Real World Asset Tokenization Disclosure

This Real World Asset ("RWA") Tokenization Disclosure ("Disclosure") is issued by 3-102-954669 S.R.L., a sociedad de responsabilidad limitada organized under the laws of the Republic of Costa Rica (operating as "XEX"), and its affiliates, subsidiaries, and related entities (collectively, "XEX," "we," "us," or "our") and applies to all tokenized real world asset products ("Tokenized Assets" or "RWA Tokens") listed, offered, traded, or otherwise made available on the XEX platform, including any associated websites, mobile applications, APIs, and services (collectively, the "Platform"). By accessing, purchasing, holding, trading, or redeeming any Tokenized Asset on the Platform, you ("User," "you," or "your") acknowledge that you have read, understood, and unconditionally accepted the terms, risks, and limitations set forth in this Disclosure in their entirety.

This Disclosure supplements and should be read in conjunction with the XEX Terms of Service, Risk Disclosure Statement, Privacy Policy, and any token-specific offering documentation, whitepapers, or prospectuses made available in connection with individual Tokenized Assets. In the event of any conflict between this Disclosure and the Terms of Service, the Terms of Service shall prevail unless this Disclosure expressly provides otherwise in relation to RWA-specific matters.

Tokenized real world assets involve significant, novel, and in many cases untested risks. You may lose some or all of the capital you invest. You should not invest funds you cannot afford to lose entirely. Past performance of any Tokenized Asset, its underlying asset, or any comparable investment is not indicative of future results.

1. Nature of Tokenized Assets

Tokenized Assets available on the Platform are blockchain-based digital tokens that purport to represent economic interests in, or exposure to, real world assets including but not limited to government bonds, corporate debt, equities, real estate, commodities, private credit facilities, fund interests, and other tangible or intangible assets ("Underlying Assets"). The precise nature of the interest represented by each token varies and is defined exclusively by the token-specific documentation issued by the relevant issuer or Special Purpose Vehicle.

1.1 Beneficial Interests, Not Direct Ownership

Unless expressly stated otherwise in token-specific documentation, holding a Tokenized Asset does not confer direct legal ownership of the Underlying Asset. Instead, tokens typically represent beneficial interests in a Special Purpose Vehicle ("SPV"), trust, or other legal wrapper entity that itself holds or has contractual exposure to the Underlying Asset. The holder's rights are therefore contractual in nature and are governed by the constitutional documents, trust deeds, or operating agreements of the relevant wrapper entity, which may be subject to the laws of a jurisdiction different from that of the holder. XEX makes no representation that any holder will have the ability to exercise rights typically associated with direct ownership of the Underlying Asset, including but not limited to voting rights, inspection rights, or the right to take physical possession.

1.2 Token Classification

Tokenized Assets on the Platform may, depending on their structure, characteristics, and the regulatory framework of the relevant jurisdiction, be classified as one or more of the following:

• Security Tokens: Tokens that constitute securities, investment contracts, or financial instruments under applicable law, entitling holders to rights analogous to those of shareholders, bondholders, or unitholders. Security tokens are subject to securities regulations in most jurisdictions and may only be offered to and traded by eligible or accredited investors.
• Asset-Backed Tokens: Tokens that are collateralized by or economically linked to a specific pool of Underlying Assets, where the value of the token is intended to reflect the value of such assets. Asset-backed tokens may or may not constitute securities depending on their precise structure and applicable law.
• Utility Tokens with Asset Exposure: Tokens that provide functional access to services on the Platform or within a particular ecosystem but that also carry incidental exposure to the performance of real world assets. The regulatory treatment of such tokens is uncertain and may change.

The classification of any Tokenized Asset may differ across jurisdictions, may be subject to change as regulatory frameworks evolve, and may be determined by a regulator retroactively. XEX does not provide legal, tax, or regulatory advice, and you are solely responsible for determining the classification of any Tokenized Asset under the laws applicable to you.

1.3 No Guarantee of Price Parity

There is no guarantee that the market price of any Tokenized Asset on the Platform will accurately reflect, track, or correlate with the value of the Underlying Asset at any point in time. Deviations may arise from, among other factors: illiquidity in the token or the Underlying Asset, delays in NAV calculations, oracle latency, market sentiment, arbitrage friction, regulatory events, smart contract issues, or the financial condition of the issuer or SPV. XEX expressly disclaims any representation or warranty that a Tokenized Asset will trade at, near, or within any specified range of its stated Net Asset Value or the market value of the Underlying Asset.

2. SPV and Legal Wrapper Structures

Most Tokenized Assets offered on the Platform are issued by or through Special Purpose Vehicles or similar legal wrapper entities ("SPVs") that are established specifically for the purpose of holding Underlying Assets and issuing tokens representing interests in those assets. The use of SPVs is intended to provide structural separation between the Underlying Assets and the operational and credit risks of the token issuer, XEX, and other parties involved in the tokenization process.

2.1 Legal Separation from XEX

XEX is not the issuer of Tokenized Assets unless expressly stated otherwise. Each SPV is a legally distinct entity from XEX, and XEX's role is limited to providing the Platform infrastructure for the listing, trading, and servicing of Tokenized Assets. XEX does not guarantee the obligations of any SPV, does not stand behind the performance of any Underlying Asset, and has no obligation to make holders whole in the event of any loss, default, or insolvency affecting an SPV or its assets. The rights and remedies of token holders are governed exclusively by the constitutional documents of the relevant SPV and the laws of its jurisdiction of incorporation.

2.2 Bankruptcy Remoteness

SPV structures are designed with the objective of achieving bankruptcy remoteness, meaning that the insolvency of XEX, the token arranger, or the asset originator should not, in theory, result in the Underlying Assets becoming available to the creditors of such insolvent entity. However, bankruptcy remoteness is a legal concept that depends on the laws of the relevant jurisdiction and is subject to judicial interpretation. There can be no assurance that a court will uphold the intended bankruptcy-remote structure in all circumstances, particularly in jurisdictions where the legal treatment of digital assets and tokenized securities is unsettled or untested. Risks include but are not limited to substantive consolidation, recharacterization of the transfer of assets to the SPV, piercing the corporate veil, and challenges to the validity of the SPV's organizational documents.

