Extracted Text
Highlighting: “"Indemnitee"”
COINBASE, INC.
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES B PREFERRED STOCK PURCHASE AGREEMENT is made as of the
12ie day of December, 2013 by and among Coinbase, Inc., a Delaware corporation (the
"Company"), and the investors listed on Exhibit A attached to this Agreement (each a
"Purchaser" and together the "Purchasers").
The parties hereby agree as follows:
1. Purchase and Sale of Preferred Stock.
1.1 Sale and Issuance of Series B Preferred Stock.
(a) The Company shall adopt and file with the Secretary of State of the
State of Delaware on or before the Initial Closing (as defined below) the Amended and Restated
Certificate of Incorporation in the form of Exhibit B attached to this Agreement (the "Restated
Certificate").
(b) Subject to the terms and conditions of this Agreement, each
Purchaser agrees to purchase at the Closing and the Company agrees to sell and issue to each
Purchaser at the Closing that number of shares of Series B Preferred Stock, $0.00001 par value
per share (the "Series B Preferred Stock"), set forth opposite each Purchaser's name on Exhibit
A, at a purchase price of $6.04054 per share. The shares of Series B Preferred Stock issued to
the Purchasers pursuant to this Agreement (including any shares issued at the Initial Closing and
any Additional Shares, as defined below) shall be referred to in this Agreement as the "Shares."
1.2 Closing: Delivery.
(a) The initial purchase and sale of the Shares shall take place
remotely via the exchange of documents and signatures, at 10:00 am. on December 12, 2013 or
at such other time and place as the Company and the Purchasers mutually agree upon, orally or in
writing (which time and place are designated as the "Initial Closing"). In the event there is more
than one closing, the term "Closing" shall apply to each such closing unless otherwise specified.
(b) At each Closing, the Company shall deliver to each Purchaser a
certificate representing the Shares being purchased by such Purchaser at such Closing against
payment of the purchase price therefor by check payable to the Company, by wire transfer to a
bank account designated by the Company, by cancellation or conversion of indebtedness of the
Company to Purchaser, including interest, or by any combination of such methods.
1.3 Sale of Additional Shares of Preferred Stock.
(a) If fewer than 4,241,757 shares of Series B Preferred Stock are sold
at the Initial Closing, the Company may sell, on the same terms and conditions as those contained
in this Agreement, such remaining shares of Series B Preferred Stock (subject to appropriate
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adjustment in the event of any stock dividend, stock split, combination or similar recapitalization
affecting such shares) of Series B Preferred Stock (the "Additional Shares"), to one or more
purchasers (the "Additional Purchasers") reasonably acceptable to Andreessen Horowitz Fund
III, L.P. ("Andreessen"), provided that (i) such subsequent sale is consummated prior to 180
days after the Initial Closing, (ii) each Additional Purchaser shall become a party to the
Transaction Agreements, (as defined below) (other than the Management Rights Letters), by
executing and delivering a counterpart signature page to each of the Transaction Agreements, and
(iii) Orrick, Herrington & Sutcliffe LLP, counsel for the Company, provides an opinion dated as
of the date of such additional Closing that the offer, issuance, sale and delivery of the Additional
Shares to the Additional Purchasers do not require registration under the Securities Act of 1933,
as amended, or applicable state securities laws. Exhibit A to this Agreement shall be updated to
reflect the number of Additional Shares purchased at each such Closing and the parties
purchasing such Additional Shares.
(b) Notwithstanding Section 1.3(a) above, on April 26, 2014,
Andreessen shall purchase from the Company and the persons listed on Schedule A hereto, the
respective number of shares of FF Preferred Stock and Series B Preferred Stock set forth on
Schedule A hereto, representing an aggregate of 608,526 shares of Series B Preferred Stock
(including Series B Preferred Stock issued upon conversion of the FF Preferred Stock), for a
purchase price of $3,675,825.65 (the "April 2014 Closing").
1.4 Defined Terms Used in this Agreement. In addition to the terms defined
above, the following terms used in this Agreement shall be construed to have the meanings set
forth or referenced below.
(a) "Affiliate" means, with respect to any specified Person, any other
Person who, directly or indirectly, controls, is controlled by, or is under common control with
such Person, including, without limitation, any general partner, managing member, officer or
director of such Person or any venture capital fund now or hereafter existing that is controlled by
one or more general partners or managing members of, or shares the same management company
with, such Person.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Company Intellectual Property" means all patents, patent
applications, trademarks, trademark applications, service marks, service mark applications,
tradenames, copyrights, trade secrets, domain names, mask works, information and proprietary
rights and processes, similar or other intellectual property rights, subject matter of any of the
foregoing, tangible embodiments of any of the foregoing, licenses in to and under any of the
foregoing, and any and all such cases as are necessary to the Company in the conduct of the
Company's business as now conducted and as presently proposed to be conducted.
(d) "Indemnification Agreement" means the agreement between the
Company and the director designated by any Purchaser entitled to designate a member of the
Board of Directors pursuant to the Voting Agreement, dated as of the date of the Initial Closing,
in the form of Exhibit D attached to this Agreement.
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(e) "Investors' Rights Agreement" means the Amended and Restated
Investors' Rights Agreement among the Company and the Purchasers dated as of the date of the
Initial Closing, in the form of Exhibit E attached to this Agreement.
(0 "Key Employee" means any executive-level employee (including
division director and vice president-level positions) as well as any employee or consultant who
either alone or in concert with others develops, invents, programs or designs any Company
Intellectual Property.
(g) "Knowledge," including the phrase "to the Company's
knowledge," shall mean the actual knowledge after reasonable investigation of: Brian
Armstrong, Fred Ehrsam and Martine Niejadik.
(h) "Management Rights Letters" means the agreements between the
Company and each of Andreessen, Union Square Ventures 2012 Fund, L.P. and USV Investors
2012 Fund, L.P. (together, "USV") and Ribbit Capital, LP and Fintech Coinbase Holdings, LLC
(together, "Ribbit Capital") dated as of the date of the Initial Closing, in the form of Exhibit F
attached to this Agreement.
(i) "Material Adverse Effect" means a material adverse effect on the
business, assets (including intangible assets), liabilities, financial condition, property, prospects
or results of operations of the Company.
(j) "Person" means any individual, corporation, partnership, trust,
limited liability company, association or other entity.
(k) "Purchaser" means each of the Purchasers who is initially a party
to this Agreement and any Additional Purchaser who becomes a party to this Agreement at a
subsequent Closing under Subsection 1.3.
(1) "Right of First Refusal and Co-Sale Agreement" means the
Amended and Restated Right of First Refusal and Co-Sale Agreement among the Company, the
Purchasers, and certain other stockholders of the Company, dated as of the date of the Initial
Closing, in the form of Exhibit G attached to this Agreement.
(m) "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
(n) "Shares" means the shares of Series B Preferred Stock issued at
the Initial Closing and any Additional Shares issued at a subsequent Closing under Subsection
1.3.
(o) "Transaction Agreements" means this Agreement, the Investors'
Rights Agreement, the Management Rights Letters, the Right of First Refusal and Co-Sale
Agreement and the Voting Agreement.
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(p) "Voting Agreement" means the Amended and Restated Voting
Agreement among the Company, the Purchasers and certain other stockholders of the Company,
dated as of the date of the Initial Closing, in the form of Exhibit II attached to this Agreement.
2. Representations and Warranties of the Company. The Company hereby represents
and warrants to each Purchaser that, except as set forth on the Disclosure Schedule attached as
Exhibit C to this Agreement, specifically identifying the relevant subsection hereof, which
exceptions shall be deemed to be part of the representations and warranties made hereunder, the
following representations are true and complete as of the date of the Initial Closing, except as
otherwise indicated.
