SMLR Semier Scientific Inc

 

Exhibit 23.1

 

Tel: 212-885-8000 Fax: 212-697-1299 www.bdo.com

BDO 200 Park Avenue New York, NY 10166 USA

 

Consent of Independent Registered Public Accounting Firm

 

We hereby consent to the incorporation by reference in this Registration Statement on Form S-3/A Amendment No.2 of our report dated March 6, 2024, relating to the financial statements of Semler Scientific, Inc. (the Company), which is included in the financial statements incorporated by reference in the Registration Statement on Form S-3/A Amendment No.2.

 

We also consent to the reference to us under the caption “Experts” in such Registration Statement.

 

/s/ BDO USA, P.C.

 

New York, New York

 

July 31, 2024

 

BDO USA, P.C., a Virginia professional corporation, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.

 

BDO is the brand name for the BDO network and for each of the BDO Member Firms.

 

 

 

Exhibit 99.2

 

CERTAIN INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL

 

 

Digital Asset Custodial Term Sheet

 

Effective Date	May 23, 2024
Custodian	NYDIG Trust Company LLC, a duly chartered New York limited liability trust company
Client [Legal name of customer], a [state] [type of entity] OR Full Legal Name	Semler Scientific, Inc., a Delaware corporation
Client Contact Info Address, Phone, Email	Renae Cormier Chief Financial Officer [***] [***]@semlerscientific.com
Eligible Assets	Bitcoin and any other assets Custodian may support in the future according to its Digital Asset Framework Policy.
Digital Assets	Digital assets in the Account will be held in cold storage by Custodian.
Cash	U.S. dollars in the Account will be deposited with one or more U.S. insured depository institutions.
[***]	[***]
[***] Fee & [***] Fee	A [***] Fee may be assessed in certain instances, as described further in the Agreement, so that the Client pays the [***] Fee, which is [***] based on [***].
Fee Calculation	The [***] Fee is calculated based on [***] (measured [***]) of [***], will be [***] will be determined using NYDIG’s [***] policy.
Invoicing	Custodian will invoice Client [***], in [***] for [***] Fees and expenses.
Payment	Payment in respect of the Fee Amount is owed on or before the [***] following the Invoice Date (such date, the “Due Date”). Subject to restrictions described in more detail in the Agreement, Custodian [***].
Statements	[***].
Deposits1	Deposits may be made [***] unless otherwise agreed with Custodian [***] each deposit with Custodian. Custodian will [***] for each deposit. Do not rely on [***] for deposits.

 

¹ For purposes of this Agreement, the term “deposit” does not refer to a deposit within the meaning of the U.S. federal and state banking laws. Custodied Digital Assets are not insured by the FDIC or SIPC.

 

 

Withdrawals

Withdrawals of Custodied Digital Assets can be made [***] unless otherwise agreed with Custodian [***].   As described in more detail in the SLA in Appendix A:   ●     Digital Asset Withdrawals: If a withdrawal request for Custodied Digital Assets is received before [***], such assets will generally be delivered [***]. ●     Cash Withdrawals: If Client requests a withdrawal of Custodied Cash, such withdrawal will be [***].

 

This Digital Asset Custodial Term Sheet (“Term Sheet”), together with the attached DIGITAL ASSET CUSTODIAL TERMS AND CONDITIONS (“Terms and Conditions”), form a DIGITAL ASSET CUSTODIAL AGREEMENT between Custodian and Client as of the Effective Date (the “Agreement”). This Term Sheet provides only a summary of certain terms and more details are in the Terms and Conditions; however, to the extent of any conflict between the Term Sheet and the Terms and Conditions, the Term Sheet controls. Capitalized terms not defined in this Term Sheet have the meaning ascribed to them in the Terms and Conditions.

 

 

DIGITAL ASSET CUSTODIAL TERMS AND CONDITIONS

 

TABLE OF CONTENTS

 

1.	Definitions	1
2.	Custodial Relationship	6
3.	Duties and Obligations of Custodian	7
4.	Account Service	9
5.	Access to Services	11
6.	Representations, Warranties and Covenants	11
7.	Prohibited Activities	15
8.	Instructions	15
9.	Audio-recording	18
10.	Responsibility of Custodian	18
11.	Indemnification	19
12.	Fees and Expenses	19
13.	Termination	20
14.	Confidentiality	22
15.	Intellectual Property	23
16.	Taxation	23
17.	Disclosure of Risks	24
18.	Limitations of Liability	25
19.	Miscellaneous	25

 

 

These DIGITAL ASSET CUSTODIAL TERMS AND CONDITIONS (“Terms and Conditions”), together with the attached DIGITAL ASSET CUSTODIAL TERM SHEET (“Term Sheet”), form a DIGITAL ASSET CUSTODIAL AGREEMENT between Custodian and Client as of the Effective Date (the “Agreement”). The Term Sheet provides only a summary of certain terms and more details are in these Terms and Conditions; however, to the extent of any conflict between the Term Sheet and the Terms and Conditions, the Term Sheet controls.

 

This Agreement sets forth the terms and conditions pursuant to which Custodian is to act as a custodian for digital assets and cash for Client.

 

In consideration of the mutual promises contained herein, Client and Custodian hereby agree as follows:

 

1.

Definitions

 

As used herein, the following terms shall have the following meanings:

 

“Account” means the Cash Account and the Digital Asset Account.

 

“Agreement” has the meaning set forth in the preamble hereto.

 

“AML and Sanctions Regulations” means U.S. federal and state anti-money laundering and sanctions laws applicable to Custodian, including (i) the Bank Secrecy Act, as amended by the USA PATRIOT Act of 2001 and the implementing regulations adopted by FinCEN codified in 31 C.F.R. Chapter X, the AML Act of 2020, and federal anti-money laundering statutes (18 U.S.C §§ 1956, 1957); (ii) New York State Department of Financial Services regulations in Parts 115, 116 and 504; and (iii) the economic and trade sanctions programs administered and enforced by OFAC.

 

“Applicable Law” means, with respect to any Person, any transnational, domestic or foreign federal, state or local law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement enacted, adopted, promulgated or applied by a Governmental Authority that is binding upon or applicable to that Person, as amended unless expressly specified otherwise, including AML and Sanctions Regulations.

 

“Approved Account” means an external bank account approved by Custodian for sending (or receiving) cash transfers to (or from) the Client’s Cash Account, whether beneficially owned by Client or a third party.

 

“Approved Address” means an external digital asset deposit or withdrawal address approved by Custodian for one-time or recurring transactions, whether beneficially owned by Client or a third party.

 

“[***]” has the meaning set forth in the Term Sheet.

 

 

“Authorized Person” means:

 

(i)

Client (if Client is a natural person), an employee or officer of Client (if applicable), a third-party service provider (including an affiliate of Custodian) or any other individual who has been designated by Client in writing as authorized by Client to give Instructions to Custodian for or on behalf of Client; or

 

(ii)

in the event of death, incapacity or disability (if Client is a natural person or a legal entity wholly owned by a natural person), a duly appointed trustee, legal representative, guardian or similar with the authority to act on behalf of such natural person’s estate under Applicable Law.

 

“Business Day” means any day that the New York Stock Exchange is open for trading.

 

“Cash Account” means one or more omnibus or segregated accounts held for benefit of customers and titled as such at one or more U.S. insured depository institutions.

 

“Cash Withdrawal Timeframes” means the times set forth in the SLA that Custodian has to take a corresponding action after Client has made a request to withdraw cash from its Cash Account.

 

“Change of Control” means:

 

(i)

the merger or consolidation of Custodian with or into another Person or the merger of another Person with or into Custodian, or the sale of all or substantially all the assets of Custodian to another Person, unless holders of a majority of the aggregate voting power of the outstanding membership interests of Custodian, immediately prior to that transaction, hold membership interests of the surviving or transferee Person that represent, immediately after the transaction, at least a majority of the aggregate voting power of the outstanding membership interests of the surviving or transferee Person; or

 

(ii)

any “person” or “group” (as those terms are used for purposes of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the “beneficial owner” (as that term is used in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of more than 50% of the total voting power of the outstanding membership interests of Custodian.

 

“Client” has the meaning set forth in the Term Sheet.

 

“Client Contact Info” means contact information that Custodian has on file for Client.

 

“Client Designated Security Procedures” means the Security Procedures for [***] and acknowledged and accepted by [***].

 

“Client Tax” means any Tax with respect to any Custodied Assets or any transaction related thereto.

 

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Cold Storage [***]” means the [***] set forth in the SLA that [***] has to take a corresponding action after [***] from [***].

 

“Confidential Information” means, (a) information disclosed in connection with this Agreement, either directly or indirectly, before, on, or after the Effective Date, whether in graphic, written, electronic or oral form, identified at the time of disclosure as confidential, or which by its context would reasonably be deemed to be confidential including, without limitation, current and potential investment and trading strategies, portfolio positions, valuations, performance data, investor reports, financial statements, marketing materials, organizational, offering and other corporate documents, risk management models, proprietary trading models, computer programs and software (both source and object code), data files, file layouts, databases and algorithms, analyses, projections, forecasts, financial statements, trade secrets (which term includes, for the avoidance of doubt, any non-public information related to the NYDIG custody system or otherwise regarding the Services), technical know-how, commitments and arrangements with service providers and other third parties, and (b) any information that contains, reflects or is based upon the foregoing Confidential Information, in each case, of the disclosing Party or of its affiliates or clients (which term includes, for the avoidance of doubt, any fund, trust, company or other entity advised or administered by the disclosing Party or any of its affiliates) and as provided by the disclosing Party or its affiliates to the receiving Party or its affiliates. For the avoidance of doubt, Confidential Information includes the terms and conditions of this Agreement.

 

“Custodied Assets” means Custodied Digital Assets and Custodied Cash.

 

“Custodied Cash” means cash properly sent to Custodian in accordance with Section 4(g) and held by Custodian in custody for the benefit of Client in the Cash Account pursuant to this Agreement.

 

“Custodied Digital Assets” means:

 

(i)

Eligible Assets properly sent to Custodian in accordance with Section 4(g) and held by Custodian in custody for the benefit of Client in the Digital Asset Account pursuant to this Agreement; and

 

(ii)

Forked or Airdropped Assets, but [***] to be included in Client’s Digital Asset Account [***], it being understood that Forked or Airdropped Assets [***] being included in the Digital Asset Account are [***].

 

“Custodian” has the meaning set forth in the Term Sheet.

 

“Custodian Designated Security Procedures” means [***].

 

“Digital Asset Account” means an account for digital assets in the name of Client.

 

“Digital Asset Framework Policy” means [***].

 

 

“Digital Asset Network” means a decentralized peer-to-peer network used to transfer a particular type of digital asset.

 

“[***]” has the meaning set forth in Section 12(b).

 

“Due Date” has the meaning set forth in the Term Sheet.

 

“Eastern Time” means local time in New York, New York.

 

“Effective Date” has the meaning set forth in the Term Sheet.

 

“Eligible Assets” means digital assets with respect to which Custodian provides Services, as specified in writing by Custodian, pursuant to its Digital Asset Framework Policy.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Execution Agreement” means the Digital Asset Execution Agreement by and between NYDIG Execution and Client, as amended from time to time.

 

“FDIC” means the Federal Deposit Insurance Corporation.

 

“Fee” means the [***], and if applicable, the [***] Fee.

 

“Fee Amount” Means, with respect to a billing period, the amount of Fees and expenses [***] such period together with any [***] Fee Amounts from prior billing periods.

 

“Fiat Currency” means any government-issued currency that is designated as legal tender in its country of issuance through government decree, regulation, or law.

 

“FinCEN” means the U.S. Treasury Department’s Financial Crimes Enforcement Network.

 

“Forked or Airdropped Assets” means any digital assets received and held by Custodian on behalf of and for the benefit of Client through air drops, forks or other similar mechanisms.

 

“Governmental Authority” means any transnational, domestic or foreign federal, state or local governmental, regulatory or administrative authority, department, court, agency or official, including any political subdivision thereof.

 

“Instruction” means a directive initiated by Client, acting through an Authorized Person, which directive conforms to the requirements set forth in Section 8.

 

“Invoice Date” means, with respect to an invoice, the date set forth on such invoice.

 

“Lien” means, with respect to any property or asset, any mortgage, deed of trust, lien, pledge, charge, security interest, encumbrance or other adverse claim of any kind in respect of that property or asset. For the purposes of this Agreement, a Person will be deemed to own subject to a Lien any property or asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to that property or asset.

 

 

“Location” means, with respect to any Custodied Digital Assets, the physical location of the private keys required to transfer those Custodied Digital Assets as stored on one or more servers, hard drives, or other media physically present in that location (including in the case of any digital asset secured by more than one private key (a “multi-sig protected digital asset”), the physical location of any private key for all the multi-sig protected digital asset as stored on one or more servers, hard drives or other media physically present in that location).

 

“Material Adverse Effect” means a material adverse effect on:

 

(i)

the financial condition, business, assets, results of operations or prospects of, as context requires, Custodian or Client;

 

(ii)

Custodian’s safekeeping of the Custodied Assets; or

 

(iii)

Custodian’s ability to provide the Services.

 

“[***] Amount” has the meaning set forth in the Term Sheet.

 

“NYDIG Execution” means NYDIG Execution LLC, a Delaware limited liability company registered as a Money Services Business with FinCEN and licensed with a BitLicense by the New York State Department of Financial Services, or any successor thereto.

 

“OFAC” means the U.S. Treasury Department’s Office of Foreign Assets Control.

 

“Party” means each party to this Agreement (together, the “Parties”).

 

“Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization.

 

“Portal” means [***] or such other [***] to from time to time.

 

“[***].

 

“SIPC” means the Securities Investor Protection Corporation.

 

“Security Procedure” means a security procedure set forth in [***] with respect to [***], to be followed:

 

(i)

by [***], upon the [***]; or

 

(ii)

with [***], upon the [***], provided that the security procedure in question is intended to [***].

 

A Security Procedure may [***]. For the avoidance of doubt, a Security Procedure includes [***].

 

 

“Services” means the custodial services to be provided by Custodian to Client under this Agreement, including the services provided through use of the Account.

 

“SLA” means the Service Level Agreement in Appendix A, which Custodian may update with 30 days’ notice.

 

“[***] Fee” has the meaning set forth in Section 12(b).

 

“Taxes” means all taxes, levies, imposts, duties, charges, assessments or fees of any nature (including such amounts that are collected by deduction or withholding) and including interest, penalties and additions thereto that are imposed by any taxing authority.

 

“Terms and Conditions” has the meaning set forth in the preamble hereto.

 

“Term Sheet” has the meaning set forth in the preamble hereto.

 

“Termination Date” means the effective date of the termination of this Agreement.

 

“UCC 4A” means Article 4A of the Uniform Commercial Code as currently in effect in the State of New York.

 

“Virtual Currency” has the meaning set forth in Section 17.

 

2.

Custodial Relationship

 

(a)

Client hereby appoints Custodian as its custodian, and Custodian hereby accepts that appointment. All Custodied Assets of Client delivered to Custodian or its agents will be held by Custodian in trust for the benefit of Client, as provided in this Agreement. The duties of Custodian with respect to the Custodied Assets will only be as set forth expressly in this Agreement, which duties are generally comprised of receiving and holding Custodied Assets for safekeeping for the benefit of Client, delivering Custodied Assets to Client in accordance with Instructions, and performing various administrative duties in accordance with Instructions and as reasonably required to effect Instructions. For the avoidance of doubt, Custodian may not transfer the Custodied Assets except as directed by Client in accordance with Instructions, as reasonably required to effect Instructions or as otherwise set forth in this Agreement.

