Exhibit 10.4
SEVERANCE AND CHANGE IN CONTROL AGREEMENT
This Severance and Change in Control Agreement (the “Agreement”) is made and
entered into by and between [Executive Name] (“Executive”) and Prosper
Marketplace, Inc. (the “Company”), effective as of the latest date set forth by
the signatures of the parties hereto below (the “Effective Date”).
RECITALS
1.The Compensation Committee of the Board of Directors of the Company (the
“Committee”) recognizes that it is possible that the Company could terminate
Executive’s employment with the Company and from time to time the Company may
consider the possibility of an acquisition by another company or other change in
control transaction. The Committee also recognizes that such considerations can
be a distraction to Executive and can cause Executive to consider alternative
employment opportunities. The Committee has determined that it is in the best
interests of the Company and its stockholders to assure that the Company will
have the continued dedication and objectivity of Executive, notwithstanding the
possibility, threat or occurrence of such a termination of employment or the
occurrence of a Change in Control (as defined herein) of the Company.
2.The Committee believes that it is in the best interests of the Company and its
stockholders to provide Executive with an incentive to continue Executive’s
employment with the Company and to motivate Executive to maximize the value of
the Company for the benefit of its stockholders.
3.The Committee believes that it is in the best interests of the Company and its
stockholders to provide senior executive officers of the Company, with at least
three (3) years of employment with the Company, with an incentive to continue
their employment with the Company and to motivate Executive to maximize the
value of the Company for the benefit of its stockholders.
4.The Company and Executive previously entered into an offer letter dated
[Date], as amended on [Date], (the “Offer Letter”), which provides for certain
payments and/or benefits upon Executive’s termination of employment.
5.The Company and Executive wish to restate the terms of Executive’s severance
and benefits (whether or not in connection with a Change in Control) and replace
any and all such provisions providing for severance and/or change in control
payments and/or benefits in the Offer Letter, as set forth below. All other
terms and conditions of the Offer Letter will remain in full force and effect.
6.Certain capitalized terms used in the Agreement are defined in Section 6
below.
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AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereto agree as follows:
1.Term of Agreement. This Agreement will not terminate until all of the
obligations of the parties hereto with respect to this Agreement have been
satisfied.
2.At-Will Employment. The Company and Executive acknowledge that Executive’s
employment is and will continue to be at-will, as defined under applicable law.
If Executive’s employment terminates for any reason, including (without
limitation) any termination of employment not set forth in Section 3, Executive
will not be entitled to any payments, benefits, damages, awards or compensation
other than the payment of accrued but unpaid wages, as required by law, and any
unreimbursed reimbursable expenses incurred and submitted in accordance with the
Company’s Travel and Expense Policy, or pursuant to written agreements with the
Company, including equity award agreements and this Agreement, with respect to
potential severance benefits.
3.Severance Benefits.
i.Termination without Cause or Resignation for Good Reason and not in Connection
with a Change in Control. If (x) the Company terminates Executive’s employment
with the Company for a reason other than Cause, Executive becoming Disabled or
Executive’s death, or (y) Executive resigns from such employment for Good
Reason, in each case at any time other than during the twenty-four (24)-month
period immediately following a Change in Control, then, subject to Section 4,
Executive will receive the following severance benefits from the Company:
a.Accrued Compensation. The Company will pay Executive all accrued but unpaid
vacation, expense reimbursements, wages, and other benefits due to Executive
under any Company-provided plans, policies, and arrangements.
b.Severance Payment. Executive will receive a lump sum severance payment equal
to 12 months of Executive’s base salary as in effect immediately prior to the
date of Executive’s termination of employment, less all required tax
withholdings and other applicable deductions, which will be paid in accordance
with the Company’s regular payroll procedures.
c.Prior Annual and LTI Cash Plan Bonus Payments. To the extent not yet paid
(including any delayed bonus that requires continued service for payment),
Executive will receive, as applicable, Executive’s actual (A) annual incentive
compensation bonus with respect to the fiscal year prior to the fiscal year in
which Executive’s termination occurs, and (B) LTI Award(s) with respect to any
completed LTI Performance Period, less all required tax withholdings and other
applicable deductions.