For purposes of these representations and warranties (other than those in
Subsections 2.2 2.3, 2.4, 2.5, and 2.6), the term "the Company" shall include any subsidiaries of
the Company, unless otherwise noted herein.
2.1 Organization, Good Standing, Corporate Power and Oualification. The
Company is a corporation duly organized, validly existing and in good standing under the laws of
the State of Delaware and has all requisite corporate power and authority to carry on its business
as presently conducted and as proposed to be conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which the failure to so qualify
would have a Material Adverse Effect.
2.2 Capitalization.
(a) The authorized capital stock of the Company consists, immediately
prior to the Initial Closing, of:
32,000,000 shares of common stock, $0.00001 par value
per share (the "Common Stock"), 8,728,833 shares of which are issued and outstanding
immediately prior to the Initial Closing. All of the outstanding shares of Common Stock have
been duly authorized, are fully paid and nonassessable and were issued in compliance with all
applicable federal and state securities laws.
(ii) 1,820,000 shares of FF Preferred Stock, $0.00001 par
value, all of which are issued and outstanding immediately prior to the Initial Closing. All
outstanding shares of FF Preferred Stock have been duly authorized, are fully paid and
nonassessable and were issued in compliance with all applicable federal and state securities laws.
(iii) 9,405,110 shares of Preferred Stock, 5,163,353 of which
have been designated Series A Preferred Stock, all of which are issued and outstanding
immediately prior to the Initial Closing, and 4,241,757 of which have been designated Series B
Preferred Stock, none of which are issued and outstanding immediately prior to the Initial
Closing. The rights, privileges and preferences of the Preferred Stock are as stated in the
Restated Certificate and as provided by the Delaware General Corporation Law.
(b) The Company has reserved 3,221,968 shares of Common Stock for
issuance to officers, directors, employees and consultants of the Company pursuant to its 2013
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Stock Plan duly adopted by the Board of Directors and approved by the Company stockholders
(the "Stock Plan"). Of such reserved shares of Common Stock, no shares have been issued
pursuant to restricted stock purchase agreements, 938,286 options to purchase shares have been
granted and are currently outstanding, and 2,283,682 shares of Common Stock remain available
for issuance to officers, directors, employees and consultants pursuant to the Stock Plan. The
Company has furnished to the Purchasers complete and accurate copies of the Stock Plan and
forms of agreements used thereunder.
(c) There are convertible notes (the "Convertible Notes") with an
aggregate conversion amount of $12,512,728.68 that will convert into an aggregate of 2,071,454
shares of Series B Preferred Stock and 103,883 shares of Common Stock at the Initial Closing.
(d) Subsection 2.2(d) of the Disclosure Schedule sets forth the
capitalization of the Company immediately following the Initial Closing including the number of
shares of the following: (i) issued and outstanding Common Stock, including, with respect to
restricted Common Stock, vesting schedule and repurchase price; (ii) granted stock options,
including vesting schedule and exercise price; (iii) shares of Common Stock reserved for future
award grants under the Stock Plan; (iv) each series of Preferred Stock; and (v) warrants or stock
purchase rights, if any. Except for (A) the conversion privileges of the Shares to be issued under
this Agreement, (B) the rights provided in Section 4 of the Investors' Rights Agreement, and (C)
the securities and rights described in Subsection 2.2(62 of this Agreement and Subsection 2.2(d)
of the Disclosure Schedule, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal or similar rights) or agreements, orally
or in writing, to purchase or acquire from the Company any shares of the Company's capital
stock, or any securities convertible into or exchangeable for shares of the Company's capital
stock. All outstanding shares of the Company's Common Stock and all shares of the Company's
Common Stock underlying outstanding options are subject to (i) a right of first refusal in favor of
the Company upon any proposed transfer (other than transfers for estate planning purposes); and
(ii) a lock-up or market standoff agreement of not less than 180 days following the Company's
initial public offering pursuant to a registration statement filed with the Securities and Exchange
Commission under the Securities Act.
(e) None of the Company's stock purchase agreements or stock option
documents contains a provision for acceleration of vesting (or lapse of a repurchase right) or
other changes in the vesting provisions or other terms of such agreement or understanding upon
the occurrence of any event or combination of events, including without limitation in the case
where the Company's Stock Plan is not assumed in an acquisition. The Company has never
adjusted or amended the exercise price of any stock options previously awarded, whether through
amendment, cancellation, replacement grant, repricing, or any other means. Except as set forth
in the Restated Certificate, the Company has no obligation (contingent or otherwise) to purchase
or redeem any of its capital stock.
(f) 409A. The Company believes in good faith that any "nonqualified
deferred compensation plan" (as such term is defined under Section 409A(dX1) of the Code and
the guidance thereunder) under which the Company makes, is obligated to make or promises to
make, payments (each, a "409A Plan") complies in all material respects, in both form and
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operation, with the requirements of Section 409A of the Code and the guidance thereunder. To
the knowledge of the Company, no payment to be made under any 409A Plan is, or will be,
subject to the penalties of Section 409A(aXI) of the Code.
(g) The Company has obtained valid waivers of any rights by other
parties to purchase any of the Shares covered by this Agreement.
2.3 Subsidiaries. The Company does not currently own or control, directly or
indirectly, any interest in any other corporation, partnership, trust, joint venture, limited liability
company, association, or other business entity. The Company is not a participant in any joint
venture, partnership or similar arrangement.
2.4 Authorization. All corporate action required to be taken by the
Company's Board of Directors and stockholders in order to authorize the Company to enter into
the Transaction Agreements, and to issue the Shares at the Closing and the Common Stock
issuable upon conversion of the Shares, has been taken or will be taken prior to the Closing. All
action on the part of the officers of the Company necessary for the execution and delivery of the
Transaction Agreements, the performance of all obligations of the Company under the
Transaction Agreements to be performed as of the Closing, and the issuance and delivery of the
Shares has been taken or will be taken prior to the Closing. The Transaction Agreements, when
executed and delivered by the Company, shall constitute valid and legally binding obligations of
the Company, enforceable against the Company in accordance with their respective terms except
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, or other laws of general application relating to or affecting the enforcement of
creditors' rights generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, or (iii) to the extent the
indemnification provisions contained in the Investors' Rights Agreement and the Indemnification
Agreement may be limited by applicable federal or state securities laws.
2.5 Valid Issuance of Shares. The Shares, when issued, sold and delivered in
accordance with the terms and for the consideration set forth in this Agreement, will be validly
issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on
transfer under the Transaction Agreements, applicable state and federal securities laws and liens
or encumbrances created by or imposed by a Purchaser. Assuming the accuracy of the
representations of the Purchasers in Section 3 of this Agreement and subject to the filings
described in Subsection 2.6(ii) below, the Shares will be issued in compliance with all applicable
federal and state securities laws. The Common Stock issuable upon conversion of the Shares has
been duly reserved for issuance, and upon issuance in accordance with the terms of the Restated
Certificate, will be validly issued, frilly paid and nonassessable and free of restrictions on transfer
other than restrictions on transfer under the Transaction Agreements, applicable federal and state
securities laws and liens or encumbrances created by or imposed by a Purchaser. Based in part
upon the representations of the Purchasers in Section 3 of this Agreement, and subject to
Subsection 2.6 below, the Common Stock issuable upon conversion of the Shares will be issued
in compliance with all applicable federal and state securities laws.
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2.6 Governmental Consents and Filings. Assuming the accuracy of the
representations made by the Purchasers in Section 3 of this Agreement, no consent, approval,
order or authorization of, or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority is required on the part of the Company in
connection with the consummation of the transactions contemplated by this Agreement, except
for (i) the filing of the Restated Certificate, which will have been filed as of the Initial Closing,
and (ii) filings pursuant to Regulation D of the Securities Act, and applicable state securities
laws, which have been made or will be made in a timely manner.
