31 DECEMBER 2016

BACKGROUND INFORMATION

The Terms and Conditions governs the issuance of certificates of IOUs (referred as "colored coins") by Lykke Corp UK Ltd., full subsidiary of Lykke Corp (referred as "Lykke").

Lykke is a FinTech company building a global marketplace with settlement on the blockchain using colored coins technology.

TECHNOLOGICAL NATURE

Lykke is using distributed ledger technology (referred as "blockchain" or "distributed ledger") for providing the services, including issuance, transfers and exchange of colored coins. The services are based on the Open Assets protocol. Open Assets is a colored coin implementation based on the OP_RETURN operator. Metadata is linked from the blockchain and stored on the web. See www.openassets.org.

For communication with the distributed ledger, client application has been created for mobile iOS and Android operating system. To own and exchange colored coins the Lykke Wallet mobile app needs to be downloaded and installed.

This document might not contain the entire information considered important by the interested parties. Since the blockchain technology is relatively new, Lykke will start testing the new colored coins issue carefully, on a limited scale and by using a design that serves to minimise risks.

LEGAL FRAMEWORK

The precondition for the purchase and redemption of the colored coins is a customer relationship with Lykke. In the establishment of the relationship, Lykke thus adheres, among other things, to the obligations arising from the Money Laundering and Terrorist Financing Prevention Act.

BASIC CONDITIONS FOR THE ISSUANCE

The colored coins shall be freely transferable and exchangeable, subject to the limitations arising from the legal acts of EU and other countries. The issue of the colored coins shall not be registered under the legal acts any other country. The colored coins may not thus be sold or offered for sale in any country, where a previous registration or other formalities are required for the purpose.

Any payments to be made by Lykke and the holder of the colored coin in connection with the colored coins shall be made in bitcoins.

ASSET DEFINITION

Colored coins are digital financial securities that specify the obligations of Lykke. A holder of a colored coin has the right to return the colored coin to Lykke and request fulfilment of the obligation (IOU) as specified by the colored coin.

FX colored coins issued by Lykke represents the IOU to request a transfer of respective amount in settlement currency. Holder of the colored coin is entitled to receive assets as specified in Appendix A.

All FX colored coins trades are placed on Lykke Exchange. Lykke organizes spot exchange to other colored coins traded. No remittance services are possible. Asset specification is provided in Appendix A.

Example of a colored coin: 1 Lykke USD colored coin: commitment to pay 1 USD within three business days.

The time period for the payment begins with the remittance of the coin to Lykke and the request for delivery.

Payment is made to the account of the holder.

ACQUISITION AND REDEMPTION

To acquire a colored coin, customer needs to use Lykke Exchange accessible of the Lykke Wallet mobile application.

The value of the colored coins is defined by the reference market prices.

Colored coins may be acquired during the entire period of the Terms.

Lykke has the right to decide on the cancellation of the issue or reduction of the volume of the issue.

Colored coins may only be redeemed by customers of Lykke.

The redemption payment per colored coin shall be the nominal value of the colored coin.

Lykke has the right to redeem colored coins at an earlier date.

Lykke shall make the redemption payment to the person who has sought redemption of the colored coin in Lykke during the term of redemption.

The last redemption date of the colored coins is 1 January 2019.

FINAL PROVISIONS

Lykke shall be liable for breach of an obligation arising from the conditions of issue only if the breach is deliberate or attributable to gross negligence.

The colored coins and any rights and obligations thereof shall be governed by the English Common Law.

 

APPENDIX A.COLORED COINS ISSUANCES (31 DECEMBER 2016)