d.Pro-Rated Annual Bonus Payment. Executive will receive a lump-sum severance
payment equal to one hundred percent (100%) of Executive’s target annual bonus
as in effect for the fiscal year in which Executive’s termination occurs,
pro-rated by multiplying such
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bonus amount by a fraction, the numerator of which shall be the number of days
from and including the first day of such fiscal year through and including the
date of Executive’s termination, and the denominator of which shall be
three-hundred and sixty-five (365), less all required tax withholdings and other
applicable deductions.
e.Pro-Rated LTI Cash Plan Bonus Payment. With respect to any open LTI
Performance Period that commenced more than one (1) year prior to Executive’s
separation, Executive will receive a lump-sum severance payment equal to one
hundred percent (100%) of Executive’s target LTI Award with respect to such
period, pro-rated by multiplying such bonus amount by a fraction, the numerator
of which shall be the number of days from and including the first day of such
applicable performance period through and including the date of Executive’s
termination, and the denominator of which shall be the total number of days in
such performance bonus period, less all required tax withholdings and other
applicable deductions. For the avoidance of doubt, this clause (v) shall not
apply with respect to any LTI Performance Period that commenced within one (1)
year prior to Executive’s separation.
f.Continued Employee Benefits. If Executive elects continuation coverage
pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (“COBRA”) for Executive and Executive’s eligible dependents, within the
time period prescribed pursuant to COBRA, the Company will reimburse Executive
for the COBRA premiums for such coverage (at the coverage levels in effect
immediately prior to Executive’s termination or resignation) until the earlier
of (A) a period of 12 months from the last date of employment of Executive with
the Company, or (B) the date upon which Executive and/or Executive’s eligible
dependents becomes covered under similar plans. COBRA reimbursements will be
made by the Company to Executive consistent with the Company’s normal expense
reimbursement policy and will be taxable to the extent required to avoid adverse
consequences to Executive or the Company under either Code Section 105(h) or the
Patient Protection and Affordable Care Act of 2010.
g.Payments or Benefits Required by Law. Executive will receive such other
compensation or benefits from the Company as may be required by law.
ii.Termination without Cause or Resignation for Good Reason in Connection with a
Change in Control. If during the twenty-four (24)-month period immediately
following a Change in Control, (x) the Company terminates Executive’s employment
with the Company for a reason other than Cause, Executive becoming Disabled or
Executive’s death, or (y) Executive resigns from such employment for Good
Reason, then, subject to Section 4, Executive will receive the following
severance benefits from the Company in lieu of the benefits described in Section
3(a) above:
h.Accrued Compensation. The Company will pay Executive all accrued but unpaid
vacation, expense reimbursements, wages, and other benefits due to Executive
under any Company-provided plans, policies, and arrangements.
i.Severance Payment. Executive will receive a lump sum severance payment equal
to 12 months of Executive’s base salary as in effect immediately prior to the
date of
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Executive’s termination of employment, less all required tax withholdings and
other applicable deductions, which will be paid in accordance with the Company’s
regular payroll procedures.
j.Prior Annual and LTI Cash Plan Bonus Payments. To the extent not yet paid
(including any delayed bonus that requires continued service for payment),
Executive will receive, as applicable, Executive’s actual (A) annual incentive
compensation bonus with respect to the fiscal year prior to the fiscal year in
which Executive’s termination occurs, and (B) LTI Award(s) with respect to any
completed LTI Performance Period, less all required tax withholdings and other
applicable deductions.
k.Target Annual Bonus Payment. Executive will receive a lump sum severance
payment equal to one hundred percent (100%) of Executive’s full target annual
bonus for the fiscal year in effect at the date of such termination of
employment (or, if greater, as in effect for the fiscal year in which the Change
in Control occurs), less all required tax withholdings and other applicable
deductions.
l.Target LTI Cash Plan Bonus Payment. Executive will receive a lump-sum
severance payment equal to one hundred percent (100%) of Executive’s full target
LTI Award covering the performance period that begins in the year of termination
of employment (or, if greater, covering the fiscal year in which the Change in
Control occurs), less all required tax withholdings and other applicable
deductions.
