Legal Notice
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Terms and definitions
DEFINITIONS TO THE PARTNERSHIP AGREEMENT
These Definitions specify the words and expressions with specific meanings found in the Agreement.
Accordingly, in the Agreement the following words and expressions shall have the following meanings:
“Affiliate” means in relation to a Party:
a) any person or body of persons or entity (without limitation: company, partnership, consortium, joint-venture) controlled, directly or indirectly, by the Party, or
b) any person or body of persons or entity (without limitation: company, partnership, consortium, joint-venture) which controls, directly or indirectly, the Party, or
c) any person or body of persons or entity (without limitation: company, partnership, consortium, joint-venture) connected or related to any director or shareholder of Party A.
“Agreement” means the Partnership Agreement, the related Definitions, General Terms and Additional Articles and all their Schedules, Annexes and Supplements.
“Authorized Signatory” means the person or persons authorized to act on behalf of Party B.
“Business Day” refers to any day in which normal business is conducted, and excludes weekends and some public holidays. Within the securities industry, any day the US financial markets are open for trading is considered to be a business day.
“CCAF” refers to the Financial Activities Supervisory Commission in Monaco (Commission de Contrôle des Activités Financières), its successors or assigns.
“Client” means the Final Investor in the Securities on behalf of whom Party B enters into arrangement with Party A.
“Confidential Information” means all information or material communicated between the Parties from any form whatsoever (including oral, documentary, magnetic, electronic, graphic or digitised form or by demonstration or observation), relating to the organisation, finances, business, marketing, techniques, customers, employees, transactions, assets or affairs of the Party or any of its Affiliates as the context may require, including the terms and conditions of the Agreement. Confidential Information shall exclude information or material which at the time of its disclosure is, or which thereafter becomes, (in each case otherwise than as a result of any act or default by the recipient), part of the public domain by publication or otherwise.
“Depositary Bank” means a financial institution whose role is to act as depositary bank/custodian for the Final Investor of the Structured Product and which will settle the Structured Product on a delivery-versus-payment basis with the Issuer.
“Effective Date” means the commencement date of the Agreement as specified in the Agreement.
“Final Investor” means Party B’s Client on whose behalf Party B will execute the Order to purchase the Structured Product issued by the Issuer.
“Force Majeure” means any event preventing either of the Parties from performing any or all of its obligations under this Agreement which arises from or is attributable to acts, events, omissions or accidents beyond the reasonable control of the Party so prevented, including, without limitation, nationalisation, expropriation or other governmental actions; any change of law or regulation; any law, order or regulation of a governmental, supranational or regulatory body; regulation of the banking or securities industry (including changes in market rules); postal or other strikes, lock-outs or other industrial disputes (whether involving the workforce of the Party so prevented or of any other party), act of terrorism or of God, fire, flood, storm, war, riot, civil commotion, malicious damage; failure or breakdown in communications, computer facilities or software; and the failure of any relevant exchange, clearing house, settlement system or broker for any reason to perform its obligations.
“Issuer” means the entity selected by Party A for the issuance of the Structured Product and with which Party A has an agreement to act as such.
“Legal Requirements” means all laws, regulations and codes of practice from time to time applicable to one of the Party in the performance of its obligations under this Agreement or in accordance with its authorized activities, and more particularly, whenever applicable, in the provision of financial, investment advice, promotion or distribution services in connection with Securities and Structured Products.
“Litigation” means any claim or potential claim in any insolvency proceedings, class action, securities litigation or other litigation, collective redress or proceedings affecting assets held from time to time by Party B or by the Client.
“Market Price” is the current price at which the Structured Product can be bought or sold in the market.
“Order” means the instruction given to the Issuer to purchase a Security or Structured Product in connection with a Trade.
“Price Buy” means the purchase price of the Security or Structured Product as agreed on the date and time of Order.
“Price Current” means the current market price of the Security or Structured Product on the date and time of the cancellation of the Order.
“Price Sell” means the sale price of the Security or Structured Product as agreed on the date and time of Order.
“Reception Date” refers to the date of receipt by Party A of the invoice in relation with the Structured Product issued and duly signed by Party B. The Reception Date cannot be before the Settlement Date of the Structured Product.
“Settlement Date” means the day on which the transaction in connection with the Structured Product must be settled and on which the buyers must make payment to the Issuer.