 

(b)

Custodian hereby acknowledges and agrees that it is a custodian of the Custodied Assets stored in the Account, such Custodied Assets are held by Custodian in trust for the benefit of Client, and that Custodian has no right, interest, or title in those Custodied Assets. Custodian hereby confirms that the Custodied Assets do not constitute an asset on the balance sheet of Custodian and that the Custodied Assets will at all times be identifiable in Custodian’s database as being stored in the Account for the benefit of Client.

 

(c)

Custodian will establish and maintain a Digital Asset Account.

 

 

(d)

With respect to Services for digital assets, Custodian will provide Services to Client only for digital assets deemed to be Eligible Assets by Custodian according to its Digital Asset Framework Policy, as set forth in the Term Sheet. Custodian will notify Client of any changes to the list of Eligible Assets.

 

(e)

Custodian will use its commercially reasonable judgment to determine which post-fork digital asset is the same as the pre-fork digital asset.

 

(f)

Client acknowledges that it may not immediately or ever have the ability to withdraw a Forked or Airdropped Asset. Unless and until a Forked or Airdropped Asset is deemed an Eligible Asset and reflected on Client’s customer account statement as a Custodied Digital Asset, Custodian has no obligation to safeguard or provide any other Services for such asset.

 

(g)

Custodian will hold Client’s cash in the Cash Account. Custodian intends for Client to benefit from FDIC deposit insurance on a pass-through basis on such cash.

 

(h)

Custodian may rely on an affiliate that is U.S.-located and appropriately licensed and regulated as a digital asset custodian as a service provider, including as a sub-custodian, in providing the Services without approval from Client.

 

3.

Duties and Obligations of Custodian

 

The duties and obligations of Custodian include the following:

 

(a)

Safekeeping of Custodied Assets.

 

(i)

Custodian will use reasonable care to keep in safe custody for the benefit and on behalf of Client all Custodied Assets.

 

(ii)

All Custodied Digital Assets credited to the Digital Asset Account will:

 

(A)

be held in the Digital Asset Account at all times, and the Digital Asset Account will be controlled by Custodian at all times;

 

(B)

be labeled or otherwise appropriately identified as being held for the benefit of Client;

 

(C)

not without the prior written consent of Client be deposited or held with any third-party depositary, custodian, clearance system or digital asset wallet; and

 

(D)

not be commingled with other digital assets held by Custodian, whether held for Custodian’s own account or the account of other Persons other than Client, [***].

 

 

(iii)

All Custodied Cash credited to the Cash Account will:

 

(A)

be held in the Cash Account at all times;

 

(B)

be labeled or otherwise appropriately identified as being held for the benefit of Client;

 

(C)

not be commingled with cash of any Person, including cash of Custodian, except that [***]; and

 

(D)

not constitute liabilities of Custodian.

 

(b)

Record Keeping. Custodian will keep appropriate records regarding the Services. All records maintained pursuant to this Section 3(b) will be retained by Custodian for such period as required by Applicable Law, but in no event for less than seven years, after which retention of the records will be at Custodian’s discretion.

 

(c)

Annual Certificate and Report.

 

(i)

Upon Client’s request, which request may occur no more than once per calendar year, Custodian will deliver to Client a certificate signed by a duly authorized officer, which certificate will:

 

(A)

certify that Custodian has complied, and is currently in compliance, with the provisions of this Agreement during the preceding calendar year; and

 

(B)

certify that the representations and warranties of Custodian contained in this Agreement are true and correct on and as of the date of the certificate and have been true and correct throughout the preceding year.

 

(d)

Inspection and Auditing.

 

(i)

To the extent Custodian may legally do so, it will permit Client’s auditors or third-party accountants, upon reasonable notice, to inspect, take extracts from and audit the records maintained pursuant to Section 3(b) containing information relevant to the safekeeping of the Custodied Assets as provided in this Agreement and take necessary steps to verify that satisfactory internal control systems and procedures are in place, all at such times as Client may [***]. If Custodian [***] that an auditing procedure proposed by Client or its auditors or third-party accountants may [***] of any Custodied Assets, Custodian may deny access to those records to auditors or third-party accountants; however, Custodian and Client will [***].

 

(ii)

If any material deficiencies or objections are identified as part of the annual audit of Custodian that are relevant to the safekeeping of the Custodied Assets as provided in this Agreement, a report will be provided to Client stating the nature of those deficiencies or objections and describing the steps taken or to be taken to remedy the same. Any audit report furnished pursuant to this Section 3(d)(ii) will be deemed Confidential Information of Custodian.

 

 

(e)

Attachment.

 

(i)

Custodian will, and will cause any agent acting on its behalf to, use reasonable care to:

 

(A)

refuse to consent to any attachment of Custodied Assets or to any similar order or to any claim that would encumber the Custodied Assets in any manner;

 

(B)

resist any writ of attachment, similar order or claim that would encumber or affect the free transferability of any Custodied Assets in any relevant market; and

 

(C)

deny any request by a third party to transfer any Custodied Assets without the prior consent of Client.

 

(ii)

Custodian will give Client immediate notice of the occurrence of any request, consent, writ, order or claim referred to in Section 3(e)(i) (unless such notice is prohibited by Applicable Law). Client will pay [***] incurred by Custodian in connection with any action taken by it in accordance with this Section ‎3(e).

 

(f)

All Locations of Custodied Digital Assets will be in the United States.

 

(g)

Custodian agrees not to consummate a transaction that would constitute a Change of Control without providing at least 30 days’ written notice to Client.

 

(h)

Custodian will give Client prompt notice if there has been a Material Adverse Effect. That notice will reasonably describe the change in business conduct, event, occurrence, development, or state of circumstances or facts.

 

4.

Account Service

 

(a)

Client and Authorized Persons will be able to provide Instructions with respect to the Account [***] in order to deposit or initiate withdrawal of digital assets or cash, subject to the Cold Storage Withdrawal Timeframes or the Cash Withdrawal Timeframes, as relevant, except as otherwise provided in this Section 4‎.

 

(b)

Custodian will send Client account statements on the frequency specified in the Term Sheet [***]. Custodian may send Client account statements, tax forms, and other documentation to Client [***].

 

 

(c)

Client must [***]. Client agrees to provide Custodian with any additional information that may be requested in connection with [***]. Custodian will timely review the proposed [***]. Any rejection will be accompanied by an explanation of the basis for the rejection unless Custodian is legally prohibited from providing such an explanation or it would be imprudent under the circumstances to do so. Custodian’s review of a proposed [***]. Custodian will not deliver Custodied Digital Assets to any addresses that are sanctioned by OFAC, would cause Custodian to violate AML and Sanctions Regulations or [***]. Custodian reserves the right to limit Client to withdrawals solely to [***].

 

(d)

Custodian will provide Client with procedures that detail how to provide Instructions to Custodian to deposit cash in the Cash Account and digital assets to the Digital Asset Account. Custodian may from time to time update the requirements [***], as appropriate, and will [***]. Client acknowledges that Custodian may not credit to the Digital Asset Account digital assets that are sent to Custodian in a manner different from that described in the procedures provided by Custodian. Client acknowledges that cash and digital assets that are sent inconsistently with Custodian’s procedures (for example, to the wrong addresses) may be irretrievable.

 

(e)

Except as set forth in Section 7(b), Custodian will not suspend Client’s ability to provide Instructions with respect to the Account, and any such suspension will constitute a breach of this Agreement. However, Custodian may restrict the ability to provide Instructions with respect to or use of the Account by [***] if, in Custodian’s [***], the restriction is [***] to comply with Custodian’s anti-money laundering and sanctions programs and policies, AML and Sanctions Regulations or any other requirements under Applicable Law or if Custodian [***] that [***] cybersecurity has been or will be compromised (for example, because someone is impersonating an Authorized Person).

 

(f)

All Instructions to withdraw, deposit or otherwise move digital assets or cash to or from an Account must be provided by [***].

 

(g)

Custodian will credit to the Account all Eligible Assets and cash properly sent to Custodian by Authorized Persons to be held in the Account for the benefit of Client pursuant to this Agreement within the timeframes set forth in the SLA. Custodian will notify Client and the relevant Authorized Person(s) of its receipt of Custodied Assets and of the related credit to the Account, including the amounts allocated to the Digital Asset Account and the Cash Account, as relevant. Notwithstanding the foregoing, processing of a credit of Eligible Assets or cash may be delayed or rejected if, [***], that delay or rejection is [***] to comply with Custodian’s anti-money laundering and sanctions programs and policies, AML and Sanctions Regulations or any other requirements of Applicable Law, or if Client did not send Custodian an Instruction before effecting a transfer on a Digital Asset Network.

 

 

(h)

Custodian will debit from the Account all Custodied Assets withdrawn by [***] from the Account within the timeframes set forth in the SLA. Custodian will notify [***] of any withdrawal and of the related debit from the Account.

 

(i)

Custodian will promptly provide Client with [***] of withdrawals from or deposits to the Account. Notwithstanding the foregoing, for any withdrawals from or deposits to the Account made in connection with settling transactions executed by Client with NYDIG Execution,[***].

 

5.

Access to Services

 

(a)

To the extent known to Client or Custodian, Client will promptly notify Custodian and Custodian shall promptly notify Client of any unauthorized access, use or disclosure of Client’s Account credentials, unauthorized access or use of the Account, which notification will reasonably describe the issue at hand including the date and type of problem.

 

(b)

Custodian may verify the [***] every [***], or more often as [***], to ensure that [***] with Client (if applicable) or otherwise authorized to act on Client’s behalf.

 

6.

Representations, Warranties and Covenants

 

(a)

Custodian represents, warrants and covenants that:

 

(i)

Custodian is (A) duly organized, validly existing and in good standing under the laws of New York; (B) has all corporate powers required to carry on its business as now conducted; and (C) is duly qualified to do business and is in good standing in each jurisdiction where such qualification is necessary;

 

(ii)

Custodian has full power to execute and deliver this Agreement and to perform all the duties and obligations to be performed by it under this Agreement;

 

(iii)

the execution, delivery and performance by Custodian of this Agreement and the provision of the Services are within Custodian’s corporate powers and have been duly authorized by all necessary corporate action on the part of Custodian;

 

(iv)

this Agreement constitutes a valid and binding agreement of Custodian enforceable against Custodian in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’ rights generally and general principles of equity) and does not contravene, or constitute a default under, any provision of Applicable Law or of documents under which Custodian is organized or of any agreement, judgment, injunction, order, decree or other similar instrument binding upon Custodian;

 

 

(v)

none of the Custodied Assets will be used by Custodian in connection with any loan, hypothecation, Lien or claim of (or by) Custodian or otherwise transferred or pledged to any third party unless otherwise agreed in writing by Custodian and Client;

 

(vi)

Custodian has and will maintain any material necessary consents, permits, licenses, approvals, authorizations or exemptions of any government or other regulatory authority or agency in the United States or any other country required to fully and timely provide the Services to Client;

 

(vii)

beneficial and legal ownership of all Custodied Assets is, and will remain, freely transferable without the payment of money or value and that Custodian has no ownership interest in the Custodied Assets;

 

(viii)

Custodian waives any right of Lien, pledge, retention or set-off or similar right it may have under any provision of law, regulation or contract with respect to the Custodied Assets; and

 

(ix)

Custodian will carry out its obligations under this Agreement in compliance with law, regulations and orders, as well as the guidelines, regulations and orders of the applicable local tax, or other competent authorities.

 

(b)

Client represents, warrants and covenants that:

 

(i)

if Client is a legal entity, Client (A) is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization; (B) has all corporate powers required to carry on its business as now conducted; and (C) is duly qualified to do business and is in good standing in each jurisdiction where such qualification is necessary;

 

(ii)

Client has the full power and authority to execute and deliver this Agreement and to perform all the duties and obligations to be performed by it under this Agreement;

 

(iii)

if Client is a legal entity, the execution, delivery and performance by Client of this Agreement are within Client’s corporate powers and have been duly authorized by all necessary corporate action on the part of Client;

 

(iv)

this Agreement constitutes a valid and binding agreement of Client enforceable against Client in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’ rights generally and general principles of equity) and does not contravene, or constitute a default under, any provision of Applicable Law or of the documents under which Client is organized (if Client is a legal entity) or of any agreement, judgment, injunction, order, decree or other similar instrument binding upon Client;

 

 

(v)

Client is not itself, nor is it an entity that is, an entity owned or controlled by any Person that is, or conducting any activities itself or on behalf of any Person that is (A) the subject of any sanctions administered or enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control, the U.S. Department of State, or any other Governmental Authority with jurisdiction over Custodian, Client or the Services; (B) identified on the Denied Persons, Entity, or Unverified Lists of the U.S. Department of Commerce’s Bureau of Industry and Security; or (C) located, organized or resident in a country or territory that is, or whose government is, the subject of U.S. economic sanctions, including, without limitation, Crimea (or other regions of Ukraine subject to comprehensive OFAC sanctions), Cuba, Iran, North Korea, Syria or other regions subject to comprehensive OFAC sanctions;

 

(vi)

Client has all rights, title and interest in and to the Custodied Assets as necessary for Custodian to perform its obligations under this Agreement;

 

(vii)

at the time of delivery of each Instruction, the execution, delivery and performance by Client of the Instruction will have been within Client’s corporate powers and will have been duly authorized by all necessary corporate action on the part of Client (if Client is a legal entity). Any Instruction issued under this Agreement constitutes a valid and binding agreement of Client enforceable against Client in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’ rights generally and general principles of equity) and does not contravene, or constitute a default under, any provision of Applicable Law or of the documents under which Client is organized (if Client is a legal entity) or of any agreement, judgment, injunction, order, decree or other similar instrument binding upon Client;

 

(viii)

by providing an Instruction, Client hereby (A) authorizes Custodian to complete any documentation that may be required or appropriate to carry out the Instruction, and agrees to be contractually bound to the terms of that documentation “as is” without recourse against Custodian; (B) represents, warrants and covenants that it will provide Custodian with any information that is [***] to enable Custodian’s performance pursuant to the Instruction or under this Agreement; and (C) represents, warrants and covenants that the processing, completion or otherwise effectuation of the Instruction will not cause the Custodian to violate AML and Sanctions Regulations;;

 

(ix)

Client will promptly respond to any information request Custodian makes in relation to Custodian’s periodic know-your-customer review or AML and Sanctions Regulations;

 

 

(x)

Client will maintain appropriate security controls with respect to sensitive information related to the Account, including, for example, procedures for secure storage of passwords, use of two-factor authentication, secure e-mail, and secure storage of documents;

 

(xi)

Client will promptly execute and deliver, upon request, any proxies, powers of attorney or other instruments that may be [***] for Custodian to provide the Services;

 

(xii)

Client will cooperate with any reasonable request Custodian makes in connection with responding to formal or informal inquiries made by exchanges or regulatory, self-regulatory or governmental authorities in connection with the Services;

 

(xiii)

to the extent that Client is not precluded from doing so by law, Client will promptly notify Custodian of any legal proceedings or formal or informal inquiries made by exchanges or regulatory, self-regulatory or governmental authorities pertaining to Client’s business activities relating to digital assets;

 

(xiv)

in the event that (x) Client is, or is acting on behalf of or with assets of, a “benefit plan investor” within the meaning of Section 3(42) of ERISA or (y) the Custodied Assets include “plan assets” for purposes of ERISA or the Code, (A) none of Custodian or any of its affiliates [***] with respect to the Custodied Assets, and none of them is [***], (B) Client has determined [***] with respect to the Services, and, in making such determination, has [***] in determining [***] involved with respect to the Services, (C) Client has determined that [***] and (D) the assets held within the Account shall comply with Section 404(b) of ERISA and accompanying regulations; and

 

(xv)

Client is independent of Custodian and did not rely on any statement of Custodian or any of its affiliates to invest in the Custodied Asset and Client has exercised independent judgment in its determination to invest in the Custodied Assets;

 

(xvi)

Client will carry out its obligations under this Agreement in compliance with law, regulations and orders, as well as the guidelines, regulations and orders of the applicable local tax, or other competent authorities; and

 

(xvii)

Client has reviewed and understand the disclosures on its State Licenses and Consumer Disclosures website located at [***] or such other website as NYDIG Trust may direct Client to from time to time.