m.Continued Employee Benefits. If Executive elects continuation coverage
pursuant to COBRA for Executive and Executive’s eligible dependents, within the
time period prescribed pursuant to COBRA, the Company will reimburse Executive
for the COBRA premiums for such coverage (at the coverage levels in effect
immediately prior to Executive’s termination or resignation) until the earlier
of (A) a period of 12 months from the last date of employment of Executive with
the Company, or (B) the date upon which Executive and/or Executive’s eligible
dependents becomes covered under similar plans. COBRA reimbursements will be
made by the Company to Executive consistent with the Company’s normal expense
reimbursement policy and will be taxable to the extent required to avoid adverse
consequences to Executive or the Company under either Code Section 105(h) or the
Patient Protection and Affordable Care Act of 2010.
n.Payments or Benefits Required by Law. Executive will receive such other
compensation or benefits from the Company as may be required by law.
iii.Disability; Death. If Executive’s employment with the Company is terminated
due to Executive becoming Disabled or Executive’s death, then Executive or
Executive’s estate (as the case may be) will (i) receive the earned but unpaid
base salary through the date of termination of employment, (ii) receive all
accrued vacation, expense reimbursements and any other benefits due to Executive
through the date of termination of employment in accordance with
Company-provided or paid plans, policies and arrangements, and (iii) not be
entitled to any other compensation or benefits from the Company except to the
extent required by law (for example, COBRA).
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iv.Voluntary Resignation; Termination for Cause. If Executive voluntarily
terminates Executive’s employment with the Company (other than for Good Reason)
or if the Company terminates Executive’s employment with the Company for Cause,
then Executive will (i) receive Executive’s earned but unpaid base salary
through the date of termination of employment, (ii) receive all accrued
vacation, expense reimbursements and any other benefits due to Executive through
the date of termination of employment in accordance with established
Company-provided or paid plans, policies and arrangements, and (iii) not be
entitled to any other compensation or benefits (including, without limitation,
accelerated vesting of any equity awards) from the Company except to the extent
provided under agreement(s) relating to any equity awards or as may be required
by law (for example, COBRA).
v.Timing of Payments. Subject to Section 4, payment of the severance and
benefits hereunder shall be made or commence to be made as soon as practicable
following Executive’s termination of employment.
vi.Exclusive Remedy. In the event of a termination of Executive’s employment
with the Company, the provisions of this Section 3 are intended to be and are
exclusive and in lieu of any other rights or remedies to which Executive or the
Company may otherwise be entitled, whether at law, tort or contract, in equity,
or under this Agreement (other than the payment of accrued but unpaid wages, as
required by law, and any unreimbursed reimbursable expenses). Executive will be
entitled to no other severance, benefits, compensation or other payments or
rights upon a termination of employment, including, without limitation, any
severance payments and/or benefits provided in the Offer Letter, other than
those benefits expressly set forth in Section 3 of this Agreement or pursuant to
written equity award agreements with the Company.
4.Conditions to Receipt of Severance.
vii.Release of Claims Agreement. The receipt of any severance payments or
benefits pursuant to this Agreement is subject to Executive signing and not
revoking a separation agreement and release of claims in a form acceptable to
the Company (the “Release”), which must become effective no later than the
sixtieth (60th) day following Executive’s termination of employment (the
“Release Deadline”), and if not, Executive will forfeit any right to severance
payments or benefits under this Agreement. To become effective, the Release must
be executed by Executive and any revocation periods (as required by statute,
regulation, or otherwise) must have expired without Executive having revoked the
Release. In addition, in no event will severance payments or benefits be paid or
provided until the Release actually becomes effective. If the termination of
employment occurs at a time during the calendar year where the Release Deadline
could occur in the calendar year following the calendar year in which
Executive’s termination of employment occurs, then any severance payments or
benefits under this Agreement that would be considered Deferred Payments (as
defined in Section 4(d)(i)) will be paid on the first payroll date to occur
during the calendar year following the calendar year in which such termination
occurs, or such later time as required by (i) the payment schedule applicable to
each payment or benefit as set forth in Section 3, (ii) the date the Release
becomes effective, or (iii) Section 4(d)(ii); provided that the first payment
shall include
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all amounts that would have been paid to Executive if payment had commenced on
the date of Executive’s termination of employment.
