her book account under this Plan and are deposited with the general funds of the
Company, except to the extent local legal restrictions outside the United States require segregation of such Contributions. No interest accrues on the Contributions, except to
the extent required due to local legal requirements. All Contributions received or held by the Company may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such Contributions, except to the extent necessary to comply with local legal requirements outside the United States.
(e) On each Purchase Date, so long as this Plan remains in effect and provided that the Participant has not submitted a signed and completed withdrawal
form before that date which notifies the Company that the Participant wishes to withdraw from that Offering Period under this Plan and have all Contributions accumulated in
the account maintained on behalf of the Participant as of that date returned to the Participant, the Company shall apply the funds then in the Participant’s account to the
purchase of whole shares of Common Stock reserved under the option granted to such Participant with respect to the Offering Period to the extent that such option is
exercisable on the Purchase Date. The Purchase Price per share shall be as specified in Section 8 of this Plan. Any fractional share, as calculated under this Subsection (e),
shall be rounded down to the next lower whole share, unless the Committee determines with respect to all Participants that any fractional share shall be credited as a fractional
share. Any amount remaining in a Participant’s account on a Purchase Date which is less than the amount necessary to purchase a full share of the Common Stock shall be
carried forward without interest (except to the extent necessary to comply with local legal requirements outside the United States) into the next Purchase Period or Offering
Period, as the case may be; however, the Committee may determine that such amounts should be refunded without interest. In the event that this Plan has been oversubscribed,
all funds not used to purchase shares on the Purchase Date shall be returned to the Participant, without interest (except to the extent required due to local legal requirements
outside the United States). No Common Stock shall be purchased on a Purchase Date on behalf of any employee whose participation in this Plan has terminated prior to such
Purchase Date, except to the extent required due to local legal requirements outside the United States.
5
(f) As promptly as practicable after the Purchase Date, the Company shall issue shares for the Participant’s benefit representing the shares purchased
upon exercise of his or her option.
(g) During a Participant’s lifetime, his or her option to purchase shares hereunder is exercisable only by him or her. The Participant will have no interest
or voting right in shares covered by his or her option until such option has been exercised.
(h) To the extent required by applicable federal, state, local or foreign law, a Participant shall make arrangements satisfactory to the Company and the
Participating Corporation employing the Participant for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company or any
Subsidiary or Affiliate, as applicable, may withhold, by any method permissible under the applicable law, the amount necessary for the Company or Subsidiary or Affiliate, as
applicable, to meet applicable withholding obligations, including any withholding required to make available to the Company or Subsidiary or Affiliate, as applicable, any tax
deductions or benefits attributable to the sale or early disposition of shares of Common Stock by a Participant. The Company shall not be required to issue any shares of
Common Stock under the Plan until such obligations are satisfied.
10. LIMITATIONS ON SHARES TO BE PURCHASED.
(a) Any other provision of the Plan notwithstanding, no Participant shall purchase Common Stock with a Fair Market Value in excess of the following
limit:
(i) In the case of Common Stock purchased during an Offering Period that commenced in the current calendar year, the limit shall be equal to
(A) $25,000 minus (B) the Fair Market Value of the Common Stock that the Participant previously purchased in the current calendar year (under this Plan and all other
employee stock purchase plans of the Company or any Parent or Subsidiary).
(ii) In the case of Common Stock purchased during an Offering Period that commenced in the immediately preceding calendar year, the limit shall
be equal to (A) $50,000 minus (B) the Fair Market Value of the Common Stock that the Participant previously purchased (under this Plan and all other employee stock
purchase plans of the Company or any Parent or Subsidiary) in the current calendar year and in the immediately preceding calendar year.
(iii) In the case of Common Stock purchased during an Offering Period that commenced two calendar years prior, the limit shall be equal to
(A) $75,000 minus (B) the Fair Market Value of the Common Stock that the Participant previously purchased (under this Plan and all other employee stock purchase plans of
the Company or any Parent or Subsidiary) in the current calendar year and in the two immediately preceding calendar years.
For purposes of this Subsection (a), the Fair Market Value of Common Stock shall be determined in each case as of the beginning of the Offering Period in which such
Common Stock is purchased. Employee stock purchase plans not described in Section 423 of the Code shall be disregarded. If a Participant is precluded by this Subsection (a)
from purchasing additional Common Stock under the Plan, then his or her Contributions shall automatically be discontinued and shall automatically resume at the beginning
of the earliest Purchase Period that will end in the next calendar year (if he or she then is an eligible employee), provided that when the Company automatically resumes such
Contributions, the Company must apply the rate in effect immediately prior to such suspension.
(b) In no event shall a Participant be permitted to purchase more than Five Thousand (5,000) shares on any one Purchase Date or such lesser number as
the Committee shall determine. If a
6
lower limit is set under this Subsection (b), then all Participants will be notified of such limit prior to the commencement of the next Offering Period for which it is to be
effective.
(c) If the number of shares to be purchased on a Purchase Date by all Participants exceeds the number of shares then available for issuance under this
Plan, then the Company will make a pro rata allocation of the remaining shares in as uniform a manner as shall be reasonably practicable and as the Committee shall
determine to be equitable. In such event, the Company will give notice of such reduction of the number of shares to be purchased under a Participant’s option to each
Participant affected.
(d) Any Contributions accumulated in a Participant’s account which are not used to purchase stock due to the limitations in this Section 10, and not
covered by Section 9(e), shall be returned to the Participant as soon as practicable after the end of the applicable Purchase Period, without interest (except to the extent
required due to local legal requirements outside the United States).
11. WITHDRAWAL.
(a) Each Participant may withdraw from an Offering Period under this Plan pursuant to a method specified for such purpose by the Company. Such
withdrawal may be elected at any time prior to the end of an Offering Period, or such other time period as specified by the Committee.
(b) Upon withdrawal from this Plan, the accumulated Contributions shall be returned to the withdrawn Participant, without interest (except to the extent
required due to local legal requirements outside the United States), and his or her interest in this Plan shall terminate. In the event a Participant voluntarily elects to withdraw
from this Plan, he or she may not resume his or her participation in this Plan during the same Offering Period, but he or she may participate in any Offering Period under this
Plan which commences on a date subsequent to such withdrawal by filing a new authorization for Contributions in the same manner as set forth in Section 6 above for initial
participation in this Plan.
(c) To the extent applicable, if the Fair Market Value on the first day of the current Offering Period in which a participant is enrolled is higher than the
Fair Market Value on the first day of any subsequent Offering Period, the Company will automatically enroll such participant in the subsequent Offering Period. Any funds
accumulated in a Participant’s account prior to the first day of such subsequent Offering Period will be applied to the purchase of shares on the Purchase Date immediately
prior to the first day of such subsequent Offering Period, if any.
12. TERMINATION OF EMPLOYMENT. Termination of a Participant’s employment for any reason, including retirement, death, disability, or the failure of a
Participant to remain an eligible employee of the Company or of a Participating Corporation, immediately terminates his or her participation in this Plan (except as required
due to local legal requirements outside the United States). In such event, accumulated Contributions credited to the Participant’s account will be returned to him or her or, in
the case of his or her death, to his or her legal representative, without interest (except to the extent required due to local legal requirements outside the United States). For
purposes of this Section 12, an employee will not be deemed to have terminated employment or failed to remain in the continuous employ of the Company or of a
Participating Corporation in the case of sick leave, military leave, or any other leave of absence approved by the Company; provided that such leave is for a period of not
more than ninety (90) days or reemployment upon the expiration of such leave is guaranteed by contract or statute. The Company will have sole discretion to determine
whether a Participant has terminated employment and the effective date on which the Participant terminated employment, regardless of any notice period or garden leave
required under local law.
7
13. RETURN OF CONTRIBUTIONS. In the event a Participant’s interest in this Plan is terminated by withdrawal, termination of employment or otherwise, or
in the event this Plan is terminated by the Board, the Company shall deliver to the Participant all accumulated Contributions credited to such Participant’s account. No interest
shall accrue on the Contributions of a Participant in this Plan (except to the extent required due to local legal requirements outside the United States).
14. CAPITAL CHANGES. If the number and class of outstanding shares is changed by a stock dividend, recapitalization, stock split, reverse stock split,
subdivision, combination, reclassification or similar change in the capital structure of the Company, without consideration, then the Committee shall adjust the number and
class of Common Stock that may be delivered under the Plan, the Purchase Price per share and the number of shares of Common Stock covered by each option under the Plan
which has not yet been exercised, and the numerical limits of Sections 2 and 10 shall be proportionately adjusted, subject to any required action by the Board or the
stockholders of the Company and in compliance with the applicable securities laws; provided that fractions of a share will not be issued.
15. NONASSIGNABILITY. Neither Contributions credited to a Participant’s account nor any rights with regard to the exercise of an option or to receive shares
under this Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 22
below) by the Participant. Any such attempt at assignment, transfer, pledge or other disposition shall be void and without effect.
16. USE OF PARTICIPANT FUNDS AND REPORTS. The Company may use all Contributions received or held by it under the Plan for any corporate
purpose, and the Company will not be required to segregate Participant Contributions (except to the extent required due to local legal requirements outside the United States).
Until shares are issued, Participants will only have the rights of an unsecured creditor unless otherwise required under local law. Each Participant shall receive, or have access
to, promptly after the end of each Purchase Period a report of his or her account setting forth the total Contributions accumulated, the number of shares purchased, the per
share price thereof and the remaining cash balance, if any, carried forward to the next Purchase Period or Offering Period, as the case may be.
17. NOTICE OF DISPOSITION. Each U.S. taxpayer Participant shall notify the Company in writing if the Participant disposes of any of the shares purchased
in any Offering Period pursuant to this Plan if such disposition occurs within two (2) years from the Offering Date or within one (1) year from the Purchase Date on which
such shares were purchased (the “Notice Period”). The Company may, at any time during the Notice Period, place a legend or legends on any certificate representing shares
acquired pursuant to this Plan requesting the Company’s transfer agent to notify the Company of any transfer of the shares. The obligation of the Participant to provide such
notice shall continue notwithstanding the placement of any such legend on the certificates.