2.7 Litigation. There is no claim, action, suit, proceeding, arbitration,
complaint, subpoena, regulatory inquiry, enforcement action, charge or investigation pending or
to the Company's knowledge, currently threatened in writing (i) against the Company or any
officer, director or Key Employee of the Company arising out of their employment or board
relationship with the Company; or (ii) to the Company's knowledge, that questions the validity of
the Transaction Agreements or the right of the Company to enter into them, or to consummate
the transactions contemplated by the Transaction Agreements. Neither the Company nor, to the
Company's knowledge, any of its officers, directors or Key Employees is a party or is named as
subject to the provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality (in the case of officers, directors or Key Employees, such
as would affect the Company). There is no action, suit, proceeding or investigation by the
Company pending or which the Company intends to initiate. The foregoing includes, without
limitation, actions, suits, proceedings or investigations pending or threatened in writing (or any
basis therefor known to the Company) involving the prior employment of any of the Company's
employees, their services provided in connection with the Company's business, or any
information or techniques allegedly proprietary to any of their former employers, or their
obligations under any agreements with prior employers.
2.8 Financial Services Laws and Rules. The Company has at all times used its
reasonable best efforts to comply with all Financial Services Laws and Rules. "Financial Services
Laws and Rules" means all (i) United States state and federal laws and regulations and any
applicable foreign laws and regulations related to money services businesses, anti-money
laundering, money transmission, sale of payment instruments (including stored value, checks and
other instruments), currency exchange, electronic funds transfers, banking, commodities and
securities, privacy and data security, and data breach remediation and notification; (ii) United
States state and federal laws and regulations and any applicable foreign laws and regulations
related to customer identity verification and screening (including the Office of Foreign Assets
Control list of Specially Designated Nationals); and (iii) relevant payment association rules.
2.9 Intellectual Property. The Company owns or possesses or believes it can
acquire on commercially reasonable terms sufficient legal rights to all Company Intellectual
Property without known conflict with, or infringement of, the rights of others. To the Company's
knowledge, no product or service marketed or sold (or proposed to be marketed or sold) by the
Company violates or will violate any license or infringes or will infringe any intellectual property
rights of any other party. Other than with respect to commercially available software products
under standard end-user object code license agreements, there are no outstanding options,
licenses, agreements, claims, encumbrances or shared ownership interests of any kind relating to
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the Company Intellectual Property, nor is the Company bound by or a party to any options,
licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade
names, copyrights, trade secrets, licenses, information, proprietary rights and processes of any
other Person. The Company has not received any communications alleging that the Company
has violated or, by conducting its business, would violate any of the patents, trademarks, service
marks, tradenames, copyrights, trade secrets, mask works or other proprietary rights or processes
of any other Person. The Company has obtained and possesses valid licenses to use all of the
software programs present on the computers and other software-enabled electronic devices that it
owns or leases or that it has otherwise provided to its employees for their use in connection with
the Company's business. To the Company's knowledge, it will not be necessary to use any
inventions of any of its employees or consultants (or Persons it currently intends to hire) made
prior to their employment by the Company. Each employee and consultant has assigned to the
Company all intellectual property rights he or she owns that are related to the Company's
business as now conducted and as presently proposed to be conducted. Subsection 2.9 of the
Disclosure Schedule lists all Company Intellectual Property. Neither the Company, the
Company's products, nor any software or technology developed by or for the Company is subject
to any obligation or condition that would require that any of the Company's products or any other
software or other technology developed by or for the Company (i) be disclosed, distributed, or
made available in source code form; (ii) be licensed with the permission to create derivative
works; or (iii) be redistributable at no charge. For purposes of this Subsection 2.9, the Company
shall be deemed to have knowledge of a patent right if the Company has actual knowledge of the
patent right or would be found to be on notice of such patent right as determined by reference to
United States patent laws.
2.10 Compliance with Other Instruments. The Company is not in violation or
default (i) of any provisions of its Restated Certificate or Bylaws, (ii) of any instrument,
judgment, order, writ or decree, (iii) under any note, indenture or mortgage, or (iv) under any
lease, agreement, contract or purchase order to which it is a party or by which it is bound that is
required to be listed on the Disclosure Schedule, or, (v) to its knowledge, of any provision of
federal or state statute, rule or regulation applicable to the Company, the violation of which
would have a Material Adverse Effect. The execution, delivery and performance of the
Transaction Agreements and the consummation of the transactions contemplated by the
Transaction Agreements will not result in any such violation or be in conflict with or constitute,
with or without the passage of time and giving of notice, either (i) a default under any such
provision, instrument, judgment, order, writ, decree, contract or agreement or (ii) an event which
results in the creation of any lien, charge or encumbrance upon any assets of the Company or the
suspension, revocation, forfeiture, or nonrenewal of any material permit or license applicable to
the Company.
2.11 Agreements; Actions.
(a) Except for the Transaction Agreements, there are no agreements,
understandings, instruments, contracts or proposed transactions to which the Company is a party
or by which it is bound that involve (i) obligations (contingent or otherwise) of, or payments to,
the Company in excess of $50,000, (ii) the license of any patent, copyright, trademark, trade
secret or other proprietary right to or from the Company, (iii) the grant of rights to manufacture,
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produce, assemble, license, market, or sell its products to any other Person that limit the
Company's exclusive right to develop, manufacture, assemble, distribute, market or sell its
products, or (iv) indemnification by the Company with respect to infringements of proprietary
rights.
(b) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series of its capital stock,
(ii) incurred any indebtedness for money borrowed or incurred any other liabilities individually in
excess of $50,000 or in excess of $200,000 in the aggregate, (iii) made any loans or advances to
any Person, other than ordinary advances for travel expenses, or (iv) sold, exchanged or
otherwise disposed of any of its assets or rights, other than the sale of its inventory in the
ordinary course of business. For the purposes of subsections (b) and (c) of this Subsection 2.11,
all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed
transactions involving the same Person (including Persons the Company has reason to believe are
affiliated with each other) shall be aggregated for the purpose of meeting the individual
minimum dollar amounts of such subsection.
(c) The Company is not a guarantor or indemnitor of any indebtedness
of any other Person.
2.12 Certain Transactions.
(a) Other than (i) standard employee benefits generally made available
to all employees, (ii) standard director and officer indemnification agreements approved by the
Board of Directors, and (iii) the purchase of shares of the Company's capital stock and the
issuance of options to purchase shares of the Company's Common Stock, in each instance,
approved in the written minutes of the Board of Directors (previously provided to the Purchasers
or their counsel), there are no agreements, understandings or proposed transactions between the
Company and any of its officers, directors, consultants or Key Employees, or any Affiliate
thereof.
(b) The Company is not indebted, directly or indirectly, to any of its
directors, officers or employees or to their respective spouses or children or to any Affiliate of
any of the foregoing, other than in connection with expenses or advances of expenses incurred in
the ordinary course of business or employee relocation expenses and for other customary
employee benefits made generally available to all employees. None of the Company's directors,
officers or employees, or any members of their immediate families, or any Affiliate of the
foregoing (i) are, directly or indirectly, indebted to the Company or, to the Company's
knowledge, have any financial interest in any material contract with the Company, or (ii) have
any direct or indirect ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm or corporation
which competes with the Company.
2.13 Rights of Registration and Voting Rights. Except as provided in the
Investors' Rights Agreement, the Company is not under any obligation to register under the
Securities Act any of its currently outstanding securities or any securities issuable upon exercise
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or conversion of its currently outstanding securities. To the Company's knowledge, except as
contemplated in the Voting Agreement, no stockholder of the Company has entered into any
agreements with respect to the voting of capital shares of the Company.