viii.Post-Separation Restrictive Covenants. Executive hereby acknowledges and
confirms Executive’s existing post-separation obligations, including, without
limitation, Executive’s non-solicitation obligations, pursuant to the
Confidential Information Agreement (as defined in Section 9). In the event
Executive violates the provisions of the Confidential Information Agreement
following the date hereof, all severance pay and other benefits to which
Executive may otherwise be entitled pursuant to Section 3(a) or 3(b) shall cease
immediately and the Company shall be entitled to prompt repayment of the gross
amount of all severance pay and other benefits paid or provided to Executive
through such date pursuant to this Agreement, subject to applicable law. The
covenant contained in this Section 4(b) hereof shall be construed as a series of
separate covenants, one for each country, province, state, city or other
political subdivision in which the Company currently engages in its business or,
during the term of this Agreement, becomes engaged in its business. Except for
geographic coverage, each such separate covenant shall be deemed identical in
terms to the covenant contained in this Section 4(b). If, in any judicial
proceeding, a court refuses to enforce any of such separate covenants (or any
part thereof), then such unenforceable covenant (or such part) shall be
eliminated from this Agreement to the extent necessary to permit the remaining
separate covenants (or portions thereof) to be enforced. In the event that the
provisions of this Section 4(b) are deemed to exceed the time, geographic or
scope limitations permitted by applicable law, then such provisions shall be
reformed to the maximum time, geographic or scope limitations, as the case may
be, permitted by applicable law.
ix.Confidential Information Agreement and Other Requirements. Executive’s
receipt of any payments or benefits under Section 3 will be subject to Executive
continuing to comply with the terms of the Confidential Information Agreement
(as defined in Section 9) executed by Executive in favor of the Company and the
provisions of this Agreement.
x.Section 409A.
o.Notwithstanding anything to the contrary in this Agreement, no severance pay
or benefits to be paid or provided to Executive, if any, pursuant to this
Agreement that, when considered together with any other severance payments or
separation benefits, are considered deferred compensation not exempt under
Section 409A (together, the “Deferred Payments”) will be paid or otherwise
provided until Executive has a “separation from service” within the meaning of
Section 409A. And for purposes of this Agreement, any reference to “termination
of employment,” “termination” or any similar term shall be construed to mean a
“separation from service” within the meaning of Section 409A. Similarly, no
severance payable to Executive, if any, pursuant to this Agreement that
otherwise would be exempt from Section 409A pursuant to Treasury Regulation
Section 1.409A-1(b)(9) will be payable until Executive has a “separation from
service” within the meaning of Section 409A.
p.Notwithstanding anything to the contrary in this Agreement, if Executive is a
“specified employee” within the meaning of Section 409A at the time of
Executive’s termination of employment (other than due to death), then the
Deferred Payments, if any, that are
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payable within the first six (6) months following Executive’s separation from
service, will become payable on the first payroll date that occurs on or after
the date six (6) months and one (1) day following the date of Executive’s
separation from service. All subsequent Deferred Payments, if any, will be
payable in accordance with the payment schedule applicable to each payment or
benefit. Notwithstanding anything herein to the contrary, if Executive dies
following Executive’s separation from service, but prior to the six (6) month
anniversary of the separation from service, then any payments delayed in
accordance with this paragraph will be payable in a lump sum as soon as
administratively practicable after the date of Executive’s death and all other
Deferred Payments will be payable in accordance with the payment schedule
applicable to each payment or benefit. Each payment, installment and benefit
payable under this Agreement is intended to constitute a separate payment for
purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.
q.Without limitation, any amount paid under this Agreement that satisfies the
requirements of the “short-term deferral” rule set forth in Section
1.409A-1(b)(4) of the Treasury Regulations is not intended constitute to
Deferred Payments for purposes of clause (i) above
r.Without limitation, any amount paid under this Agreement that qualifies as a
payment made as a result of an involuntary separation from service pursuant to
Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed the
Section 409A Limit is not intended to constitute Deferred Payments for purposes
of clause (i) above. Any payment intended to qualify under this exemption must
be made within the allowable time period specified in Section
1.409A-1(b)(9)(iii) of the Treasury Regulations.
s.To the extent that reimbursements or in-kind benefits under this Agreement
constitute non-exempt “nonqualified deferred compensation” for purposes of
Section 409A, (1) all reimbursements hereunder shall be made on or prior to the
last day of the calendar year following the calendar year in which the expense
was incurred by Executive, (2) any right to reimbursement or in-kind benefits
shall not be subject to liquidation or exchange for another benefit, and (3) the
amount of expenses eligible for reimbursement or in-kind benefits provided in
any calendar year shall not in any way affect the expenses eligible for
reimbursement or in-kind benefits to be provided, in any other calendar year.