2.3 Trustees and Custodians

Depending on the structure, each SPV may appoint one or more trustees, custodians, administrators, or directors to oversee its operations and the safekeeping of its assets. These parties owe duties as defined by their respective engagement agreements and applicable law, which may be more limited than fiduciary duties owed in traditional trust or fund arrangements. XEX has no control over, and assumes no liability for, the acts or omissions of such third parties. The replacement of a trustee or custodian may be subject to contractual and regulatory constraints that could delay the safeguarding of assets in adverse circumstances.

2.4 Multi-Jurisdictional Structures

SPVs may be organized under the laws of various jurisdictions, including but not limited to the Cayman Islands, the British Virgin Islands, Luxembourg, Ireland, Singapore, Switzerland, and the State of Delaware in the United States. The choice of jurisdiction affects the governance regime, tax treatment, creditor protections, and enforceability of the SPV's constitutional documents. Token holders may find it difficult, costly, or impossible to enforce their rights under the laws of a foreign jurisdiction, and there may be no mutual recognition or enforcement of judgments between the holder's jurisdiction of residence and the SPV's jurisdiction of incorporation.

3. Smart Contract Risk and Audit Disclosures

Tokenized Assets are implemented through smart contracts deployed on one or more blockchain networks. Smart contracts are self-executing programs whose behavior is determined by their code. While smart contracts offer transparency and automation, they also introduce unique and potentially irreversible risks.

3.1 Audit Status

XEX requires that all smart contracts governing Tokenized Assets listed on the Platform undergo security audits conducted by reputable third-party firms specializing in blockchain security. Audit reports, where available, are published or referenced in token-specific documentation. However, an audit is not a guarantee that a smart contract is free from vulnerabilities, bugs, logic errors, or exploitable defects. Audits are limited in scope and are conducted at a specific point in time; they do not account for changes in the blockchain environment, newly discovered attack vectors, or interactions with other smart contracts or protocols that may occur after the audit is completed. No audit firm guarantees the security of any smart contract, and XEX disclaims any liability arising from the reliance on audit reports.

3.2 Immutability and Upgrade Mechanisms

Smart contracts deployed on public blockchains are generally immutable once deployed, meaning that bugs or vulnerabilities discovered after deployment may not be correctable without deploying a new contract and migrating token balances. Certain Tokenized Asset smart contracts may implement upgradeability mechanisms, including proxy patterns (such as UUPS or Transparent Proxy patterns), which allow the contract logic to be updated by authorized parties. While upgrade mechanisms provide flexibility to address bugs and respond to regulatory changes, they also introduce centralization risks: specifically, the risk that the party controlling the upgrade mechanism could modify the contract in a manner adverse to token holders, either intentionally or due to compromise of the upgrade key. XEX reserves the right to require issuers to implement timelocks, multi-signature governance, or other safeguards on upgrade mechanisms but does not guarantee that such safeguards will be in place for all Tokenized Assets.

3.3 Blockchain Network Risks

The functionality, security, and availability of Tokenized Assets depend on the underlying blockchain network(s) on which they are deployed. Risks associated with blockchain networks include but are not limited to: network congestion resulting in delayed or failed transactions, hard forks that may split the network and create incompatible versions of the token, consensus mechanism failures, 51% attacks or other forms of network manipulation, changes in protocol rules or gas fee structures, and the potential discontinuation or abandonment of the network. XEX is not responsible for the operation or governance of any blockchain network and disclaims all liability arising from network-level events.

3.4 Governance Risks

Where Tokenized Assets are governed by on-chain or off-chain governance mechanisms (such as DAO governance, multi-signature controls, or admin keys), the actions of governance participants may adversely affect token holders. Governance decisions may include changes to token supply, fee structures, redemption terms, or contract logic. XEX does not participate in or control the governance of Tokenized Assets issued by third parties and assumes no responsibility for the outcomes of governance processes.

4. Oracle Dependency and Price Feed Risks

Many Tokenized Assets rely on blockchain oracle services to deliver off-chain data, including but not limited to Net Asset Value ("NAV") calculations, asset pricing, interest rate benchmarks, and other reference data, to on-chain smart contracts. The accuracy, timeliness, and integrity of this data are critical to the proper functioning of Tokenized Assets.

4.1 Oracle Services

Oracle data may be sourced from third-party oracle networks (including but not limited to Chainlink, Pyth Network, Band Protocol, API3, and similar providers), proprietary oracle solutions operated by the token issuer, or direct API integrations with data providers. XEX does not operate, control, or guarantee the performance of any oracle service. The selection of oracle providers is determined by the token issuer, and XEX's review of oracle arrangements does not constitute an endorsement, warranty, or guarantee of their reliability.

4.2 Price Feed Latency and Inaccuracy

Oracle-delivered price feeds and NAV data may be delayed, stale, inaccurate, or incomplete due to, among other factors: latency in data aggregation, network congestion on the oracle or target blockchain, failures in data source APIs, computational errors in data aggregation algorithms, or disruptions in the oracle network's consensus mechanism. During periods of extreme market volatility, oracle data may diverge materially from actual market prices, leading to incorrect valuations, erroneous redemptions, or unintended liquidations. XEX shall not be liable for any losses arising from oracle latency, inaccuracy, or failure.

4.3 Oracle Manipulation

Oracle systems are susceptible to manipulation by sophisticated actors, including but not limited to flash loan attacks designed to temporarily distort market prices on reference exchanges, collusion among oracle node operators, man-in-the-middle attacks on data transmission, and economic incentive misalignment among oracle participants. While reputable oracle networks implement safeguards such as decentralized node networks, data aggregation across multiple sources, and deviation threshold checks, no oracle system is immune to manipulation. Users acknowledge and accept the risk that oracle manipulation could result in material loss.