2.14 Property. The property and assets that the Company owns are free and
clear of all mortgages, deeds of trust, liens, loans and encumbrances, except for statutory liens for
the payment of current taxes that are not yet delinquent and encumbrances and liens that arise in
the ordinary course of business and do not materially impair the Company's ownership or use of
such property or assets. With respect to the property and assets it leases, the Company is in
compliance with such leases and, to its knowledge, holds a valid leasehold interest free of any
liens, claims or encumbrances other than those of the lessors of such property or assets. The
Company does not own any real property.
2.15 Financial Statements. The Company has made available to each Purchaser
its unaudited financial statements (including balance sheet, income statement and statement of
cash flows) as of October 31, 2013 and for the fiscal year ended October 31, 2013 (collectively,
the "Financial Statements"). The Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis throughout the periods
indicated, except that the unaudited Financial Statements may not contain all footnotes required
by generally accepted accounting principles. The Financial Statements fairly present in all
material respects the financial condition and operating results of the Company as of the dates,
and for the periods, indicated therein, except that the interim financial statements are subject to
normal year-end audit adjustments. Except as set forth in the Financial Statements, the Company
has no material liabilities or obligations, contingent or otherwise, other than (a) liabilities
incurred in the ordinary course of business subsequent to the date of the most recent balance
sheet included in the Financial Statements and (b) obligations under contracts and commitments
incurred in the ordinary course of business and not required under generally accepted accounting
principles to be reflected in the Financial Statements, which, in both cases, individually or in the
aggregate are not material to the financial condition or operating results of the Company.
2.16 Chances. Since October 31, 2013, there has not been:
(a) any change in the assets, liabilities, financial condition or operating
results of the Company from that reflected in the Financial Statements, except changes in the
ordinary course of business that have not caused, in the aggregate, a Material Adverse Effect;
(b) any damage, destruction or loss, whether or not covered by
insurance, that would have a Material Adverse Effect;
(c) any waiver or compromise by the Company of a valuable right or
of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or encumbrance or
payment of any obligation by the Company, except in the ordinary course of business and the
satisfaction or discharge of which would not have a Material Adverse Effect;
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(e) any material change to a material contract or agreement by which
the Company or any of its assets is bound or subject;
(f) any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;
(g) any resignation or termination of employment of any officer or Key
Employee of the Company;
(h) any mortgage, pledge, transfer of a security interest in, or lien,
created by the Company, with respect to any of its material properties or assets, except liens for
taxes not yet due or payable and liens that arise in the ordinary course of business and do not
materially impair the Company's ownership or use of such property or assets;
(i) any loans or guarantees made by the Company to or for the benefit
of its employees, officers or directors, or any members of their immediate families, other than
travel advances and other advances made in the ordinary course of its business;
(j) any declaration, setting aside or payment or other distribution in
respect of any of the Company's capital stock, or any direct or indirect redemption, purchase, or
other acquisition of any of such stock by the Company;
(k) any sale, assignment or transfer of any Company Intellectual
Property that could reasonably be expected to result in a Material Adverse Effect;
(I) receipt of notice that there has been a loss of, or material order
cancellation by, any major customer of the Company;
(m) to the Company's knowledge, any other event or condition of any
character, other than events affecting the economy or the Company's industry generally, that
could reasonably be expected to result in a Material Adverse Effect; or
(n) any arrangement or commitment by the Company to do any of the
things described in this Subsection 2.16.
2.17 Employee Matters.
(a) Subsection 2.16 sets forth a list of all employees, consultants and
independent contractors of the Company as of the date hereof. To the Company's knowledge,
none of its employees is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would materially interfere with such employee's ability
to promote the interest of the Company or that would conflict with the Company's business.
Neither the execution or delivery of the Transaction Agreements, nor the carrying on of the
Company's business by the employees of the Company, nor the conduct of the Company's
business as now conducted and as presently proposed to be conducted, will, to the Company's
knowledge, conflict with or result in a breach of the terms, conditions, or provisions of, or
OHSUSA:755718737.3 11
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constitute a default under, any contract, covenant or instrument under which any such employee
is now obligated.
(b) The Company is not delinquent in payments to any of its
employees, consultants, or independent contractors for any wages, salaries, commissions,
bonuses, or other direct compensation for any service performed for it to the date hereof or
amounts required to be reimbursed to such employees, consultants, or independent contractors.
The Company has complied in all material respects with all applicable state and federal equal
employment opportunity laws and with other laws related to employment, including those related
to wages, hours, worker classification, and collective bargaining. The Company has withheld
and paid to the appropriate governmental entity or is holding for payment not yet due to such
governmental entity all amounts required to be withheld from employees of the Company and is
not liable for any arrears of wages, taxes, penalties, or other sums for failure to comply with any
of the foregoing.
(c) To the Company's knowledge, no Key Employee intends to
terminate employment with the Company or is otherwise likely to become unavailable to
continue as a Key Employee, nor does the Company have a present intention to terminate the
employment of any of the foregoing. The employment of each employee of the Company is
terminable at the will of the Company. Except as set forth in Subsection 2.17 of the Disclosure
Schedule or as required by law, upon termination of the employment of any such employees, no
severance or other payments will become due. Except as set forth in Subsection 2.17 of the
Disclosure Schedule, the Company has no policy, practice, plan, or program of paying severance
pay or any form of severance compensation in connection with the termination of employment
services.
(d) The Company has not made any representations regarding equity
incentives to any officer, employees, director or consultant that are inconsistent with the share
amounts and terms set forth in the minutes of meetings of the Company's board of directors.
(e) Each former Key Employee whose employment was terminated by
the Company has entered into an agreement with the Company providing for the full release of
any claims against the Company or any related party arising out of such employment.
(f) Subsection 2.17 of the Disclosure Schedule sets forth each
employee benefit plan maintained, established or sponsored by the Company, or which the
Company participates in or contributes to, which is subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Company has made all required
contributions and has no liability to any such employee benefit plan, other than liability for health
plan continuation coverage described in Part 6 of Title I(B) of ERISA, and has complied in all
material respects with all applicable laws for any such employee benefit plan.
2.18 Tax Returns and Payments. There are no federal, state, county, local or
foreign taxes dues and payable by the Company which have not been timely paid. There are no
accrued and unpaid federal, state, country, local or foreign taxes of the Company which are due,
whether or not assessed or disputed. There have been no examinations or audits of any tax
OHSUSA:755718737.3 12
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returns or reports by any applicable federal, state, local or foreign governmental agency. The
Company has duly and timely filed all federal, state, county, local and foreign tax returns
required to have been filed by it and there are in effect no waivers of applicable statutes of
limitations with respect to taxes for any year.
2.19 Insurance. The Company has in full force and effect fire and casualty
insurance policies with extended coverage, sufficient in amount (subject to reasonable
deductions) to allow it to replace any of its properties that might be damaged or destroyed.
2.20 Emnlovee Agreements. Each current and former employee, consultant and
officer of the Company has executed an agreement with the Company regarding confidentiality
and proprietary information substantially in the form or forms delivered to the counsel for the
Purchasers (the "Confidential Information Agreements"). Each current and former Key
Employee has executed a non-solicitation agreement substantially in the for► or forms delivered
to counsel for Andreessen. No current or former Key Employee has excluded works or
inventions from his or her assignment of inventions pursuant to such Key Employee's
Confidential Information Agreement. The Company is not aware that any of its Key Employees
is in violation of any agreement covered by this Subsection 2.20.