t.Any tax gross-up that Executive is entitled to receive under this Agreement or
otherwise shall be paid to Executive no later than December 31 of the calendar
year following the calendar year in which Executive remits the related taxes.
u.Notwithstanding any other provision of this Agreement to the contrary, in no
event shall any payment under this Agreement that constitutes “nonqualified
deferred compensation” for purposes of Code Section 409A be subject to offset by
any other amount unless otherwise permitted by Code Section 409A.
v.The foregoing provisions are intended to be exempt from or comply with the
requirements of Section 409A so that none of the severance payments and benefits
to be provided hereunder will be subject to the additional tax imposed under
Section 409A, and any
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ambiguities or ambiguous terms herein will be interpreted to be exempt or so
comply. The Company and Executive agree to work together in good faith to
consider amendments to this Agreement and to take such reasonable actions which
are necessary, appropriate or desirable to avoid imposition of any additional
tax or income recognition prior to actual payment to Executive under Section
409A.
5.Limitation on Payments.
xi.Anything in this Agreement to the contrary notwithstanding, if any payment or
benefit Executive would receive from the Company or otherwise (“Payment”) would
(i) constitute a “parachute payment” within the meaning of Section 280G of the
Code; and (ii) but for this sentence, be subject to the excise tax imposed by
Section 4999 of the Code (the “Excise Tax”), then such Payment shall be equal to
the Reduced Amount. The “Reduced Amount” shall be either (x) the largest portion
of the Payment that would result in no portion of the Payment being subject to
the Excise Tax; or (y) the largest portion, up to and including the total, of
the Payment, whichever amount, after taking into account all applicable federal,
state and local employment taxes, income taxes, and the Excise Tax (all computed
at the highest applicable marginal rate), results in Executive’s receipt, on an
after-tax basis, of the greater amount of the Payment. Any reduction made
pursuant to this Section 5(a) shall be made in accordance with the following
order of priority: (i) stock options whose exercise price exceeds the fair
market value of the optioned stock (“Underwater Options”) (ii) Full Credit
Payments (as defined below) that are payable in cash, (iii) non-cash Full Credit
Payments that are taxable, (iv) non-cash Full Credit Payments that are not
taxable (v) Partial Credit Payments (as defined below) and (vi) non-cash
employee welfare benefits. In each case, reductions shall be made in reverse
chronological order such that the payment or benefit owed on the latest date
following the occurrence of the event triggering the excise tax will be the
first payment or benefit to be reduced (with reductions made pro-rata in the
event payments or benefits are owed at the same time). “Full Credit Payment”
means a payment, distribution or benefit, whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise, that if
reduced in value by one dollar reduces the amount of the parachute payment (as
defined in Section 280G of the Code) by one dollar, determined as if such
payment, distribution or benefit had been paid or distributed on the date of the
event triggering the excise tax. “Partial Credit Payment” means any payment,
distribution or benefit that is not a Full Credit Payment. In no event shall the
Executive have any discretion with respect to the ordering of payment
reductions.
xii.Unless the Company and Executive otherwise agree in writing, any
determination required under this Section 5 will be made in writing by an
independent firm (the “Firm”), whose determination will be conclusive and
binding upon Executive and the Company for all purposes. For purposes of making
the calculations required by this Section 5, the Firm may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code. The Company and Executive will furnish to the Firm
such information and documents as the Firm may reasonably request in order to
make a determination under this Section 5. The Company will bear all costs the
Firm may reasonably incur in connection with any calculations contemplated by
this Section 5.