 

(c)

Notification of Adverse Change. Each Party agrees to notify the other Party, if, at any time after the date of this Agreement, any of the representations, warranties or covenants made by such Party under this Section 6 fail to be materially true and correct as if made at and as of that time. The notifying Party will describe in reasonable detail the representation, warranty or covenant affected, the circumstances giving rise to that failure and the steps it has taken or proposes to take to rectify the failure.

 

 

7.

Prohibited Activities

 

(a)

Client agrees that Client will not use the Services for any illegal purpose or any other type of illegal activity of any sort or take any action that negatively affects the performance of the Services. Client may not engage in any of the following activities, either directly or through a third party:

 

(i)

attempt to gain unauthorized access to the Services or another user’s account;

 

(ii)

make any attempt to bypass or circumvent any security features;

 

(iii)

reproduce, duplicate, copy, sell or resell the Services or access to the Services for any purpose except as authorized in this Agreement;

 

(iv)

engage in any activity that is abusive or interferes with or disrupts the Services. Use of the Services in connection with any transaction involving illegal products or services is prohibited; or

 

(v)

engage in any activity that would cause Custodian to violate AML and Sanctions Regulations.

 

(b)

Custodian may suspend Client's (or any Authorized Person’s) ability to provide Instructions with respect to the Account in the event of any breach of Section 7(a).

 

(c)

Client will remain fully responsible for any acts or omissions of its Authorized Persons and will ensure that Authorized Persons comply with the terms of this Agreement.

 

8.

Instructions

 

(a)

Unless otherwise explicitly provided for in this Agreement, Custodian will perform its duties under this Agreement pursuant to Instructions.

 

(b)

Client must deliver Instructions in accordance with a Custodian Designated Security Procedure, unless Client elects to transmit an Instruction in accordance with a Client Designated Security Procedure.

 

 

 

(c)

Client may use a Client Designated Security Procedure to transmit Instructions only if Custodian has agreed to and acknowledged that procedure. If Client determines to use [***] it must provide Custodian sufficient notice and information to allow testing or other confirmation that Instructions received via the Client Designated Security Procedure can be [***]. Custodian may require Client to execute additional documentation prior to the use of such transmission method. Custodian’s acknowledgment of [***] will authorize it to accept such means of delivery but will not represent [***]. In electing to transmit an Instruction via a Client Designated Security Procedure, Client:

 

(i)

agrees to be bound by the transaction(s) or payment order(s) specified on said Instruction, whether or not authorized, and accepted by Custodian in compliance with such Client Designated Security Procedure; and

 

(ii)

accepts the risk associated with such Client Designated Security Procedure and confirms it is commercially reasonable for the transmission and authentication of the Instruction.

 

(d)

Instructions provided [***] will be binding upon Custodian only if and when Custodian takes action with respect thereto. Custodian reserves the right to restrict Client’s use of telephonic Instruction and/or to require Client to [***].

 

(e)

Client must provide an Instruction to Custodian to deposit Eligible Assets to the Digital Asset Account [***] on the relevant Digital Asset Network into the Digital Asset Account. Client acknowledges that if Client attempts to [***], Client may experience delays in the crediting of those Eligible Assets to the Digital Asset Account, or the Eligible Assets may be forever lost or inaccessible. Custodian will not be liable for any damages related to delays that result from the lack of a proper Instruction.

 

(f)

Custodian may treat [***]. Custodian will be entitled to [***].

 

(g)

The [***] providing an Instruction will be responsible for assuring the adequacy and accuracy of that Instruction. If Custodian determines that an Instruction is either unclear or incomplete, Custodian will give [***] notice of that determination to Client. Such notice may be [***]. Client must thereupon amend or otherwise reform the Instruction. In such event, Custodian will have no obligation to take any action in response to the Instruction initially delivered until the redelivery of an amended or reformed Instruction.

 

(h)

The purpose of any Client Designated Security Procedure or Custodian Designated Security Procedure is to confirm the authenticity of any Instruction and is not designed to detect errors or omissions in such Instructions. Therefore, Custodian is not responsible for detecting any Client error or omission contained in any Instruction received by Custodian.

 

(i)

With respect to Instructions to transfer cash, Custodian will not be liable for interest on the amount of any Instruction that was not authorized or was erroneously executed unless Client so notifies Custodian within [***]. Any such compensation payable in the form of interest will be payable in accordance with [***]. If an Instruction in the name of Client and accepted by Custodian was not authorized by Client, the liability of the parties will be governed by [***].

 

 

(j)

Custodian, after providing [***] may decide to no longer accept a particular Client Designated Security Procedure or Custodian Designated Security Procedure, or to do so only on revised terms, in the event that it determines that such agreed or established method of transmission represents a security risk or is attendant to any general change in Custodian’s policy regarding Instructions.

 

(k)

Client will use reasonable care to comply with any applicable Security Procedures with respect to the delivery or authentication of Instructions and will use commercially reasonable efforts to safeguard any codes, passwords or similar devices.

 

(l)

Custodian will use reasonable care to comply with any applicable Security Procedures with respect to the receipt or verification of Instructions and will use commercially reasonable efforts to safeguard any codes, passwords or similar devices.

 

(m)

Client may cancel an Instruction but Custodian will have no liability for Custodian’s failure to act on a cancellation Instruction unless Custodian has [***]. Any cancellation Instruction must be sent and confirmed by a Custodian Designated Security Procedure or a Client Designated Security Procedure.

 

(n)

Custodian cannot and does not guarantee the value of Eligible Assets. Custodian does not control the relevant Digital Asset Networks and therefore is not responsible for the services provided by those Digital Asset Networks – in particular, verifying and confirming transactions that are submitted to the Digital Asset Networks. Furthermore, notwithstanding Section 8(m), Custodian cannot cancel or reverse a transaction that has been submitted to a Digital Asset Network. Once a transaction request has been submitted to a Digital Asset Network, Client will subsequently not be able to cancel or otherwise modify Client’s transaction request. Client acknowledges and agrees that, to the extent Custodian did not cause or contribute to a loss Client suffers in connection with any Eligible Asset transaction initiated, Custodian will have no liability for that loss. Custodian has no control over the relevant Digital Asset Networks and therefore does not ensure that any transaction request Custodian submits to a Digital Asset Network will be completed. Client acknowledges and agrees that the transaction requests Client instructs Custodian to submit on a Digital Asset Network may not be completed, or may be substantially delayed, by that Digital Asset Network and Custodian is not responsible for any delay or any failure of completion caused by that Digital Asset Network. When Client provides Instructions to Custodian, Client authorizes Custodian to submit Client’s transaction to the relevant Digital Asset Network in accordance with the Instructions Client provides.

 

(o)

Client may establish with Custodian a process to [***]. Client will execute all documentation reasonably required by Custodian, including a separate [***].

 

(p)

In the event Custodian fails to execute a properly executable Instruction and fails to give Client notice of Custodian’s non-execution, Custodian will be liable [***]. Notwithstanding anything in this Agreement to the contrary, Custodian will in no event be liable for [***].

 

 

(q)

If Client does not have an Execution Agreement, Client authorizes NYDIG Execution to act as agent on its behalf solely for the limited purposes set forth in this Agreement.

 

9.

Audio-recording

 

Client on behalf of itself and its customers (if any) authorizes Custodian to record any and all telephonic or other oral instructions given to Custodian by or on behalf of Client, including from any Authorized Person. This authorization will remain in effect until and unless revoked by Client in writing.

 

10.

Responsibility of Custodian

 

(a)

In performing its duties and obligations hereunder, Custodian will use reasonable care. Subject to the specific provisions of this Section 10, Custodian will be liable for any direct damage incurred by Client in consequence of Custodian’s gross negligence, bad faith or willful misconduct. In no event will Custodian be liable hereunder for any special, indirect, punitive or consequential damages arising out of, pursuant to or in connection with this Agreement even if Custodian has been advised of the possibility of such damages. It is agreed that Custodian will have no duty to assess the risks inherent in Client’s investments or to provide investment advice with respect to those investments and that Client as principal will bear any risks attendant to particular investments such as failure of counterparty, issuer, promoter or developer.

 

(b)

Custodian will not be responsible under this Agreement for any failure to perform its duties, and will not be liable hereunder for any loss or damage in association with such failure to perform, for or in consequence of any circumstance or event which is beyond the reasonable control of Custodian or any agent of Custodian and which adversely affects the performance by Custodian of its obligations hereunder or by any other agent of Custodian, including any event caused by, arising out of or involving (i) an act of God, (ii) accident, fire, water or wind damage or explosion, (iii) any computer, system or other equipment failure or malfunction caused by any computer virus or the malfunction or failure of any communications medium, (iv) any interruption of the power supply or other utility service, (v) any strike or other work stoppage, whether partial or total, (vi) any disruption of, or suspension of trading in, the digital asset markets, or (vii) any other cause similarly beyond the reasonable control of Custodian (except in all such cases as may arise from Custodian’s own [***]).

 

 

(c)

Custodian will not be liable for any loss, claim, damage or other liability arising from the following causes (except such as may arise from its or its nominee’s, agent’s, employee’s, contractor’s, or representative’s own grossly negligent action, grossly negligent failure to act, bad faith, or willful misconduct):

 

(i)

The failure of any third party beyond the control or choice of Custodian, including the failure of a Digital Asset Network or a commercially reasonable information provider relied upon by Custodian;

 

(ii)

Client’s or any Authorized Person’s failure to protect the confidentiality or security of the Account information associated with Custodied Assets;

 

(iii)

An unauthorized party’s impersonation of an Authorized Person to provide an Instruction or otherwise access the Account;

 

(iv)

Any action taken or omitted by Custodian in accordance with an Instruction, even when that action conflicts with, or is contrary to any provision of, Client’s declaration of trust, certificate of incorporation or by-laws or other constitutive document, Applicable Law, or actions by the trustees, directors or shareholders of Client;

 

(v)

Specific inaccuracies in information that Custodian received from a commercially reasonable source such as a commercial database, provided that Custodian has relied upon that information in good faith;

 

(vi)

Any action taken or omitted by Custodian based on a good faith belief that the action is reasonably necessary to comply with requirements under Applicable Law, including AML and Sanctions Regulations; or

 

(vii)

Any action taken or omitted by Custodian pursuant to the advice of legal counsel and accountants (who may also be advisors to Client), in each case nationally recognized and with expertise in the relevant area, in relation to matters of law, regulation or market practice, provided that Custodian has relied upon that advice in good faith.

 

11.

Indemnification

 

Client hereby indemnifies Custodian and its agents, nominees, employees, officers and directors, and agrees to hold each of them harmless from and against all claims and liabilities, [***] and taxes, incurred or assessed against any of them in connection with the performance of this Agreement and any Instruction, including for the acts, omissions, or any unlawful activity of any of Client’s agents, except such as may arise from Custodian’s or its nominees’ own [***].

 

12.

Fees and Expenses

 

(a)

Client will pay Custodian an [***] Fee for the Services as set forth in the Term Sheet.

 

 

(b)

Client will also pay Custodian a [***] for the Services in such amount as [***]. For the avoidance of doubt, if the [***] shall be due for such billing period. Custodian may [***]. For example, Custodian may, but is not required to, [***] for the amount of [***] paid by Client to affiliates of the Custodian in such billing period. With respect to any spreads paid that [***], Custodian and its affiliates shall [***], unless and only to the extent otherwise required by the applicable agreement. Custodian does not expect to [***]. Custodian expects that [***]. Custodian may rely on [***]. Notwithstanding anything to the contrary in this paragraph, Custodian may further [***].

 

(c)

Custodian may increase Fees upon [***] notice to Client.

 

(d)

Custodian will invoice Client [***], and such invoice shall reflect the Fee Amount.

 

(e)

[Reserved].

 

(f)

[Reserved].

 

(g)

For any Fee Amount outstanding [***] the Due Date, Client hereby authorizes Custodian to [***].

 

13.

Termination

 

(a)

This Agreement will commence on the Effective Date and will continue for one year, unless otherwise terminated as provided in this Section 13. After one year, this Agreement will automatically renew for successive one-year periods, unless either Party notifies the other of termination, in writing, in accordance with this Section 13.

 

(b)

This Agreement may be terminated by either Party upon 30 days’ written notice to the other Party, which notice shall set forth the Termination Date.

 

(c)

Either Party may terminate this Agreement at any time by written notice to the other Party, effective immediately, or on such later date as may be specified in the notice, if:

 

(i)

any representation, warranty, certification or statement made by the other Party under this Agreement, or pursuant to any certificate or document delivered pursuant to this Agreement, was incorrect in any material respect when made or becomes incorrect in any material respect;

 

(ii)

the other Party fails in any material respect to perform any of its obligations under this Agreement, including (A) if Client is in breach of Section 6(b)(ix) or (B) if Custodian fails to perform in accordance with the Service Levels specified in Appendix A and, upon notification of such breach, the failure is not cured within [***].

 

(iii)

the other Party requests a postponement of maturity or a moratorium with respect to any indebtedness or is adjudged bankrupt or insolvent, or there is commenced against the other Party a case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or the other Party files an application for an arrangement with its creditors, seeks or consents to the appointment of a receiver, administrator or other similar official for all or any substantial part of its property, admits in writing its inability to pay its debts as they mature, or takes any corporate action in furtherance of any of the foregoing, or fails to meet applicable legal minimum capital requirements;

 

 

(iv)

any Applicable Law or any change therein or in the interpretation or administration thereof has or may have a Material Adverse Effect on:

 

(A)

Client or the rights of Client with respect to the Services;

 

(B)

the quality or efficiency of the Services provided under this Agreement; or

 

(C)

Custodian’s ability to provide the Services to Client as required under this Agreement; or

 

(v)

a substantial change in the ownership or control, or a material adverse change in the financial condition, of Client or Custodian, as applicable, or in the ability of Client or Custodian, as applicable, to fulfill its responsibilities under this Agreement occurs.

 

(d)

A notice of termination by either Party shall be treated as a withdrawal request as of the Termination Date or another date that the Parties agree for all Custodied Assets. Custodian will deliver or cause to be delivered to Client all Custodied Assets held or controlled by Custodian as of the Termination Date.

 

(e)

Upon receiving written notice of termination of this Agreement (or [***] after receiving written notice, in the case of a termination pursuant to Section 13(c)(iii)):

 

(i)

Client shall ensure that Custodian has accurate withdrawal instructions for the Custodied Assets as soon as practicable thereafter, and in any event, prior to the Termination Date;

 

(ii)

Client will, but only upon the performance by Custodian of its obligations under Section 3(d)(i), pay to Custodian the unpaid balance of any Fee Amount owed as of the Termination Date; and

 

(iii)

Client and its Authorized Persons must immediately discontinue all access and use of the Services.

 

(f)

As of the Termination Date:

 

(i)

if Client has not satisfied its obligation to provide digital asset withdrawal instructions pursuant to Section 13(e)(i), Client hereby authorizes Custodian to act as Client’s agent to instruct, NYDIG Execution to liquidate Custodied Digital Assets on the first Business Day following the Termination Date or any Business Day thereafter; and

 

 

(ii)

Client has no right and forfeits any claim to any actual or potential Forked or Airdropped Assets before or after the Termination Date if such digital assets were not Custodied Digital Assets on the Termination Date.

 

(g)

Termination of this Agreement will not affect any right or liability arising out of events occurring, or services delivered, prior to the effectiveness thereof.

 

14.