“SICCFIN” refers to the Service d’Information et de Contrôle sur les Circuits Financiers, which is the Monegasque national central authority responsible for matters related to the fight against money laundering, terrorist financing and corruption.
“Sophisticated Investor” is a type of investor who is deemed to have sufficient investment experience and knowledge to weight the risks and merits of an investment opportunity, and who has accordingly a special status under financial laws. Considering the different expressions used by financial regulations in force in different countries to refer to such type of investor, for the purpose of the Agreement, “Sophisticated Investor” or “Accredited Investor” or “Qualified Investor” or “Professional Client” shall be indifferently quoted and have the same meaning.
“Termination Date” means the date determined in accordance with Article B.III, B.IV or B.V. of the Partnership Agreement.
“Trade” means the decision made by Party B resulting in an Order in relation with a Structured Product arranged by Party A.
“Trade Date” is when Party B formally confirms the Trade and when the Trade is relayed to the Issuer.
GENERAL TERMS AND ADDITIONAL ARTICLES
The following General Terms and Additional Articles shall be considered integral part of the Agreement and consist of the following clauses and provisions.
ARTICLE 1
ISSUANCE DOCUMENTS, MARKETING DOCUMENTS AND OBLIGATIONS OF PARTY B
1.1 The final terms of a Structured Product are exclusively those defined in the Issuance Documents (mainly Term Sheet) prepared by the Issuer for the relevant Structured Product in the case of a public offering or those defined in the Terms and Conditions in the event of a private placement, (the “Issuance Documents”). Only the provisions set out in the Issuance Documents shall be legally binding.
1.2 Upon the issuance of a Structured Product for which Party A has acted as arranger, Party A provides Party B with the Issuance Documents in physical or electronic form at its sole discretion, e.g. by indicating an internet address where the Issuance Documents can be downloaded.
1.3 Party A may provide specific marketing documents and materials in relation with a Structured Product or a potential Structured Product, e.g. in the form of a flyer or factsheet in the usual standard format of Party A (all documents collectively referred to as the “Marketing Documents”). Party A reserves the right, at its sole and absolute discretion, to prohibit at any time the further use of the Marketing Documents.
1.4 Any statements made by Party B may not be contrary to the information disclosed in the Issuance Documents or in the Marketing Documents provided by Party A and must be explicitly identified as Party B’s own statements.
1.5 Party B will use only Marketing Documents provided by Party A for any marketing or advertising event or sales action or publication with respect to the Structured Products. Party B shall not distribute or communicate under whatever form to any external party, any documents relating to the Structured Products other than the Issuance Documents or the Marketing Documents prepared by Party A without the prior written consent of Party A.
1.6 Party B represents to comply with all applicable legal obligations and supervisory rules with respect to the distribution and marketing of the Structured Products (including requirements regarding securities, banking supervision, trading, conduct of financial activities and data protection laws).
1.7 In particular, Party B represents:
a. not to offer the Structured Products in the countries listed in Schedule 3;
b. to provide its clients with proper investor and investment advice based on the Issuance Documents or Marketing Documents provided by Party A; and
c. verify the suitability of the relevant Structured Products for each of its Clients.
1.8 Party B hereby warrants that it has all necessary authorisations and knowledge and experience to market and distribute the Structured Products and more generally to perform its obligations under this Agreement.
ARTICLE 2
DELEGATION OF THE SERVICE AND USE OF THIRD PARTIES
2.1 In relation to the Services pursuant to this Agreement, Party A shall, without the need for prior consent of or subsequent notification to Party B, be entitled to appoint or retain third parties (including any Affiliate of Party A) to perform any such services.
2.2 Party B agrees that the extent and modalities of the delegation by Party A of some tasks in full or in part to third parties shall come under the single judgement and responsibility of Party A. Accordingly, Party A shall be responsible for the fees and charges of any delegate or third party that Party A has selected and appointed under this Article.
ARTICLE 3
SELECTION AND USE OF ISSUERS
3.1 Party A may carry out the Services in relation to the Structured Products selecting Issuers with whom Party A has a business relationship agreement in place as it considers appropriate and provided that such a business relationship agreement does not affect in any negative manner the Services rendered by Party A.
3.2 Party A shall select the Issuers in accordance to its own internal requirements and can in no circumstances be held responsible for the selection or use of such Issuer or trading venue.