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6.Definition of Terms. The following terms referred to in this Agreement will
have the following meanings:
xiii.Cause. “Cause” shall mean the occurrence of any of the following events:
w.Executive’s unauthorized use or disclosure of the Company’s confidential
information or trade secrets, which use or disclosure causes material harm to
the Company;
x.the material breach by Executive of any agreement between Executive and the
Company;
y.Executive’s material failure to comply with the Company’s written policies or
rules;
z.Executive’s conviction of, or plea of “guilty” or “no contest” to, a felony
under the laws of the United States or any State thereof;
aa.Executive’s gross negligence or willful misconduct;
ab.Executive’s continuing failure to perform assigned duties after receiving
written notification of such failure from the Company, or
ac.Executive’s failure to cooperate in good faith with a governmental or
internal investigation of the Company or its directors, officers or employees,
if the Company has requested Executive’s cooperation.
xiv.Change in Control. “Change in Control” means the occurrence of any of the
following:
ad.any person (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act (a “Person”)), other than any person who currently owns more than a
majority of the Company’s Common Stock, becoming the beneficial owner (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50%
of the combined voting power of the then outstanding voting securities of the
Company, except that any change in the ownership of the stock of the Company as
a result of a private financing of the Company that is approved by the Board
will not be considered a Change in Control;
ae.a consolidation or merger of the Company with or into another entity, unless
the stockholders of the Company immediately before such consolidation or merger
own, directly or indirectly, a majority of the combined voting power of the
outstanding voting securities of the corporation or other entity resulting from
such consolidation or merger;
af.the sale of all or substantially all of the assets of the Company; or
ag.the liquidation, dissolution or winding up of the entity.
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Notwithstanding anything to the contrary, (x) a transaction shall not constitute
a Change in Control if its sole purpose is to change the jurisdiction of the
Company’s incorporation or to create a holding company that will be owned in
substantially the same proportions by the persons who held the Company’s
securities immediately before such transaction; and (y) to the extent necessary
to avoid the imposition of taxes and penalties under Code Section 409A, a Change
in Control shall not be deemed to have occurred for purposes of the Plan unless
such Change in Control also constitutes a change in the ownership or effective
control of the Company or a change in ownership of a substantial portion of the
assets of the Company under Code Section 409A shall not be deemed to constitute
a Change in Control.
xv.Code. “Code” means the Internal Revenue Code of 1986, as amended.
xvi.Disability. “Disability” means that Executive is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted,
or can be expected to last, for a continuous period of not less than one (1)
year.
xvii.Good Reason. “Good Reason” shall mean the termination of Executive’s
employment within ninety (90) days following the expiration of any cure period
(discussed below) following the occurrence, without Executive’s consent, of one
or more of the following:
ah.A material reduction of Executive’s duties, authority or responsibilities,
relative to Executive’s duties, authority or responsibilities in effect
immediately prior to such reduction; or
ai.A material reduction in Executive’s base compensation (except where both of
the following criteria are satisfied: (x) there is a reduction applicable to all
similarly situated executive officers generally, and (y) such reduction occurs
prior to a Change in Control); provided, that a reduction of less than ten
percent (10%) prior to a Change in Control will not be considered a material
reduction in base compensation.
Executive may not resign for Good Reason without first providing the Company
with written notice within sixty (60) days of the event that Executive believes
constitutes “Good Reason,” specifically identifying the acts or omissions
constituting the grounds for Good Reason and a reasonable cure period of not
less than thirty (30) days following the date of such notice during which such
condition must not have been cured.
xviii.LTI Award. “LTI Award” means any Award as defined in and pursuant to the
LTI Cash Plan.
xix.LTI Cash Plan. “LTI Cash Plan” means the Prosper Marketplace, Inc. Long-Term
Cash Incentive Plan of the Company, as in effect from time to time.
xx.LTI Performance Period. “LTI Performance Period” means any Performance Period
as defined in and pursuant to the LTI Cash Plan.
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xxi.Section 409A. “Section 409A” means Code Section 409A, and the final
regulations and any guidance promulgated thereunder or any state law equivalent.
xxii.Section 409A Limit. “Section 409A Limit” will mean two (2) times the lesser
of: (i) Executive’s annualized compensation based upon the annual rate of pay
paid to Executive during the Executive’s taxable year preceding the Executive’s
taxable year of Executive’s separation from service as determined under Treasury
Regulation Section 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service
guidance issued with respect thereto; or (ii) the maximum amount that may be
taken into account under a qualified plan pursuant to Section 401(a)(17) of the
Internal Revenue Code for the year in which Executive’s separation from service
occurred.