Confidentiality

 

(a)

In connection with this Agreement, each Party may receive or otherwise have access to Confidential Information of the other Party. Except as otherwise expressly provided herein, the receiving Party agrees to retain the Confidential Information in strict confidence from the date of receipt of the Confidential Information and shall not disclose the Confidential Information to any third party, except as previously approved in writing by the disclosing Party or as provided herein, and will use and reproduce the Confidential Information for no purpose other than as necessary in connection with this Agreement. The receiving Party may permit access to Confidential Information by its employees, agents, advisors and other authorized representatives who have a need to know such Confidential Information for the purposes of this Agreement; provided that the receiving Party ensures any such individuals have agreed (either as a condition of employment or service or in order to obtain the Confidential Information) to be bound by confidentiality obligations substantially similar to those of this Section 14, informs any such individuals in possession of Confidential Information of the confidential nature of such Confidential Information, and remains responsible for the compliance by such individuals with the terms of this Section 14.

 

(b)

The receiving Party's obligations under this Agreement with respect to any portion of the Confidential Information shall not apply or shall terminate when: (a) the Confidential Information was in the public domain at the time it was communicated to the receiving Party; (b) the Confidential Information becomes publicly known through no wrongful act on the part of the receiving Party; (c) the Confidential Information was in the receiving Party's possession free of any obligation of confidence at the time of disclosure by the disclosing Party; or (d) the Confidential Information was independently developed by the receiving Party without reference to the Confidential Information subject to this Agreement and without breach of this Agreement.

 

(c)

The receiving Party may make a disclosure of Confidential Information as required by any legal proceeding or governmental entity, or in response to a request by a competent regulatory authority; provided that, to the extent permitted by law, the receiving Party provides prompt written notice of such request prior to disclosure so that the disclosing Party may have an opportunity to seek a protective order or other legal actions to protect its interest in the Confidential Information. Notwithstanding the foregoing, the receiving Party is not required to give notice to the disclosing Party in connection with a disclosure that has been requested by a regulator of competent jurisdiction (over the receiving Party or its affiliates) exercising its normal course supervisory or examination authority and where no specific reference is made by such regulator to the disclosing Party.

 

 

(d)

At any time following the termination or expiration of this Agreement for any reason, the disclosing Party may request from the receiving Party, and the receiving Party shall promptly provide upon receipt of such request, a written confirmation that all documents and other tangible materials (including notes, writings and other material developed therefrom by the receiving Party) containing Confidential Information and all copies thereof have been returned or destroyed, except that the receiving Party may retain copies of the Confidential Information in accordance with its standard document retention policies, and the receiving Party may retain electronic copies of the Confidential Information that exist on its computer system and backups thereof in the ordinary course. Any retained Confidential Information shall remain subject to the obligations of confidentiality and non-use herein.

 

(e)

Each Party's obligations under this Section 14 shall survive the termination or expiration of this Agreement.

 

(f)

Notwithstanding anything to the contrary in this Agreement, neither Party will use the name or logo of the other Party or its affiliates as a reference for marketing or promotional purposes, or in public or private conversations with existing or potential customers.

 

15.

Intellectual Property

 

As between the Parties, Custodian will retain all right, title, and interest (including all copyright, trademark, patent, trade secrets, and all other intellectual property rights) in its Confidential Information.

 

16.

Taxation

 

Client is liable for any and all Client Taxes. Client will indemnify Custodian for any Client Tax, and any expenses related thereto, other than any Client Tax arising out of Custodian’s gross negligence, bad faith, or willful misconduct. Client acknowledges that Custodian may, or may instruct the applicable withholding agent to, withhold and remit to the appropriate Governmental Authority the amount of any Client Tax that Custodian is advised by counsel to withhold. Client also acknowledges that Custodian may, or may instruct another party to, report actions taken with respect to the Custodied Assets to the Internal Revenue Service or other Governmental Authority if advised to do so by counsel. Upon execution of this Agreement, Client will deliver to Custodian a properly completed and executed Internal Revenue Service Form W-8 or W-9 appropriate to Client’s circumstances.

 

 

17.

Disclosure of Risks

 

Custodian hereby notifies Client, and Client hereby acknowledges, that:

 

a.

digital units that are used as a medium of exchange or a form of digitally stored value (“Virtual Currency”) are not legal tender, and are not backed by the government;

 

b.

although this Agreement uses the term “deposit,” digital assets in the Digital Asset Account are not “deposits” within the meaning of U.S. federal or state banking law, and cash in the Cash Account are not deposits of Custodian. Balances of digital assets in the Digital Asset Account are not subject to FDIC or SIPC protections;

 

c.

legislative and regulatory changes or actions at the state, federal, or international level may adversely affect the use, transfer, exchange, and value of Virtual Currency;

 

d.

if any Custodied Digital Assets are deemed to be securities under state or Federal securities laws or if providing custody services or the ability to withdraw with respect to any Custodied Digital Asset would otherwise violate applicable state or federal laws, Custodian will make reasonable efforts to return such Custodied Digital Assets to Client but such Custodied Digital Assets may become temporarily or permanently inaccessible to Client;

 

e.

the software and cryptography that governs the protocols of Digital Asset Networks have short histories and could at any time be found ineffective or faulty, which could result in the complete loss of value or theft of the Custodied Digital Assets;

 

f.

no physical, operational and cryptographic system for the secure storage of private keys is perfectly secure, and loss or theft due to operational or other failure is always possible;

 

g.

transactions in Virtual Currency may be irreversible, and, accordingly, losses due to fraudulent or accidental transactions may not be recoverable;

 

h.

some Virtual Currency transactions shall be deemed to be made when recorded on a public ledger, which is not necessarily the date or time that an Authorized Person provides an Instruction;

 

i.

the value of Virtual Currency may be derived from the continued willingness of market participants to exchange Fiat Currency for Virtual Currency, which may result in the potential for permanent and total loss of value of a particular Virtual Currency should the market for that Virtual Currency disappear;

 

j.

there is no assurance that a Person who accepts a Virtual Currency as payment today will continue to do so in the future;

 

k.

the volatility and unpredictability of the price of Virtual Currency relative to Fiat Currency may result in significant loss over a short period of time;

 

l.

the nature of Virtual Currency may lead to an increased risk of fraud or cyber-attack;

 

m.

the nature of Virtual Currency means that any technological difficulties experienced by Custodian may prevent the access or use of Client’s Virtual Currency;

 

 

n.

any bond or trust account maintained by Custodian for the benefit of its customers may not be sufficient to cover all losses incurred by customers; and

 

o.

for purposes of calculating Fees and for account statements, the fair market value of each Custodied Asset will be determined by Custodian according to its valuation policy, which may differ from the way that Client values its digital asset holdings.

 

18.

Limitations of Liability

 

(a)

Neither Party will be liable to the other Party (whether under contract, tort (including negligence) or otherwise) for any indirect, incidental, special or consequential losses suffered or incurred by the other Party (whether or not any such losses were foreseeable or within the contemplation of the Parties).

 

(b)

Neither Party’s total aggregate liability arising out of or relating to this Agreement will exceed the greater of (i) the fair market value of the amount of Custodied Assets at the time in which the events giving rise to the liability occurred and (ii) the fair market value of the amount of Custodied Assets at the time that Custodian notifies Client in writing or Client otherwise has actual knowledge of the events giving rise to the liability. The fair market value of each digital asset will be determined by Custodian according to its valuation policy, which may differ from the way that Client values its digital asset holdings.

 

19.

Miscellaneous

 

(a)

Counterparts. This Agreement may be signed in any number of counterparts, each of which must be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement will become effective when each Party has received a counterpart hereof signed by all of the other Parties. Until and unless each Party has received a counterpart hereof signed by the other Party, this Agreement will have no effect and no Party will have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication). No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any Person other than the Parties and their respective successors and assigns.

 

(b)

Electronic Documents. Client consents to the delivery of confirmations, any other required or optional communication or agreement under any Applicable Law by e-mail, Web site or other electronic means, including through the Portal, subject to compliance with Applicable Law. Any such documents that are delivered to Client electronically are deemed to be “in writing.” If Client’s signature or acknowledgment is required or requested with respect to any such document and Client (if a natural person) or an authorized representative of Client “clicks” in the appropriate space, Client will be deemed to have signed or acknowledged the document to the same extent and with the same effect as if Client had signed the document manually. Client acknowledges its understanding that Client has the right to withdraw its consent to the electronic delivery and signature of documents at any time by providing prior written notice.

 

 

(c)

Notices. All notices, requests and other communications to any Party hereunder must be in writing (including e-mail transmission, so long as a confirmation of receipt of any e-mail transmission is requested and received) and must be given,

 

if to Client, using Client Contact Info;

 

if to Custodian, to:

 

NYDIG Trust Company LLC
One Vanderbilt Avenue, 65th Floor
New York, NY 10017
Attention: [***]
E-mail: [***]

 

or such other address as a Party may hereafter specify for the purpose by notice to the other Party. Each of the foregoing addresses will be effective unless and until notice of a new address is given by the applicable Party to the other Party in writing. Notice will not be deemed to be given unless it has been received.

 

(d)

Relationship of the Parties. Nothing in this Agreement will be deemed or is intended to be deemed, nor will it cause, Client and Custodian to be treated as partners, joint ventures, or otherwise as joint associates for profit.

 

(e)

Governing Law. This Agreement is governed by and is to be construed in accordance with the law of the State of New York, without giving effect to the conflicts of law rules of that state.

 

(f)

Jurisdiction. The Parties agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby will be brought in the United States District Court for the Southern District of New York or any New York State court sitting in New York City, so long as one of those courts has subject matter jurisdiction over the suit, action or proceeding, and that any cause of action arising out of this Agreement will be deemed to have arisen from a transaction of business in the State of New York, and each of the Parties hereby irrevocably consents to the jurisdiction of those courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

 

        Process in any such suit, action or proceeding may be served on any Party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each Party agrees that service of process on that Party as provided in Section 19(c) will be deemed effective service of process on that Party.

 

 

(g)

Claims; Third-Party Beneficiaries. It is the intention of the Parties that no party other than the Parties will have or assert any rights, claims or remedies against any Party in respect of any action, omission, failure or neglect in the performance of any responsibilities referred to in this Agreement. For the avoidance of doubt, the Parties acknowledge and agree that the foregoing sentence does not affect the right of any party to recover from Custodian pursuant to Section 10 the losses, claims, damages, liabilities or expenses specified in Section 10. Custodian will advise Client as soon as reasonably practicable in the event any such claim is asserted by a third party against Custodian.

 

(h)

Modifications, Amendments and Waivers.

 

(i)

Custodian may modify or amend the terms and conditions of this Agreement at any time after providing 30 days’ advance notice to Client. The Parties may agree, memorialized in writing signed by both Parties, to modify or amend this Agreement at any time.

 

(ii)

Any provision of this Agreement may be waived if the waiver is in writing and is signed by the Party against whom the waiver is to be effective. Notwithstanding the foregoing, Custodian may unilaterally waive any provision of this Agreement that it determines in good faith does not adversely affect Client.

 

(iii)

Custodian may change its internal policies and procedures, including its valuation policy, without notice to, or consent by, Client. However, to the extent of any conflict between this Agreement and updated policies and procedures, this Agreement shall control.

 

(iv)

No failure or delay by any Party in exercising any right, power or privilege hereunder operates as a waiver thereof nor may any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies provided by law.

 

(i)

Headings; Internal References; Rule of Construction. When a reference is made in this Agreement to Sections or Appendices, such reference shall be to a Section or Appendix to this Agreement unless otherwise indicated. The table of contents, if any, and headings contained in this Agreement are for convenience and reference purposes only and shall not be deemed to alter or affect in any way the meaning or interpretation of any provisions of this Agreement. To the fullest extent permitted by Applicable Law, whenever in this Agreement a Person is permitted or required to make a decision (i) in its “sole discretion,” “discretion” or under a grant of similar authority or latitude, the Person shall be entitled to consider such interests and factors as it desires, including its own interests or the interests of any other Person, and shall have no duty or obligation to give any consideration to any interest of or factors affecting the any other Person; or (ii) in its “good faith” or under another express standard, in the case of either clause (i) or (ii) the Person shall act under such express standard and shall not be subject to any other or different standard imposed by this Agreement or any other agreement contemplated hereby, under any other law, rule or regulation, or at equity. Further, whenever in this Agreement a Person is permitted or required to rely or to make a decision, determination, judgment or a similar action in “good faith,” such provision shall be satisfied by such Person’s subjective belief as to the matter specified.

 

 

(j)

Successors and Assigns. The provisions of this Agreement will be binding upon and inure to the benefit of the Parties and their respective successors and assigns but the Parties agree that no Party may assign its rights and obligations under this Agreement without the prior written consent of the other Parties, which consent may not be unreasonably withheld or delayed, except that Custodian may assign its rights and obligations under this Agreement to any affiliate of Custodian that is chartered or licensed to provide the Services or to any entity which succeeds to all or substantially all of the assets and business of Custodian without the prior written consent of Client.

 

(k)

Entire Agreement. This Agreement embodies the entire agreement and understanding between the Parties and supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter of this Agreement, except that any non-disclosure agreement or agreements previously entered into between the Parties continue to be in force.

 

(l)

Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement will remain in full force and effect and will in no way be affected, impaired or invalidated so long as the economic or legal substance of the Services contemplated hereby is not affected in any manner materially adverse to either Party. Upon such a determination, the Parties will negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the Services contemplated hereby be consummated as originally contemplated to the fullest extent possible.

 

(m)

No Advice. Client acknowledges that Custodian is not providing, and it is not relying on Custodian to provide, any legal, tax, or investment advice in providing the Services.

 

 

Each of the undersigned has caused this Agreement to be executed by an authorized person, which in the case of a legal entity is its duly authorized officer.

 

		NYDIG Trust Company LLC
By:	/s/ Renae Cormier		By:	/s/ [***]
Name:	Renae Cormier		Name:	[***]
Title:	CFO		Title:	[***]
Date:	5/23/024		Date:	5/23/2024

 

 

Appendix A

 

Service Level Agreement

 

Custodian is open every [***]. The tables below indicate, for each [***] that Client may make in relation to its account, [***] Custodian has to [***]. All SLAs are subject to Custodian [***], if applicable [***].

 

Custodian accepts its [***]. All other requests may be made until [***]. ANY REQUEST MADE AFTER [***] WILL BE TREATED AS THOUGH [***].

 

General SLAs

 

Client Request	Custodian Action	SLA Time
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]

 

Problem Severity Levels

 

[***]	[***]
[***]	[***]
[***]	[***]

 

Cold Storage SLAs

 

Client Request/Action	Custodian Action	SLA Time
[***]	[***]	[***]
[***]	[***]	[***]
	[***]   [***]	[***]   [***]
[***]	[***]	[***]

 

 

Cash SLAs

 

Client Request/Action	Custodian Action	SLA Time
[***]	[***]	[***]
[***]	[***]	[***]
	[***]   [***]	[***]   [***]

 

 

Exhibit 99.3

 

CERTAIN INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL

 

COINBASE PRIME BROKER AGREEMENT

 

General Terms and Conditions

 

1.

Introduction

 

1.1

This agreement dated as of __________________ (the “Effective Date”) (including, the Coinbase Custody Services Agreement attached hereto as Exhibit A (the “Custody Agreement”), the Coinbase Master Trading Agreement attached hereto as Exhibit B (the “MTA”), and all other exhibits, addenda, and supplements attached hereto or referenced herein, (collectively, the “Coinbase PBA”)), is entered into by and between Semler Scientific, Inc. (“Client”), and Coinbase, Inc. (“Coinbase”), for and on behalf of itself and on behalf of Coinbase Custody Trust Company, LLC (“Coinbase Custody”), and, if applicable, Coinbase Credit, Inc. (“Coinbase Credit,”) or Coinbase Custody International Ltd. (“CCI”) and collectively with Coinbase and Coinbase Custody, the “Coinbase Entities”).