2.21 Permits. The Company has all franchises, permits, licenses and any
similar authority necessary for the conduct of its business, the lack of which could reasonably be
expected to have a Material Adverse Effect. The Company is not in default in any material
respect under any of such franchises, permits, licenses or other similar authority.
2.22 Corporate Documents. The Restated Certificate and Bylaws of the
Company are in the form provided to the Purchasers. The copy of the minute books of the
Company provided to the Purchasers contains minutes of all meetings of directors and
stockholders and all actions by written consent without a meeting by the directors and
stockholders since the date of incorporation and accurately reflects in all material respects all
actions by the directors (and any committee of directors) and stockholders with respect to all
transactions referred to in such minutes.
2.23 Environmental and Safety Laws. Except as could not reasonably be
expected to have a Material Adverse Effect to the best of its knowledge (a) the Company is and
has been in compliance with all Environmental Laws; (b) there has been no release or to the
Company's knowledge threatened release of any pollutant, contaminant or toxic or hazardous
material, substance or waste, or petroleum or any fraction thereof, (each a "Hazardous
Substance") on, upon, into or from any site currently or heretofore owned, leased or otherwise
used by the Company; (c) there have been no Hazardous Substances generated by the Company
that have been disposed of or come to rest at any site that has been included in any published
U.S. federal, state or local "superfund" site list or any other similar list of hazardous or toxic
waste sites published by any governmental authority in the United States; and (d) there are no
underground storage tanks located on, no polychlorinated biphenyls ("PCBs") or PCB-containing
equipment used or stored on, and no hazardous waste as defined by the Resource Conservation
and Recovery Act, as amended, stored on, any site owned or operated by the Company, except
for the storage of hazardous waste in compliance with Environmental Laws. The Company has
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made available to the Purchasers true and complete copies of all material environmental records,
reports, notifications, certificates of need, permits, pending permit applications, correspondence,
engineering studies, and environmental studies or assessments.
For purposes of this Section 2.23 "Environmental Laws" means any law,
regulation, or other applicable requirement relating to (a) releases or threatened release of
Hazardous Substance; (b) pollution or protection of employee health or safety, public health or
the environment; or (c) the manufacture, handling, transport, use, treatment, storage, or disposal
of Hazardous Substances.
2.24 Disclosure. The Company has made available to the Purchasers all the
information reasonably available to the Company that the Purchasers have requested for deciding
whether to acquire the Shares, including certain of the Company's projections describing its
proposed business plan (the "Business Plan"). No representation or warranty of the Company
contained in this Agreement, as qualified by the Disclosure Schedule, and no certificate furnished
or to be furnished to Purchasers at the Closing contains any untrue statement of a material fact or,
to the Company's knowledge, omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading in light of the circumstances under which
they were made. The Business Plan was prepared in good faith; however, the Company does not
warrant that it will achieve any results projected in the Business Plan. It is understood that this
representation is qualified by the fact that the Company has not delivered to the Purchasers, and
has not been requested to deliver, a private placement or similar memorandum or any written
disclosure of the types of information customarily furnished to purchasers of securities.
2.25 Data Privacy and Security. In connection with its collection, storage,
transfer (including without limitation, any transfer across national borders) and/or use of any
personally identifiable information from any individuals, including, without limitation, any
customers, prospective customers, employees and/or other third parties (collectively, "Personal
Information"), the Company is and has been, to the Company's knowledge, in compliance with
all applicable laws in all relevant jurisdictions, the Company's privacy policies, and the
requirements of any contract or codes of conduct to which the Company is a party. The
Company has physical, technical, organizational and administrative security measures and
policies in place to protect all Personal Information and all bitcoin public and/or private key
pairs, wallet addresses and similar data ("Sensitive Data") collected by it or on its behalf from
and against unauthorized access, use and/or disclosure. The Company has not experienced any
actual, probable or reasonably suspected breach of security of the Company Systems and/or of
any actual, probable or reasonably suspected unauthorized access, use, loss, destruction,
compromise or disclosure of any Sensitive Data and/or Personal Information ("Security
Breach"). The Company is and has been, to the Company's knowledge, in compliance in all
material respects with all laws relating to data loss, theft and breach of security notification
obligations. As used herein, "Company Systems" means the computer, information technology
and data processing systems, facilities and services used by or for the Company, including,
without limitation, all software, hardware, networks, communications facilities, platforms and
related systems and services used by the Company to store or otherwise process any Personal
Information or Sensitive Data.
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2.26 Disqualification. The Company is not disqualified from relying on Rule
506 of Regulation D ("Rule 506") under the Securities Act for any of the reasons stated in Rule
506(d) in connection with the issuance and sale of the Stock to the Purchasers. The Company
has furnished to each Purchaser, a reasonable time prior to the date hereof, a description in
writing of any matters that would have triggered disqualification under Rule 506(d) but which
occurred before September 23, 2013, in each case, in compliance with the disclosure
requirements of Rule 506(e).
3. Representations and Warranties of the Purchasers. Each Purchaser hereby
represents and warrants to the Company, severally and not jointly, that:
3.1 Authorization. The Purchaser has full power and authority to enter into
the Transaction Agreements. The Transaction Agreements to which the Purchaser is a party,
when executed and delivered by the Purchaser, will constitute valid and legally binding
obligations of the Purchaser, enforceable in accordance with their terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any
other laws of general application affecting enforcement of creditors' rights generally, and as
limited by laws relating to the availability of specific performance, injunctive relief, or other
equitable remedies, or (b) to the extent the indemnification provisions contained in the Investors'
Rights Agreement may be limited by applicable federal or state securities laws.
3.2 Purchase Entirely for Own Account. This Agreement is made with the
Purchaser in reliance upon the Purchaser's representation to the Company, which by the
Purchaser's execution of this Agreement, the Purchaser hereby confirms, that the Shares to be
acquired by the Purchaser will be acquired for investment for the Purchaser's own account, not as
a nominee or agent (except as noted on the signature page hereof) and not with a view to the
resale or distribution of any part thereof, and that the Purchaser has no present intention of
selling, granting any participation in, or otherwise distributing the same. By executing this
Agreement, the Purchaser further represents that the Purchaser does not presently have any
contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant
participations to such Person or to any third Person, with respect to any of the Shares. The
Purchaser has not been formed for the specific purpose of acquiring the Shares.
3.3 Disclosure of Information. The Purchaser has had an opportunity to
discuss the Company's business, management, financial affairs and the terms and conditions of
the offering of the Shares with the Company's management and has had an opportunity to review
the Company's facilities. The foregoing, however, does not limit or modify the representations
and warranties of the Company in Section 2 of this Agreement or the right of the Purchasers to
rely thereon.
3.4 Restricted Securities. The Purchaser understands that the Shares have not
been, and will not be, registered under the Securities Act, by reason of a specific exemption from
the registration provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of the Purchaser's representations as
expressed herein. The Purchaser understands that the Shares are "restricted securities" under
applicable U.S. federal and state securities laws and that, pursuant to these laws, the Purchaser
OHSUSA:75571$737.3 15
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must hold the Shares indefinitely unless they are registered with the Securities and Exchange
Commission and qualified by state authorities, or an exemption from such registration and
qualification requirements is available. The Purchaser acknowledges that the Company has no
obligation to register or qualify the Shares, or the Common Stock into which it may be converted,
for resale except as set forth in the Investors' Rights Agreement. The Purchaser further
acknowledges that if an exemption from registration or qualification is available, it may be
conditioned on various requirements including, but not limited to, the time and manner of sale,
the holding period for the Shares, and on requirements relating to the Company which are outside
of the Purchaser's control, and which the Company is under no obligation and may not be able to
satisfy.
3.5 No Public Market. The Purchaser understands that no public market now
exists for the Shares, and that the Company has made no assurances that a public market will
ever exist for the Shares.