7.Successors.
xxiii.The Company’s Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company’s business and/or assets
will assume the obligations under this Agreement and agree expressly to perform
the obligations under this Agreement in the same manner and to the same extent
as the Company would be required to perform such obligations in the absence of a
succession. For all purposes under this Agreement, the term “Company” will
include any successor to the Company’s business and/or assets which executes and
delivers the assumption agreement described in this Section 7(a) or which
becomes bound by the terms of this Agreement by operation of law.
xxiv.Executive’s Successors. The terms of this Agreement and all rights of
Executive hereunder will inure to the benefit of, and be enforceable by,
Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
8.Arbitration.
xxv.Arbitration. In consideration of Executive’s employment with the Company,
its promise to arbitrate all employment-related disputes, and Executive’s
receipt of the compensation, pay raises and other benefits paid to Executive by
the Company, at present and in the future, Executive agrees that any and all
controversies, claims, or disputes with anyone (including the Company and any
employee, officer, director, shareholder or benefit plan of the Company in their
capacity as such or otherwise) arising out of, relating to, or resulting from
Executive’s employment with the Company or termination thereof, including any
breach of this Agreement, will be subject to binding arbitration under the
Arbitration Rules set forth in California Code of Civil Procedure Section 1280
through 1294.2, including Section 1281.8 (the “Act”), and pursuant to California
law. The Federal Arbitration Act shall also apply with full force and effect,
notwithstanding the application of procedural rules set forth under the Act.
xxvi.Dispute Resolution. Disputes that Executive agrees to arbitrate, and
thereby agrees to waive any right to a trial by jury, include any statutory
claims under local, state, or federal law, including, but not limited to, claims
under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities
Act of 1990, the Age Discrimination in Employment Act of 1967, the
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Older Workers Benefit Protection Act, the Sarbanes Oxley Act, the Worker
Adjustment and Retraining Notification Act, the California Fair Employment and
Housing Act, the Family and Medical Leave Act, the California Family Rights Act,
the California Labor Code, claims of harassment, discrimination, and wrongful
termination, and any statutory or common law claims. Executive further
understands that this Agreement to arbitrate also applies to any disputes that
the Company may have with Executive.
xxvii.Procedure. Executive agrees that any arbitration will be administered by
the Judicial Arbitration & Mediation Services, Inc. (“JAMS”), pursuant to its
Employment Arbitration Rules & Procedures (the “JAMS Rules”). The arbitrator
shall have the power to decide any motions brought by any party to the
arbitration, including motions for summary judgment and/or adjudication, motions
to dismiss and demurrers, and motions for class certification, prior to any
arbitration hearing. The arbitrator shall have the power to award any remedies
available under applicable law, and the arbitrator shall award attorneys’ fees
and costs to the prevailing party, except as prohibited by law. The Company will
pay for any administrative or hearing fees charged by the administrator or JAMS,
and all arbitrator’s fees, except that Executive shall pay any filing fees
associated with any arbitration that Executive initiates, but only so much of
the filing fee as Executive would have instead paid had Executive filed a
complaint in a court of law. Executive agrees that the arbitrator shall
administer and conduct any arbitration in accordance with California law,
including the California Code of Civil Procedure and the California Evidence
Code, and that the arbitrator shall apply substantive and procedural California
law to any dispute or claim, without reference to the rules of conflict of law.
To the extent that the JAMS Rules conflict with California law, California law
shall take precedence. The decision of the arbitrator shall be in writing. Any
arbitration under this Agreement shall be conducted in Alameda County,
California.
xxviii.Remedy. Except as provided by the Act, arbitration shall be the sole,
exclusive, and final remedy for any dispute between Executive and the Company.
Accordingly, except as provided by the Act and this Agreement, neither Executive
nor the Company will be permitted to pursue court action regarding claims that
are subject to arbitration. Notwithstanding, the arbitrator will not have the
authority to disregard or refuse to enforce any lawful Company policy, and the
arbitrator will not order or require the Company to adopt a policy not otherwise
required by law which the Company has not adopted.
xxix.Administrative Relief. Executive is not prohibited from pursuing an
administrative claim with a local, state, or federal administrative body or
government agency that is authorized to enforce or administer laws related to
employment, including, but not limited to, the Department of Fair Employment and
Housing, the Equal Employment Opportunity Commission, the National Labor
Relations Board, or the Workers’ Compensation Board. However, Executive may not
pursue court action regarding any such claim, except as permitted by law.
xxx.Voluntary Nature of Agreement. Executive acknowledges and agrees that
Executive is executing this Agreement voluntarily and without any duress or
undue influence by the Company or anyone else. Executive further acknowledges
and agrees that Executive has carefully read this Agreement and that Executive
has asked any questions needed for Executive to understand the
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terms, consequences and binding effect of this Agreement and fully understands
it, including that EXECUTIVE IS WAIVING EXECUTIVE’S RIGHT TO A JURY TRIAL.
