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General Terms & Conditions for Lykke

Please find below the General Terms & Conditions for Lykke. For each platform the Terms and Conditions are composed of the General Terms of Use combined with the specific Trading Rules for the relevant platform.

Registration Agreement

Preamble

  1. The Issuer is a joint stock corporation (Aktiengesellschaft) with registered seat in Zug incorporated under the laws of Switzerland and registered in the commercial register of the Canton of Zug under the company UID-number CHE-330.252.499. 
  2. The Issuer is building a global marketplace based on blockchain for all asset classes and financial instruments.
  3. The Issuer intends to transfer its existing Lykke Shares in ledger-based securities in accordance with article 973d of the Swiss Code of Obligations ("CO").
  4. The Issuer intends to issue ledger-based securities to the Investor in accordance with the terms of this Agreement. 
  5. The Issuer and the holder of the ledger-based securities are further referred to in this agreement as Parties.

Now, therefore, the Parties agree what follows:

Definitions

Capitalised terms used in this Agreement shall have the following meaning:

Agreement means this registration agreement in accordance with article 973d CO between the Issuer and the Investor dated as set forth on the cover page. 

CC means the Swiss Civil Code (Zivilgesetzbuch).

CHF means Swiss Francs, the lawful currency in Switzerland.

CO means the Swiss Code of Obligations (Obligationenrecht).

Company or Investor shall have the meaning ascribed to it on the cover page.

Issuer shall have the meaning ascribed to it on the cover page. 

Party / Parties shall have the meaning ascribed to it in Section "Subject matter and scope".

Preamble means the preamble of this Agreement. 

Section means a section of this Agreement. 

Shareholder means each holder of Shares.

Shares means any shares of the Issuer held by the Shareholder. 

Share Token means a digital token representing one Share in the form of a ledger-based security. 

Tokenization means the representation of the Shares by way of a digital token (the “Token”) which is, or will be, issued and transferred on a distributed ledger.

Token Holder means a person having control (Verfügungsmacht, article 973d(2)(1) CO over a token, including the Issuer/the owner, or any third-party acquiring Tokens.

Transferee means a subsequent acquirer of a Token.

General Information

Subject matter and scope

  1. The Issuer's articles of association allow the board of the Company to change the legal form of the Shares upon request of the respective shareholder, including the conversion of Shares held as uncertificated securities according to article 973c CO into ledger-based securities according to article 973d CO. The Issuer issues one numeric unit in the Token Contract for each Share that is issued as a ledger-based security ("Share Tokens"). 
  2. This Agreement sets out the terms relating to the Share Tokens, such as the rules of transfer and the process in case of loss thereof. The Issuer and all Token Holders are bound to this Agreement by law. 
  3. This Agreement may be updated by the Issuer from time to time to reflect the latest legal and technical developments, as well as decisions taken by the general assembly or the board of directors as tasked by the general assembly. 
  4. The Issuer makes the currently applicable version of this Agreement available on the Website and, where necessary, informs the registered shareholders in accordance with the articles of association.
  5. This Agreement shall be binding on any subsequent acquirer of a Token (a "Transferee"), whether by way of an agreement or by law (the Issuer, the Investor and a Transferee, each a “Party”, together, the “Parties”). 

Registration

  1. The Parties agree and consent that the ledger-based securities (Registerwertrechte) be registered in the securities ledger (Wertrechteregister) as further defined below. The ledger-based securities shall be issued in the form of digital tokens (the “Share Token”), with each Share Token representing one ledger-based security.
  2. The securities ledger is based on the (ERC-777/CMTA20/ERC-20) standard as a smart contract. The Ethereum Blockchain serves as the base technology and open-source platform and operates under joint management by several independent participants to protect it from unauthorized modification. General information on the DLT technology and Ethereum blockchain can be found here (What is Ethereum? | ethereum.org).
  3. The Issuer reserves the right to substitute Share Tokens with new Share Tokens, to amend the smart contract or to migrate Share Tokens to a new protocol if necessary to comply with legal developments and/or technical amendments of the token standard or the protocol being used, provided such substitution or amendment in no way affects the ledger-based securities and the rights represented by such ledger-based securities.

Effects of registration

  1. The registration in accordance with this Agreement has the following effect:
    a. The ledger-based security/Share Token can only be transferred in accordance with the rules and procedures set forth in this Agreement and the securities ledger;
    b. Only a Tokenholder shall be entitled to power of disposal over the ledger-based security/Share Token in accordance with the rules and procedures set forth in this Agreement and the securities ledger;
    c. Only persons registered in the securities ledger as a Tokenholder shall have the right to assert any claim or right represented by the ledger-based security/Share Token, and payment to such person shall discharge the debtor from its obligations;
    d. A person who acquires ledger-based securities/Share Tokens from the person registered in the securities ledger as the Tokenholder in good faith shall be protected in respect of the acquisition even where the transferor had no legal power or authority to dispose of the ledger-based security/Share Token.
  2. Tokenholders have the right, but not the obligation, to view and verify any information regarding Share Tokens held by them and to check the integrity of the ledger contents relating to themselves without the intervention of a third party via a blockchain explorer e.g. etherscan.io/token/0x84e698ef44711cb1b04f7ebf979e20e37638ad9d.