4.4 Fallback Mechanisms

Certain Tokenized Asset smart contracts may implement fallback mechanisms that activate when primary oracle feeds fail or report data outside of acceptable deviation thresholds. Fallback mechanisms may include switching to secondary oracle providers, reverting to the last known good value, pausing certain contract functions, or enabling manual override by designated administrators. There is no guarantee that fallback mechanisms will function as intended in all circumstances, and their activation may result in temporary suspension of trading, redemptions, or other token functions.

5. Regulatory Status by Jurisdiction

The regulatory treatment of Tokenized Assets varies significantly across jurisdictions and is subject to rapid and unpredictable change. The following summaries are provided for general informational purposes only and do not constitute legal advice. You are solely responsible for determining and complying with all laws, regulations, and requirements applicable to you in connection with the purchase, holding, trading, and redemption of Tokenized Assets. XEX makes no representation that any Tokenized Asset is lawfully available for purchase or trading in any particular jurisdiction.

5.1 United States

Under United States federal securities law, a Tokenized Asset may constitute a "security" within the meaning of Section 2(a)(1) of the Securities Act of 1933 (the "Securities Act") and Section 3(a)(10) of the Securities Exchange Act of 1934 (the "Exchange Act") if it satisfies the test articulated by the U.S. Supreme Court in SEC v. W.J. Howey Co., 328 U.S. 293 (1946) (the "Howey Test"). Under the Howey Test, an instrument is a security if it involves (i) an investment of money, (ii) in a common enterprise, (iii) with an expectation of profits, (iv) derived from the efforts of others. Many Tokenized Assets that represent interests in SPVs holding income-generating real world assets are likely to satisfy all four prongs of the Howey Test and would therefore be classified as securities under federal law.

Tokenized Assets that constitute securities may only be offered and sold in the United States pursuant to a registration statement filed with the Securities and Exchange Commission ("SEC") or pursuant to an applicable exemption from registration, including but not limited to:

• Regulation D (Rule 506(b) and 506(c)): Permits offers and sales to accredited investors (as defined in Rule 501 of Regulation D) without general solicitation (506(b)) or with general solicitation and verification of accredited investor status (506(c)). Resale of securities acquired under Regulation D is restricted under Rule 144.
• Regulation S: Provides a safe harbor for offers and sales made outside the United States to non-U.S. persons, subject to distribution compliance periods and restrictions on flowback into the U.S. market.
• Regulation A+ (Tier 1 and Tier 2): A "mini-IPO" framework that permits public offers of up to $20 million (Tier 1) or $75 million (Tier 2) in a 12-month period, subject to SEC qualification of an offering circular and, for Tier 2, ongoing reporting requirements.
• Regulation CF (Crowdfunding): Permits offers of up to $5 million in a 12-month period through registered intermediaries, subject to investment limits based on the investor's income and net worth.

As of the date of this Disclosure, Tokenized Assets on the Platform are not registered under the Securities Act, and the Platform is not registered as a national securities exchange, alternative trading system, broker-dealer, or transfer agent with the SEC or any U.S. state securities regulator. Tokenized Assets classified as securities are not available to U.S. persons (as defined in Regulation S) pending the completion of applicable licensing and registration processes. Any U.S. person who accesses the Platform or acquires Tokenized Assets in violation of this restriction does so at their own risk and in violation of the Terms of Service.

Additionally, Tokenized Assets may be subject to state-level securities laws ("Blue Sky Laws"), money transmission regulations, and the rules of the Commodity Futures Trading Commission ("CFTC") if they are determined to constitute commodities or commodity interests. The Financial Crimes Enforcement Network ("FinCEN") and the Internal Revenue Service ("IRS") may also impose reporting and compliance obligations in connection with digital asset transactions.

5.2 European Union

The Markets in Crypto-Assets Regulation ("MiCA"), Regulation (EU) 2023/1114, which entered full application across all EU member states, establishes a comprehensive regulatory framework for crypto-assets not already covered by existing EU financial services legislation. However, MiCA expressly excludes crypto-assets that qualify as "financial instruments" under the Markets in Financial Instruments Directive II ("MiFID II"), Directive 2014/65/EU, which remain subject to the full scope of EU securities regulation.

Tokenized Assets that represent interests in SPVs holding real world assets and that confer rights analogous to those of traditional securities (such as profit participation, redemption rights, or voting rights) are likely to be classified as "transferable securities" under MiFID II, Article 4(1)(44). Such tokens would be subject to the Prospectus Regulation (Regulation (EU) 2017/1129), requiring publication of a prospectus approved by a competent authority unless an exemption applies (such as offers directed exclusively at qualified investors or offers with a total consideration below EUR 8 million).

The EU's DLT Pilot Regime (Regulation (EU) 2022/858) provides a sandbox framework for the trading and settlement of DLT-based financial instruments through DLT market infrastructures, including DLT multilateral trading facilities and DLT settlement systems. XEX may seek to participate in the DLT Pilot Regime for certain Tokenized Assets, subject to the authorization requirements of national competent authorities.

Users in the EU should be aware that, depending on the classification of a Tokenized Asset, protections under the Investor Compensation Schemes Directive (97/9/EC), the Markets in Financial Instruments Regulation ("MiFIR"), and national implementation measures may or may not apply. XEX does not guarantee that any particular EU investor protection scheme applies to Tokenized Assets.

5.3 United Kingdom

In the United Kingdom, the Financial Conduct Authority ("FCA") regulates cryptoassets under a framework that distinguishes between security tokens, e-money tokens, and unregulated tokens. Tokenized Assets that confer rights equivalent to "specified investments" under the Financial Services and Markets Act 2000 ("FSMA 2000") and the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 ("RAO") are classified as security tokens and are subject to the full scope of UK financial services regulation, including requirements for FCA authorization, prospectus publication under the UK Prospectus Regulation, and compliance with the FCA's conduct of business rules.