18. NO RIGHTS TO CONTINUED EMPLOYMENT. Neither this Plan nor the grant of any option hereunder shall confer any right on any employee to
remain in the employ of the Company or any Participating Corporation, or restrict the right of the Company or any Participating Corporation to terminate such employee’s
employment.
19. EQUAL RIGHTS AND PRIVILEGES. All eligible employees granted an option under the Section 423 Component of this Plan shall have equal rights and
privileges with respect to this Plan or within any separate offering under the Plan so that this Plan qualifies as an “employee stock purchase plan” within the meaning of
Section 423 or any successor provision of the Code and the related regulations. Any provision of this Plan which is inconsistent with Section 423 or any successor provision
of the Code, without further act or amendment by the Company, the Committee or the Board, shall be
8
reformed to comply with the requirements of Section 423. This Section 19 shall take precedence over all other provisions in this Plan.
20. NOTICES. All notices or other communications by a Participant to the Company under or in connection with this Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.
21. TERM; STOCKHOLDER APPROVAL. This Plan will become effective on the Effective Date. This Plan shall be approved by the stockholders of the
Company, in any manner permitted by applicable corporate law, within twelve (12) months before or after the date this Plan is adopted by the Board. No purchase of shares
that are subject to such stockholder approval before becoming available under this Plan shall occur prior to stockholder approval of such shares and the Board or Committee
may delay any Purchase Date and postpone the commencement of any Offering Period subsequent to such Purchase Date as deemed necessary or desirable to obtain such
approval (provided that if a Purchase Date would occur more than six (6) months after commencement of the Offering Period to which it relates, then such Purchase Date
shall not occur and instead such Offering Period shall terminate without the purchase of such shares and Participants in such Offering Period shall be refunded their
Contributions without interest). This Plan shall continue until the earlier to occur of (a) termination of this Plan by the Board (which termination may be effected by the Board
at any time pursuant to Section 25 below), (b) issuance of all of the shares of Common Stock reserved for issuance under this Plan, or (c) the tenth anniversary of the Effective
Date.
22. DESIGNATION OF BENEFICIARY.
(a) If authorized by the Committee, a Participant may file a written designation of a beneficiary who is to receive any cash from the Participant’s account
under this Plan in the event of such Participant’s death prior to a Purchase Date. Such form shall be valid only if it was filed with the Company at the prescribed location
before the Participant’s death.
(b) If authorized by the Company, such designation of beneficiary may be changed by the Participant at any time by written notice filed with the
Company at the prescribed location before the Participant’s death. In the event of the death of a Participant and in the absence of a beneficiary validly designated under this
Plan who is living at the time of such Participant’s death, the Company shall deliver such cash to the executor or administrator of the estate of the Participant or to the legal
heirs of the Participant.
23. CONDITIONS UPON ISSUANCE OF SHARES; LIMITATION ON SALE OF SHARES. Shares shall not be issued with respect to an option unless the
exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including,
without limitation, the U.S. Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any stock
exchange or automated quotation system upon which the shares may then be listed, exchange control restrictions and/or securities law restrictions outside the United States,
and shall be further subject to the approval of counsel for the Company with respect to such compliance. Shares may be held in trust or subject to further restrictions as
permitted by any subplan.
24. APPLICABLE LAW. The Plan shall be governed by the substantive laws (excluding the conflict of laws rules) of the State of Delaware.
9
25. AMENDMENT OR TERMINATION. The Committee, in its sole discretion, may amend, suspend, or terminate the Plan, or any part thereof, at any time
and for any reason. Unless otherwise required by applicable law, if the Plan is terminated, the Committee, in its discretion, may elect to terminate all outstanding Offering
Periods either immediately or upon completion of the purchase of shares of Common Stock on the next Purchase Date (which may be sooner than originally scheduled, if
determined by the Committee in its discretion), or may elect to permit Offering Periods to expire in accordance with their terms (and subject to any adjustment pursuant to
Section 14). If an Offering Period is terminated prior to its previously-scheduled expiration, all amounts then credited to Participants’ accounts for such Offering Period,
which have not been used to purchase shares of Common Stock, shall be returned to those Participants (without interest thereon, except as otherwise required under local
laws) as soon as administratively practicable. Further, the Committee will be entitled to change the Purchase Periods and Offering Periods, limit the frequency and/or number
of changes in the amount contributed during an Offering Period, establish the exchange ratio applicable to amounts contributed in a currency other than U.S. dollars, permit
payroll withholding in excess of the amount designated by a Participant in order to adjust for delays or mistakes in the administration of the Plan, establish reasonable waiting
and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each Participant properly
correspond with amounts contributed from the Participant’s base salary and other eligible compensation, and establish such other limitations or procedures as the Committee
determines in its sole discretion advisable which are consistent with the Plan. Such actions will not require stockholder approval or the consent of any Participants. However,
no amendment shall be made without approval of the stockholders of the Company (obtained in accordance with Section 21 above) within twelve (12) months of the adoption
of such amendment (or earlier if required by Section 21) if such amendment would: (a) increase the number of shares that may be issued under this Plan; or (b) change the
designation of the employees (or class of employees) eligible for participation in this Plan. In addition, in the event the Board or Committee determines that the ongoing
operation of the Plan may result in unfavorable financial accounting consequences, the Board or Committee may, in its discretion and, to the extent necessary or desirable,
modify, amend or terminate the Plan to reduce or eliminate such accounting consequences including, but not limited to: (i) amending the definition of compensation, including
with respect to an Offering Period underway at the time; (ii) altering the Purchase Price for any Offering Period including an Offering Period underway at the time of the
change in Purchase Price; (iii) shortening any Offering Period by setting a Purchase Date, including an Offering Period underway at the time of the Committee’s action;
(iv) reducing the maximum percentage of Compensation a participant may elect to set aside as Contributions; and (v) reducing the maximum number of shares a Participant
may purchase during any Offering Period. Such modifications or amendments will not require approval of the stockholders of the Company or the consent of any Participants.
26. CORPORATE TRANSACTIONS. In the event of a Corporate Transaction, the Offering Period for each outstanding right to purchase Common Stock will
be shortened by setting a new Purchase Date and will end on the new Purchase Date. The new Purchase Date shall occur on or prior to the consummation of the Corporate
Transaction, as determined by the Board or Committee, and the Plan shall terminate on the consummation of the Corporate Transaction.
27. CODE SECTION 409A; TAX QUALIFICATION.
(a) Options granted under the Plan generally are exempt from the application of Section 409A of the Code. However, options granted to U.S. taxpayers
which are not intended to meet the Code Section 423 requirements are intended to be exempt from the application of Section 409A of the Code under the short-term deferral
exception and any ambiguities shall be construed and interpreted in accordance with such intent. Subject to Subsection (b), options granted to U.S. taxpayers outside of the
10
Code Section 423 requirements shall be subject to such terms and conditions that will permit such options to satisfy the requirements of the short-term deferral exception
available under Section 409A of the Code, including the requirement that the shares of Common Stock subject to an option be delivered within the short-term deferral period.
Subject to Subsection (b), in the case of a Participant who would otherwise be subject to Section 409A of the Code, to the extent the Committee determines that an option or
the exercise, payment, settlement or deferral thereof is subject to Section 409A of the Code, the option shall be granted, exercised, paid, settled or deferred in a manner that
will comply with Section 409A of the Code, including Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such
regulations or other guidance that may be issued after the Effective Date. Notwithstanding the foregoing, the Company shall have no liability to a Participant or any other
party if the option that is intended to be exempt from or compliant with Section 409A of the Code is not so exempt or compliant or for any action taken by the Committee with
respect thereto.
(b) Although the Company may endeavor to (i) qualify an option for favorable tax treatment under the laws of the United States or jurisdictions outside of
the United States or (ii) avoid adverse tax treatment (e.g., under Section 409A of the Code), the Company makes no representation to that effect and expressly disavows any
covenant to maintain favorable or avoid unfavorable tax treatment, notwithstanding anything to the contrary in this Plan, including Subsection (a). The Company shall be
unconstrained in its corporate activities without regard to the potential negative tax impact on Participants under the Plan.
28. DEFINITIONS.
(a) “Affiliate” means any entity, other than a Subsidiary or Parent, (i) that, directly or indirectly, is controlled by, controls or is under common control
with, the Company and (ii) in which the Company has a significant equity interest, in either case as determined by the Committee, whether now or hereafter existing.
(b) “Board” shall mean the Board of Directors of the Company.
(c) “Code” shall mean the U.S. Internal Revenue Code of 1986, as amended.
(d) “Committee” shall mean the Compensation Committee of the Board that consists exclusively of one or more members of the Board appointed by the
Board.
(e) “Common Stock” shall mean the common stock of the Company.
(f) “Company” shall mean Coinbase Global, Inc.
(g) “Contributions” means payroll deductions taken from a Participant's Compensation and used to purchase shares of Common Stock under the Plan
and, to the extent payroll deductions are not permitted by applicable laws (as determined by the Committee in its sole discretion) contributions by other means, provided,
however, that allowing such other contributions does not jeopardize the qualification of the Plan as an “employee stock purchase plan” under Section 423 of the Plan.
(h) “Corporate Transaction” means the occurrence of any of the following events: (i) any “person” (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities; or (ii) the consummation of the sale or disposition by the
Company of all or substantially all of the Company’s assets; or (iii) the consummation of a merger or
11
consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least
fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such
merger or consolidation.
(i) “Effective Date” shall mean the date on which the Company’s registration statement on Form S-1 in connection with its direct listing of Common
Stock is declared effective by the U.S. Securities and Exchange Commission.
(j) “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
(k) “Fair Market Value” shall mean, as of any date, the value of a share of Common Stock determined as follows:
(1) if such Common Stock is then quoted on the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market
(collectively, the “Nasdaq Market”), its closing price on the Nasdaq Market on the date of determination, or if there are no sales for such date, then the last preceding business
day on which there were sales, as reported in The Wall Street Journal or such other source as the Board or the Committee deems reliable;
(2) if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on
the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal or such other source as the Board
or the Committee deems reliable;
(3) if such Common Stock is publicly traded but is neither quoted on the Nasdaq Market nor listed or admitted to trading on a national securities
exchange, the average of the closing bid and asked prices on the date of determination as reported in The Wall Street Journal or such other source as the Board or the
Committee deems reliable; or
(4) if none of the foregoing is applicable, by the Board or the Committee in good faith.