3.6 Legends. The Purchaser understands that the Shares and any securities
issued in respect of or exchange for the Shares, may bear one or all of the following legends:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE
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 TRANSFER
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."
(b) Any legend set forth in, or required by, the other Transaction
Agreements.
(c) Any legend required by the securities laws of any state to the extent
such laws are applicable to the Shares represented by the certificate so legended.
3.7 Accredited Investor. The Purchaser is an accredited investor as defined in
Rule 501(a) of Regulation D promulgated under the Securities Act.
3.8 Foreign Investors. If the Purchaser is not a United States person (as
defined by Section 7701(aX30) of the Code), the Purchaser hereby represents that it has satisfied
itself as to the full observance of the laws of its jurisdiction in connection with any invitation to
subscribe for the Shares or any use of this Agreement, including (i) the legal requirements within
its jurisdiction for the purchase of the Shares, (ii) any foreign exchange restrictions applicable to
such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the
income tax and other tax consequences, if any, that may be relevant to the purchase, holding,
redemption, sale, or transfer of the Shares. The Purchaser's subscription and payment for and
continued beneficial ownership of the Shares will not violate any applicable securities or other
laws of the Purchaser's jurisdiction.
OHSUSA:755718737.3 16
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3.9 No General Solicitation. Neither the Purchaser, nor any of its officers,
directors, employees, agents, stockholders or partners has either directly or indirectly, including
through a broker or finder (a) engaged in any general solicitation, or (b) published any
advertisement in connection with the offer and sale of the Shares.
3.10 Exculpation Among Purchasers. The Purchaser acknowledges that it is
not relying upon any Person, other than the Company and its officers and directors, in making its
investment or decision to invest in the Company.
3.11 Residence. If the Purchaser is an individual, then the Purchaser resides in
the state or province identified in the address of the Purchaser set forth on Exhibit A; if the
Purchaser is a partnership, corporation, limited liability company or other entity, then the office
or offices of the Purchaser in which its principal place of business is identified in the address or
addresses of the Purchaser set forth on Exhibit A.
3.12 Consent to Promissory Note Conversion and Termination. Each
Purchaser, to the extent that such Purchaser, as set forth on the Schedule of Purchasers, is a
holder of any promissory note of the Company being converted and/or cancelled in consideration
of the issuance hereunder of Shares to such Purchaser, hereby agrees that the entire amount owed
to such Purchaser under such note is being tendered to the Company in exchange for the
applicable Shares set forth on the Schedule of Purchasers, and effective upon the Company's and
such Purchaser's execution and delivery of this Agreement, without any further action required
by the Company or such Purchaser, such note and all obligations set forth therein shall be
immediately deemed repaid in full and terminated in their entirety, including, but not limited to,
any security interest effected therein.
3.13 Disqualification. Each Purchaser represents that neither such Purchaser,
nor any person or entity with whom such Purchaser shares beneficial ownership of Company
securities, is subject to any of the "Bad Actor" disqualifications described in Rule 506(dX I Xi) to
(viii) under the Securities Act (attached hereto as Annex D.
4. Conditions to the Purchasers' Obligations at Closing. The obligations of each
Purchaser to purchase Shares at the Initial Closing and each subsequent Closing are subject to the
fulfillment, on or before such Closing, of each of the following conditions, unless otherwise
waived:
4.1 Representations and Warranties. The representations and warranties of the
Company contained in Section 2 shall be true and correct in all material respects on and as of the
Initial Closing with the same effect as though such representations and warranties had been made
on and as of the date of such Initial Closing.
4.2 Performance. The Company shall have performed and complied with all
covenants, agreements, obligations and conditions contained in this Agreement that are required
to be performed or complied with by the Company on or before such Closing.
OHSUSA:7557I 8737.3 17
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4.3 Compliance Certificate. The President of the Company shall deliver to the
Purchasers at such Closing a certificate certifying that the conditions specified in Subsections 4.1
and 4.2 have been fulfilled.
4.4 Qualifications. All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Shares pursuant to this Agreement shall be
obtained and effective as of such Closing.
4.5 Opinion of Company Counsel. The Purchasers shall have received from
Orrick, Herrington & Sutcliffe LLP, counsel for the Company, an opinion, dated as of the Initial
Closing, in substantially the form of Exhibit I attached to this Agreement
4.6 Board of Directors. As of the Initial Closing, the authorized size of the
Board shall be 2, and the Board shall be comprised of Brian Armstrong and Fred Ehrsam.
4.7 Indemnification Agreement. The Company shall have executed and
delivered the Indemnification Agreements.
4.8 Investors' Rights Agreement. The Company and each Purchaser (other
than the Purchaser relying upon this condition to excuse such Purchaser's performance
hereunder) shall have executed and delivered the Investors' Rights Agreement.
4.9 Right of First Refusal and Co-Sale Agreement. The Company, each
Purchaser (other than the Purchaser relying upon this condition to excuse such Purchaser's
performance hereunder), and the other stockholders of the Company named as parties thereto
shall have executed and delivered the Right of First Refusal and Co-Sale Agreement.
4.10 Voting Agreement. The Company, each Purchaser (other than the
Purchaser relying upon this condition to excuse such Purchaser's performance hereunder), and
the other stockholders of the Company named as parties thereto shall have executed and
delivered the Voting Agreement.
4.11 Restated Certificate. The Company shall have filed the Restated
Certificate with the Secretary of State of Delaware on or prior to the Closing, which shall
continue to be in full force and effect as of the Closing.
4.12 Secretary's Certificate. The Secretary of the Company shall have
delivered to the Purchasers at the Closing a certificate certifying (i) the Bylaws of the Company,
(ii) resolutions of the Board of Directors of the Company approving the Transaction Agreements
and the transactions contemplated under the Transaction Agreements, and (iii) resolutions of the
stockholders of the Company approving the Restated Certificate.
4.13 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents incident thereto
shall be reasonably satisfactory in form and substance to each Purchaser, and each Purchaser (or
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EFTA01120992
its counsel) shall have received all such counterpart original and certified or other copies of such
documents as reasonably requested. Such documents may include good standing certificates.
4.14 Management Rights. Management Rights Letters shall have been
executed by the Company and delivered to each of Andreessen, USV and Ribbit Capital.
4.15 Preemptive Rights. The Company shall have fully satisfied (including
with respect to rights of timely notification) or obtained enforceable waivers in respect of any
preemptive or similar rights directly or indirectly affecting any of its securities.
4.16 indemnification Agreement. The Company's board and stockholders shall
have approved a form of indemnification agreement for use between the Company, its directors
and Purchaser Affiliates, if any, affiliated with any Purchaser that is entitled to designate a
member of the Company's Board of Directors.
4.17 Amendment of Convertible Notes: Satisfaction and Cancelation. The
Company and each Purchaser who holds (either directly or through an affiliate or affiliates) one
or more Convertible Notes issued prior to the Closing, on behalf of itself and all such Purchasers,
hereby (i) agree to amend each such Convertible Note such that the entire principal amount of
each such Convertible Note plus accrued interest to be converted into Series B Preferred Stock
and, if applicable, Common Stock pursuant to such Convertible Note shall be equal to the
amount shown on Exhibit A, (ii) agree that upon the Initial Closing each Convertible Note has
been convened in accordance with the terms into a right of the Purchaser to receive the shares of
Series B Preferred Stock and, if applicable, Common Stock set forth on Exhibit A, (iii) agree that
all amounts owed to such Purchaser by the Company under any borrowings by the Company,
whether evidenced orally or in writing, including without limitation, the Convertible Notes and
any unpaid principal balance, any interest owed and any penalties or additional fees owed to such
Purchaser shall be deemed fully paid and satisfied by the Company and are deemed canceled and
(iv) agree to terminate the Note Purchase Agreements pursuant to which such Convertible Notes
were issued.