The UK financial promotions regime (Section 21 of FSMA 2000 and the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005) restricts the communication of invitations or inducements to engage in investment activity to persons authorized by the FCA or to communications that fall within prescribed exemptions (including communications to high net worth individuals, certified sophisticated investors, or investment professionals). XEX does not direct financial promotions for security tokens to UK retail consumers unless and until all applicable FCA approvals are obtained.

5.4 Singapore

The Monetary Authority of Singapore ("MAS") regulates digital token offerings and exchanges under the Securities and Futures Act 2001 ("SFA") where such tokens constitute "capital markets products" as defined therein, including securities, units in collective investment schemes, and derivatives contracts. Tokenized Assets that represent interests in SPVs or fund-like structures may be classified as "securities" or "units in a collective investment scheme" under the SFA, requiring compliance with prospectus requirements, licensing requirements for intermediaries, and restrictions on offers to non-accredited investors.

Where Tokenized Assets do not constitute capital markets products but function as a medium of exchange or payment, they may instead fall under the Payment Services Act 2019 ("PSA"), which regulates digital payment token services. XEX maintains licensing under applicable MAS regulatory frameworks; however, the classification of specific Tokenized Assets may be subject to MAS guidance or determination that could change the applicable regulatory requirements.

5.5 Japan

The Japan Financial Services Agency ("JFSA") regulates crypto-assets under the Payment Services Act ("PSA") and security tokens under the Financial Instruments and Exchange Act ("FIEA"). Tokenized Assets that constitute "electronically recorded transferable rights" (denshi kiroku iten kenri) under Article 2(3) of the FIEA are treated as Type I securities, requiring registration as a Type I Financial Instruments Business and compliance with prospectus and continuous disclosure obligations. Trading of security tokens is restricted to registered platforms, and holders are subject to Japanese tax obligations on income and capital gains.

5.6 Australia

The Australian Securities and Investments Commission ("ASIC") applies a technology-neutral approach to the regulation of digital assets. Tokenized Assets that constitute "financial products" under the Corporations Act 2001 (Cth), including securities, managed investment schemes, and derivatives, are subject to ASIC's licensing, disclosure, and conduct requirements. Issuers of financial product tokens must hold or be exempt from holding an Australian Financial Services Licence ("AFSL"), and offers must be accompanied by a Product Disclosure Statement ("PDS") or prospectus unless an exemption applies.

5.7 Switzerland

The Swiss Financial Market Supervisory Authority ("FINMA") classifies tokens into payment tokens, utility tokens, and asset tokens under its ICO Guidelines. Tokenized Assets that represent claims against an issuer or rights in an underlying asset are classified as asset tokens and are treated analogously to securities under the Financial Market Infrastructure Act ("FMIA") and the Financial Services Act ("FinSA"). Switzerland has introduced the concept of "ledger-based securities" (Registerwertrechte) under the DLT Act, which provides a legal basis for the issuance and transfer of tokenized securities via distributed ledger technology. Offers of asset tokens to the public in Switzerland are subject to prospectus requirements under FinSA unless an exemption applies.

5.8 Hong Kong

The Securities and Futures Commission ("SFC") of Hong Kong regulates tokenized securities under the Securities and Futures Ordinance ("SFO"). Security tokens are classified as "securities" under the SFO and may only be offered to the public by way of a prospectus authorized by the SFC, or under an applicable exemption (such as offers to professional investors only). Platforms facilitating the trading of security tokens must be licensed under Type 1 (dealing in securities) and Type 7 (providing automated trading services) of the SFO. The SFC has issued guidance on the regulation of virtual asset trading platforms, including requirements for security token offerings and secondary trading.

5.9 United Arab Emirates

The regulatory framework for tokenized assets in the United Arab Emirates varies between the federal level and the financial free zones. The Virtual Assets Regulatory Authority ("VARA") in Dubai regulates virtual assets and virtual asset service providers under the Dubai Virtual Assets Regulation Law No. 4 of 2022. In the Abu Dhabi Global Market ("ADGM"), the Financial Services Regulatory Authority ("FSRA") regulates security tokens as "specified investments" under its financial services framework, requiring operators to obtain appropriate financial services permissions. In the Dubai International Financial Centre ("DIFC"), the Dubai Financial Services Authority ("DFSA") applies its own investment token framework. Users in the UAE must independently determine which regulatory regime applies to their activities.

5.10 Cayman Islands

The Cayman Islands is a common jurisdiction for the organization of SPVs used in RWA tokenization due to its flexible corporate and trust law, tax-neutral status, and established funds regulatory framework. The Cayman Islands Monetary Authority ("CIMA") regulates securities investment business and mutual funds under the Securities Investment Business Act and the Mutual Funds Act. SPVs organized as exempted limited partnerships or exempted companies may be subject to registration or licensing requirements depending on their structure and activities. The Virtual Asset (Service Providers) Act 2020 ("VASPA") imposes registration and compliance obligations on virtual asset service providers operating in or from the Cayman Islands.

5.11 Other Jurisdictions

The foregoing summaries are illustrative only and do not constitute an exhaustive analysis of all jurisdictions in which Tokenized Assets may be subject to regulation. Users in jurisdictions not specifically addressed above, including but not limited to Canada (OSC, AMF, and CSA guidance), South Korea (Virtual Asset Users Protection Act), Brazil (CVM regulations), India (evolving SEBI guidelines), and all other jurisdictions, are solely responsible for determining the legality of purchasing, holding, trading, and redeeming Tokenized Assets under their local law. XEX reserves the right to restrict access to some or all Tokenized Assets for users in any jurisdiction, at any time, without prior notice, if XEX determines in its sole discretion that such restriction is necessary or advisable for legal, regulatory, or compliance reasons.

6. Accredited Investor Requirements

Certain Tokenized Assets listed on the Platform may, by virtue of their classification as securities or the terms of their offering documentation, be available only to accredited investors, qualified investors, professional investors, or equivalent categories of investors as defined under the applicable laws and regulations of the relevant jurisdiction.