(l) “Non-Section 423 Component” means the part of the Plan which is not intended to meet the requirements set forth in Section 423 of the Code.
(m) “Notice Period” shall mean within two (2) years from the Offering Date or within one (1) year from the Purchase Date on which such shares were
purchased.
(n) “Offering Date” shall mean the first business day of each Offering Period. However, for the initial Offering Period the Offering Date shall be the
Effective Date.
(o) “Offering Period” shall mean a period with respect to which the right to purchase Common Stock may be granted under the Plan, as determined by
the Committee pursuant to Section 5(a).
(p) “Parent” shall have the same meaning as “parent corporation” in Sections 424(e) and 424(f) of the Code.
(q) “Participant” shall mean an eligible employee who meets the eligibility requirements set forth in Section 4 and who is either automatically enrolled in
the initial Offering Period or who elects to participate in this Plan pursuant to Section 6(b).
12
(r) “Participating Corporation” shall mean any Parent, Subsidiary or Affiliate that the Committee designates from time to time as eligible to participate
in this Plan. For purposes of the Section 423 Component, only the Parent and Subsidiaries may be Participating Corporations, provided, however, that at any given time a
Parent or Subsidiary that is a Participating Corporation under the Section 423 Component shall not be a Participating Corporation under the Non-Section 423 Component. The
Committee may provide that any Participating Corporation shall only be eligible to participate in the Non-Section 423 Component.
(s) “Plan” shall mean this 2021 Coinbase Global, Inc. Employee Stock Purchase Plan, as may be amended from time to time.
(t) “Purchase Date” shall mean the last business day of each Purchase Period.
(u) “Purchase Period” shall mean a period during which Contributions may be made toward the purchase of Common Stock under the Plan, as
determined by the Committee pursuant to Section 5(b).
(v) “Purchase Price” shall mean the price at which Participants may purchase shares of Common Stock under the Plan, as determined pursuant to
Section 8.
(w) “Section 423 Component” means the part of the Plan, which excludes the Non-Section 423 Component, pursuant to which options to purchase shares
of Common Stock under the Plan that satisfy the requirements for “employee stock purchase plans” set forth in Section 423 of the Code may be granted to eligible employees.
(x) “Subsidiary” shall have the same meaning as “subsidiary corporation” in Sections 424(e) and 424(f) of the Code.
13
COINBASE GLOBAL, INC. (THE “COMPANY”)
2021 EMPLOYEE STOCK PURCHASE PLAN
Capitalized terms used but not otherwise defined herein shall
have the meaning given to them in the ESPP.
ENROLLMENT CONFIRMATION/
CHANGE FORM
FOR INITIAL OFFERING PERIOD COMMENCING ON
EFFECTIVE DATE
You have been automatically enrolled in the ESPP. This form must be completed by [DATE]
regardless of whether you want to continue, change your contribution level, or withdraw from the ESPP.
SECTION 1: Name:
PERSONAL DATA Home Address:
Employee ID:
SECTION 2:
ELECT/CHANGE/OPT-OUT OF ESPP
Continue participation in ESPP
I hereby authorize the Company to continue my enrollment by withholding from each of my paychecks during each Purchase Period the
below-specified percentage of my compensation, as long as I continue to participate in the ESPP.
£ Continue my contribution level at 15%
£ Decrease my contribution level to __% (must be a whole number between 1% and 14%)
Note: After this initial election, you may only decrease your contributions one more time to a percentage other than 0% during this
Offering Period, to be effective during this Offering Period. Such a change will be effective as soon as reasonably practicable after this
form is received by the Company. Any other decreases will take effect with the next Offering Period. You may not increase your
contributions during this Offering Period. Any increase in your contribution percentage can only take effect with the next Offering Period
Withdraw from ESPP
£ I understand that my enrollment in the ESPP was automatically effective at the beginning of the initial Offering Period. I hereby elect to
withdraw from the ESPP and stop my contributions under the ESPP, effective as soon as reasonably practicable after this form is received
by the Company. Accumulated contributions will be returned to me without interest. Note: If you withdraw, you cannot resume
participation until the start of the next Offering Period
SECTION 6:
COMPLIANCE WITH LAW
Unless there is an available exemption from any registration, qualification or other legal requirement applicable to the shares of Common
Stock, the Company shall not be required to deliver any shares under the ESPP prior to the completion of any registration or qualification
of the shares under any applicable law, or prior to obtaining any approval or other clearance from any local, state, federal or foreign
governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, deem necessary or
advisable. I agree that the Company shall have unilateral authority to amend the ESPP and this Agreement without my consent to the
extent necessary to comply with securities or other laws applicable to the issuance of shares.
14
SECTION 7:
NO ADVICE REGARDING GRANT
The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding my
participation in the ESPP or my acquisition or sale of shares of Common Stock. I understand that I should consult with my own personal
tax, legal and financial advisors regarding my participation in the ESPP before taking any action related to the ESPP.
SECTION 8:
ELECTRONIC DELIVERY AND ACCEPTANCE
The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the ESPP by
electronic means. I hereby consent to receive such documents by electronic delivery and agree to participate in the ESPP through an on-
line or electronic system established and maintained by the Company or a third party designated by the Company.
SECTION 9:
ACKNOWLEDGEMENT AND SIGNATURE
I acknowledge that I have received the ESPP Prospectus (which summarizes the major features of the ESPP) and that the ESPP is
available online at sec.gov. I have read the ESPP Prospectus and my signature below indicates that I hereby agree to be bound by the
terms of the ESPP.
Signature: Date:
15
For Changes to elections after initial Offering Period and to Enroll in subsequent Offering Periods
COINBASE GLOBAL, INC. (THE “COMPANY”)
2021 EMPLOYEE STOCK PURCHASE PLAN
Capitalized terms used but not otherwise defined herein shall
have the meaning given to them in the ESPP.
ENROLLMENT / CHANGE FORM
SECTION 1: CHECK DESIRED ACTION: AND COMPLETE SECTIONS:
ACTIONS ☐ Enroll in the ESPP 2 + 3 + 4 + 9
☐ Elect / Change Contribution Percentage 2 + 4 + 9
☐ Discontinue/Withdraw from ESPP 2 + 5 + 9
SECTION 2: Name:
PERSONAL DATA Home Address:
Employee ID:
SECTION 3:
ENROLL
☐ I hereby elect to participate in the Company’s 2021 Employee Stock Purchase Plan (the “ ESPP”), effective at the beginning of the next
Offering Period. I elect to purchase shares of Common Stock of the Company pursuant to the terms and conditions of the ESPP and this
Enrollment/Change Form. I understand that the shares purchased on my behalf will be issued in street name and deposited directly into my
brokerage account. I hereby agree to take all steps, and sign all forms, required to establish an account with the Company’s broker for this
purpose.
My participation will continue as long as I remain eligible, unless I withdraw from the ESPP by filing a new Enrollment/Change Form with the
Company or any third party designated by the Company. I understand that I must notify the Company of any disposition of shares purchased
under the ESPP.
SECTION 4:
ELECT/CHANGE CONTRIBUTION
PERCENTAGE
I hereby authorize the Company to withhold from each of my paychecks such amount as is equal to ___% of my compensation (base salary) paid
during such Purchase Period, as long as I continue to participate in the ESPP. My contributions, plus any accumulated contributions thus far
during the current Purchase Period if this is a change, will be applied to the purchase of shares of Common Stock pursuant to the ESPP. The
percentage must be a whole number (from 1% up to a maximum of 15% contribution).
If this is a change to my current enrollment, this represents an ☐-increase ☐-decrease to my contribution percentage.
Note: You may not increase your contributions at any time within an ongoing Offering Period. An increase in your contribution percentage can
only take effect with the next Offering Period. You may decrease your contribution percentage to a percentage other than 0% only once
within an Offering Period to be effective during that Offering Period. A change will become effective as soon as reasonably practicable
after the form is received by the Company.
SECTION 5:
WITHDRAW FROM ESPP / DISCONTINUE
CONTRIBUTIONS
DO NOT CHECK THE BOX BELOW IF YOU WISH TO CONTINUE PARTICIPATION IN THE ESPP
☐ I hereby elect to withdraw from the ESPP and stop my contributions under the ESPP, effective as soon as reasonably practicable after
this form is received by the Company. Accumulated contributions will be returned to me without interest.
Please ☐-refund all contributions to me in cash, without interest OR ☐- use my contributions to purchase shares on the next Purchase
Date. I understand that I cannot resume participation until the start of the next Offering Period and must timely file a new
enrollment form to do so.
Note: No future contributions will be made if you elect to discontinue contributions or withdraw from the ESPP. You may enroll in
subsequent Offering Periods.
SECTION 6:
COMPLIANCE WITH LAW
Unless there is an available exemption from any registration, qualification or other legal requirement applicable to the shares of Common
Stock the Company shall not be required to deliver any shares under the ESPP prior to the completion of any registration or qualification
of the shares under any applicable law, or prior to obtaining any approval or other clearance from any local, state, federal or foreign
governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, deem necessary or
advisable. I agree that the Company shall have unilateral authority to amend the ESPP and this Agreement without my consent to the
extent necessary to comply with securities or other laws applicable to the issuance of shares.
SECTION 7:
NO ADVICE REGARDING GRANT
The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding my
participation in the ESPP or my acquisition or sale of shares of Common Stock. I understand that I should consult with my own personal
tax, legal and financial advisors regarding my participation in the ESPP before taking any action related to the ESPP.
SECTION 8:
ELECTRONIC DELIVERY AND ACCEPTANCE
The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the ESPP by
electronic means. I hereby consent to receive such documents by electronic delivery and agree to participate in the ESPP through an on-
line or electronic system established and maintained by the Company or a third party designated by the Company.
SECTION 9:
ACKNOWLEDGEMENT AND SIGNATURE
I acknowledge that I have received a copy of the ESPP and the ESPP Prospectus (which summarizes the major features of the ESPP). I
have read the ESPP and the ESPP Prospectus and my signature below indicates that I hereby agree to be bound by the terms of the ESPP.