 

1.2

This Coinbase PBA sets forth the terms and conditions pursuant to which the Coinbase Entities will provide to Client custody, trade execution, lending, post-trade credit (if applicable), and other services (collectively, the “PB Services”) for certain digital assets (“Digital Assets”) and cash as set forth herein. As part of the PB Services, Coinbase will establish and maintain for Client the Trading Account (as defined and described in Section 2 of the MTA), and Coinbase Custody will establish and maintain for Client the Vault Account (as defined and described in Sections 1.1 and 2 of the Custody Agreement) (collectively with the Trading account, the “Accounts”).

 

1.3

Client’s Digital Assets are referred to as “Client Digital Assets,” Client’s cash is referred to as “Client Cash,” and Client Digital Assets and Client Cash are together referred to as “Client Assets.”

 

1.4

Client and the Coinbase Entities (individually or collectively, as the context requires) may also be referred to as a “Party.” Capitalized terms not defined in these General Terms and Conditions (the “General Terms”) shall have the meanings assigned to them in the respective exhibit, addendum, or supplement. Any singular term in this Coinbase PBA will be deemed to include the plural, and any plural term the singular and the words “such as,” “include,” “includes,” or “including” are deemed to be followed by the words “without limitation,” whether or not expressly stated. The word “will” shall be construed to have the same meaning and effect as the word “shall.” In the event of a conflict between these General Terms and any exhibit, addendum, or supplement hereto, the document governing the specific relevant PB Service shall control in respect of such PB Service.

 

2.

Conflicts of Interest Acknowledgement

 

Client acknowledges that the Coinbase Entities may have actual or potential conflicts of interest in connection with providing the PB Services including that (i) Orders (as such term is defined in the MTA) may be routed to Coinbase’s exchange platform where Orders may be executed against other Coinbase clients or with Coinbase acting as principal, (ii) the beneficial identity of the purchaser or seller with respect to an Order is unknown and therefore may be another Coinbase client, (iii) Coinbase does not engage in front-running, but is aware of Orders or imminent Orders and may execute a trade for its own inventory (or the account of an affiliate) while in possession of that knowledge, and (iv) Coinbase may act in a principal capacity with respect to certain Orders (e.g., to fill residual Order size when a portion of an Order may be below the minimum size accepted by the CTV (as defined in Section 1.1 of the MTA)). As a result of these and other conflicts, the Coinbase Entities may have an incentive to favor their own interests and the interests of their affiliates over a particular client’s (including Client’s) interests. Coinbase has in place certain policies and procedures that are designed to mitigate such conflicts.

 

 

3.

Account Statements

 

Coinbase will make available to Client an electronic account statement [***]. Each account statement will identify [***].

 

4.

Client Instructions

 

4.1

In a written notice to the relevant Coinbase Entity, Client may designate persons or entities authorized to act on behalf of Client with respect to the PB Services (the “Authorized Representative”). Upon such designation, [***].

 

4.2

The Coinbase Entities may act upon instructions received from Client or Client’s Authorized Representative (“Instructions”). When taking action upon Instructions, the applicable Coinbase Entity shall act in a reasonable manner, and in conformance with the following: [(a) Instructions shall continue in full force and effect until executed, canceled, or superseded; (b) if any Instructions are ambiguous, the applicable Coinbase Entity shall refuse to execute such Instructions until any such ambiguity has been resolved to the Coinbase Entity’s satisfaction; (c) the Coinbase Entities may refuse to execute Instructions if in the applicable Coinbase Entity’s opinion such Instructions are outside the scope of its obligations under this Coinbase PBA or are contrary to any applicable law, rule, regulation, court order, or binding order of a government authority; and (d) the Coinbase Entities may rely on any Instructions, notice, or other communication believed by it [***] to be given by Client or Client’s Authorized Representative. Client shall be fully responsible and liable for, and the Coinbase Entities shall have no liability with respect to, any and all Claims and Losses (each as defined below) arising out of or relating to inaccurate or ambiguous Instructions. If Client is a trust, Client agrees that the Coinbase Entities shall have no liability for following the trustee’s instructions.

 

4.3

Each Coinbase Entity will comply with Client’s Instructions to stake, stack, or vote Client Digital Assets to the extent the applicable Coinbase Entity supports proof of stake validation, proof of transfer validation, or voting for such Digital Assets. The Coinbase Entities may, in their sole discretion, decide whether or not to support or cease supporting staking services, stacking, or voting for a Digital Asset.

 

 

5.

Representations, Warranties, and Additional Covenants

 

Client represents, warrants, and covenants (which shall be deemed to repeat each of the following on each day on which it provides an Instruction) that:

 

5.1

Client has the full power, authority, and capacity to enter into this Coinbase PBA and to engage in transactions with respect to all Digital Assets relating to the PB Services;

 

5.2

Client is and shall remain in full compliance with all applicable laws, rules, and regulations in each jurisdiction in which Client operates or otherwise uses the PB Services, including U.S. securities laws and regulations, as well as any applicable state and federal laws, including AML and Sanctions Laws and Regulations (as defined below), and other anti-terrorism statutes, regulations, and conventions of the U.S. or other international jurisdictions;

 

5.3

Client is and shall remain in good standing with all relevant government agencies, departments, regulatory, self-regulatory, and supervisory bodies in all relevant jurisdictions in which it does business, and it will immediately notify Coinbase if it ceases to be in good standing with any regulatory authority;

 

5.4

Client is not a resident in nor organized under the laws of any country with which transactions or dealings are prohibited by governmental sanctions imposed by the U.S., the United Nations, the European Union, the United Kingdom, or any other applicable jurisdiction (collectively, “Sanctions Regimes”), nor is it owned or controlled by a person, entity or government prohibited under an applicable Sanctions Regime;

 

5.5

If it is a legal entity, it has implemented an AML and sanctions program that is reasonably designed to comply with applicable AML, anti-terrorist, anti-bribery/corruption, and Sanctions Regime laws and regulations, including, but not limited to, the Bank Secrecy Act, as amended by the USA PATRIOT Act (collectively, “AML and Sanctions Laws and Regulations”). Said program includes: (a) a customer due diligence program designed to identify and verify the identities of Client’s customers; (b) enhanced due diligence on high-risk customers, including but not limited to customers designated as politically exposed persons or residing in high-risk jurisdictions; (c) processes to conduct ongoing monitoring of customer transactional activity and report any activity deemed to be suspicious; (d) ongoing customer sanctions screening against applicable Sanctions Regimes lists; and (e) processes to maintain records related to the above controls as required by law;

 

5.6

Client does not maintain any asset in an Account which is derived from any unlawful activity and it will not instruct or otherwise cause Coinbase to hold any assets or engage in any transaction that would cause Coinbase to violate applicable laws and regulations, including applicable AML and Sanctions Laws and Regulations;

 

5.7

Client shall promptly provide such information as the Coinbase Entities may reasonably request from time to time regarding: (a) its policies, procedures, and activities which relate to the PB Services, including information on Client’s underlying customers, where applicable; and (b) its use of the PB Services, in each case to the extent reasonably necessary for the Coinbase Entities to comply with any applicable laws, rules, and regulations (including money laundering statutes, regulations, and conventions of the U.S. or other jurisdictions), or the guidance or direction of, or request from, any regulatory authority or financial institution;

 

 

5.8

By executing this Agreement, Client further provides written consent to allow the Coinbase Entities to request and obtain any and all beneficial owner information regarding the Client that is maintained on any national beneficial ownership registry, including, but not limited to, the Beneficial Ownership Information Registry maintained by the U.S. Financial Crimes Enforcement Network (“FinCEN”), in order to assist the Coinbase Entities in complying with their anti-money laundering and customer due diligence obligations, with the understanding that the Coinbase Entities will only use such information for those purposes and will maintain the information pursuant to the confidentiality provisions of this Agreement.

 

5.9

Client’s use of the PB Services shall be for commercial, business purposes only, limited to activities disclosed in the due diligence information submitted to Coinbase, and shall not include any personal, family, or household purposes. It shall promptly notify Coinbase in writing in the event it intends to use the PB Services in connection with any business activities not previously disclosed to Coinbase. Coinbase may, in its sole discretion, prohibit Client from using the PB Services in connection with any business activities not previously disclosed;

 

5.10

Client’s Authorized Representatives have the: (a) full power, authority, and capacity to access and use the PB Services; and (b) appropriate sophistication, expertise, and knowledge necessary to understand the nature and risks, and make informed decisions, in respect of Digital Assets and the PB Services;

 

5.11

This Coinbase PBA is a legal, valid, and binding obligation, enforceable against it in accordance with its terms;

 

5.12

Client has not relied on any Coinbase Entity for any investment, legal, tax, or accounting advice, and Client is solely responsible, and shall not rely on any Coinbase Entity, for determining whether any investment, investment strategy, transaction, legal consideration, or tax or accounting treatment involving any assets (including Digital Assets) is appropriate for Client based on its investment objectives, financial circumstances, risk tolerance, legal considerations, and tax or accounting consequences;

 

5.13

Client has duly appointed and authorized the individual(s) whose signatures are stated below to execute and deliver this Coinbase PBA;

 

5.14

Client has the right to deliver any assets it transfers to a Coinbase Entity and all such assets are free and clear of all liens, claims, and encumbrances (other than liens solely in favor of any of the Coinbase Entities) and Client will not cause or allow any of the Accounts, whether now owned or hereafter acquired, to be or become subject to any liens, security interests, mortgages, or encumbrances of any nature (other than liens solely in favor of any of the Coinbase Entities);

 

5.15

To the best of Client’s knowledge, there is no pending or threatened action, suit, or proceeding at law or in equity or before any court, tribunal, governmental body, agency, official, or arbitrator against Client that is likely to affect the legality, validity, or enforceability against it of this Coinbase PBA or the ability of Client to perform its obligations hereunder;

 

 

5.16

Unless it advises Coinbase to the contrary in writing, at all times, none of Client’s assets constitute, directly or indirectly, [***] the Employment Retirement Income Security Act of 1974, as amended (“ERISA”), [***], and Client shall immediately provide Coinbase with a written notice in the event that it becomes aware that it is in breach of the foregoing;

 

5.17

To the extent Client provides a Coinbase Entity with Instructions (which may include standing Instructions) to implement a vesting or lockup schedule for a particular token in connection with Client’s obligations to a token issuer, such vesting or lockup schedule (and any subsequent changes made by Client to the vesting or lockup schedule, if any) will accurately reflect the terms of Client’s obligations to the token issuer; and

 

5.18

Client will promptly inform Coinbase in writing if any of the above representations, warranties, and covenants cease to be true.

 

Coinbase, on behalf of itself and each other Coinbase Entity, represents, warrants, and covenants that:

 

5.19

Coinbase possesses and will maintain all licenses, registrations, authorizations, and approvals required by any applicable government agency or regulatory authority for it to operate its business and provide the PB Services;

 

5.20

Coinbase will not, directly or indirectly, lend, pledge, hypothecate, or rehypothecate Client Assets unless otherwise agreed in writing by Client;

 

5.21

Coinbase has the full power, authority, and capacity to enter into and be bound by this Coinbase PBA; and

 

5.22

This Coinbase PBA is a legal, valid, and binding obligation, enforceable against it in accordance with its terms.

 

6.

No Investment Advice or Brokerage

 

6.1

Client assumes responsibility for each transaction executed by or for it in connection with this Coinbase PBA. Client understands and agrees that none of the Coinbase Entities is acting as a “broker” as defined in the Securities Exchange Act of 1934 or as an investment adviser as defined in the Investment Advisers Act of 1940 (the “Investment Advisers Act”) with respect to their activities in connection with this Coinbase PBA, and the Coinbase Entities have no liability, obligation, or responsibility whatsoever for Client decisions relating to the PB Services. Client should consult its own legal, tax, investment, and accounting professionals.

 

6.2

While the Coinbase Entities may make certain general information available to Client (including Market Data, as defined in Section 7 of the MTA), the Coinbase Entities are not providing and will not provide Client with any investment, legal, tax, or accounting advice regarding Client’s specific situation. The Coinbase Entities shall have no liability, obligation, or responsibility whatsoever regarding any decision to enter into in any transaction with respect to any asset (including Digital Assets).

 

 

7.

Opt-In to Article 8 of the Uniform Commercial Code

 

Each item of property (including Client Assets) credited to an Account will be treated as “financial assets” under Article 8 of the New York Uniform Commercial Code (“Article 8”). Coinbase and Coinbase Custody are “securities intermediaries,” the Accounts are each “securities accounts,” and Client is an “entitlement holder” under Article 8. This Coinbase PBA sets forth how the Coinbase Entities will satisfy their Article 8 duties. Treating property in the Accounts as financial assets under Article 8 does not determine the characterization or treatment of such property under any other law or rule. New York will be the securities intermediary’s jurisdiction with respect to Coinbase and Coinbase Custody, and New York law will govern all issues addressed in Article 2(1) of the Hague Securities Convention. Coinbase and Coinbase Custody will credit Client with any payments or distributions on any Client Assets it holds for Client’s Accounts, unless (i) the payment or distribution is an Advanced Protocol (as defined below) that Coinbase does not support (as described in Section 14.2), (ii) Coinbase lacks the technological capabilities to provide Client with these payments or distributions, or (iii) Coinbase cannot deliver the distributions for legal or other reasons that make providing such distributions impossible or impracticable. Coinbase and Coinbase Custody will comply with Client’s Instructions with respect to Client Assets in the Accounts, subject to the terms of this Coinbase PBA, and related Coinbase rules, including the Prime Trading Rules (as defined in preamble to the MTA).

 

8.

General Use, Security and Prohibited Use

 

8.1

Prime Broker Site and Content. During the term of this Coinbase PBA, the Coinbase Entities hereby grant Client a limited, nonexclusive, non-transferable, non-sublicensable, revocable, and royalty- free license, subject to the terms of this Coinbase PBA, to access and use [***] (the “Coinbase PB Site”) and related content, materials, and information (collectively, the “Content”) solely for Client’s internal business use and other purposes as permitted by Coinbase in writing from time to time. Any other use of the Coinbase PB Site or Content is hereby prohibited. All other right, title, and interest (including all copyright, trademark, patent, trade secrets, and all other intellectual property rights) in the Coinbase PB Site, Content, and PB Services is and will remain the exclusive property of the Coinbase Entities and their licensors. Client shall not copy, transmit, distribute, sell, license, reverse engineer, modify, publish, or participate in the transfer or sale of, create derivative works from, or in any other way exploit any of the PB Services or Content, in whole or in part. “Coinbase,” “Coinbase Prime,” “[***],” and all logos related to the PB Services or displayed on the Coinbase PB Site are either trademarks or registered marks of the Coinbase Entities or their licensors. Client may not copy, imitate, or use them without Coinbase’s prior written consent. The license granted under this Section will automatically terminate upon termination of this Coinbase PBA, or the suspension or termination of Client’s access to the Coinbase PB Site or PB Services.

 

8.2

Supported Digital Assets. Coinbase determines in its sole discretion which Digital Assets to support for use with the Trading Services (as defined in the preamble to the MTA), as specified on the Coinbase PB Site. Not all Digital Assets supported for Custodial Services (as defined in Section 1.1 of the Custody Agreement) are also supported for Trading Services.

 

 

8.3

Use of the Coinbase PB Site. Client agrees to access and use the Coinbase PB Site to review any Orders, deposits, or withdrawals or required actions to confirm the authenticity of any communication or notice from the Coinbase Entities.