6.1 Definitions of Accredited Investor

The definition of "accredited investor" or its equivalent varies by jurisdiction. For illustrative purposes:

• United States: As defined in Rule 501(a) of Regulation D, an accredited investor includes, among others, a natural person with individual income exceeding $200,000 (or joint income with a spouse exceeding $300,000) in each of the two most recent years with a reasonable expectation of the same in the current year, or a natural person with net worth exceeding $1,000,000 (excluding the value of their primary residence), or holders of Series 7, Series 65, or Series 82 licenses in good standing.
• European Union: A "qualified investor" as defined in Article 2(e) of the Prospectus Regulation, which includes legal entities authorized or regulated to operate in financial markets, entities meeting at least two of three size criteria, and natural persons who request to be treated as professional clients.
• Singapore: An "accredited investor" as defined in Section 4A of the SFA, including individuals with net personal assets exceeding SGD 2 million (with the value of the primary residence capped at SGD 1 million) or annual income of at least SGD 300,000.
• United Kingdom: A "certified high net worth individual" (annual income of at least GBP 100,000 or net assets of at least GBP 250,000) or a "certified sophisticated investor" as defined in the FCA's rules.

6.2 Self-Certification and Verification

Where required, Users must complete accredited investor self-certification through the Platform's onboarding process and may be required to provide supporting documentation, including but not limited to tax returns, brokerage statements, bank statements, letters from licensed attorneys or certified public accountants, or third-party verification reports. XEX reserves the right to engage third-party verification services to confirm accredited investor status. XEX may rely on self-certification where permitted by applicable law but reserves the right to require additional verification at any time.

6.3 Consequences of Misrepresentation

Any User who misrepresents their accredited investor status, income, net worth, or other qualifying criteria in order to access Tokenized Assets restricted to accredited investors does so in violation of the Terms of Service and potentially in violation of applicable securities laws. XEX reserves the right to immediately freeze or close the account of any User found to have made a material misrepresentation, to forcibly redeem or liquidate any Tokenized Assets held in such account at the prevailing market price (which may be materially below the User's acquisition price), and to report such misrepresentation to applicable regulatory authorities. The User shall be solely liable for all losses, penalties, and legal consequences arising from such misrepresentation, and XEX shall have no liability whatsoever in connection therewith.

7. Redemption Terms and Restrictions

Certain Tokenized Assets may provide holders with the right to redeem their tokens for the Underlying Asset, cash, or other consideration, subject to the redemption terms specified in the token-specific documentation. Redemption is not guaranteed for all Tokenized Assets, and where available, is subject to the following terms and restrictions.

7.1 Redemption Windows

Redemptions may only be submitted during designated redemption windows, which may be daily, weekly, monthly, quarterly, or at other intervals as specified in the token-specific documentation. Redemption requests submitted outside of a redemption window will be queued for the next available window. XEX and the relevant SPV reserve the right to modify redemption window schedules with reasonable notice to holders.

7.2 Minimum Holding Periods

Certain Tokenized Assets may be subject to minimum holding periods, during which redemption is not available. Minimum holding periods may be imposed by the terms of the offering, regulatory requirements (such as Regulation D holding periods), or the operational requirements of the Underlying Asset. Holders who attempt to redeem prior to the expiration of the minimum holding period will have their redemption requests rejected.

7.3 Redemption Fees

Redemptions may be subject to fees, including but not limited to early redemption fees, administrative processing fees, exit loads, and fees charged by custodians or administrators of the Underlying Asset. Redemption fees are disclosed in the token-specific documentation and may be deducted from the redemption proceeds.

7.4 In-Kind vs. Cash Redemption

Depending on the nature of the Underlying Asset, redemptions may be settled in cash (fiat currency or stablecoins), in kind (delivery of the Underlying Asset or a pro rata share thereof), or in a combination of both, as determined by the SPV in its sole discretion. In-kind redemption may not be practical for all asset types (for example, fractional interests in real estate) and may be subject to additional transfer restrictions, tax implications, or regulatory requirements.

7.5 Delays, Gates, and Suspension

XEX and the relevant SPV reserve the right to delay, gate, or suspend redemptions in circumstances including but not limited to: periods of extreme market stress or illiquidity in the Underlying Asset, force majeure events, regulatory orders or investigations, material uncertainty regarding the NAV of the Underlying Asset, operational disruptions affecting the custodian or administrator, or any other circumstance in which the SPV determines that processing redemptions would be materially prejudicial to remaining holders. Gate provisions may limit the aggregate amount of redemptions processed in any single redemption window to a specified percentage of the total outstanding tokens (typically between 5% and 25%). Gated redemption requests will be carried forward to subsequent windows on a pro rata basis. There is no guarantee that a suspended redemption facility will be reinstated or that gated requests will be processed within any specific timeframe.

8. Underlying Asset Custody and Insurance

The safekeeping of Underlying Assets is a critical element of the RWA tokenization structure. The custody arrangements for each Tokenized Asset are specified in the token-specific documentation and may vary depending on the nature of the Underlying Asset.

8.1 Custody Arrangements

Underlying Assets may be held by regulated custodians, prime brokers, depositories, trust companies, real estate trustees, or other qualified institutions appointed by the relevant SPV. For financial assets (such as bonds and equities), custody is typically maintained through established clearing and settlement systems (such as DTCC, Euroclear, or Clearstream). For physical assets (such as real estate or commodities), custody may involve physical possession, warehouse receipts, title registration, or other mechanisms appropriate to the asset type. XEX does not serve as custodian of Underlying Assets unless expressly stated in the token-specific documentation.