Signature: Date:
Exhibit 10.6
February 18, 2021
Brian Armstrong
Dear Brian:
You will continue to serve as the Chief Executive Officer, and as Co-Founder, of Coinbase Global, Inc. and be employed by Coinbase, Inc. (the “Company”), reporting to
Coinbase Global, Inc.’s Board of Directors, on the terms of this letter agreement.
1. Cash Compensation. In this position, the Company will pay you an annual base salary payable in accordance with the Company’s standard payroll schedule. Your
pay will be periodically reviewed as a part of the Company’s regular reviews of compensation.
2. Employee Benefits. You will continue to be eligible to participate in a number of Company-sponsored benefits to the extent that you comply with the eligibility
requirements of each such benefit plan. The Company, in its sole discretion, may amend, suspend or terminate its employee benefits at any time, with or without notice.
3. Termination Benefits. You will continue to be eligible to receive certain change in control and severance payments and benefits under the Company’s Change of
Control and Severance Policy (the “Severance Policy”) and the participation letter between you and the Company, dated September 16, 2019(the “Participation Letter”), in
each case, attached to this offer letter as Exhibit A.
4. Confidentiality Agreement. By signing this letter agreement, you reaffirm the terms and conditions of the Confidential Information, Invention Assignment and
Arbitration Agreement by and between you and the Company.
5. No Conflicting Obligations. You understand and agree that by signing this letter agreement, you represent to the Company that your performance will not breach any
other agreement to which you are a party with any third party and that you have not, and will not during the term of your employment with the Company, enter into any oral
or written agreement with any third party in conflict with any of the provisions of this letter or the Company’s policies. You are not to bring with you to the Company, or use
or disclose to any person associated with the Company, any confidential or proprietary information belonging to any former employer or other person or entity with respect to
which you owe an obligation of confidentiality under any agreement or otherwise. The Company does not need and will not use such information and we will assist you in
any way possible to preserve and protect the confidentiality of proprietary information belonging to third parties. Also, we expect you to abide by any obligations to refrain
from soliciting any person employed by or otherwise associated with any former employer and suggest that you refrain from having any contact with such persons until such
time as any non-solicitation obligation expires.
6. Outside Activities. While you render services to the Company, you agree that you will not engage in any other employment, consulting or other business activity
without the written consent of the Company, it being understood that nothing herein shall prohibit any activity for which the Company has provided consent prior to the date
hereof. In addition, while you render services to the Company, you will not assist any person or entity in competing with the Company, in preparing to compete with the
Company or in hiring any employees or consultants of the Company.
7. Equal Employment Opportunity. The Company is an equal opportunity employer and conducts its employment practices based on business needs and in a manner
that treats employees and applicants on the basis of merit and experience. The Company prohibits unlawful discrimination on the basis of race, color, religion, sex, pregnancy,
national origin, citizenship, ancestry, age, physical or mental disability, veteran status, marital status, domestic partner status, sexual orientation, or any other consideration
made unlawful by federal, state or local laws.
8. General Obligations. As an employee, you will be expected to continue to adhere to the Company’s standards of professionalism, loyalty, integrity, honesty,
reliability and respect for all. You will also be expected to continue to comply with the Company’s policies and procedures. The Company is an equal opportunity employer.
9. At-Will Employment. Subject to the Company’s current Amended and Restated Certificate of Incorporation, the Company’s Second Amended and Restated Bylaws,
the Company’s Amended and Restated Voting Agreement, the Severance Policy and Participation Letter, and any other governance documents of the Company, in each case
as may be amended from time to time, in all respects:
a. Your employment with the Company continues to be for no specific period of time. Your employment with the Company will continue to be on an “at will”
basis, meaning that either you or the Company may terminate your employment at any time for any reason or no reason.
b. The Company reserves the right to modify or amend the terms of your employment at any time for any reason.
c. Although your job duties, title, compensation and benefits, as well as the Company’s personnel policies and procedures, may change from time to time, the “at
will” nature of your employment may only be changed in an express written agreement signed by you and the Company’s Board of Directors.
10. Withholdings. All forms of compensation paid to you as an employee of the Company shall be less all applicable withholdings.
11. Section 409A. It is intended that all of the severance benefits and other payments payable under this letter agreement satisfy, to the greatest extent possible, the
exemptions from the application of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code” and “Section 409A”) provided under Treasury Regulations
1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9), and this letter agreement will be construed to the greatest extent possible as consistent with those provisions, and to the
extent not so exempt, this letter agreement (and any definitions hereunder) will be construed in a manner that complies with Section 409A. All payments and benefits that are
payable upon a termination of employment hereunder shall be paid or provided only upon your “separation from service” from the Company (within the meaning of Section
409A).
[SIGNATURE PAGE FOLLOWS]
Subject to section 9, this letter agreement supersedes and replaces any prior understandings or agreements, whether oral, written or implied, between you and the Company
regarding the matters described in this letter (other than the Company’s current Amended and Restated Certificate of Incorporation, the Company’s Second Amended and
Restated Bylaws, the Company’s Amended and Restated Voting Agreement, the Severance Policy and Participation Letter, and any other governance documents of the
Company, in each case as may be amended from time to time). This letter will be governed by the laws of California, without regard to its conflict of laws provisions.
Very truly yours,
COINBASE, INC.
/s/ Fred Wilson
By: FRED WILSON on behalf of the Board of
Directors of Coinbase Global, Inc.
ACCEPTED AND AGREED:
BRIAN ARMSTRONG
/s/ Brian Armstrong
Signature
February 22, 2021
Date
[SIGNATURE PAGE TO AMENDED AND RESTATED OFFER LETTER]
Exhibit A
COINBASE GLOBAL, INC.
100 Pine Street, Suite 1250
San Francisco, CA 94111
September 16, 2019
Brian Armstrong
Re: Participation in Change of Control Severance Policy
Dear Brian:
The purpose of this letter is to inform you that you have been designated by Coinbase Global, Inc., a Delaware corporation (the “Company”), as a participant in the
Company’s Change of Control Severance Policy, a copy of which is enclosed herewith (as in effect from time to time, the “Policy”). Capitalized terms used in this letter but
not otherwise defined herein have the meanings given to those terms in the Policy.
Subject to the terms and conditions of the Policy, if you undergo a COC Qualifying Termination and satisfy the Release Conditions (as well as the other terms and conditions
set forth in the Policy), the Company will provide you the following amounts of severance benefits described in the Policy:
Severance benefits under Section 2(a): 12 months
COBRA subsidization under Section 2(b): 12 months
Equity acceleration under Section 2(c): 100%
Your participation in the Policy is governed in all respects by the terms and conditions of the Policy, and in the event of any conflict between this letter and the Policy, the
Policy will control.
Sincerely,
Coinbase Global, Inc.
/s/ Alesia Haas
Alesia Haas, Chief Financial Officer
Acknowledged and agreed,
Signature: /s/ Brian Armstrong
Printed Name: Brian Armstrong
Date: 9/17/2019
Exhibit 10.7
February 24, 2021
Surojit Chatterjee
Dear Surojit:
This letter agreement amends and restates any prior offer letter(s) between you and Coinbase, Inc. (the “Company”) (the “Prior Agreement”) effective February 24,
2021.
You will continue to work in the role of Chief Product Officer, reporting to the Company’s Chief Executive Officer.
1. Cash Compensation. In this position, the Company will pay you an annual base salary payable in accordance with the Company’s standard payroll schedule. Your
pay will be periodically reviewed as a part of the Company’s regular reviews of compensation.
2. Signing Advance. You will continue to be eligible to receive any unpaid portion of the signing advance set forth in the Prior Agreement, in accordance with its terms
(the “Signing Advance”), less any amounts paid as of the date of this letter agreement.
3. Employee Benefits. You will continue to be eligible to participate in a number of Company-sponsored benefits to the extent that you comply with the eligibility
requirements of each such benefit plan. The Company, in its sole discretion, may amend, suspend or terminate its employee benefits at any time, with or without notice.
4. Termination Benefits.
a. Change of Control. You will continue to be eligible to receive certain change in control and severance payments and benefits under the Company’s Change of
Control and Severance Policy (the “Severance Policy”) and the participation letter between you and the Company, dated December 6, 2019 (the “Participation Letter”), in
each case, attached to this offer letter as Exhibit A.
b. Unrelated to a Change of Control, in the event of your Separation (as defined in the Severance Policy) by the Company without Cause or your resignation for
Good Reason, that is not a COC Qualifying Termination (as defined in the Severance Policy), subject to your execution and delivery to the Company of a Release (as defined
in the Severance Policy), and your satisfaction of all conditions to make the Release effective within forty-five (45) days following the date of such termination, you will be
entitled to a lump sum payment in an amount equal to six (6) months of your then-current annual base salary, payable on the first regularly scheduled payroll date after the
45 day following your termination date, provided that the Release conditions have been satisfied. In the event of your termination of employment by the Company without
Cause or your resignation for Good Reason (as defined in the Severance Policy) before the two (2) year anniversary of your employment start date with the Company and
provided that you execute and deliver to the Company a a Release and satisfy all conditions to make the Release effective within forty-five (45) days following the date of
your Separation, and subject to the approval of the Company’s board of directors, the Company will extend the period for you to exercise the vested portion of your Company
stock option granted on February 5, 2020, from three (3) months following your Separation date to seven (7) years following your Separation date.
5. Confidentiality Agreement. By signing this letter agreement, you reaffirm the terms and conditions of the Confidential Information, Invention Assignment and
Arbitration Agreement by and between you and the Company.
th
6. No Conflicting Obligations. You understand and agree that by signing this letter agreement, you represent to the Company that your performance will not breach any
other agreement to which you are a party and that you have not, and will not during the term of your employment with the Company, enter into any oral or written agreement
in conflict with any of the provisions of this letter or the Company’s policies. You are not to bring with you to the Company, or use or disclose to any person associated with
the Company, any confidential or proprietary information belonging to any former employer or other person or entity with respect to which you owe an obligation of
confidentiality under any agreement or otherwise. The Company does not need and will not use such information and we will assist you in any way possible to preserve and
protect the confidentiality of proprietary information belonging to third parties. Also, we expect you to abide by any obligations to refrain from soliciting any person
employed by or otherwise associated with any former employer and suggest that you refrain from having any contact with such persons until such time as any non-solicitation
obligation expires.