 

8.4

Unauthorized Users. Client shall not permit any person or entity that is not Client or an Authorized Representative (each, an “Unauthorized User”) to access, connect to, or use the Coinbase PB Site or the PB Services. The Coinbase Entities shall have no liability, obligation, or responsibility whatsoever for, and Client shall be fully responsible and liable for, any and all Claims and Losses arising out of or relating to the acts and omissions of any Unauthorized User in respect of the Coinbase PB Site or the PB Services. Client shall notify Coinbase immediately if Client believes or becomes aware that an Unauthorized User has accessed, connected to, or used the Coinbase PB Site or the PB Services.

 

8.5

Password Security; Contact Information. Client is fully responsible for maintaining adequate security and control of any and all IDs, passwords, hints, personal identification numbers (PINs), API keys, YubiKeys, other security or confirmation information or hardware, and any other codes that Client or an Authorized Representative uses to access the Coinbase PB Site or the PB Services. Client agrees to keep Client’s email address and telephone number on the Coinbase PB Site up to date in order to receive any notices or alerts that the Coinbase Entities may send to Client. Client shall be fully responsible for, and the Coinbase Entities shall have no liability, obligation, or responsibility whatsoever for, any Losses that Client may sustain due to compromise of Client’s login credentials. In the event Client believes Client’s login credentials or other information with respect to the Coinbase PB Site or the PB Services has been compromised, Client must contact Coinbase immediately.

 

8.6

Prohibited Use. Client will comply with the Prohibited Use Policy found at [***].

 

9.

Taxes

 

9.1

Taxes. Except as otherwise expressly stated herein, Client shall be fully responsible and liable for, and the Coinbase Entities shall have no liability, obligation, or responsibility whatsoever for, the payment of any and all present and future tariffs, duties, or taxes (including withholding taxes, transfer taxes, stamp taxes, documentary taxes, value added taxes, personal property taxes, and all similar costs) imposed or levied by any government or governmental agency (collectively, “Taxes”) and any related Claims and Losses or the accounting or reporting of income or other Taxes arising from or relating to any transactions Client conducts through the PB Services. Client shall file all tax returns, reports, and disclosures required by applicable law.

 

9.2

Withholding Tax. Except as required by applicable law, each payment under this Coinbase PBA or collateral deliverable by Client to any Coinbase Entities shall be made, and the value of any collateral or margin shall be calculated, without withholding or deducting of any Taxes. If any Taxes are required to be withheld or deducted, Client (a) authorizes the Coinbase Entities to effect such withholding or deduction and remit such Taxes to the relevant taxing authorities and (b) shall pay such additional amounts or deliver such further collateral as necessary to ensure that the actual net amount received by the Coinbase Entities is equal to the amount that the Coinbase Entities would have received had no such withholding or deduction been required. Client agrees that the Coinbase Entities may disclose any information with respect to Client Assets and the PB Services, including the Accounts and Client’s transactions and Orders, required by any applicable taxing authority or other governmental entity. Client agrees that the Coinbase Entities may withhold or deduct Taxes as may be required by applicable law. From time to time, Coinbase Entities shall ask Client for tax documentation or certification of Client’s taxpayer status as required by applicable law, and any failure by Client to comply with this request in the time frame identified may result in withholding or remission of taxes to a tax authority as required by applicable law.

 

 

10.

PB Services Fees

 

10.1

Client agrees to pay all undisputed commissions and fees in connection with Orders and the PB Services [***]. This includes the fees set out in the Fee Schedule, as amended from time- to-time, and pass-through fees such as bank fees and network fees from third parties. If such undisputed fees remain unpaid following the payment date, [***]. In the event that Client [***] disputes any commissions or fees owed under this Coinbase PBA Client shall provide notice in writing to the appropriate Coinbase Entity within [***] of an applicable Order. The undisputed portion of the commissions and fees of an applicable Order shall be paid in accordance with the payment terms set forth in this Section 10 and the disputed portion of any commissions and fees shall be resolved by the Parties within [***] of the notice and that agreed upon amount shall be paid within [***] after resolution of the dispute in accordance with the payment terms of this Section 10.1. If the Parties do not resolve the dispute, then the Parties’ liabilities and remedies shall be in accordance with the terms of this Coinbase PBA, [***] determine the appropriate level of rounding of amounts to minimize any rounding error.

 

10.2

In addition to any fees payable pursuant to the Fee Schedule, as payment in part for the Custodial Services Coinbase provides under this Coinbase PBA, Client agrees to pay Coinbase an [***].

 

11.

Confidentiality

 

11.1

Client and the Coinbase Entities each agree that with respect to any non-public, confidential, or proprietary information of the other Party, including the existence and terms of this Coinbase PBA, the other Party’s business operations or business relationships (including the Coinbase Entities’ fees), and any arbitration pursuant to Section 21 (collectively, “Confidential Information”), it (a) will not disclose such Confidential Information except to such party’s officers, directors, agents, employees, and professional advisors who need to know such Confidential Information for the purpose of assisting in the performance of this Coinbase PBA and who are informed of, and agree to be bound by, obligations of confidentiality no less restrictive than those set forth herein and (b) will protect such Confidential Information from unauthorized use and disclosure. Each Party shall use any Confidential Information that it receives solely for purposes of (i) exercising its rights and performing its duties under the Coinbase PBA and (ii) complying with any applicable laws, rules, and regulations; provided that, the Coinbase Entities may use Confidential Information for (1) risk management and (2) to develop, enhance, and market their products and services. Confidential Information shall not include any (v) information that is or becomes generally publicly available through no fault of the recipient, (w) information that the recipient obtains from a third party (other than in connection with this Coinbase PBA) that, to the recipient’s best knowledge, is not bound by a confidentiality agreement prohibiting such disclosure, (x) information that is independently developed or acquired by the recipient without the use of Confidential Information provided by the disclosing party, (y)disclosure with the prior written consent of the disclosing Party or (z)information that is already in the recipient’s rightful possession and not subject to an obligation of confidentiality.

 

 

11.2

Notwithstanding the foregoing, each Party may disclose Confidential Information of the other Party to the extent required by a court of competent jurisdiction or governmental authority or otherwise required by law; provided, however, the Party making such required disclosure shall first notify the other Party (to the extent legally permissible) and shall afford the other Party a reasonable opportunity to seek confidential treatment if it wishes to do so and will consider in good faith reasonable and timely requests for redaction,. The Parties agree to minimize the disclosure of confidential information in response to request from regulators or court orders. Each party will cover their respective legal fees associated with these efforts to ensure the protection of shared information. For purposes of this Section, no affiliate of Coinbase shall be considered a third party of any Coinbase Entity, and the Coinbase Entities may freely share Client’s Confidential Information among each other and with such affiliates. All documents and other tangible objects containing or representing Confidential Information and all copies or extracts thereof or notes derived therefrom that are in the possession or control of the receiving Party shall be and remain the property of the disclosing Party and shall be promptly returned to the disclosing Party or destroyed, each upon the disclosing Party’s request; provided, however, notwithstanding the foregoing, the receiving Party may retain one (1) copy of Confidential Information if (a) required by law or regulation or (b) retained pursuant to an established document retention policy. The receiving party shall use the same degree of care to protect the other party’s Confidential Information used by the receiving party to protect its own information of similar sensitivity and confidentiality, but in any case no less than a reasonable degree of care.

 

12.

Security and Business Continuity

 

The Coinbase Entities shall not have any liability, obligation, or responsibility whatsoever for any damage or interruptions caused by any computer viruses, spyware, scareware, Trojan horses, worms, or other malware that may affect computer or other equipment, or any phishing, spoofing, or other attack, unless such damage or interruption [***] resulted from the Coinbase Entities’ [***]. Client agrees to access and use the PB Services through the Coinbase PB Site [***].

 

The Coinbase Entities have implemented and will maintain a reasonable information security program that includes policies and procedures that are reasonably designed to safeguard the Coinbase Entities’ electronic systems and Client’s Confidential Information from, among other things, unauthorized access or misuse. In the event of a Data Security Incident (as defined below), the applicable Coinbase Entity shall promptly notify as required by New York law, Client and such notice shall include the following information: (a) the timing and nature of the Data Security Incident; (b) the information related to Client that was compromised; (c) when the Data Security Incident was discovered; and (d) any remedial actions that have been taken and that the applicable Coinbase Entity plans to take. “Data Security Incident” means an incident whereby (i) an unauthorized person acquired or accessed Client’s Confidential Information, or (ii) Client’s Confidential Information is otherwise lost, stolen, or compromised, in each case while in the possession or control of the Coinbase Entities resulting in material harm to the Client.

 

 

The Coinbase Entities have established a business continuity plan that will support their ability to conduct business in the event of a significant business disruption. The business continuity plan is reviewed and updated annually, and may be updated more frequently as deemed necessary by the Coinbase Entities in their sole discretion. To receive more information about the Coinbase Entities’ business continuity plan, please send a written request to Client’s account manager or sales representative.

 

13.

Acknowledgement of Risks

 

Client hereby acknowledges, that:

 

(i)

Digital Assets are not legal tender, are not backed by any government or government agency, and the Vault Account and the Trading Account are not subject to the Federal Deposit Insurance Corporation or Securities Investor Protection Corporation protections;

 

(ii)

Legislative and regulatory changes or actions at the state, federal, or international level may adversely affect (1) the use, transfer, exchange, and value of Digital Assets or (2) Coinbase’s ability or willingness to support one or more Digital Assets;

 

(iii)

Transactions in Digital Assets are irreversible, and, accordingly, Digital Assets lost due to fraudulent or accidental transactions may not be recoverable;

 

(iv)

Certain Digital Asset transactions will be deemed to be made when recorded on a public blockchain ledger, which is not necessarily the date or time that Client initiates the transaction or such transaction enters the pool;

 

(v)

The value of Digital Assets may be derived from the continued willingness of market participants to exchange any fiat currency for Digital Assets, which may result in the permanent and total loss of value of a Digital Asset should the market for that Digital Asset disappear;

 

(vi)

There is no assurance that a person or entity who accepts a Digital Assets as payment today will continue to do so in the future;

 

(vii)

The volatility and unpredictability of the price of Digital Assets relative to fiat currency may result in significant losses over a short period of time;

 

 

(viii)

The nature of Digital Assets may lead to an increased risk of fraud or cyber-attack;

 

(ix)

The nature of Digital Assets means that any technological difficulties experienced by a Coinbase Entity may prevent access to or use of Client Digital Assets; and

 

(x)

Any bond or trust account maintained by Coinbase Entities for the benefit of its customers may not be sufficient to cover all losses (including Losses) incurred by customers.

 

14.

Operation of Digital Asset Protocols

 

14.1

The Coinbase Entities do not own or control the underlying software protocols which govern the operation of Digital Assets. Generally, the underlying software protocols and, if applicable, related smart contracts (referred to collectively as “Protocols” for purposes of this Section) are open source and anyone can use, copy, modify, or distribute them. By using the PB Services, Client acknowledges and agrees that: (i) the Coinbase Entities make no guarantee of the functionality, security, or availability of underlying Protocols; (ii) some underlying Protocols are subject to consensus-based proof of stake validation methods which may allow, by virtue of their governance systems, changes to the associated blockchain or digital ledger (“Governance Modifiable Blockchains”), and that any Client transactions validated on such Governance Modifiable Blockchains may be affected accordingly; and (iii) the underlying Protocols are subject to sudden changes in operating rules (a/k/a “forks”), and that such forks may materially affect the value, function, and even the name of the Digital Assets. In the event of a fork, Client agrees that the Coinbase Entities may temporarily suspend PB Services (with or without notice to Client) and that the Coinbase Entities may[***] determine whether or not to support or cease supporting either branch of the forked protocol entirely. Client agrees that the Coinbase Entities shall have no liability, obligation, or responsibility whatsoever arising out of or relating to the operation of Protocols, transactions affected by Governance Modifiable Blockchains, or an unsupported branch of a forked protocol and, accordingly, Client acknowledges and assumes the risk of the same.

 

14.2

Except to the extent otherwise specifically communicated by the Coinbase Entities through a written public statement on the Coinbase website, the Coinbase Entities do not support airdrops, metacoins, colored coins, side chains, or other derivative, enhanced, or forked protocols, tokens, or coins, which supplement or interact with a Digital Asset (collectively, “Advanced Protocols”) in connection with the PB Services. The PB Services are not configured to detect, process, or secure Advanced Protocol transactions and neither Client nor any Coinbase Entity will be able to retrieve any unsupported Advanced Protocol. No Coinbase Entity shall have liability, obligation, or responsibility whatsoever in respect of Advanced Protocols.

 

 

15.

Disclaimer of Warranties

 

TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE PB SERVICES AND THE COINBASE WEBSITE ARE PROVIDED ON AN “AS IS” AND “AS AVAILABLE” BASIS WITHOUT ANY WARRANTY OF ANY KIND, AND THE COINBASE ENTITIES HEREBY SPECIFICALLY DISCLAIM ALL WARRANTIES WITH RESPECT TO THE PB SERVICES, WHETHER EXPRESS, IMPLIED, OR STATUTORY, INCLUDING THE IMPLIED WARRANTIES OR CONDITIONS OF TITLE, MERCHANTABILITY, SATISFACTORY QUALITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT. THE COINBASE ENTITIES DO NOT WARRANT THAT THE PB SERVICES, INCLUDING ACCESS TO AND USE OF THE COINBASE WEBSITES, OR ANY OF THE CONTENT CONTAINED THEREIN, WILL BE CONTINUOUS, UNINTERRUPTED, TIMELY, COMPATIBLE WITH ANY SOFTWARE, SYSTEM OR OTHER SERVICES, SECURE, COMPLETE, FREE OF HARMFUL CODE, OR ERROR-FREE.

 

16.

Indemnification

 

16.1

Client shall defend, indemnify, and hold harmless each Coinbase Entity, its affiliates, and their respective officers, directors, agents, employees, and representatives (each, a “Coinbase Party” and collectively, the “Coinbase Parties”) from and against any and all Claims and Losses arising out of or relating to Client’s breach of this Coinbase PBA, Client’s violation of any law, rule, or regulation, or rights of any third party, or Client’s gross negligence, fraud, or willful misconduct. This obligation will survive any termination of this Coinbase PBA. Client shall not accept any settlement of any Claims or Losses if such settlement imposes any financial or non-financial liabilities, obligations or restrictions on, or requires an admission of guilt or wrong-doing from, any Coinbase Party pursuant to this Section, without such Coinbase Party’s prior written consent.

 

16.2

For the purposes of this Coinbase PBA:

 

(a)

“Claim” means any action, suit, litigation, demand, charge, arbitration, proceeding (including any civil, criminal, administrative, investigative, or appellate proceeding), hearing, inquiry, audit, examination, or investigation commenced, brought, conducted, or heard by or before, or otherwise involving, any court or other governmental, regulatory, or administrative body, or any arbitrator or arbitration panel; and

 

(b)

“Losses” means any liabilities, damages, diminution in value, payments, obligations, losses, interest, costs and expenses, security, or other remediation costs [***]; fines, taxes, fees, restitution, or penalties imposed by any governmental, regulatory, or administrative body, interest on and additions to tax with respect to, or resulting from, Taxes imposed on Client’s assets, cash, other property, or any income or gains derived therefrom; and judgments (at law or in equity) or awards of any nature.

 

 

17.

Limitation of Liability

 

17.1

Standard of Care.

 

IN NO EVENT SHALL ANY COINBASE PARTY BE RESPONSIBLE OR LIABLE FOR ANY LOSS, CLAIM, OR DAMAGE SUFFERED BY CLIENT, EXCEPT TO THE EXTENT THAT SUCH LOSS, CLAIM, OR DAMAGE DIRECTLY RESULTED FROM THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR FRAUD OF A COINBASE PARTY.