8.2 Insurance Coverage

Certain Underlying Assets may be covered by insurance policies maintained by the custodian, the SPV, or third-party insurers. Insurance coverage, where applicable, may cover losses arising from theft, fraud, custodial errors, natural disasters, or other insured events, subject to policy limits, deductibles, and exclusions. Insurance coverage does not protect against market risk, credit risk, issuer default, smart contract exploits, or regulatory action. The existence, scope, and limits of insurance coverage vary by Tokenized Asset and are disclosed in the token-specific documentation. XEX does not warrant that insurance coverage will be maintained at any particular level, that claims will be honored by insurers, or that insurance proceeds will be sufficient to cover all losses.

8.3 Segregation of Assets

Underlying Assets held by SPVs are intended to be segregated from the proprietary assets of XEX, the custodian, and other parties involved in the tokenization structure. Segregation is designed to ensure that Underlying Assets are not available to creditors of these entities in the event of insolvency. However, the effectiveness of segregation depends on the laws of the relevant jurisdiction, the terms of the custody agreement, and the operational practices of the custodian. XEX does not guarantee perfect segregation in all circumstances.

9. Tax Treatment of Tokenized Securities

The tax treatment of Tokenized Assets is complex, uncertain, and varies significantly depending on the nature of the token, the Underlying Asset, the jurisdiction of the holder, the jurisdiction of the SPV, and the specific facts and circumstances of each transaction. The following information is provided for general awareness only and does not constitute tax advice. You should consult a qualified tax advisor regarding your specific tax obligations.

9.1 Potential Tax Treatment

Depending on their classification, Tokenized Assets may be treated for tax purposes as:

• Securities: Subject to taxation on dividends, interest, distributions, and capital gains at rates applicable to securities in the holder's jurisdiction.
• Property or digital assets: Subject to capital gains taxation on disposal, with the cost basis determined by the acquisition price and any applicable fees.
• Interests in pass-through entities: Where the SPV is treated as a partnership or flow-through entity for tax purposes, holders may be subject to taxation on their allocable share of the SPV's income, gains, losses, and deductions, regardless of whether cash distributions are received.
• Foreign financial assets: Holders in certain jurisdictions (including the United States, under FATCA and the FBAR reporting requirements) may have obligations to report holdings of Tokenized Assets as foreign financial assets if the SPV is organized outside of their home jurisdiction.

9.2 Withholding and Reporting

SPVs, issuers, or custodians may be required to withhold taxes on dividends, interest, or other distributions paid to token holders, at rates that may vary depending on the existence and terms of applicable tax treaties. XEX may be required to report certain information regarding token holders and their transactions to tax authorities, including under the Common Reporting Standard ("CRS"), the Foreign Account Tax Compliance Act ("FATCA"), and analogous reporting regimes. You are solely responsible for the accurate reporting of all income, gains, losses, and other tax items arising from your Tokenized Asset holdings on your tax returns, and for the timely payment of all taxes due.

9.3 Uncertain and Evolving Tax Law

Tax authorities in many jurisdictions have not issued definitive guidance on the treatment of tokenized securities and real world asset tokens. The tax treatment of Tokenized Assets may change retroactively as a result of new legislation, regulatory guidance, or judicial decisions. XEX is not responsible for any taxes, penalties, or interest that may arise from your failure to comply with applicable tax laws or from changes in tax law.

10. Bankruptcy Remoteness and Asset Segregation

The tokenization structures described in this Disclosure are designed with the objective of achieving bankruptcy remoteness and asset segregation. These concepts are fundamental to the protection of token holders but are subject to legal and practical limitations.

10.1 Design Principles

Each SPV is established as a special purpose, orphan entity (where applicable) with limited objects, independent directors (where applicable), and restrictions on the incurrence of additional indebtedness. These structural features are intended to minimize the risk that the SPV will be dragged into the insolvency proceedings of XEX, the asset originator, or any other affiliated entity. The transfer of Underlying Assets to the SPV is structured as a "true sale" (where applicable) to ensure that the assets are not characterized as merely pledged or secured but as owned outright by the SPV.

10.2 Limitations and Risks

Notwithstanding the foregoing design principles, the effectiveness of bankruptcy-remote structures is subject to, among other risks:

• Substantive consolidation: A bankruptcy court may order the consolidation of the assets and liabilities of the SPV with those of an insolvent affiliate if it determines that the entities' affairs are so intermingled that separate existence is a fiction.
• Recharacterization: A court may recharacterize the transfer of assets from the originator to the SPV as a secured loan rather than a true sale, which would make the assets available to the originator's creditors.
• Fraudulent transfer: If the transfer of assets to the SPV is deemed to have been made with the intent to hinder, delay, or defraud creditors, or for less than reasonably equivalent value, a court may set aside the transfer.
• Cross-border insolvency conflicts: Where the SPV, the asset originator, the custodian, and the token holders are located in different jurisdictions, conflicting insolvency laws may produce unpredictable outcomes.

10.3 XEX Insolvency

In the event that XEX enters insolvency, administration, receivership, liquidation, or any analogous proceedings, the Underlying Assets held by SPVs are intended to remain outside the scope of XEX's insolvency estate. However, the insolvency of XEX would likely disrupt the Platform's operations, including trading, redemption processing, NAV calculation, and oracle services, which could materially impair the ability of token holders to access or realize the value of their Tokenized Assets for an extended period. XEX makes no representation regarding the timeframe within which normal operations could be restored following an insolvency event or whether token holders would be made whole.

11. Transfer Restrictions and Lockup Periods

Tokenized Assets may be subject to transfer restrictions imposed by applicable securities laws, the terms of the offering documentation, or the smart contract itself. Users should familiarize themselves with the transfer restrictions applicable to each Tokenized Asset before acquiring it.

11.1 Regulatory Transfer Restrictions

Tokenized Assets that constitute securities may only be transferred to persons who meet the eligibility requirements of the applicable securities laws and exemptions. For example, securities sold under Regulation D in the United States are subject to resale restrictions under Rule 144, which generally requires a holding period of at least six months (for reporting issuers) or twelve months (for non-reporting issuers) before resale to the public is permitted. Transfers that do not comply with applicable restrictions are void and will not be processed by the Platform.