7. Outside Activities. While you render services to the Company, you agree that you will not engage in any other employment, consulting or other business activity
without the written consent of the Company. In addition, while you render services to the Company, you will not assist any person or entity in competing with the Company,
in preparing to compete with the Company or in hiring any employees or consultants of the Company.
8. Equal Employment Opportunity. The Company is an equal opportunity employer and conducts its employment practices based on business needs and in a manner
that treats employees and applicants on the basis of merit and experience. The Company prohibits unlawful discrimination on the basis of race, color, religion, sex, pregnancy,
national origin, citizenship, ancestry, age, physical or mental disability, veteran status, marital status, domestic partner status, sexual orientation, or any other consideration
made unlawful by federal, state or local laws.
9. General Obligations. As an employee, you will be expected to continue to adhere to the Company’s standards of professionalism, loyalty, integrity, honesty,
reliability and respect for all. You will also be expected to continue to comply with the Company’s policies and procedures. The Company is an equal opportunity employer.
10. At-Will Employment. Your employment with the Company continues to be for no specific period of time. Your employment with the Company will continue to be
on an “at will” basis, meaning that either you or the Company may terminate your employment at any time for any reason or no reason. The Company also reserves the right
to modify or amend the terms of your employment at any time for any reason. Any contrary representations which may have been made to you are superseded by this letter
agreement. This is the full and complete agreement between you and the Company on this term. Although your job duties, title, compensation and benefits, as well as the
Company’s personnel policies and procedures, may change from time to time, the “at will” nature of your employment may only be changed in an express written agreement
signed by you and the Company’s Board of Directors.
11. Withholdings. All forms of compensation paid to you as an employee of the Company shall be less all applicable withholdings.
12. Section 409A. It is intended that all of the severance benefits and other payments payable under this letter agreement satisfy, to the greatest extent possible, the
exemptions from the application of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code” and “Section 409A”) provided under Treasury Regulations
1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9), and this letter agreement will be construed to the greatest extent possible as consistent with those provisions, and to the
extent not so exempt, this letter agreement (and any definitions hereunder) will be construed in a manner
that complies with Section 409A. All payments and benefits that are payable upon a termination of employment hereunder shall be paid or provided only upon your
“separation from service” from the Company (within the meaning of Section 409A).
[SIGNATURE PAGE FOLLOWS]
This letter agreement supersedes and replaces any prior understandings or agreements, whether oral, written or implied, between you and the Company regarding the matters
described in this letter (other than the Severance Policy and Participation Letter), including, without limitation, the Prior Agreement. This letter will be governed by the laws
of California, without regard to its conflict of laws provisions.
Very truly yours,
COINBASE, INC.
/s/ Paul Grewal
By: Paul Grewal
Chief Legal Officer, Coinbase, Inc.
ACCEPTED AND AGREED:
SUROJIT CHATTERJEE
/s/ Surojit Chatterjee
Signature
February 24, 2021
Date
[SIGNATURE PAGE TO AMENDED AND RESTATED OFFER LETTER]
Exhibit A
COINBASE GLOBAL, INC.
100 Pine Street, Suite 1250
San Francisco, CA 94111
December 6, 2019
Surojit Chatterjee
Re: Participation in Change of Control Severance Policy
Dear Surojit:
The purpose of this letter is to inform you that you have been designated by Coinbase Global, Inc., a Delaware corporation (the “Company”), as a participant in the
Company’s Change of Control Severance Policy, a copy of which is enclosed herewith (as in effect from time to time, the “Policy”). Capitalized terms used in this letter but
not otherwise defined herein have the meanings given to those terms in the Policy.
Subject to the terms and conditions of the Policy, if you undergo a COC Qualifying Termination and satisfy the Release Conditions (as well as the other terms and conditions
set forth in the Policy), the Company will provide you the following amounts of severance benefits described in the Policy:
Severance benefits under Section 2(a): 12 months
COBRA subsidization under Section 2(b): 12 months
Equity acceleration under Section 2(c): 100%
Your participation in the Policy is governed in all respects by the terms and conditions of the Policy, and in the event of any conflict between this letter and the Policy, the Policy will control.
Sincerely,
Coinbase Global, Inc.
/s/ Brian Armstrong
Brian Armstrong, Chief Executive Officer
Acknowledged and agreed,
Signature: /s/ Surojit Chatterjee
Printed Name: Surojit Chatterjee
Date: 12/9/2019
Exhibit 10.8
February 11, 2021
Paul Grewal
Dear Paul:
This letter agreement amends and restates the offer letter between you and Coinbase, Inc. (the “Company”), dated June 24, 2020 (the “Prior Agreement”) effective
February 19, 2021.
You will continue to work in the role of Chief Legal Officer, reporting to the Company’s President and Chief Operating Officer.
1. Cash Compensation. In this position, the Company will pay you an annual base salary payable in accordance with the Company’s standard payroll schedule. Your
pay will be periodically reviewed as a part of the Company’s regular reviews of compensation.
2. Signing Bonus Clawback. In accordance with the terms of the Prior Agreement, in the event that your employment with the Company ends (but not due to
downsizing or layoff) within twelve (12) months of your first day of employment, you agree to repay the signing bonus set forth in the Prior Agreement, pro-rated with
respect to the amount of time you have been employed.
3. Employee Benefits. You will continue to be eligible to participate in a number of Company-sponsored benefits to the extent that you comply with the eligibility
requirements of each such benefit plan. The Company, in its sole discretion, may amend, suspend or terminate its employee benefits at any time, with or without notice.
4. Termination Benefits. You will continue to be eligible to receive certain change in control and severance payments and benefits under the Company’s Change of
Control and Severance Policy (the “Severance Policy”) and the participation letter between you and the Company, dated June 24, 2020 (the “Participation Letter”), in each
case, attached to this offer letter as Exhibit A.
5. Confidentiality Agreement. By signing this letter agreement, you reaffirm the terms and conditions of the Confidential Information, Invention Assignment and
Arbitration Agreement by and between you and the Company.
6. No Conflicting Obligations. You understand and agree that by signing this letter agreement, you represent to the Company that your performance will not breach any
other agreement to which you are a party and that you have not, and will not during the term of your employment with the Company, enter into any oral or written agreement
in conflict with any of the provisions of this letter or the Company’s policies. You are not to bring with you to the Company, or use or disclose to any person associated with
the Company, any confidential or proprietary information belonging to any former employer or other person or entity with respect to which you owe an obligation of
confidentiality under any agreement or otherwise. The Company does not need and will not use such information and we will assist you in any way possible to preserve and
protect the confidentiality of proprietary information belonging to third parties. Also, we expect you to abide by any obligations to refrain from soliciting any person
employed by or otherwise associated with any former employer and suggest that you refrain from having any contact with such persons until such time as any non-solicitation
obligation expires.
7. Outside Activities. While you render services to the Company, you agree that you will not engage in any other employment, consulting or other business activity
without the written consent of the
Company. In addition, while you render services to the Company, you will not assist any person or entity in competing with the Company, in preparing to compete with the
Company or in hiring any employees or consultants of the Company.
8. Equal Employment Opportunity. The Company is an equal opportunity employer and conducts its employment practices based on business needs and in a manner
that treats employees and applicants on the basis of merit and experience. The Company prohibits unlawful discrimination on the basis of race, color, religion, sex, pregnancy,
national origin, citizenship, ancestry, age, physical or mental disability, veteran status, marital status, domestic partner status, sexual orientation, or any other consideration
made unlawful by federal, state or local laws.
9. General Obligations. As an employee, you will be expected to continue to adhere to the Company’s standards of professionalism, loyalty, integrity, honesty,
reliability and respect for all. You will also be expected to continue to comply with the Company’s policies and procedures. The Company is an equal opportunity employer.
10. At-Will Employment. Your employment with the Company continues to be for no specific period of time. Your employment with the Company will continue to be
on an “at will” basis, meaning that either you or the Company may terminate your employment at any time for any reason or no reason. The Company also reserves the right
to modify or amend the terms of your employment at any time for any reason. Any contrary representations which may have been made to you are superseded by this letter
agreement. This is the full and complete agreement between you and the Company on this term. Although your job duties, title, compensation and benefits, as well as the
Company’s personnel policies and procedures, may change from time to time, the “at will” nature of your employment may only be changed in an express written agreement
signed by you and the Company’s Board of Directors.
11. Withholdings. All forms of compensation paid to you as an employee of the Company shall be less all applicable withholdings.
12. Section 409A. It is intended that all of the severance benefits and other payments payable under this letter agreement satisfy, to the greatest extent possible, the
exemptions from the application of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code” and “Section 409A”) provided under Treasury Regulations
1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9), and this letter agreement will be construed to the greatest extent possible as consistent with those provisions, and to the
extent not so exempt, this letter agreement (and any definitions hereunder) will be construed in a manner that complies with Section 409A. All payments and benefits that are
payable upon a termination of employment hereunder shall be paid or provided only upon your “separation from service” from the Company (within the meaning of Section
409A).
[SIGNATURE PAGE FOLLOWS]
This letter agreement supersedes and replaces any prior understandings or agreements, whether oral, written or implied, between you and the Company regarding the
matters described in this letter (other than the Severance Policy and Participation Letter), including, without limitation, the Prior Agreement. This letter will be governed by
the laws of California, without regard to its conflict of laws provisions.
Very truly yours,
COINBASE, INC.
/s/ Emilie Choi
By: Emilie Choi
Chief Operating Officer, Coinbase, Inc.
ACCEPTED AND AGREED:
PAUL GREWAL
/s/ Paul Grewal
Signature
February 16, 2021
Date
[SIGNATURE PAGE TO AMENDED AND RESTATED OFFER LETTER]
Exhibit A
COINBASE GLOBAL, INC.