5. Conditions of the Company's Obligations at Closing. The obligations of the
Company to sell Shares to the Purchasers at the Initial Closing or any subsequent Closing are
subject to the fulfillment, on or before the Closing, of each of the following conditions, unless
otherwise waived:
5.1 Representations and Warranties. The representations and warranties of
each Purchaser contained in Subsection 4.1 shall be true and correct in all respects as of such
Closing.
5.2 Performance. The Purchasers shall have performed and complied with all
covenants, agreements, obligations and conditions contained in this Agreement that are required
to be performed or complied with by them on or before such Closing.
5.3 Oualifications. All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or of any state that are required in
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EFTA01120993
connection with the lawful issuance and sale of the Shares pursuant to this Agreement shall be
obtained and effective as of the Closing.
5.4 Investors' Rights Agreement. Each Purchaser shall have executed and
delivered the Investors' Rights Agreement.
5.5 Right of First Refusal and Co-Sale Agreement. Each Purchaser and the
other stockholders of the Company named as parties thereto shall have executed and delivered
the Right of First Refusal and Co-Sale Agreement.
5.6 Voting Agreement. Each Purchaser and the other stockholders of the
Company named as parties thereto shall have executed and delivered the Voting Agreement.
6. Miscellaneous.
6.1 Survival of Warranties. Unless otherwise set forth in this Agreement, the
representations and warranties of the Company and the Purchasers contained in or made pursuant
to this Agreement shall survive the execution and delivery of this Agreement and the Closing for
a period of two (2) years following the Closing and shall in no way be affected by any
investigation or knowledge of the subject matter thereof made by or on behalf of the Purchasers
or the Company.
6.2 Successors and Assigns. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly provided in this
Agreement.
6.3 Governing Law. This Agreement shall be governed by the internal law of
the State of Delaware.
6.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Counterparts may be delivered via facsimile, electronic mail
(including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000,
e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be
deemed to have been duly and validly delivered and be valid and effective for all purposes.
6.5 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or interpreting this
Agreement.
6.6 Notices. All notices and other communications given or made pursuant to
this Agreement shall be in writing and shall be deemed effectively given upon the earlier of
actual receipt or: (a) personal delivery to the party to be notified, (b) when sent, if sent by
electronic mail or facsimile during normal business hours of the recipient, and if not sent during
O11SUSA:755718737.3 20
EFTA01120994
normal business hours, then on the recipient's next business day, (c) five (5) days after having
been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1)
business day after deposit with a nationally recognized overnight courier, freight prepaid,
specifying next business day delivery, with written verification of receipt. All communications
shall be sent to the respective parties at their address as set forth on the signature page or Exhibit
A, or to such e-mail address, facsimile number or address as subsequently modified by written
notice given in accordance with this Subsection 6.6. If notice is given to the Company, a copy
shall also be sent to Orrick, Herrington & Sutcliffe LLP, 1000 Marsh Road, Menlo Park, CA
94025 Attention: John V. Bautista and if notice is given to the Purchasers, a copy shall also be
given to Perkins Coie LLP, 3150 Porter Drive, Palo Alto, CA 94304 Attention: Lowell Ness.
6.7 No Finder's Fees. Each party represents that it neither is nor will be
obligated for any finder's fee or commission in connection with this transaction. Each Purchaser
agrees to indemnify and to hold harmless the Company from any liability for any commission or
compensation in the nature of a finder's or broker's fee arising out of this transaction (and the
costs and expenses of defending against such liability or asserted liability) for which each
Purchaser or any of its officers, employees, or representatives is responsible. The Company
agrees to indemnify and hold harmless each Purchaser from any liability for any commission or
compensation in the nature of a finder's or broker's fee arising out of this transaction (and the
costs and expenses of defending against such liability or asserted liability) for which the
Company or any of its officers, employees or representatives is responsible.
6.8 Fees and Expenses. At the Closing, the Company shall pay the reasonable
fees and expenses of Perkins Coie LLP, the counsel for Andreessen Horowitz, in an amount not
to exceed, in the aggregate, $35,000.
6.9 Amendments and Waivers. Except as set forth in Subsection 1.3 of this
Agreement, any term of this Agreement may be amended, terminated or waived only with the
written consent of the Company and (i) the holders of at least a majority of the then-outstanding
Shares or (ii) for an amendment, termination or waiver effected prior to the Initial Closing,
Purchasers obligated to purchase a majority of the Shares to be issued at the Initial Closing. Any
amendment or waiver effected in accordance with this Subsection 6.9 shall be binding upon the
Purchasers and each transferee of the Shares (or the Common Stock issuable upon conversion
thereof), each future holder of all such securities, and the Company.
6.10 Severability. The invalidity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other provision.
6.11 Delays or Omissions. No delay or omission to exercise any right, power
or remedy accruing to any party under this Agreement, upon any breach or default of any other
party under this Agreement, shall impair any such right, power or remedy of such non-breaching
or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or
an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall
any waiver of any single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this Agreement, or any waiver on
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EFTA01120995
the part of any party of any provisions or conditions of this Agreement, must be in writing and
shall be effective only to the extent specifically set forth in such writing. All remedies, either
under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not
alternative.
6.12 Entire Agreement. This Agreement (including the Exhibits hereto), the
Restated Certificate and the other Transaction Agreements constitute the full and entire
understanding and agreement between the parties with respect to the subject matter hereof, and
any other written or oral agreement relating to the subject matter hereof existing between the
parties are expressly canceled.
6.13 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 THE 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.
6.14 Dispute Resolution. Any unresolved controversy or claim arising out of or
relating to this Agreement, except as (i) otherwise provided in this Agreement, or (ii) any such
controversies or claims arising out of either party's intellectual property rights for which a
provisional remedy or equitable relief is sought, shall be submitted to arbitration by one arbitrator
mutually agreed upon by the parties, and if no agreement can be reached within thirty (30) days
after names of potential arbitrators have been proposed by the American Arbitration Association
(the "AAA"), then by one arbitrator having reasonable experience in corporate finance
transactions of the type provided for in this Agreement and who is chosen by the AAA. The
arbitration shall take place in Delaware County, Delaware, in accordance with the AAA rules
then in effect, and judgment upon any award rendered in such arbitration will be binding and may
be entered in any court having jurisdiction thereof. There shall be limited discovery prior to the
arbitration hearing as follows: (a) exchange of witness lists and copies of documentary evidence
and documents relating to or arising out of the issues to be arbitrated, (b) depositions of all party
witnesses and (c) such other depositions as may be allowed by the arbitrators upon a showing of
good cause. Depositions shall be conducted in accordance with the Delaware Code of Civil
Procedure, the arbitrator shall be required to provide in writing to the parties the basis for the
award or order of such arbitrator, and a court reporter shall record all hearings, with such record
constituting the official transcript of such proceedings. The prevailing party shall be entitled to
reasonable attorney's fees, costs, and necessary disbursements in addition to any other relief to
which such party may be entitled. Each of the parties to this Agreement consents to personal
jurisdiction for any equitable action sought in the U.S. District Court for the District of Delaware
or any court of the State of Delaware having subject matter jurisdiction.