11.2 Whitelisted Transfers

Certain Tokenized Asset smart contracts implement whitelisting mechanisms that restrict token transfers to wallet addresses that have been pre-approved through the Platform's KYC/AML verification process. Transfers to non-whitelisted addresses will be rejected by the smart contract at the protocol level. The whitelisting requirement ensures compliance with know-your-customer and transfer restriction obligations but may significantly limit the secondary market for such tokens.

11.3 Lockup Periods for Initial Offerings

Users who acquire Tokenized Assets in primary offerings (initial token offerings or tokenized security offerings) may be subject to lockup periods during which they are prohibited from selling or transferring their tokens. Lockup periods are specified in the token-specific documentation and are enforced either contractually or programmatically through the smart contract. XEX shall not be liable for any losses incurred by users who are unable to sell during a lockup period, including losses resulting from adverse price movements.

12. Issuer Disclosure Obligations

Issuers and SPVs responsible for Tokenized Assets listed on the Platform are subject to ongoing disclosure obligations as specified in their offering documentation, constitutional documents, and applicable regulatory requirements.

12.1 Ongoing Reporting

Issuers are expected to provide periodic reports to token holders and the Platform, including but not limited to: audited annual financial statements of the SPV, unaudited semi-annual or quarterly financial statements, NAV reports at the frequency specified in the token-specific documentation, and material event notifications. Reporting obligations are determined by the terms of the relevant offering and applicable regulatory requirements. XEX endeavors to make issuer reports available to token holders through the Platform but does not independently verify the accuracy or completeness of such reports.

12.2 Material Event Notifications

Issuers are required to promptly notify XEX and token holders of material events affecting the Tokenized Asset or its Underlying Asset, including but not limited to: changes in the financial condition or creditworthiness of the issuer or SPV, defaults or delinquencies in the Underlying Asset, material changes in the value of the Underlying Asset, changes in key service providers (custodian, administrator, trustee, auditor), regulatory actions or proceedings affecting the issuer or the Underlying Asset, and any other event that would reasonably be expected to have a material effect on the value or characteristics of the Tokenized Asset.

12.3 Audited Financial Statements

SPVs issuing Tokenized Assets on the Platform are required to obtain annual audited financial statements from an independent accounting firm. XEX reserves the right to delist any Tokenized Asset for which the issuer fails to provide audited financial statements within a reasonable period following the end of the relevant fiscal year. The cost of audits is borne by the issuer or SPV and may be passed on to token holders through management fees or other charges.

13. Conflicts of Interest

Users should be aware that XEX and its affiliates occupy multiple roles in the RWA tokenization ecosystem, which may give rise to actual or potential conflicts of interest. XEX is committed to managing conflicts fairly but cannot eliminate them entirely.

13.1 Multiple Roles

XEX and its affiliates may simultaneously act in one or more of the following capacities with respect to a given Tokenized Asset:

• Platform operator: Providing the technology infrastructure for listing, trading, and servicing Tokenized Assets and earning listing fees, trading commissions, and technology fees.
• Market maker: Quoting bid and ask prices for Tokenized Assets to provide liquidity, earning the bid-ask spread and potentially taking proprietary positions.
• Custodian or sub-custodian: Holding digital assets (including the tokens themselves) on behalf of users, earning custody fees.
• Arranger or structurer: Advising on or structuring the tokenization of Underlying Assets, earning arrangement fees.
• Holder for its own account: Holding Tokenized Assets in its proprietary inventory or treasury.
• Affiliate of the issuer: In certain cases, the issuer or SPV may be an affiliate of XEX, creating a direct financial interest in the performance of the Tokenized Asset.

13.2 Mitigation Measures

XEX employs the following measures to manage conflicts of interest: information barriers between business units, independent compliance oversight, disclosure of material conflicts in token-specific documentation, policies restricting proprietary trading in advance of client orders, and regular review of conflict management procedures by the compliance function. Notwithstanding these measures, conflicts of interest cannot be entirely eliminated, and Users should consider the existence of these conflicts when making investment decisions.

13.3 No Fiduciary Duty

Unless expressly stated in writing by an authorized officer of XEX, XEX does not act as a fiduciary, investment adviser, or agent of any User in connection with Tokenized Assets. XEX's listing of a Tokenized Asset on the Platform does not constitute a recommendation, endorsement, or opinion as to the merits, suitability, or appropriateness of the investment for any particular User. All investment decisions are made solely by the User, and XEX accepts no responsibility for any losses arising from such decisions.

14. No Guarantee of Liquidity or Secondary Market

XEX does not guarantee that any active, liquid, or continuous secondary market will exist for any Tokenized Asset at any time. The following risks should be carefully considered.

14.1 Absence of Market Assurance

Unlike securities listed on regulated stock exchanges, Tokenized Assets may trade on a limited number of platforms and may not have established market-making arrangements. Trading volumes may be low or non-existent for extended periods, and there may be no buyers available at any price when you wish to sell. The absence of an active secondary market means that you may be unable to liquidate your position in a timely manner or at a price that reflects the NAV or the fair value of the Underlying Asset.

14.2 Delisting

XEX reserves the right to delist any Tokenized Asset from the Platform at any time, for any reason, including but not limited to: regulatory concerns, low trading volume, issuer non-compliance with reporting obligations, material adverse events affecting the Underlying Asset, smart contract vulnerabilities, or any other reason that XEX deems sufficient in its sole discretion. Following delisting, trading of the affected Tokenized Asset on the Platform will cease, and holders will be limited to redemption (if available) or off-platform transfer (if permitted by the smart contract and applicable law).

14.3 Wide Bid-Ask Spreads

Even where secondary market trading is available, bid-ask spreads for Tokenized Assets may be significantly wider than those observed for comparable traditional securities, particularly during periods of low liquidity, market stress, or uncertainty regarding the value of the Underlying Asset. Wide spreads result in higher transaction costs and may make it uneconomical to trade in small quantities.