100 Pine Street, Suite 1250
San Francisco, CA 94111
June 24, 2020
Paul Grewal
Re: Participation in Change of Control Severance Policy Dear Paul:
The purpose of this letter is to inform you that you have been designated by Coinbase Global, Inc., a Delaware corporation (the “Company”), as a participant in the
Company’s Change of Control Severance Policy, a copy of which is enclosed herewith (as in effect from time to time, the “Policy”). Capitalized terms used in this letter but
not otherwise defined herein have the meanings given to those terms in the Policy.
Subject to the terms and conditions of the Policy, if you undergo a COC Qualifying Termination and satisfy the Release Conditions (as well as the other terms and conditions
set forth in the Policy), the Company will provide you the following amounts of severance benefits described in the Policy:
Severance benefits under Section 2(a): 12 months
COBRA subsidization under Section 2(b): 12 months
Equity acceleration under Section 2(c): 100%
Your participation in the Policy is governed in all respects by the terms and conditions of the Policy, and in the event of any conflict between this letter and the Policy, the
Policy will control.
Sincerely,
Coinbase Global, Inc.
/s/ Brian Armstrong
Brian Armstrong, Chief Executive Officer
Acknowledged and agreed,
Signature: /s/ Paul Grewal
Printed Name: Paul Grewal
Date: 6/26/2020
Exhibit 10.9
CHANGE OF CONTROL AND SEVERANCE POLICY
This Change of Control and Severance Policy (the “Policy”) of Coinbase Global, Inc., a Delaware corporation (the “Company”), is effective as of February 23, 2021
(the “Effective Date”).
1. General.
(a) Purpose and Participation. The purpose of this Policy is to provide specified benefits to employees Level 11 or 12 and above of the Company designated by
the Company’s board of directors (the “Board”) or compensation committee thereof (the “Committee”) (such employees, the “Participants”), in order to induce the
Participants to remain employed by the Company. If the Administrator (as defined below) so determines, in its sole discretion, Participants may be provided participation
letters or agreements (“Participation Letters”) memorializing their participation in this Policy in accordance with the terms herewith.
(b) Term and Automatic Renewal. This Policy will terminate the third (3rd) anniversary of the Effective Date, provided that if a definitive agreement relating to
a Change of Control has been signed by the Company on or before the Expiration Date, then this Policy will remain in effect through the date the Company has met all of its
obligations hereunder. This Policy will renew automatically and continue in effect for three (3) year periods measured from the initial Expiration Date, unless the Company
provides each Participant hereunder notice of nonrenewal at least three (3) months prior to the date on which this Policy would otherwise renew.
2. Qualifying Termination. If a Participant is Level 12 or above and is subject to a Qualifying Termination, then subject to the terms and conditions set forth in this
Policy, the Participant will be entitled to the following benefits:
(a) Severance Benefits.
(i) The Company will pay the Participant six (6) months, or such other number of months as may be set forth in the Participant’s Participation Letter, of
his or her base salary at the rate in effect immediately prior to the actions that resulted in the Qualifying Termination.
(ii) The Participant will receive his or her severance payment in a cash lump sum in accordance with the Company’s standard payroll procedures, which
payment will be made no later than the first regular payroll date occurring after the sixtieth (60 ) day following the Separation, provided that the Release Conditions have
been satisfied.
(b) Continued Employee Benefits.
(i) If Participant timely elects continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the
Company will continue to pay the employer portion of Participant’s COBRA premiums on behalf of the Participant (and his or her eligible dependents) for continued
coverage under the Company’s welfare benefit plans for up to six (6) months, or such other number of months as may be set forth in the Participant’s Participation Letter,
following the Participant’s Separation, in any case, only until Participant is eligible to be covered under substantially equivalent group insurance plans of a subsequent
employer, provided, however, that if the Release Conditions are not satisfied, then the COBRA subsidies described in this subsection (i) will immediately cease as of the
sixtieth (60 ) day following the Separation, and any COBRA subsidies previously paid by
th
th
1
the Company will immediately become due and repayable in full (gross of any applicable taxes) by the Participant.
(ii) Notwithstanding the foregoing, if the Company, in its sole discretion, determines that it cannot provide the foregoing subsidy of COBRA coverage
without potentially violating, or causing the Company to incur additional expense as a result of noncompliance with, applicable law (including, without limitation,
Section 2716 of the Public Health Service Act), then the Company instead will provide Participant a taxable monthly payment in an amount equal to the employer portion of
the monthly COBRA premium for the Participant (and his or her eligible dependents) to continue the coverage in effect on the date of the Separation, which amounts will:
(A) be based on the premium for the first month of COBRA coverage, (B) not be grossed up to account for taxes and/or withholding on such amounts, (C) be paid regardless
of whether Participant elects COBRA continuation coverage, (D) commence on the later of (1) the first day of the month following the month in which Participant experiences
a Separation and (2) the effective date of the Company’s determination of violation of applicable law and (E) end on the effective date on which Participant becomes covered
by a group insurance plan of a subsequent employer.
(iii) Any taxable payments under the foregoing subsection (ii) will not be paid before the first business day occurring after the sixtieth (60 ) day following
the Separation and, once they commence, will include any unpaid amounts accrued from the date of Participant’s Separation (to the extent not otherwise satisfied with
continuation coverage). If the sixty (60)-day period described in the preceding sentence and the ten (10)-day period described in the definition of “Good Reason” below,
together, span two calendar years, then the payments that constitute deferred compensation subject to Section 409A will not in any case be paid in the first calendar year.
3. COC Qualifying Termination. If a Participant is Level 11 or above and is subject to a COC Qualifying Termination, then subject to the terms and conditions set
forth in this Policy, the Participant will be entitled to the following benefits:
(a) Severance Benefits.
(i) The Company will pay the Participant twelve (12) months, or such other number of months as may be set forth in the Participant’s Participation
Letter, of his or her base salary at the rate in effect immediately prior to the actions that resulted in the COC Qualifying Termination.
(ii) The Participant will receive his or her severance payment in a cash lump sum in accordance with the Company’s standard payroll procedures, which
payment will be made no later than the first regular payroll date occurring after the sixtieth (60 ) day following the Separation, provided that the Release Conditions have
been satisfied.
(b) Continued Employee Benefits.
(i) If Participant timely elects continued coverage under COBRA, the Company will continue to pay the employer portion of Participant’s COBRA
premiums on behalf of the Participant (and his or her eligible dependents) for continued coverage under the Company’s welfare benefit plans for up to twelve (12) months, or
such other number of months as may be set forth in the Participant’s Participation Letter, following the Participant’s Separation, in any case, only until Participant is eligible
to be covered under substantially equivalent group insurance plans of a subsequent employer, provided, however, that if the Release Conditions are not satisfied, then the
COBRA subsidies described in this subsection (i) will immediately cease as of the sixtieth (60 ) day following the Separation, and any
th
th
th
2
COBRA subsidies previously paid by the Company will immediately become due and repayable in full (gross of any applicable taxes) by the Participant.
(ii) Notwithstanding the foregoing, if the Company, in its sole discretion, determines that it cannot provide the foregoing subsidy of COBRA coverage
without potentially violating, or causing the Company to incur additional expense as a result of noncompliance with, applicable law (including, without limitation,
Section 2716 of the Public Health Service Act), then the Company instead will provide Participant a taxable monthly payment in an amount equal to the employer portion of
the monthly COBRA premium for the Participant (and his or her eligible dependents) to continue the coverage in effect on the date of the Separation, which amounts will:
(A) be based on the premium for the first month of COBRA coverage, (B) not be grossed up to account for taxes and/or withholding on such amounts, (C) be paid regardless
of whether Participant elects COBRA continuation coverage, (D) commence on the later of (1) the first day of the month following the month in which Participant experiences
a Separation and (2) the effective date of the Company’s determination of violation of applicable law and (E) end on the effective date on which Participant becomes covered
by a group insurance plan of a subsequent employer.
(iii) Any taxable payments under the foregoing subsection (ii) will not be paid before the first business day occurring after the sixtieth (60 ) day following
the Separation and, once they commence, will include any unpaid amounts accrued from the date of Participant’s Separation (to the extent not otherwise satisfied with
continuation coverage). If the sixty (60)-day period described in the preceding sentence and the ten (10)-day period described in the definition of “Good Reason” below,
together, span two calendar years, then the payments that constitute deferred compensation subject to Section 409A will not in any case be paid in the first calendar year.
(c) Equity.
(i) Each of Participant’s then-outstanding Equity Awards, including awards that would otherwise vest only upon satisfaction of performance criteria, will
accelerate and become vested and exercisable as to, if such Participant is Level 11, fifty percent (50%), or, if such Participant is Level 12 or above, one hundred percent
(100%), of the then-unvested and, in the case of performance-based awards, if such Participant is Level 11, fifty percent (50%), or, if such Participant is Level 12 or above,
one hundred percent (100%), of the then-unearned (at the actual performance level or, if the actual performance level has not been determined at the time of such COC
Qualifying Termination, at achievement of target or, if better, actual performance through the end of the performance period, projected based on information available as of
immediately prior to such Qualifying Termination, in any case, unless more-favorable acceleration terms are otherwise provided in the award agreement applicable to such
performance-based award) shares subject to the Equity Award.
(ii) Subject to Section 4 below, the accelerated vesting described above in this subsection (c) will be effective as of the Separation, and the Participant’s
Equity Awards will remain outstanding (including as to the then-unvested portion thereof), notwithstanding anything to the contrary in the applicable award agreement(s), for
the minimum amount of time necessary following a Separation that occurs other than within twelve (12) months following Change of Control but that would constitute a COC
Qualifying Termination if a Change of Control occurs within three (3) months following such Separation.
(iii) This subsection (c) expressly supersedes the acceleration provision(s), if any, set forth in Equity Awards granted prior to the effective date hereof, to
the extent (if at all) that the former
th
3
and the latter conflict, and applies to all future Equity Awards, except to the extent the applicable award agreement provides otherwise in a provision that expressly references
this provision.