WAIVER OF JURY TRIAL: EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
OHSUSA:755718737.3 22
EFTA01120996
THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR
THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY
DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL
NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER
WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL
6.15 Waiver of Conflicts. Each party to this Agreement acknowledges that
Orrick, Herrington & Sutcliffe LLP, counsel for the Company, has in the past performed and may
continue to perform legal services for certain of the Purchasers in matters unrelated to the
transactions described in this Agreement, including the representation of such Purchasers in
venture capital financings and other matters. Accordingly, each party to this Agreement hereby
(a) acknowledges that they have had an opportunity to ask for information relevant to this
disclosure; and (b) gives its informed consent to Orrick, Herrington & Sutcliffe LLP's
representation of certain of the Purchasers in such unrelated matters and to Orrick, Herrington &
Sutcliffe LLP's representation of the Company in connection with this Agreement and the
transactions contemplated hereby.
6.16 Attorney's Fees. If any action at law or in equity (including arbitration) is
necessary to enforce or interpret the terms of any of the Transaction Agreements, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
6.17 Sale of FF Preferred Stock. The Purchasers that are purchasing FF
Preferred Stock, listed on Exhibit A attached hereto (the "FF Preferred Stock Purchasers") shall
purchase shares of FF Preferred Stock from certain holders thereof (as set forth on Exhibit A, the
"FF Sellers"), pursuant to an FF Preferred Stock Transfer Agreement at the April 2014 Closing,
which shares shall automatically convert into shares of Series B Preferred Stock as of the date of
purchase. Notwithstanding the foregoing, the FF Preferred Stock Purchasers shall be considered
"Purchasers" for the purposes of this Agreement with respect to the shares of FF Preferred Stock
purchased by such Purchasers and shall sign and be bound by the terms of the Transaction
Agreements with respect to such shares of FF Preferred Stock.
[Signature pagesfollow]
OHSUSA:755718737.3 23
EFTA01120997
IN WITNESS WHEREOF, the parties have executed this Series B Preferred Stock
Purchase Agreement as of the date first written above.
COMPANY:
COINBASE, INC.
By:
Name: Brian Armstrong
Title: Chief Executive Officer
FF SELLERS:
By: C13--- e ——
Name: Brian Armstrong
By:
?red uhrsani
Name: Fred Ehrsam
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
EFTA01120998
IN WITNESS WHEREOF, the parties have executed this Series B Preferred Stock
Purchase Agreement as of the date first written above.
PURCHASERS:
UNION SQUARE VENTURES 2012 FUND, L.P.
By: Union Square 2012 ., its General
Partner
By
Name: Wtlke\
Title: 420, A.,/
USV INVESTORS 2012 FUND, L.P.
By: Union Square 2012 G .C., its General
Partner
By
Name: fac N\Ascn
Title: ocrw a ,e-
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
EFTA01120999
IN WITNESS WHEREOF, the parties have executed this Series B Preferred Stock
Purchase Agreement as of the date first written above.
PURCHASERS:
RIBBIT CAPITAL, L.P.
By: Ribbit Capital GP, L.P., its General Partner
By: Ribbit Capital GP,
Ltd., its general partner
FINTECH COINBASE HOLDINGS, LLC
By:
Meyer M ka, Director
SIGNATURE PAGE TO STOCK PURCIIASE AGREEMENT
EFTA01121000
IN WITNESS WHEREOF, the parties have executed this Series B Preferred Stock
Purchase Agreement as of the date first written above.
PURCHASERS:
ANDREESSEN HOROWITZ FUND III, L.P.
for itself and as nominee for
Andreessen Horowitz Fund Ill-A, L.P.,
Andreessen Horowitz Fund L.P. and
Andreessen Horowitz Fund III-Q, L.P.
By: AH Equity Partners III, L.L.C.
Its general partner
By:
Name:
Title: Th ew. har
SIGNATURE PAGE TO STOCK PURCHASE AGREEhIENT
EFTA01121001
IN WITNESS WHEREOF, the parties have executed this Series B Preferred Stock
Purchase Agreement as of the date first written above.
PURCHASERS:
QUEENSBRIDGE PARTNERS, LLC
By:
Name: Dennis Nguyen
Title: COO/CFO
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
EFTA01121002
IN WITNESS WHEREOF, the parties have executed this Series B Preferred Stock
Purchase Agreement as of the date first written above.
PURCHASERS:
KINDLING CAPITAL LLC
By:
Name:
*tit
Jenny Haeg
or
(print)
Title: Managing Member
Address:
28 2nd Street, 3rd floor
San Francisco, CA 94105
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
EFTA01121003
EXHIBIT B - FORM OF AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
Exhibit C - DISCLOSURE SCHEDULE
Exhibit D - FORM OF INDEMNIFICATION AGREEMENT
Exhibit E - FORM OF AMENDED AND RESTATED INVESTORS'
RIGHTS AGREEMENT
Exhibit F - FORM OF MANAGEMENT RIGHTS LETTER
Exhibit G - FORM OF AMENDED AND RESTATED RIGHT OF FIRST
REFUSAL AND CO-SALE AGREEMENT
Exhibit H - FORM OF AMENDED AND RESTATED VOTING
AGREEMENT
Exhibit I - FORM OF LEGAL OPINION OF ORRICK, HERRINGTON &
SUTCLIFFE LLP
EFTA01121004
EXHIBIT A
SCHEDULE OF PURCHASERS
EFTA01121005
SCHEDULE OF PURCHASERS
Initial Closing: December 12,2013
Common Stock Series B Shares
Series B Shares Total Series B
Purchaser Name Cancelled Debt Shares for for Cancelled Cash
for Cash Shares
Cancelled Debt Debt
Union Square Ventures 2012 Fund, L.P.
$1,403,769.94 58,099 232,390 $2,071,041.43 342,857 575,247
USV Investors 2012 Fund, L.P.
$54,305.90 2,248 8,989 $80,121.73 13,264 22,253
Ribbit Capital, LP
$1,051,913.12 43,536 174,141 51,288,767.34 213,353 387,494
Fintech Coinbase Holdings, LLC
- - $260,069.41 43,054 43,054
Andreessen Horowitz Fund III, L.P., as nominee $10,002,739.73 - 1,655,934 $5,633,975.42 932,694
2,588,628
TOTAL S12,512,728.69 103,883 2,071,454 $9,333,975.33 1,545,222 3,616,676
EFTA01121006
SCHEDULE OF PURCHASERS
Subsequent Closing: December 27, 2013
FF Preferred FF Preferred
Total Series B Shares
Series B Shares Shares for Cash Shares for Cash
Purchaser Name Cash (including FF
for Cash (from Brian (from Fred
Preferred Shares)
Armstrong) Ehrsam)
Queensbridge Partners, LLC $50,003.59 8,278 0 0 8,278
-4-
EFTA01121007
SCHEDULE OF PURCHASERS
Subsequent Closing: February 10, 2014
FF Preferred FF Preferred
Total Series B Shares
Series B Shares Shares for Cash Shares for Cash
Purchaser Name Cash (including FF
for Cash (from Brian (from Fred
Preferred Shares)
Armstrong) Ehrsam)
Kindling Capital LLC S14,998.66 2,483 0 0 2,483
-5-
EFTA01121008
SCHEDULE OF PURCHASERS
Subsequent Closing: April 26, 2014
FF Preferred FT Preferred
Total Series B Shares
Series B Shares Shares for Cash Shares for Cash
Purchaser Name Cash (including FE
for Cash (from Brian (from Fred
Preferred Shares)
Armstrong) Ehrsam)
Andreessen Horowitz Fund III, M., as nominee $3,675,825.65 165,548 342,978 100,000 608,526
-5-
EFTA01121009
EXHIBIT B
FORM OF AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
See Tab 3
EFTA01121010
EXHIBIT C
DISCLOSURE SCHEDULE
See Tab 5
EFTA01121011
EXHIBIT D
FORM OF INDEMNIFICATION AGREEMENT
EFTA01121012
COINBASE, INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") is made as of by and
between Coinbase, Inc., a Delaware corporation (the "Company"), and
(