3.3 If any Issuer fails to deliver any necessary documents or to complete any transaction, Party A shall take reasonable steps on behalf of Party B to rectify such failure or obtain compensation.
3.4 Party B recognizes that Party A may receive commissions or retrocessions or fees from the Issuer in relation with a Trade and more generally with the issuance of a Structured Product, as long as Party A refrains from choosing an Issuer or taking any initiative whose sole intention or effect would be detrimental to the performance of the Services under this Agreement or would result in maximizing its profits without taking into consideration Party B’s best interest.
ARTICLE 4
PRE-TRADE POLICY
4.1 Party B hereby confirms that it consents to the Pre-Trade Policy which is based on the reverse enquiry principle.
4.2 Accordingly, Party B shall contact Party A and provide it with appropriate information regarding the needs, constraints and financial objectives in order to enable Party A to arrange the most suitable Structured Product considering market conditions and operational modalities. Such information shall notably consist of:
a. currency
b. notional
c. description of the payoff.
4.3 Party A will at all times comply with the Pre-Trade Policy and in particular will act in the best interests of Party B.
4.4 A Structured Product arranged by Party A for Party B may be proposed by Party A to other third parties. Party B hereby acknowledges that it has no exclusivity and that Party A may conclude several Trades with different parties in relation to one single Structured Product.
ARTICLE 5
ORDER PROCESSING AND ORDER CANCELLATION POLICY
5.1 Party A shall duly inform Issuers in order to arrange the issuance of Structured Products and to ensure proper order processing.
5.2 Party B undertakes to communicate to Party A by email all necessary information regarding each and every Depositary Bank which will intervene in the Order of a Structured Product as defined .
5.3 Party B agrees that it shall not directly contact the Issuer of the Structured Product, unless expressely authorized by Party A.
5.4 In the event that any Depositary Bank intervening in the Order fails to confirm in full or in part the requested notional or quantities as previously defined when concluding the Trade, Party A reserves the right to declare the Trade null and void and to negotiate the cancellation of the Order.
5.5 In this eventuality, Party B agrees to indemnify Party A for any losses incurred as direct or indirect consequence of the cancellation of both the Trade and the Order. In particular, Party B acknowledges and agrees to pay to Party A, the amounts equivalent to:
a. in a buy Order, Max (0, Price Buy –Price Current)
b. in a sell Order, Max (0, Price Current –Price Sell).
ARTICLE 6
DUTIES, LIABILITIES AND RISKS WARNINGS
1.1 For the purpose of this Agreement, Party B acknowledges and conforms that it can be classified Sophisticated Investor. Party A is entitled to assume that Party B has the necessary level of experience, knowledge and resources in order to understand the risks involved under the Agreement and more particularly in dealing with Securities, including Structured Products.
1.2 Party B shall be responsible for ensuring that information provided to Party A is accurate and is kept up to date so as to enable Party A to assess whether transactions are suitable for Party B. Changes in information regarding Party B, which might affect the classification as Sophisticated Investor, must be promptly notified and its receipt acknowledged by Party A in writing.
1.3 Party B is solely responsible for ensuring that the Securities or Structured Products are a suitable and/or appropriate investment for its Clients or itself (as the case may require) and that their distribution or placement complies with all guidelines, limitations, restrictions or requirements applicable to Party B and its Clients.
1.4 In this context, Party B shall take reasonable steps to ensure that a decision to invest in a specific Security is suitable for the Client.
1.5 Party B should ensure that the Client fully understands the nature of the service and the extent of its exposure to risks. The investment decisions should consider the suitability of the service as an investment in the light of the circumstance and financial condition of the Client. Investments products arranged by Party A for Party B may involve a high degree of risk, including the potential risk of expiring worthless.
1.6 Party B recognizes that Party A shall not bear any responsibility whatsoever for any information, documentation, comment and recommendation provided by in writing, orally or otherwise by Party B to its Clients or any third parties in relation with a Structured Product arranged by Party A.
1.7 Party B acknowledges that the Client should be prepared in certain circumstances to sustain a total loss of the capital invested to purchase Structured Products. It is the responsibility of Party B to make sure, whenever necessary or requested by the Legal Requirements that the Client understands the risk factors of the chosen investment product and that the Client reads the “Risk Factors” section of the specific Security chosen for details on all risks to be considered in taking the investment decision.