4. Release Conditions. The benefits under Section 2 and Section 3 will not apply unless the Participant (i) has executed a general release (in a form prescribed by the
Company) of all known and unknown claims that he or she may then have against the Company and/or persons affiliated with the Company and such release has become
effective and (ii) has agreed not to prosecute any legal action or other proceeding based upon any of such claims. The release must be in the form prescribed by the Company
(to include, in the Company’s sole discretion, such standard clauses as confidentiality, cooperation and non-disparagement) without alterations (this document effecting the
foregoing, the “Release”), which the Company will deliver to the Participant within thirty (30) days after the Participant’s Separation. The Participant must execute and return
the Release within the time period specified in the form and, in any case, within sixty (60) days following Participant’s Separation. “Release Conditions” means: (i) Company
has timely received the Participant’s executed Release and (ii) any rescission period applicable to the Participant’s executed Release has expired (without Participant having
rescinded the executed Release).
5. Accrued Compensation and Benefits. In connection with any termination of employment, whether a Qualifying Termination, COC Qualifying Termination or
otherwise, the Company will pay Participant’s earned but unpaid base salary and other vested but unpaid cash entitlements for the period through and including the
termination of employment, including unreimbursed documented business expenses incurred by Participant through and including the date of termination (all the foregoing,
collectively, “Accrued Compensation and Expenses”), as required by law and the applicable Company plan or policy. Participant will also be entitled to any other vested
benefits earned by Participant for the period through and including the termination date of Participant’s employment under any other employee benefit plans and arrangements
maintained by the Company, in accordance with the terms of such plans and arrangements, except as modified herein.
6. Certain Definitions.
(a) “Cause” means, with respect to a Participant, any of the following: (i) any material breach by the Participant of any material written agreement between the
Participant and the Company and the Participant’s failure to cure such breach within thirty (30) days after receiving written notice thereof; (ii) any failure by the Participant to
comply with the Company’s material written policies or rules, as they may be in effect from time to time; (iii) neglect or persistent unsatisfactory performance of the
Participant’s duties and the Participant’s failure to cure such condition within thirty (30) days after receiving written notice thereof; (iv) the Participant’s repeated failure to
follow reasonable and lawful instructions from the Board or the Company’s Chief Executive Officer and the Participant’s failure to cure such condition within 30 days after
receiving written notice thereof; (v) the Participant’s conviction of, or plea of guilty or nolo contendre to, any felony or crime that results in, or is reasonably expected to
result in, a material adverse effect on the business or reputation of the Company; (vi) the Participant’s commission of or participation in an act of fraud against the Company;
(vii) the Participant’s intentional material damage to the Company’s business, property or reputation; or (viii) the Participant’s unauthorized use or disclosure of any
proprietary information or trade secrets of the Company or any other party to whom the Participant owe an obligation of nondisclosure as a result of the Participant’s
relationship with the Company.
(b) “Code” means the Internal Revenue Code of 1986, as amended.
4
(c) “Change of Control” means a “Corporate Transaction” as defined in the Plan, provided that the transaction or series of transactions also qualifies as a “change
in control event” under U.S. Treasury Regulation 1.409A-3(i)(5).
(d) “COC Qualifying Termination” means, with respect to a Participant, his or her Separation (i) occurring within three (3) months before or twelve (12) months
after a Change of Control and (ii) resulting from (A) the Company or its successor terminating the Participant’s employment for any reason other than Cause or (B) the
Participant voluntarily resigning his or her employment for Good Reason, provided, in any case, that a termination or resignation due to the Participant’s death or disability
will not constitute a COC Qualifying Termination.
(e) “Equity Awards” means all Participants’ options to purchase shares of Company common stock, as well as all other stock-based awards, including, but not
limited to, stock bonus awards, restricted stock, restricted stock units and stock appreciation rights.
(f) “Good Reason” means, with respect to a Participant, any of the following without Participant’s express written consent: (i) a material reduction in
Participant’s base salary, except in a general reduction applicable to the Company’s management team, (ii) a material reduction in Participant’s overall responsibilities,
authority or scope of duties, provided that a reduction in title alone shall not constitute a reduction in responsibilities, authority or scope of duties and further provided that a
reduction in Participant’s responsibilities, authority and/or scope of duties following a Change of Control shall not constitute Good Reason if Participant is given a position of
materially similar or greater overall responsibility, authority and/or scope of duties within the acquiring company, taking into appropriate consideration that a nominally lower
hierarchical role in a larger company may involve responsibilities, authority and/or scope of duties greater than those of a nominally higher role in the hierarchy of a smaller
company, or (iii) a relocation of Participant’s principal workplace that increases Participant’s one-way commute by at least fifty (50) miles; however, for Participant’s
resignation to qualify as a resignation for Good Reason, (i) Participant must provide written notice to the Company of the occurrence(s) that Participant believes may provide
Participant Good Reason to resign within fifteen (15) days following the initial occurrence(s), (iii) the Company must fail to cure such occurrence(s) within thirty (30) days
after Participant’s notice is received by the Company and, (iv) provided that the Company has failed to cure such occurrence(s) within such thirty (30) day cure period,
Participant must terminate Participant’s employment immediately following the expiration of such cure period or, if applicable, the Company’s earlier written notice to
Participant that the Company will not cure such occurrence(s).
(g) “Plan” means the Company’s 2021 Equity Incentive Plan, as may be amended from time to time.
(h) “Qualifying Termination” means, with respect to a Participant, his or her Separation resulting from (i) the Company terminating the Participant’s
employment for any reason other than Cause or (ii) the Participant voluntarily resigning his or her employment for Good Reason, in each case, occurring outside of the three
(3) months prior to or twelve (12) months following a Change of Control, provided, in any case, that a termination or resignation due to the Participant’s death or disability
will not constitute a Qualifying Termination.
(i) “Separation” means a “separation from service” (as such term is defined in the regulations under Section 409A of the Code).
5
7. Golden Parachute Taxes.
(a) Best After-Tax Result. In the event that any payment or benefit received or to be received by Participant pursuant to this Policy or otherwise (such payments
and benefits, “Payments”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code and, (ii) but for this subsection (a), be subject to the
excise tax imposed by Section 4999 of the Code, any successor provisions, or any comparable federal, state, local or foreign excise tax (any of these, as applicable, the
“Excise Tax”), then, subject to the provisions of Section 8, such Payments will be provided either (A) in full, pursuant to the terms of this Policy or any other applicable
agreement, or (B) as to such lesser extent as would result in no portion of such Payments being subject to the Excise Tax (such lesser amount, the “Reduced Amount”),
whichever of the foregoing amounts, taking into account the applicable federal, state, local and foreign income, employment and other taxes and the Excise Tax (including,
without limitation, any interest or penalties on such taxes), results in the receipt by Participant, on an after-tax basis, of the greatest amount of payments and benefits provided
for hereunder or otherwise, notwithstanding that all or some portion of such Payments may be subject to the Excise Tax. If the Internal Revenue Service (the “IRS”)
determines that any Payment is subject to the Excise Tax, then the following subsection (b) will apply, and the enforcement thereof will be the exclusive remedy to the
Company.
(b) Adjustments. If, notwithstanding any reduction described in the foregoing subsection (a) (or in the absence of any such reduction), the IRS determines that
Participant is liable for the Excise Tax as a result of the receipt of one or more Payments, then Participant will be obligated to surrender or pay back to the Company, within
one-hundred twenty (120) days after a final IRS determination, the smallest amount, if any, as will be required to be surrendered or paid to the Company so that Participant’s
net proceeds with respect to such Payments (after taking into account the payment of the Excise Tax imposed on such Payments) will be maximized (such smallest amount,
the “Repayment Amount”). Notwithstanding the foregoing, the Repayment Amount with respect to such Payments will be zero (0) if a Repayment Amount of more than zero
(0) would not eliminate the Excise Tax imposed on such Payments or if a Repayment Amount of more than zero would not maximize the net amount received by Participant
from the Payments. If the Excise Tax is not eliminated pursuant to this subsection (b), Participant will pay the Excise Tax.
(c) Independent Tax Counsel. Unless the Company and Participant otherwise agree in writing, any determination required under this Section 7 will be made by
independent tax counsel (the “Independent Tax Counsel”) designated by the Company and reasonably acceptable to Participant, whose determination will be conclusive and
binding upon Participant and the Company for all purposes. For purposes of making the calculations required under this Section 7, Independent Tax Counsel may make
reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G
and 4999 of the Code, provided that Independent Tax Counsel will assume that Participant pays all taxes at the highest marginal rate. The Company and Participant will
furnish to Independent Tax Counsel such information and documents as Independent Tax Counsel may reasonably request in order to make a determination under this Section
7. The Company will bear all costs that Independent Tax Counsel may reasonably incur in connection with any calculations contemplated by this Section 7. In the event that
clause (B) above applies, then based on the information provided to Participant and the Company by Independent Tax Counsel, Participant may, in Participant’s sole
discretion and within thirty (30) days of the date on which Participant is provided with the information prepared by Independent Tax Counsel, determine which and how much
of the Payments (including the accelerated vesting of equity compensation awards) to be otherwise received by Participant will be eliminated or reduced (as long as after such
determination the
6
value (as calculated by Independent Tax Counsel in accordance with the provisions of Sections 280G and 4999 of the Code) of the amounts payable or distributable to
Participant equals the Reduced Amount).
8. Section 409A.
(a) Specified Employees. To the extent (i) any payments to which a Participant becomes entitled under this Policy, or any agreement or plan referenced herein, in
connection with the Participant’s Separation constitute deferred compensation subject to Section 409A of the Code and (ii) the Participant is deemed at the time of such
termination of employment to be a “specified” employee under Section 409A of the Code, then such payment or payments will not be made or commence until the earlier of
(i) six (6) months after the Participant’s Separation and (ii) the Participant’s death following such Separation, provided, however, that such deferral will be effected only to
the extent required to avoid adverse tax treatment to the Participant, including (without limitation) the additional twenty percent (20%) tax for which the Participant would
otherwise be liable under Section 409A(a)(1)(B) of the Code in the absence of such deferral. Upon the expiration of the applicable deferral period, any payments which would
have otherwise been made during that period (whether in a single sum or in installments) in the absence of this paragraph will be paid to the Participant (or his or her
beneficiary) in one lump sum without interest.