14.4 Termination of Market Making

Where XEX or a third party provides market-making services for a Tokenized Asset, such arrangements may be terminated at any time with or without notice to token holders. The termination of market-making services is likely to result in a significant reduction in liquidity and a widening of bid-ask spreads. XEX shall not be liable for any losses arising from the termination of market-making arrangements.

15. NAV Calculation Methodology

The Net Asset Value ("NAV") of a Tokenized Asset represents the estimated value of the Underlying Assets held by the SPV, net of liabilities, on a per-token basis. NAV is a key reference metric for pricing, redemption, and performance evaluation but is subject to inherent limitations.

15.1 Calculation Frequency

NAV is calculated at the frequency specified in the token-specific documentation, which may range from real-time (for highly liquid assets such as listed equities and government bonds) to daily, weekly, monthly, or quarterly (for less liquid assets such as real estate, private credit, and fund interests). Less frequent NAV calculations mean that the reported NAV may not reflect current market conditions or recent changes in the value of the Underlying Asset.

15.2 Pricing Sources and Fair Value Methodology

NAV calculations are based on pricing data obtained from one or more of the following sources: regulated exchange closing prices, over-the-counter dealer quotes, independent valuation firms, appraisals (for real estate and other physical assets), pricing models (such as discounted cash flow or comparable transactions analysis), and oracle-delivered data feeds. Where market prices are not available or are deemed unreliable, the SPV or its administrator may apply fair value methodologies that involve subjective judgment and estimation. Fair value determinations may differ materially from the price at which the Underlying Asset could actually be sold in an arm's-length transaction.

15.3 Deviation Tolerance

XEX may establish deviation tolerance thresholds beyond which the market price of a Tokenized Asset is considered to have diverged materially from its NAV. When deviation thresholds are exceeded, XEX may take remedial actions including but not limited to: publishing a deviation notice, suspending trading in the affected token, requesting a revaluation of the Underlying Asset, or triggering an extraordinary redemption window. The specific deviation thresholds and remedial actions are defined in the token-specific documentation.

16. Whitepaper and Prospectus Availability

Each Tokenized Asset listed on the Platform is accompanied by token-specific documentation that provides detailed information regarding the token's structure, risks, terms, and the Underlying Asset.

16.1 Token-Specific Documentation

Depending on the nature and regulatory classification of the Tokenized Asset, the following documents may be available:

• Whitepaper: A technical and commercial document describing the tokenization structure, the Underlying Asset, the smart contract architecture, the roles of key parties, and the risks associated with the token.
• Prospectus or Offering Circular: A regulatory document prepared in accordance with the securities laws of the relevant jurisdiction, providing the disclosures required for a public or exempt offering of securities.
• Private Placement Memorandum ("PPM"): A disclosure document prepared for offerings made under private placement exemptions (such as Regulation D in the United States), providing detailed risk factors, terms, and conditions.
• Key Information Document ("KID") or Key Investor Information Document ("KIID"): A summary document required under certain EU and UK regulations, providing essential information about the token in a standardized format.
• Term Sheet: A summary of the principal terms and conditions of the Tokenized Asset.

16.2 Accessing Documentation

Token-specific documentation is available through the individual asset pages on the Platform, which can be accessed from the RWA product section. Additional documentation may be available upon request by contacting the issuer or XEX support. Users are strongly encouraged to read all available documentation in full before acquiring any Tokenized Asset. In the event of any conflict between this Disclosure and the token-specific documentation, the token-specific documentation shall prevail with respect to the terms and conditions of the particular Tokenized Asset.

General Disclaimers and Limitation of Liability

TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, XEX, ITS AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, AND SERVICE PROVIDERS (COLLECTIVELY, THE "XEX PARTIES") DISCLAIM ALL WARRANTIES, WHETHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, IN CONNECTION WITH TOKENIZED ASSETS, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, ACCURACY, COMPLETENESS, TIMELINESS, NON-INFRINGEMENT, AND ANY WARRANTIES ARISING FROM COURSE OF DEALING OR USAGE OF TRADE.

IN NO EVENT SHALL ANY XEX PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, PUNITIVE, OR EXEMPLARY DAMAGES ARISING FROM OR RELATED TO TOKENIZED ASSETS, INCLUDING BUT NOT LIMITED TO LOSS OF PROFITS, LOSS OF DATA, LOSS OF GOODWILL, LOSS OF OPPORTUNITY, OR THE COST OF PROCURING SUBSTITUTE GOODS OR SERVICES, REGARDLESS OF THE THEORY OF LIABILITY (CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE), EVEN IF ANY XEX PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

THE AGGREGATE LIABILITY OF ALL XEX PARTIES FOR ALL CLAIMS ARISING FROM OR RELATED TO TOKENIZED ASSETS SHALL NOT EXCEED THE LESSER OF (A) THE TOTAL FEES PAID BY YOU TO XEX IN THE TWELVE (12) MONTHS PRECEDING THE EVENT GIVING RISE TO THE CLAIM, OR (B) ONE HUNDRED UNITED STATES DOLLARS (USD $100.00).

This Disclosure is governed by and construed in accordance with the laws specified in the XEX Terms of Service. Any dispute arising from or in connection with this Disclosure shall be resolved exclusively through the dispute resolution mechanism specified in the Terms of Service, which may include mandatory arbitration and waiver of class action rights.

XEX reserves the right to amend, modify, or supplement this Disclosure at any time by publishing the revised version on the Platform. Your continued use of the Platform or holding of Tokenized Assets after the publication of any amendments constitutes your acceptance of such amendments. Material changes will be notified through the Platform or by email, although XEX is not obligated to provide individual notice of all changes.

If any provision of this Disclosure is held to be invalid, unenforceable, or illegal by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect. The invalid or unenforceable provision shall be replaced with a valid and enforceable provision that most closely reflects the original intent.

For questions regarding this Disclosure, please contact legal@xex.to.