Content of the ledger-based securities/Share Token

One ledger-based security/Share Token represents one single Share as defined the articles of association of the Company as well as in the CO and confers rights in relation to that Share. The Tokenholder shall gain possession and sole ownership of the Shares by acquiring ledger-based securities/Share Token.

Shareholder Registration

  1. The Company keeps an off-chain share register that is separate from the Token Register (the "Share Register"). Any person, legal or natural, that can demonstrate the power to dispose over a Share Token (a "Token Holder"), can request the registration in the Share Register. Only the persons registered in the Share Register are entitled to the rights as a shareholder (such as voting and dividend rights). 
  2. For the avoidance of doubt, a Token Holder is free to transfer its Share Tokens without having first registered in the Share Register.
  3. To request the entry in the Share Register, the Token Holder must prove that she or he controls the address where the Share Tokens in question are held. In addition, the Token Holder needs to provide the personal information as per the electronic form provided by the Company or a third party designated by the Company. For Share Tokens held through an intermediary, the intermediary may perform the registration on behalf of the beneficiary.

Beneficial Owners

  1. If a third party such as fiduciary holds the power to dispose for a beneficial owner, such third party is required to report the beneficial owner, and any changes to the beneficial ownership, to the Company.
  2. If such third party holds Share Tokens of different beneficial owners on the same address and transfers one of these Share Tokens to a new address, the third party is required to report to the Company the Share Tokens of which beneficial owner have been transferred. In absence of any indication to the contrary, the Company assumes that Share Tokens are transferred “first in – first out” (FIFO).

Sub-Registers

  1. The Issuer can, but is not required to, recognize sub-registers. A sub-register can be any technical means to keep track of the ownership of a multitude of Share Tokens assigned to a single address in the Token Register. Possible are  for example another smart contract, a register deployed to a different blockchain or sidechain, or a database of a custodian.
  2. In case the Company recognizes a sub-register, it suffices to prove control of the sub-register (or a fraction thereof) to be registered as a shareholder for the tokens held by the sub-register (or the respective fraction thereof).
  3. The Company shall inform on the recognition of subregisters on its website.

Hard Fork

In case of a split of the Blockchain (hard fork), the Company decides, at its own discretion, which version of the Blockchain will be considered to hold the real Share Tokens and communicates this decision on the Website.

Issuance

When a holder of shares in the form of unregistered securities according to Art. 973c CO requests the tokenization of all or some of his or her shares, the board of directors reviews the request and, unless the board sees reasonable grounds to refuse such request, mints the according number of Share Tokens, and delivers them to the requesting shareholder. The board can delegate all issuance steps by technically authorizing employees or anyone else to perform these tasks.

Transfer Principle

Any action that results in a transfer of the capability to demonstrate the power to dispose over a Share Token constitutes a valid transfer of the Share Token. This includes the transfer of private keys to a new owner, for example by sending a paper wallet by mail.

Transfer Indivisibility

  1. Shares issued as Share Tokens are indivisibly bound to each other in accordance with article 973d ss. CO: It is not possible to transfer a Share Token without transferring the right to register a Share in the Share Register and vice versa. 
  2. The transfer of Share Tokens is legally effective irrespective of the validity of the underlying obligatory transaction (abstract effect). No grounds for invalidity, such as lack of will, material error or withdrawal of consent to the transfer, may be invoked. 
  3. The acquirer of Share Tokens is protected in her/his acquisition even if the transferor did not have the right to dispose over the Share Tokens, except if the acquirer acted in bad faith or with gross negligence. In case of bankruptcy (Konkurs), seizure of assets (Pfändung) or a moratorium (Nachlassstundung) of a Token Holder, article 973f CO applies.

Transfer restrictions

  1. The Company may refuse entry in the Share Register in accordance with the transfer restrictions in the articles of association, see above, section "General Information".  
  2. Tokenholders may transfer ledger-based securities/Share Tokens in accordance with the rules and procedures set forth in this Agreement and the securities ledger. By acquiring a Share Token in accordance with this Agreement, the Transferee shall gain possession and the corresponding ownership. 
  3. Any such transfer of a Share Token shall be deemed to be an endorsement in the meaning of article 968 et seqq. CO.
  4. In case the Company refuses the entry into the share register of a Token Holder, such Token Holder can validly transfer the affected Share Tokens regardless, i.e., the right to request entry into the Share Register is transferred to the next recipient of Share Tokens and the ownership of the Shares and all attendant rights remain with the selling Tokenholder (article 685c(1) CO). 
  5. In the case of acquisition of the Shares by inheritance, division of estate, matrimonial property law or compulsory execution, ownership and the attendant pecuniary rights pass (e.g. dividend payments) to the acquirer immediately, whereas the attendant participation rights (e.g. voting rights) pass to the Transferee only when the Issuer has given its authorization (article 685c (2) CO).