1.8 The market performance of Securities is dependent, in particular, on the development of the capital markets which, for their part, are influenced by the general global economic situation as well as by the economic and political framework conditions in the respective countries (so-called market risk). Changes to market prices such as interest rates, commodity prices or corresponding volatilities may have a negative effect on the valuation of the underlying(s) or the Security. There is also the risk of market disruptions (such as trading or stock market interruptions or discontinuation of trading) or other unforeseeable occurrences concerning the respective underlying(s) and/or their stock exchanges or markets taking place during the term or upon maturity of the Security. Such occurrences can have an effect on the time of redemption and/or on the value of the Security.
1.9 In particular, Structured Products involve derivative components and Party B should make sure that the service is suitable for the Client’s portfolio taking into account the Client’s financial situation, investment experience and investment objectives. Party B shall make sure that Clients, whose usual currency is not the currency in which Structured Products are redeemed, are aware of their possible currency risk. The value of Structured Products may not correlate with the value of the Underlying(s).
1.10 Party B acknowledges and agrees that the Client bears the credit risk of the Issuer of the Structured Product. The insolvency of an Issuer may lead to a partly or total loss of the invested capital.
1.11 Issuers intend, under normal market conditions, to provide bid and offer prices for the Structured Products on a regular basis. However, Issuers make no firm commitment to provide liquidity by means of bid and offer prices for Party B or its Client, and assume no legal obligation to quote any such prices or with respect to the level or determination of such prices. In special market situations, where Issuers are unable to enter into hedging transactions, or where such transactions are very difficult to enter into, the spread between the bid and offer prices may be temporarily expanded, in order to limit the economic risks of the Issuers.
ARTICLE 7
CUSTODY ASSETS
7.1 Party A shall not provide custody services to Party B nor to its Clients.
7.2 Party B shall remain solely responsible for the selection and use of any credit institution or other entity with which cash and/or Securities are deposited.
7.3 All assets shall be held by the Depositary Banks pursuant to separate agreements. Party A shall at no time hold any assets belonging to Party B nor to one of its Clients.
7.4 Party B acknowledges that it has been and will be solely responsible in compliance with the Legal Requirements for the selection, appointment, monitoring and supervision of any Depositary Banks and for any services which the Depositary Banks provide to Party B and to its Client including, without limitation, cash management services, stock-lending and repo services and foreign exchange services.
7.5 Party B confirms and warrants that the Depositary Banks used for the purchase of Structured Products arranged by Party A:
a. shall act in accordance with instructions from Party B or its Clients for the purchase of Securities;
b. shall contact the Issuer as soon as Party B or its Clients send the instruction to purchase the Securities;
c. shall settle the instruction on a delivery-versus-payment basis as instructed by Party B or its Client.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
8.1 Party A represents, warrants and agrees, on the date of this Agreement that:
a. it is duly organized and validly existing under the laws of its jurisdiction of incorporation;
b. it has full authority and capacity to enter into this Agreement;
c. it shall conduct the Services wit the requisite skills, care and diligence and shall commit itself to act, in all estimated good faith, honestly and fairly in the best interest of Party B and the integrity of the market;
d. it shall perform its obligations herein in a manner consistent with practices and procedures generally accepted in the financial industry;
e. it must endeavour to avoid conflicts of interest and, if such conflicts cannot be avoided, ensure that Party B is treated fairly;
f. it shall undertake its duties under the agreement to the best of its knowledge and experience but cannot guarantee any future performance or yield regarding the Structured Products and cannot be held responsible for any loss deriving from the Services.