(b) Expense Reimbursements and In-Kind Benefits. Except as otherwise expressly provided herein, to the extent any expense reimbursement, or the provision
of any in-kind benefit, under this Policy (or otherwise referenced herein) is determined to be subject to (and not exempt from) Section 409A of the Code, the amount of any
such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year will not affect the expenses eligible for reimbursement or in kind
benefits to be provided in any other calendar year. In no event will any expenses be reimbursed for a Participant after the last day of the calendar year following the calendar
year in which the Participant incurred such expenses, and in no event will any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or
exchange for another benefit.
(c) Interpretation. To the extent that any provision of this Policy is ambiguous as to its exemption or compliance with Section 409A, the provision will be read
in such a manner so that all payments hereunder are exempt from Section 409A to the maximum permissible extent, and for any payments where such construction is not
tenable, that those payments comply with Section 409A to the maximum permissible extent. To the extent any payment under this Policy may be classified as a “short-term
deferral” within the meaning of Section 409A, such payment will be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under
another provision of Section 409A. Payments pursuant to this Policy (or referenced in this Policy) are intended to constitute separate payments for purposes of Section
1.409A-2(b)(2) of the regulations under Section 409A.
9. Miscellaneous Provisions.
(a) Administration. This Policy shall be administered by the Board or the Committee (either of these, as applicable, the “ Administrator”). All questions of
interpretation or application of this Policy shall be determined by the Administrator, and every finding, decision and determination made by the Administrator will, to the full
extent permitted by law, be final and binding upon all Participants. The Administrator will have full and exclusive discretionary authority to construe, interpret and apply the
terms of the Policy, to determine eligibility, to designate the Participants and to decide claims filed under the Policy.
7
(b) Other Arrangements. This Policy supersedes all cash severance arrangements and vesting acceleration arrangements (if any) under any agreement governing
Equity Awards, severance and salary continuation arrangements, programs and plans that were previously offered by the Company to Participants, including employment
agreements and offer letters, and by participating in this Policy, Participants waive their rights to such other benefits. In no event will any individual receive cash severance
benefits under both this Policy and any other vesting acceleration, severance pay or salary continuation program, plan or other arrangement with the Company. The vesting
acceleration provisions set forth in any employment agreement, offer letter or similar agreement between the Company and any Participant in effect on the Effective Date, to
the extent more favorable to the Participant, will continue to apply to the Equity Awards held by the Participant on such date.
(c) Dispute Resolution. To ensure rapid and economical resolution of any and all disputes that might arise in connection with this Policy, the Participants and the
Company agree that any and all disputes, claims, and causes of action, in law or equity, arising from or relating to this Policy or its enforcement, performance, breach or
interpretation, will be resolved solely and exclusively by final, binding and individual arbitration, by a single arbitrator in accordance with the Confidential Information,
Invention Assignment and Arbitration Agreement (CIIAA) Participant signed at the start of Participant’s employment. Nothing in this section, however, is intended to prevent
either party from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration. Each party to an arbitration or litigation
hereunder will be responsible for the payment of its own attorneys’ fees.
(d) Notice. Notices and all other communications contemplated by this Policy will be in writing and will be deemed to have been duly given when personally
delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid or deposited with Federal Express Corporation, with shipping
charges prepaid. Notices mailed to Participants will be addressed to each of them at the respective home address that he or she most recently communicated to the Company in
writing. Notices mailed to the Company will be addressed to its corporate headquarters, and all notices will be directed to the attention of its Secretary.
(e) Waiver. The Administrator may modify and/or terminate this Policy, in whole or in part, and/or add/remove Participants at any time, provided that no such
modification and/or termination will adversely affect any Participant’s rights under this Policy without such Participant’s prior written consent. No provision of this Policy, as
applicable to any Participant, will be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Participant and by
an authorized officer of the Company (other than the Participant). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Policy
will be considered a waiver of any other condition or provision or of the same condition or provision at another time.
(f) Withholding Taxes. All payments made under this Policy will be subject to all such taxes and/or withholding as may be required by applicable federal, state
and local law.
(g) Severability. The invalidity or unenforceability of any provision or provisions of this Policy will not affect the validity or enforceability of any other provision
hereof, which will remain in full force and effect.
(h) Unfunded Obligations. The obligations of the Company under this Policy are funded from the Company’s general assets.
8
(i) Successors. The Company will require any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company’s business and/or assets to assume this Policy and to agree expressly to perform this Policy in the same manner and to the
same extent as the Company would be required to perform it in the absence of a succession. For all purposes under this Policy, the term “Company” will include any
successor to the Company’s business and/or assets or which becomes bound by this Policy by operation of law. This Policy and all rights of Participants hereunder will inure
to the benefit of, and be enforceable by, the Participants’ respective personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and
legatees.
(j) Employment At Will. This Policy does not obligate the Company to continue to employ any Participant for any specific period of time or in any specific role
or geographic location. Nothing in this Policy will confer upon any Participant any right to continue in service for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Company or any subsidiary of the Company or of the Participant to terminate the Participant’s service at any time and for any reason or no
reason, with or without Cause, and such rights are hereby expressly reserved.
(k) Choice of Law. The validity, interpretation, construction and performance of this Policy will be governed by the laws of the State of California (other than its
choice-of-law provisions).
(l) Entire Agreement. This Policy represents the entire agreement between the Participants and the Company with respect to the Participants’ severance rights,
except where the Company has entered into a separate written agreement with any Participant. This Policy otherwise supersedes and replaces all the Company’s prior
severance policies (if any), including, but not limited to, prior versions of this Policy, applicable to the Participants.
***
9
Level 12 Participant
COINBASE GLOBAL, INC.
[Letter Transmission Date]
[Participant First] [Participant Last]
Re: Participation in Change of Control Severance Policy
Dear [Participant First]:
The purpose of this letter is to inform you that you have been designated by Coinbase Global, Inc., a Delaware corporation (the “Company”), as a participant in the
Company’s Change of Control Severance Policy, a copy of which is enclosed herewith (as in effect from time to time, the “Policy”). Capitalized terms used in this letter but
not otherwise defined herein have the meanings given in the Policy.
Subject to the terms and conditions of the Policy, if you undergo a Qualifying Termination and satisfy the Release Conditions (as well as the other terms and conditions set
forth in the Policy), the Company will provide you the following amounts of severance benefits described in the Policy:
Severance benefits under Section 2(a): six months
COBRA subsidization under Section 2(b): six months
Subject to the terms and conditions of the Policy, if you undergo a COC Qualifying Termination and satisfy the Release Conditions (as well as the other terms and conditions
set forth in the Policy), the Company will provide you the following amounts of severance benefits described in the Policy:
Severance benefits under Section 3(a): twelve months
COBRA subsidization under Section 3(b): twelve months
Equity acceleration under Section 3(c): 100%
Your participation in the Policy is governed in all respects by the terms and conditions of the Policy, and in the event of any conflict between this letter and the Policy, the
Policy will control.
Sincerely,
Coinbase Global, Inc.
[Company Signatory Name, Title]
Acknowledged and agreed,
[Participant First] [Participant Last]
(Date)
Level 11 Participant
COINBASE GLOBAL, INC.
[Letter Transmission Date]
[Participant First] [Participant Last]
Re: Participation in Change of Control Severance Policy
Dear [Participant First]:
The purpose of this letter is to inform you that you have been designated by Coinbase Global, Inc., a Delaware corporation (the “Company”), as a participant in the
Company’s Change of Control Severance Policy, a copy of which is enclosed herewith (as in effect from time to time, the “Policy”). Capitalized terms used in this letter but
not otherwise defined herein have the meanings given in the Policy.
Subject to the terms and conditions of the Policy, if you undergo a COC Qualifying Termination and satisfy the Release Conditions (as well as the other terms and conditions
set forth in the Policy), the Company will provide you the following amounts of severance benefits described in the Policy:
Severance benefits under Section 3(a): twelve months
COBRA subsidization under Section 3(b): twelve months
Equity acceleration under Section 3(c): 50%
Your participation in the Policy is governed in all respects by the terms and conditions of the Policy, and in the event of any conflict between this letter and the Policy, the
Policy will control.
Sincerely,
Coinbase Global, Inc.
[Company Signatory Name, Title]
Acknowledged and agreed,
[Participant First] [Participant Last]
(Date)
11
Exhibit 16.1
October 9, 2020
GRANTTHORNTONLLP
U.S. Securities and Exchange Commission
757 Third Avenue, 9 Floor
Office of the Chief Accountant
New York, New York, 10017
100 F Street, NE
Washington, DC 20549
D +1 212 599 0100
Re: Coinbase Global, Inc
F +1 212 370 4520
Dear Sir or Madam:
We have read the disclosure regarding the change in registered public accounting firms included under the caption “Change in
Accountants” in the Registration Statement and agree with the statements concerning our Firm contained therein.
Very truly yours,
/s/ GRANT THORNTON LLP
th
GT.COM Grant Thornton LLP is the U.S. member firm of Grant Thornton International Ltd (GTIL). GTIL and each of its member firms are separate legal entities and are not a worldwide partnership
Exhibit 21.1
SUBSIDIARIES OF COINBASE GLOBAL, INC.*
Subsidiary name Jurisdiction of incorporation
Coinbase, Inc.
Coinbase Ireland Limited
Tagomi Trading LLC
Delaware, United States
Ireland
Delaware, United States
* Pursuant to Item 601(b)(21)(ii) of Regulation S-K, the names of other subsidiaries of Coinbase Global, Inc. are omitted because, considered in the aggregate, they would not constitute a significant
subsidiary as of the end of the year covered by this report.
Exhibit 23.2
We consent to the use in this Registration Statement on Form S-1 of our report dated February 25, 2021, relating to the financial statements of Coinbase Global, Inc. We also consent to the reference to
us under the heading “Experts” in such Registration Statement.
/s/ Deloitte & Touche LLP
San Francisco, California
February 25, 2021
Exhibit 23.3
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our report dated October 9, 2020 (except for Notes 2 and 6, as to which the date is February 25, 2021), with respect to the December 31, 2019 consolidated
financial statements of Coinbase Global, Inc. contained in the Registration Statement and Prospectus. We consent to the use of the aforementioned report in the
Registration Statement and Prospectus, and to the use of our name as it appears under the caption “Experts.”
/s/ GRANT THORNTON LLP
New York, New York
February 25, 2021