Establishment of collateral or security rights

The registration of a security is technically not supported in the Token Register. The legally valid establishment of a security on a Share Token therefore requires the transfer of the Share Token or the use of a sub-register that offers the required functionality.

Burning

Burning a token is the technical process of deleting it from the Token Register or making it otherwise permanently and provably inaccessible. The ability to burn tokens is part of the ERC-20 standard. However, burning of Share Tokens is only allowed based on mutual agreement between Token Holder and the Issuer.

Loss of Tokens

  1. By default, all issued Share Tokens are subject to a recovery function embedded in the Token Register. The recovery function allows Token Holders that lost access to their Share Tokens to reclaim them. The recovery function will only be used if the requesting Token Holder provides a collateral and accepts that for a suitably long period counterclaims can be filed. 
  2. The Issuer is authorised to cancel a pending token recovery, thereby preventing the recovery from completing. The Issuer agrees to only exert this power in case of suspected abuse or errors.
  3. Alternatively, lost Share Tokens can be declared invalid by a judge and replaced with new Share Tokens in accordance with the procedure laid out in article. 973h CO. Invalid Share Tokens remain in the Token Register but do not represent Shares anymore. It is the responsibility of the Issuer to inform about invalid tokens on the Website. 
  4. To initiate the recovery function, Token Holders should contact the Issuer directly. Additional fees may be incurred following a token recovery proceedure.

Exclusion of Representations / Liability

To the extent permitted by law, all representations and warranties with regard to the Shares and the Share Tokens and any liability by the Company or any person acting on behalf of the Company with regard thereto are herewith excluded. The Token Holder herewith waives any and all claims related to misrepresentations or breaches of warranties it may have under the applicable law.

Taxes

The Token Holder bears the sole responsibility to determine if its purchase of the Share Tokens, the potential appreciation or depreciation in the Share Tokens over time, the sale and purchase of Share Tokens and/or any other action or transaction related to the Share Tokens has tax implications for the Token Holder.

General Risks

Shares involve a high degree of risk, including the potential risk of becoming worthless. Potential buyers should be prepared in certain circumstances to sustain a total loss of the capital invested to purchase the Shares.

Regulatory Risk

The blockchain technology allows new forms of interaction and it is possible that certain jurisdictions will apply existing regulations on or introduce new regulations addressing blockchain technology-based applications which may be contrary to the current setup of the Share Tokens. This may, inter alia, result in substantial modifications of the Share Tokens including their loss. 

Operational and IT Risks 

  1. The smart-contract concept on which the Share Tokens are built and the blockchain technology in general are still in an early development stage and unproven, therefore there is no warranty that the process of creating, receiving, holding, using and storing Share Tokens will be uninterrupted or error-free and there is an inherent risk that the software could contain weaknesses, vulnerabilities or bugs causing, inter alia, the complete loss of Share Tokens. Furthermore, it is possible that there may take place hacking attacks and other unexpected activities which could result in the theft or loss of Share Tokens. Moreover, the underlying protocol may be subject to future changes and unforeseen problems which can affect the proper functioning of the smart-contract and cannot be influenced by the Issuer. 
  2. In particular, blockchains are susceptible to mining attacks, including but not limited to doublespend attacks, majority mining power attacks, "selfish-mining" attacks, timestamp manipulation, and race condition attacks. Any successful attacks present a risk to the Share Tokens, expected proper execution and sequencing of transactions in Share Tokens, and expected proper execution and sequencing of contract computations and may result in the loss of Share Tokens.

Loss of Keys Risk

Share Tokens may be lost or become inaccessible in particular if the holder of Share Tokens loses the respective private key to their Share Tokens or due to malfunctioning or incompatibilities of the wallet in which the Share Tokens are stored. This could also lead to the loss of the Share Tokens. Moreover, it is the responsibility of the Token Holder not to lose the key or password that allows access to the wallet.

  1. etherscan.io/token/0x84e698ef44711cb1b04f7ebf979e20e37638ad9d

Governing Law and Jurisdiction

  1. This Agreement shall in all respects exclusively be governed by, and construed in accordance with, the substantive laws of Switzerland.
  2. The place of performance and debt enforcement for a Party with domicile or place of incorporation outside of Switzerland shall be Zug, Switzerland. The exclusive place of jurisdiction for all types of proceedings shall be Zug, Switzerland.
  3. This section "Governing Law and Jurisdiction" shall qualify as a choice of the law governing the transfer of ledger-based securities in accordance with article 145a Private International Law Act.

If the participant has any questions about the Privacy Policy or the collection and use of information by Lykke, it should contact the Data Protection Officer: dpo@lykke.com.