8.2 Party B represents, warrants and agrees, on the date of this Agreement that:
a. it is duly organized and validly existing under the laws of its jurisdiction of incorporation;
b. it has all necessary power and authority to execute, deliver and perform this Agreement and to enter into the Services contemplated by this Agreement;
c. it is fully aware of and comply with legal and regulatory obligations relating to the participation of financial institutions and companies in the prevention of money laundering , drug trafficking, financing of terrorism, corruption and other offencessubject to similar obligations;
d. it fulfils all legal requirements in relation with the activities which it undertakes;
e. it shall exercise the due care of a professional in the performance of its duties and conducts itself in line with internationally-recognized rules of conduct applicable to its activities;
f. it has sufficient and adequate knowledge and experience to understand and use the Services rendered by Party A and to assess the benefits or risks of transactions that may be carried out pursuant to this Agreement;
g. it has read and understood the Article referring to the Duties, Liabilities and Risk Warnings, which provide a warning of certain risks associated with the Securities which may be purchased;
h. it is acting as principal with respect to the transactions following the Services contemplated under the Agreement and shall accordingly be liable as principal for all obligations resulting from the Services provided by Party A under this Agreement;
i. it fully complies with the Legal Requirements for any aspects covered by the Agreement, including when it is acting on behalf of its Client for instructions related to the Structured Products arranged by Party A and more generally to the Services provided by Party A;
j. it knows the limitations imposed by certain regulations and jurisdictions regarding the promotion, distribution or marketing of Structured Products and the adequacy of a Security with an Investor’s profile;
k. it shall promptly provide Party A with all information or documents which are reasonably necessary for Party A to receive with a view to the proper discharge of its functions under this Agreement or which Party A may reasonably request for such purpose or which is required by any competent authority; and,
l. information or documentation provided by the Party B or its agents to Party A pursuant to the Agreement is accurate, complete, up-to-date and not misleading in any respect;
m. shall not do anything which Party A may consider to be prejudicial to the goodwill, reputation or commercial interests of Party A and/or its Affiliates.
8.3 Save as expressly provided in this Agreement, no other representation or warranty, express or implied, is made by either Party. Each Party shall promptly notify the other Party if any representation ceases to be true, accurate or complete in any material respect.
ARTICLE 9
LIMITATION OF LIABILITIES
9.1 Party A shall be liable to Party B for any losses incurred by Party B only to the extent that such losses arise under the law of contract and are the direct result of any act or omission taken or omitted by Party A during the term of, and under, this Agreement which constitutes negligence, wilful default or fraud of Party A in providing any of the Services under this Agreement.
9.2 Party B shall otherwise be liable for any other losses suffered by it or by the Client including losses arising from:
a. negligence, wilful default, fraud or insolvency of any other person;
b. Party A carrying out or relying on any instructions or on any information provided or made available to Party A by Party B, the Depository Banks, any agent of Party B or any person appointed by Party B, which is incorrect;
c. any delays due to market conditions or changes in market conditions; or,
d. any delayed receipt, non-receipt, loss or corruption of any information contained in email or for any breach of confidentiality resulting from email communication or any consequential loss arising from either of the foregoing.
9.3 The Parties acknowledge that they are aware of the risks entailed by the use of certain communication means (telephone, electronic mail,…) and in particular regarding Confidential Information. The Parties already release and discharge each other of any responsibilirty of any kind for the detrimental consequences of fraud or errors or other risks inherent to those means of communication.
9.4 Party A shall not be liable in any circumstances for any losses that constitute indirect, special or consequential loss, or loss of profits, opportunity, goodwill or reputation in connection with or arising out of this Agreement.
9.5 Party A shall not be responsible for any losses incurred after the Termination Date under this Agreement unless and to the extent that the act or omission causing such losses can be evidenced to have occurred prior to the Termination Date under this Agreement.
ARTICLE 10
INDEMNIFICATION
10.1 Party B shall indemnify Party A and/or its Affiliates and/or their directors, officers or employees against any and all losses paid, suffered or incurred by Party A and/or its Affiliates and/or their directors, officers or employees, directly or indirectly arising as a result of (i) the performance by Party A of its duties under this Agreement, or (ii) carrying out or relying on any instructions and any information provided or made available to Party A by Party B, its Depository Banks or any other agent of Party B, except to the extent that such losses result directly from the negligence, wilful default or fraud of Party A and/or its Affiliates and/or their directors, officers or employees in providing the Services under this Agreement.
10.2 Party B shall indemnify Party A against any and all losses paid, suffered or incurred by Party A following a cancellation of a Trade and/or an Order as described in the Order Processing and Order Cancellation Policy.
10.3 Any indemnity given to Party A under this Agreement is in addition to, and without prejudice to, any indemnity allowed to Party A under applicable law.
ARTICLE 11
TAX AND ACCOUNTING
11.1 Party B shall remain responsible for tax and accounting aspects falling under its responsibility in connection with the Client’s assets. Party A shall not provide Party B with tax a