 

NO COINBASE PARTY SHALL BE LIABLE FOR ANY LOSS CAUSED DIRECTLY OR INDIRECTLY BY (A) THE FAILURE OF CLIENT TO ADHERE TO CLIENT’S POLICIES AND PROCEDURES THAT HAVE BEEN DISCLOSED TO THE CLIENT, (B) ANY FAILURE OR DELAY TO ACT BY ANY SERVICE PROVIDER TO CLIENT, OR (C) ANY SYSTEM FAILURE (OTHER THAN A SYSTEM FAILURE CAUSED BY THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR FRAUD OF A COINBASE ENTITY) THAT PREVENTS A COINBASE ENTITY FROM FULFILLING ITS OBLIGATIONS UNDER THIS COINBASE PBA.

 

17.2

Liability Caps.

 

THE LIABILITY OF SUCH COINBASE PARTY WILL NOT EXCEED

 

(A)

THE AGGREGATE AMOUNT OF FEES PAID BY CLIENT TO THE RELEVANT COINBASE ENTITY IN RESPECT OF THE PB SERVICES IN THE 12-MONTH PERIOD PRIOR TO THE OCCURRENCE OF THE EVENT GIVING RISE TO SUCH LIABILITY (SUCH EVENT, THE “LIABILITY EVENT”), OR

 

(B)

SOLELY IN RESPECT OF CUSTODIAL SERVICES PROVIDED PURSUANT TO THE CUSTODY AGREEMENT, THE GREATER OF:

 

(i)

THE AGGREGATE AMOUNT OF FEES PAID BY CLIENT TO COINBASE CUSTODY IN RESPECT OF THE CUSTODIAL SERVICES IN THE 12-MONTH PERIOD PRIOR TO THE LIABILITY EVENT, OR

 

(ii)

THE VALUE, AT THE TIME THE LIABILITY EVENT OCCURRED, OF THE SUPPORTED DIGITAL ASSETS ON DEPOSIT IN CLIENT’S VAULT ACCOUNT(S) DIRECTLY AFFECTED BY SUCH LIABILITY EVENT. THE COINBASE ENTITIES WILL VALUE THE SUPPORTED DIGITAL ASSETS USING THE SAME VALUATION METHODS AND PROCESSES THAT ARE OTHERWISE USED WHEN A COINBASE CUSTOMER SELLS AN ASSET ON THE COINBASE PB SITE OR ANY OTHER COMMERCIALLY REASONABLE VALUATION METHOD AS DETERMINED BY COINBASE IN ITS SOLE DISCRETION;

 

PROVIDED THAT IN NO EVENT SHALL COINBASE CUSTODY’S AGGREGATE LIABILITY IN RESPECT OF ANY CUSTODY COLD WALLET EXCEED ONE HUNDRED MILLION U.S. DOLLARS (US$100,000,000). IN THE EVENT OF ANY LOSS SUSTAINED BY CLIENT FOR WHICH A COINBASE PARTY IS LIABLE HEREUNDER, THE LIABILITY OF SUCH COINBASE PARTY SHALL BE REDUCED TO THE EXTENT THAT CLIENT’S OWN NEGLIGENCE CONTRIBUTED TO SUCH LOSS.

 

 

17.3

Waiver of Consequential Damages

 

TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, NO PARTY HERETO SHALL BE LIABLE FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL, OR PUNITIVE LOSS OR DAMAGE OR SIMILAR LOSSES OR DAMAGES, EVEN IF THE OTHER PARTY HAD BEEN ADVISED OF OR KNEW OR SHOULD HAVE KNOWN OF THE POSSIBILITY THEREOF.

 

17.4

No Joint and Several Liability

 

NOTHING IN THIS COINBASE PBA SHALL BE DEEMED TO CREATE ANY JOINT OR SEVERAL LIABILITY AMONG ANY OF THE COINBASE ENTITIES.

 

18.

Term, Termination and Suspension

 

This Coinbase PBA shall remain in effect until terminated by a Coinbase Entity or Client as follows:

 

18.1

Client or any Coinbase Entity may terminate this Coinbase PBA in whole or in part for any reason and absent an Event of Default by providing at least [***] prior notice to the other party; provided, however, Client’s termination of this Coinbase PBA shall not be effective until Client has fully satisfied its obligations hereunder. In addition, any Coinbase Entity may suspend or restrict any PB Service by providing at least [***] prior notice to Client.

 

18.2

Regardless of any other provision of this Coinbase PBA, the Coinbase Entities may, in their sole discretion, suspend, restrict, or terminate Client’s PB Services, including by suspending, restricting, or closing Client’s Accounts or any provision of credit (as applicable), immediately upon the occurrence of an Event of Default, at any time and without prior notice to Client.

 

“Event of Default” shall mean:

 

(i)

Client breaches any provision of this Coinbase PBA;

 

(ii)

Client breaches any of the representations or warranties contained in Section 5 of this Coinbase PBA;

 

(iii)

A default or event of default under, or termination of, any other agreement between Client and a Coinbase Entity, including the Events of Default listed in the Post Trade Financing Agreement or Portfolio Financing and Margining Agreement;

 

(iv)

Client takes any action to dissolve or liquidate, in whole or in part;

 

(v)

Client becomes insolvent, makes an assignment for the benefit of creditors, or becomes subject to the direct control of a trustee, receiver, or similar authority;

 

 

(vi)

Client institutes or becomes subject to any bankruptcy or insolvency proceeding under any applicable laws, rules, or regulations, such termination being effective immediately upon any declaration of bankruptcy;

 

(vii)

A Coinbase Entity becomes aware of any facts or circumstances with respect to Client’s financial, legal, regulatory, or reputational position which may affect Client’s ability to comply with its obligations under this Coinbase PBA;

 

(viii)

Termination is required pursuant to a facially valid subpoena, court order, or binding order of a government authority;

 

(ix)

Any Account or Client’s use of the PB Services is subject to any pending litigation, investigation, or government proceeding or a Coinbase Entity reasonably perceives a heightened risk of legal regulatory non-compliance, in each case as associated with any Account or Client’s use of the PB Services; or

 

(x)

A Coinbase Entity reasonably suspects Client of attempting to circumvent a Coinbase Entity’s controls or uses the PB Services in a manner a Coinbase Entity otherwise deems inappropriate or potentially harmful to itself or third parties.

 

18.3

Client acknowledges that the Coinbase Entities’ decision to take certain actions, including suspending, restricting, or terminating the provision of PB Services, may be based on confidential criteria that are essential to a Coinbase Entity’s risk management and security practices and agrees that the Coinbase Entities are under no obligation to disclose the details of its risk management and security practices to Client.

 

18.4

Inactive Accounts. Client agrees that to the extent that Client has not utilized the PB Services or the Accounts have been inactive or dormant for a period of at least twelve (12) months, the Coinbase Entities may close any such dormant Accounts or cease to provide one or more PB Services or immediately, upon notice, terminate this Coinbase PBA.

 

18.5

Termination and Closure.

 

Upon notice by one party hereunder to the other of the termination of this Coinbase PBA or the termination of a service provided hereunder or closure of an Account pursuant to 18.1, Client shall withdraw affected Client Assets (“Affected Assets”) within [***] following such notice to the extent not prohibited under applicable law, including applicable AML and Sanctions Laws and Regulations, or by a facially valid subpoena, court order, or binding order of a government authority. Client agrees that failure to do so within that [***] period may result in Client Assets being transferred to Client’s linked bank account or Digital Asset wallet on file.

 

Client is liable to pay fees until all Client Assets are removed. However, the relevant Coinbase Entities will provide no services other than continuing to maintain Affected Assets following termination or closure. Notwithstanding anything provided herein to the contrary, the relevant Coinbase Entities may retain sufficient Client Assets to close out or complete any transaction that was in process prior to such termination or to satisfy any remaining obligations or indebtedness. Client is responsible for all fees, debits, costs, commissions, and losses arising from any actions a Coinbase Entity must take to liquidate or close transactions.

 

 

19.

Set off

 

Upon the occurrence of an Event of Default , each Coinbase Entity may set off and net the amounts due from it or any other Coinbase Entity to Client and from Client to it or any other Coinbase Entity, so that a single payment (the “Net Payment”), shall be immediately due and payable by Client or the Coinbase Entity to the other (subject to the other provisions hereof and of any agreement with a Coinbase Entity). If any amounts cannot be included within the Net Payment, such amounts shall be excluded but may still be netted against any other similarly excluded amounts. Upon the occurrence of an Event of Default , each Coinbase Entity may also (a) liquidate, apply, and set off any or all Client Assets against any Net Payment, unpaid trade credits, or any other obligation owed by Client to any Coinbase Entity and (b) set off and net any Net Payment or any other obligation owed to Client by any Coinbase Entity against (i) any or all collateral or margin posted by any Coinbase Entity to Client (or the U.S. dollar value thereof, determined by Coinbase in its sole discretion on the basis of a recent price at which the relevant Digital Asset was sold to clients via the Trading Services), and (ii) any Net Payment, unpaid trade credits, or any other obligation owed by Client to any Coinbase Entity (in each case, whether matured or unmatured, fixed or contingent, or liquidated or unliquidated). Client agrees that in the exercise of setoff rights or secured party remedies, the Coinbase Entities may value Client Digital Assets using the same valuation methods and processes that are otherwise used when a Coinbase client sells an asset via the Trading Services or any other commercially reasonable valuation method as determined by Coinbase in its sole discretion.

 

20.

Privacy

 

The Coinbase Entities shall use and disclose Client’s and its Authorized Representatives’ non-public personal information in accordance with the Coinbase Privacy Policy, as set forth at [***] or a successor website, and as amended and updated from time to time.

 

21.

Arbitration

 

21.1

Any Claim arising out of or relating to this Coinbase PBA, or the breach, termination, enforcement, interpretation, or validity thereof, including any determination of the scope or applicability of the agreement to arbitrate as set forth in this Section, shall be determined by arbitration in the state of New York or another mutually agreeable location before one neutral arbitrator. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures, and the award of the arbitrator (the “Award”) shall be accompanied by a reasoned opinion. Judgment on the Award may be entered in any court having jurisdiction. This Coinbase PBA shall not preclude the Parties from seeking provisional relief, including injunctive relief, in any court of competent jurisdiction. Seeking any such provisional relief shall not be deemed to be a waiver of such party’s right to compel arbitration. The Parties expressly waive their right to a jury trial to the extent permitted by applicable law.

 

 

21.2

In any arbitration arising out of or related to this Coinbase PBA, the arbitrator shall award to the prevailing party, if any, as determined by the arbitrator, all of its costs and fees. “Costs and fees” mean all reasonable and documented pre-award expenses of the arbitration, including the arbitrator’s fees, administrative fees, travel expenses, out-of-pocket expenses such as copying and telephone, court costs, witness fees, and attorneys’ fees.

 

21.3

The Parties acknowledge that this Coinbase PBA evidences a transaction involving interstate commerce. Notwithstanding the provision herein with respect to applicable substantive law, any arbitration conducted pursuant to the terms of this Coinbase PBA shall be governed by the Federal Arbitration Act (9 U.S.C. §§ 1-16).

 

22.

Recording of Conversations

 

For compliance and monitoring purposes, Client authorizes each Coinbase Entity at its sole discretion to record conversations between such Coinbase Entity and Client or its Authorized Representatives relating to this Coinbase PBA and the PB Services. Client agrees that the Coinbase Entities may submit such recordings in evidence in any dispute, suit, action, or other proceeding.

 

23.

Waiver

 

Any waivers of rights by the Coinbase Entities under this Coinbase PBA must be in writing and signed by Coinbase on behalf of the relevant Coinbase Entities. A waiver will apply only to the particular circumstance giving rise to the waiver and will not be considered a continuing waiver in other similar circumstances. The Coinbase Entities’ failure to insist on strict compliance with this Coinbase PBA or any other course of conduct by the Coinbase Entities shall not be considered a waiver of their rights under this Coinbase PBA.

 

24.

Survival

 

All provisions of this Coinbase PBA which by their nature extend beyond the expiration or termination of this Coinbase PBA shall survive the termination or expiration of this Coinbase PBA.

 

25.

Governing Law

 

This Coinbase PBA and the PB Services will be governed by and construed in accordance with the laws of the State of New York, excluding its conflicts of laws principles, except to the extent such state law is preempted by federal law.

 

26.

Force Majeure

 

The Coinbase Entities shall not be liable for delays, suspension of operations, whether temporary or permanent, failure in performance, or interruption of service which result directly or indirectly from any cause or condition beyond the reasonable control of the Coinbase Entities, including any act of God; embargo; natural disaster; act of civil or military authorities; act of terrorists; hacking; government restrictions; market volatility or disruptions in order trading on any CTV, exchange or market; suspension of trading; civil disturbance; war; strike or other labor dispute; fire; severe weather; interruption in telecommunications, Internet services, or network provider services; failure of equipment or software; failure of computer or other electronic or mechanical equipment or communication lines; unauthorized access; theft; outbreaks of infectious disease or any other public health crises, including quarantine or other employee restrictions; acts or omissions of any CTV; or any other catastrophe or other occurrence which is beyond the reasonable control of the Coinbase Entities.

 

 

27.

Unclaimed Property

 

If a Coinbase Entity (i) is holding Client Assets, (ii) has no record of Client’s use of the Custodial Services or Trading Services as applicable for an extended period, and/or (iii) is otherwise unable to contact Client, then the Coinbase Entity may be required under applicable laws, rules, or regulations to report these assets as unclaimed property and to deliver such unclaimed property to the applicable authority. The Coinbase Entity may deduct a dormancy fee or other administrative charge from such unclaimed funds, as permitted by applicable laws, rules, or regulations.

 

28.

Entire Agreement; Headings; Severability

 

This Coinbase PBA, together with all exhibits, addenda, and supplements attached hereto or referenced herein, comprise the entire understanding between Client and the Coinbase Entities as to the PB Services and supersedes all prior discussions, agreements, and understandings, including any previous version of this Coinbase PBA, and a Custodial Services Agreement between Client and any Coinbase Entity, including all exhibits, addenda, policies, and supplements attached thereto or referenced therein. Section headings in this Coinbase PBA are for convenience only and shall not govern the meaning or interpretation of any provision of this Coinbase PBA.

 

If any provision or condition of this Coinbase PBA shall be held invalid or unenforceable, the remainder of this Coinbase PBA shall continue in full force and effect.

 

29.

Amendments

 

Any modification or addition to this Coinbase PBA must be in writing and either (a) signed by a duly authorized representative of each party, or (b) approved by Coinbase and accepted and agreed to by Client.

 

30.

Assignment

 

Any assignment of Client’s rights or licenses granted under this Coinbase PBA without obtaining the prior written consent of Coinbase shall be null and void. Coinbase reserves the right to assign its rights under this Coinbase PBA without restriction, including to any of the Coinbase Entities or their affiliates or subsidiaries, or to any successor in interest of any business associated with the PB Services, provided that Coinbase shall notify Client within a reasonable amount of time after such assignment. Subject to the foregoing, this Coinbase PBA will bind and inure to the benefit of the Parties, their successors, and permitted assigns.

 

31.

Electronic Delivery of Communications and Notices

 

31.1

Client agrees and consents to receive electronically (including through a posting on the Coinbase PB Site) all communications, agreements, documents, notices, information, and disclosures (collectively, “Communications”) that the Coinbase Entities provide in connection with the PB Services. Communications include: (a) terms of use and policies Client agrees to, including updates to policies or the Coinbase PBA; (b) details of Client’s use of the PB Services, including transaction receipts, confirmations, records of deposits, withdrawals, or transaction information; (c) legal, regulatory, and tax disclosures or statements the Coinbase Entities may be required to make available to Client; (d) responses to claims or customer support inquiries filed in connection with Client’s use of the PB Services; and (e) notice of termination or closure.