Finally, Executive agrees that Executive has been provided an opportunity to
seek the advice of an attorney of Executive’s choice before signing this
Agreement.
9.Confidential Information. Executive agrees to continue to comply with and be
bound by the Confidential Information, Invention Assignment and Arbitration
Agreement (the “Confidential Information Agreement”) entered into by and between
Executive and the Company, dated [Enter Date].
10.Notice.
xxxi.General. Notices and all other communications contemplated by this
Agreement will be in writing and will be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid, delivered by a recognized national
overnight courier service, or delivered by email (if to the Company, to
legalnotices@prosper.com, and if to Executive, to the last email address known
by the Company). In the case of Executive, mailed notices will be addressed to
him or her at the home address which he or she most recently communicated to the
Company in writing. In the case of the Company, mailed notices will be addressed
to its corporate headquarters, and all notices will be directed to the attention
of its General Counsel.
xxxii.Notice of Termination. Any termination by the Company for Cause or by
Executive for Good Reason will be communicated by a notice of termination to the
other party hereto given in accordance with Section 10(a) of this Agreement.
Such notice will indicate the specific termination provision in this Agreement
relied upon, will set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination under the provision so indicated, and
will specify the termination date (which will be not more than thirty (30) days
after the giving of such notice). The failure by Executive to include in the
notice any fact or circumstance which contributes to a showing of Good Reason
will not waive any right of Executive hereunder or preclude Executive from
asserting such fact or circumstance in enforcing Executive’s rights hereunder.
11.Miscellaneous Provisions.
xxxiii.No Duty to Mitigate. Executive will not be required to mitigate the
amount of any payment contemplated by this Agreement, nor will any such payment
be reduced by any earnings that Executive may receive from any other source.
xxxiv.Waiver. No provision of this Agreement will be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by Executive and by an authorized officer of the Company (other than
Executive). No waiver by either party of any breach of, or of compliance with,
any condition or provision of this Agreement by the other party will be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.
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xxxv.Headings. All captions and section headings used in this Agreement are for
convenient reference only and do not form a part of this Agreement.
xxxvi.Entire Agreement. This Agreement constitutes the entire agreement of the
parties hereto and supersedes in their entirety all prior or contemporaneous
representations, understandings, undertakings or agreements (whether oral or
written and whether expressed or implied) of the parties with respect to the
subject matter hereof, including, without limitation, any severance payments
and/or benefits contained in the Offer Letter, but excluding any equity or
equity-based award agreements entered into between Executive and the Company.
Executive acknowledges and agrees that this Agreement encompasses all the rights
of Executive to any severance payments and/or benefits based on the termination
of Executive’s employment and Executive hereby agrees that he or she has no such
rights except as stated herein. No waiver, alteration, or modification of any of
the provisions of this Agreement will be binding unless in writing and signed by
duly authorized representatives of the parties hereto and which specifically
mention this Agreement.
xxxvii.Choice of Law. The validity, interpretation, construction and performance
of this Agreement will be governed by the laws of the State of California (with
the exception of its conflict of laws provisions).
xxxviii.Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement will not affect the validity or enforceability of
any other provision hereof, which will remain in full force and effect.
xxxix.Withholding. All payments made pursuant to this Agreement will be subject
to withholding of applicable income, employment and other taxes, as determined
in the Company’s reasonable judgment.
xl.Counterparts. This Agreement may be executed in counterparts, each of which
will be deemed an original, but all of which together will constitute one and
the same instrument.
[Signature Page to Follow]
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year set forth
below.
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COMPANY    PROSPER MARKETPLACE, INC.

By:                            
Title:                            
Date:                            

EXECUTIVE                    [EXECUTIVE]
    
    By:                             
Date:                            

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