 

 

31.2

Client agrees that electronically delivered Communications may be accepted and agreed to by Client through the PB Services interface. Furthermore, the Parties consent to the use of electronic signatures in connection with Client’s use of the PB Services.

 

31.3

If a notice is not provided electronically as provided for in Section 31.1 above, then the notice shall be in writing delivered to the Party at its address specified below via an overnight mailing company of national reputation. Any Party that changes its notice address or principal place of business must notify the other Party promptly of such change.

 

If to any Coinbase Entity:

 

[***]
Coinbase, Inc.
248 3rd St, #434
Oakland, CA 94607
[***]@coinbase.com

 

If to Client,

 

[***]
Semler Scientific, Inc.
2340-2348 Walsh Avenue, Suite 2344
Santa Clara, CA 95051
[***]@semlerscientific.com

 

31.4

In the event of any market operations, connectivity, or erroneous trade issues that require immediate attention including any unauthorized access to the PB Services or the Coinbase PB Site, please contact:

 

To Coinbase: [***]@coinbase.com

 

To Client: the address specified in its signature block on the Execution Page.

 

Client has the sole responsibility to provide the Coinbase Entities with true, accurate, and complete contact information including any e-mail address, and to keep such information up to date. Client understands and agrees that if a Coinbase Entity sends Client an electronic Communication but Client does not receive it because Client’s primary email address on file is incorrect, out of date, blocked by Client’s service provider, or Client is otherwise unable to receive electronic Communications, such Coinbase Entity will be deemed to have provided the Communication to Client. Client may update Client’s information on the Coinbase PB Site or by providing a notice to Coinbase as prescribed above.

 

 

Any notice or other communication in respect of this Coinbase PBA shall be deemed effective: (i) if sent by email, on the date it is sent; (ii) if posted on a website, the date on which it is posted; or (iii) if by overnight mail, the following Business Day after it is sent. If a communication is sent (or delivery is attempted) on a non-Business Day, the communication will be deemed effective on the first following day that is a Business Day.

 

“Business Day” means any day on which it is not (i) a public holiday in New York, or (ii) a Saturday or Sunday.

 

31.5

To see more information about our regulators, licenses, and contact information for feedback, questions, or complaints, please visit [***].

 

32.

Address for Process

 

Client hereby appoints the entity located in the state of New York detailed below to receive for itself and on its behalf any service of process (the “Process Agent”) with respect to any claim, action, or proceeding arising hereunder or related to this Coinbase PBA. Client will promptly notify Coinbase of any change in Process Agent and provide details of the substitute process agent who is acceptable to Coinbase.

 

 

	Process Agent:	[***]

Address:

2340-2348 Walsh Avenue, Suite 2344 Santa Clara, CA 95051

 

Email:

[***]@semlerscientific.com

 

Telephone number:

[***]

 

Client irrevocably consents to service of process in a manner provided for in Section 31. Nothing in this Coinbase PBA will affect the right of Coinbase to serve process in any other manner permitted by applicable law.

 

33.

Natural Persons

 

To the extent Client is a natural person over 18 years of age, if Coinbase receives legal documentation confirming Client’s death or other information leading Coinbase to believe Client is deceased, Coinbase will freeze Client’s access to the PB Services (“Freeze Period”). During the Freeze Period, no transactions may be completed until (i) Client’s designated fiduciary has entered into a new Coinbase Prime Broker Agreement and the entirety of Client Assets have been transferred to the accounts subject to that Coinbase Prime Broker Agreement, or (ii) Coinbase has received proof in a form satisfactory to Coinbase that Client is not deceased. If Coinbase has reason to believe Client is deceased but Coinbase does not have proof of Client’s death in a form satisfactory to Coinbase, Client authorizes Coinbase to make inquiries, whether directly or through third parties, that Coinbase considers necessary to ascertain whether Client is deceased. Upon receipt by Coinbase of proof satisfactory to Coinbase that Client is deceased, the fiduciary Client designated in a valid will or similar testamentary document will be required to enter into a new Coinbase Prime Broker Agreement. If Client has not designated a fiduciary, then Coinbase reserves the right to (i) treat as Client’s fiduciary any person entitled to inherit Client’s Client Assets, as determined by Coinbase upon receipt and review of the documentation Coinbase, in its sole and absolute discretion, deems necessary or appropriate, including (but not limited to) a will, a living trust, or a small estate affidavit, or (ii) require an order designating a fiduciary from a court having competent jurisdiction over Client’s estate. In the event Coinbase determines, in its sole and absolute discretion, that there is uncertainty regarding the validity of the fiduciary designation, Coinbase reserves the right to require an order resolving such issue from a court of competent jurisdiction before taking any action relating to the PB Services. Pursuant to the above, the entry into a new Coinbase Prime Broker Agreement by a designated fiduciary is mandatory following the death of Client, and Client hereby agrees that its fiduciary shall be required to enter into a new Coinbase Prime Broker Agreement and provide required account opening information to gain access to the contents of Client’s PB Services.

 

 

34.

Counterparts

 

This Coinbase PBA may be executed in one or more counterparts, including by email of .pdf signatures or DocuSign (or similar electronic signature software), each of which shall be deemed to be an original document, but all such separate counterparts shall constitute only one and the same Coinbase PBA.

 

[Signatures on following page]

 

 

IN WITNESS WHEREOF, the Parties have caused this Coinbase PBA, including the Custody Agreement and MTA, to be duly executed and delivered on the Effective Date.

 

COINBASE, INC. For itself and as agent for the Coinbase Entities

 

By:
Name:
Title:
Date:
CLIENT: Semler Scientific, Inc.
By:
Name:
Title:
Date:
Address:
E-Mail:

 

 

EXHIBIT A
to the Coinbase Prime Broker Agreement

 

COINBASE CUSTODY SERVICES AGREEMENT

 

This Custody Agreement is entered into between Client and Coinbase Custody and forms a part of the Coinbase PBA between Client and the Coinbase Entities. Capitalized terms used in this Custody Agreement that are not defined herein shall have the meanings assigned to them in the other parts of the Coinbase PBA.

 

1.            Custody Accounts.

 

1.1

Accounts Established. Coinbase Custody shall establish and maintain a vault account for the purpose of storing Digital Assets (the “Vault Account”) and effecting Custody Transactions (as defined below) (the “Custodial Services”). Digital Assets credited to the Vault Account will be held by Coinbase Custody in one or more segregated cold wallets (each, a “Custody Cold Wallet”) in Client’s name controlled and secured by Coinbase Custody.

 

1.2

Maintenance of Assets. Coinbase Custody is a fiduciary under Section 100 of the New York Banking Law and a qualified custodian for purposes of Rule 206(4)-2(d)(6) under the Investment Advisers Act, and is licensed to custody Client Digital Assets in trust on Client’s behalf. Unless Client instructs CCTC to hold these assets as a bailee, CCTC will hold these assets in trust and administer them for Client’s benefit consistent with New York Estates, Powers, and Trusts Law § 13-A-4.1 and New York Banking Law § 100. Client Assets in Client’s Vault Account shall (i) be segregated from, and not commingled with, the assets held by Coinbase Custody as principal and the assets of other clients of Coinbase Custody, (ii) not be treated as general assets of Coinbase Custody, and except as otherwise provided herein, Coinbase Custody shall have no right, title, or interest in such Client Assets, and (iii) constitute custodial assets and Client’s property. Coinbase Custody shall maintain adequate capital and reserves to the extent required by applicable law. Coinbase Custody shall not sell, transfer, assign, lend, hypothecate, pledge, or otherwise use or encumber Client Digital Assets in the Vault Account, except to sell, transfer, or assign such assets at the direction of Client.

 

2.

Vault Account.

 

2.1

Services Provided. The Custodial Services shall (a) permit Client (i) to transfer Client Digital Assets to and from the Vault Account, (ii) to deposit supported Digital Assets from a public blockchain address controlled by Client into the Vault Account, and (iii) to withdraw supported Digital Assets from the Vault Account to a public blockchain address controlled by Client, and (b) include certain additional services as may be agreed to between Client and Coinbase Custody from time to time. Each such transfer, deposit, or withdrawal shall be referred to as a “Custody Transaction” and shall conform to Instructions provided by Client through [***] Client must withdraw or deposit Digital Assets to [***] or an address for which Client has conducted the necessary Know Your Customer (“KYC”) and anti-money laundering (“AML”) due diligence. Coinbase Custody reserves the right to [***], or to [***] to comply with applicable law or in response to a subpoena, court order, or other binding government order, or to enforce transaction, threshold, and condition limits, or if Coinbase Custody [***] that the Custody Transaction [***] an applicable law, regulation, or rule of a governmental authority or self-regulatory organization, or if it [***] fraud or illegal activity.

 

 

2.2

Digital Asset Deposits and Withdrawals. Coinbase Custody will process Custody Transactions according to Instructions received from Client or Client’s Authorized Representatives. Client [***] regarding a Custody Transaction. Coinbase Custody [***] for Client Digital Asset transfers [***], and Coinbase Custody [***]. Coinbase Custody [***] to process a Custody Transaction on Client’s behalf. Once Client has initiated a Digital Asset withdrawal, the associated Client Digital Assets [***]. Client acknowledges that Coinbase may not be able to reverse a withdrawal once initiated.

 

2.3

Digital Asset Storage and Transmission Delays. [***] With respect to the foregoing, Coinbase Custody makes no representations or warranties with respect to the availability or accessibility of (1) the Digital Assets, (2) a Custody Transaction, (3) the Vault Account, or (4) the Custodial Services. While Coinbase Custody will make reasonable efforts to [***].

 

2.4

Supported Digital Assets. The Custodial Services are available only in connection with those Digital Assets that Coinbase Custody [***] decides to support, which may change from time to time. Prior to initiating a deposit of a Digital Asset to Coinbase Custody, Client [***]. By initiating a deposit of any Digital Asset to the Vault Account, Client attests that Client has confirmed that the Digital Asset being transferred is a supported Digital Asset offered by Coinbase Custody. Under no circumstances should Client attempt to initiate a Custody Transaction or use the Custodial Services to deposit or store Digital Assets in any forms that are not supported by Coinbase Custody. Depositing or attempting to deposit Digital Assets that are not supported by Coinbase Custody may result in such Digital Asset being irretrievable by Client and Coinbase Custody. Client shall be fully responsible and liable, and Coinbase Custody shall have no liability, obligation, or responsibility whatsoever, regarding any unsupported Digital Asset sent or attempted to be sent to it, or regarding any attempt to use the Custodial Services for Digital Assets that Coinbase Custody does not support. Digital Assets supported by Coinbase Custody shall be listed on the Coinbase PB Site. Coinbase Custody shall provide Client with [***] notice before ceasing to support a Digital Asset, unless Coinbase Custody is required to cease such support by court order, statute, law, rule (including a self-regulatory organization rule), regulation, code, or other similar requirement.

 

2.5

Use of the Custodial Services. Client acknowledges and agrees that Coinbase Custody may monitor use of the Vault Account and the Custodial Services. The resulting information may be utilized, reviewed, retained, and or disclosed by Coinbase Custody for its internal purposes or in accordance with the rules of any applicable legal, regulatory, or self-regulatory organization or as otherwise may be required to comply with relevant law, sanctions programs, legal process, or government request.

 

 

2.6

Independent Verification. If Client is subject to Rule 206(4)-2 under the Investment Advisers Act, Coinbase Custody shall, upon written request, provide Client’s authorized independent public accountant confirmation of or access to information sufficient to confirm (i) Client’s Assets as of the date of an examination conducted pursuant to Rule 206(4)-2(a)(4) or an audit conducted pursuant to Rule 206(4)-2(b)(4), and (ii) that Client Digital Assets are held either in a separate account under Client’s name or in accounts under Client’s name as agent or trustee for Client’s clients.

 

2.7

Third Party Payments. The Custodial Services are not intended to facilitate third party payments of any kind. As such, Coinbase Custody has no control over, or liability for, the delivery, quality, safety, legality, or any other aspect of any goods or services that Client may purchase or sell to or from a third party (including other users of Custodial Services) involving Digital Assets that Client intends to store, or have stored, in Client’s Vault Account.

 

3.

Staking

 

3.1

Staking with Coinbase Custody Validators. For certain supported Digital Assets, Client may engage with Coinbase Custody to provide validator services for such supported Digital Assets pursuant to a separate agreement.

 

3.2

Staking With Third Party Validators. Client may engage with third-party service providers (“Third Party Staking Service Providers”) to provide validator services for Client’s Digital Assets. From time to time, Coinbase Custody may allow Client to select or designate (A) certain Third Party Staking Service Providers directly via the Coinbase PB Site, or (B) an arbitrary Third Party Staking Service Provider by manually entering the applicable staking or delegate address for such provider via the Coinbase PB Site (collectively, the “Third Party Staking Services”). Notwithstanding the affiliate relationship between the Coinbase Entities and Coinbase Crypto Services, LLC (d/b/a “Coinbase Cloud,” f/k/a Bison Trails), all staking services provided by Coinbase Cloud shall be deemed Third Party Staking Services and Coinbase Cloud shall be deemed a Third Party Staking Service Provider for purposes of this Section.

 

(i)

Third Party Staking Service Providers may require that Client withdraw its Digital Assets from Client’s Vault Account and transfer such assets to such Third Party Staking Service Provider, in which case, subject to any bonding, unbonding, warm-up, lockup, or any other restrictions on the applicable blockchain network, Client may do so in accordance with this Coinbase PBA.

 

(ii)

Client hereby acknowledges and agrees that: (1) the availability of any Third Party Staking Service Providers on the Coinbase PB Site does not constitute an endorsement or approval by any Coinbase Entity of any such Third Party Staking Service Provider; (2) by electing to stake or delegate Client’s Digital Assets to any Third Party Staking Service Provider, including via the Third Party Staking Services, Client is subject to such Third Party Staking Service Provider’s terms of use, terms of service, or other applicable agreements; and (3) Third Party Staking Service Providers may require that Client’s Digital Assets be transferred on-chain to a wallet, public key, or smart contract address not controlled by Coinbase Custody or any other Coinbase Entity.

 

 

(iii)

Client is [***] Client’s use of any Third Party Staking Service Providers and Third Party Staking Services. Client must ensure that the applicable staking or delegate address for any Third Party Staking Service Provider is accurately entered and updated from time to time, as necessary. There is no assurance that the Third Party Staking Services or any Third Party Staking Service Provider will be available, function, or operate as expected. Client may not receive any rewards regardless of the amount of time or the number of Digital Assets staked or delegated to Third Party Staking Service Providers. In addition, Client’s Digital Assets may be subject to slashing or a total loss due to Client’s use of Third Party Staking Service Providers, including via the Third Party Staking Services. The Coinbase Entities bear no responsibility whatsoever with respect to any decision made by Client to stake or delegate Digital Assets to any Third Party Staking Service Provider, including via the Third Party Staking Services, or any losses, damages, or liabilities arising therefrom.

 

4.

Coinbase Custody Obligations

 

4.1

Bookkeeping. Coinbase Custody shall keep timely and accurate records as to the deposit, disbursement, investment, and reinvestment of Client Assets, as required by applicable law and in accordance with Coinbase Custody’s internal document retention policies.

 

4.2

Insurance. Coinbase Custody shall obtain and maintain, at its sole expense, insurance coverage in such types and amounts as shall be commercially reasonable for the Custodial Services provided hereunder.

 

5.

Additional Matters

 

In addition to any additional service providers that may be described in an addendum or attachment hereto, Client acknowledges and agrees that the Custodial Services may be provided from time to time by, through, or with the assistance of affiliates of, or vendors to, Coinbase Custody. Client shall receive notice of any material change in the entities that provide the Custodial Services.

 

[Remainder of page intentionally left blank]

 

[***]

 

 

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