Document:

qumi_ex101.htm

EXHIBIT 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of the 13th day of December 2010 (the “Effective Date”)  by and between QuamTel, Inc., a Texas corporation (the “Company”), and William McLaughlin, whose residence address is 2717 Nighthawk Drive Plano, TX  75025 (the “Executive”).

 

The Company wishes to employ the Executive and the Executive wishes to enter into the employment of the Company as Chief Financial Officer of the Company.

 

This Agreement shall become effective immediately upon the execution hereof.

 

NOW, THEREFORE, in consideration of the promises and mutual covenants set forth herein, the parties hereby agree as follows:

 

1.      Employment.

 

1.1           Employment and Term.  The Company shall employ the Executive and the Executive shall continue to serve the Company, on the terms and conditions set forth herein, for the period (the “Term”) from the Effective Date and expiring on the third anniversary of the Effective Date, unless sooner terminated as hereinafter set forth. After the expiration of the third anniversary date hereof, the Agreement will automatically renew for subsequent one year period(s), unless terminated at least 90 days prior to the expiration of the applicable one year period.

 

1.2           Duties of Executive.  The Executive shall serve as Chief Financial Officer of the Company and shall perform the duties of an executive commensurate with such position, shall diligently perform all services and exercise such power and authority as may from time to time be assigned or delegated to him by the Company’s Chief Executive Officer, Board of Directors and Executive Committee. The Executive’s responsibilities shall include, but not be limited to, directing the Financial and Accounting functions of the Company by performing the following duties personally or through subordinates:

 

	
  

	
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Oversight and direct supervision of the Company’s financial, accounting, regulatory, compliance and budgetary functions.

 

	
  

	
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Operating and maintaining a coordinated financial management system to budget, collect, control, and properly account for the Company’s revenues and cash reserves.

 

	
  

	
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Management of key financial relationships, including banking and outside investors.

 

	
  

	
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To support the fund raising initiatives as the Company’s financial spokesman supporting road shows, and media and analyst interviews.

 

	
  

	
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Periodic reporting to the Company’s Board of Directors.

 

  

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To assist senior management in the development of strategic plans, budgets and forecasts.

 

	
  

	
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To provide accurate and timely preparation of Corporate, SEC and tax filings, financial statements or other management reports, on a consistent basis.

 

1.3           The Company.  As used herein the term the “Company” shall be deemed to include any and all present and future subsidiaries, divisions and affiliates of the Company.

 

2.      Compensation.

 

2.1           Base Salary and Bonuses.  During the term, the Executive shall receive a base salary paid bi-weekly, as well as periodic cash payments, in the following amounts during the following time periods (the “Base Salary”):

 

	
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from December 13, 2010 through December 31, 2010, the Executive will receive salary of $6,250.00 per month (pro rated); and

 

	
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from January 1, 2011 through February 28, 2011, the Executive will receive salary of $6,250.00 per month; and

 

	
●  

	
on February 28, 2011, the Executive will receive a cash payment of $1,250.00; and

 

	
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from March 1, 2011 through May 31, 2011, the Executive will receive salary of $7,500.00 per month; and

 

	
●  

	
on May 31, 2011, the Executive will receive a cash payment of $2,500.00; and

 

	
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from June 1, 2011 through December 12, 2011, the Executive will receive salary of $10,000.00 per month; and

 

	
●  

	
on December 12, 2011, the Executive will receive a cash payment of $1,250.00; and

 

	
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from December 13, 2011 through the remainder of the Term, the Executive will receive salary of $11,250.00 per month.

 

The Board of Directors may increase these amounts at any other time if the Company has achieved the goals set by the Board.  Once increased, the Executive’s Base Salary will not be reduced. In addition, the Board of Directors may elect to award the Executive performance bonuses from time to time based on the Executive’s performance or the performance of the Company.

 

2.2           Equity.  Upon the execution of this Agreement, the Company will issue to the Executive incentive stock grants totaling 30,000 shares issued on a quarterly basis, all stock issuances will be common stock of QuamTel, Inc. Such grants (“Grants”) shall become fully-vested effective quarterly during the term of this Agreement.

 

Stock Option Grants.  The Executive shall be entitled to receive a grant based on the Executive’s performance during each year during the term of this Agreement, beginning with 2011. The amount of the stock option grant in any year shall be determined by reference to the profitability of the Company and such other measures as the Board of Directors and the Executive may agree.  The terms and conditions relating to the stock option bonus shall be negotiated in good faith.  The shares of common stock underlying such options shall also be registered with the SEC on Form S-8 or any other registration form available for use by the Company, and the Company shall keep such registration statement effective until the Executive has sold all of such shares.

 

3.      Expense Reimbursement and Other Benefits.

 

3.1           Expense Reimbursement.  During the Term, upon the submission of supporting documentation by the Executive, and in accordance with Company policies for its executives, the Company shall reimburse the Executive for all expenses actually paid or incurred by the Executive in the course of and pursuant to the business of the Company, including expenses for travel, entertainment and reimbursement or payment to Executive of costs to maintain the Executive’s certified public accounting license, required continuing education and professional organizations not to exceed $1,000.00 annually.

 

  

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3.2           Other Benefits and Indemnification.  During the term, the Company shall pay for 50% of the costs to provide the Executive with coverage for medical and dental insurance in accordance with the Company’s handbook. The Executive may elect not to receive the medical and dental coverage in which case an amount equal to the cost of said coverage will be paid to the Executive as additional compensation.

 

3.3           Vacation.  Executive shall be entitled paid vacation during each calendar year in accordance with the Company’s handbook taking into consideration the business needs of the Company.

 

4.      Termination for Cause.  Notwithstanding anything contained in this Agreement to the contrary, the Company may terminate this Agreement for Cause.  As used in this Agreement “Cause” shall mean (i) an act of fraud, embezzlement or theft of funds or property of the Company or any of its clients/customers; (ii) any intentional wrongful disclosure of proprietary information or trade secrets of the Company or its affiliates or any intentional form of self-dealing detrimental to the Interests of the Company; (iii) the habitual and debilitating use of alcohol or drugs; (iv) continued failure to comply with the reasonable and lawful written directives of the CEO, Executive Committee or Board of Directors; insubordination or abandonment of position (after written notice and a fifteen (30) day period to cure; or (v) failure to comply in any material respect with the terms of this Agreement (after written notice and a thirty (30) day period to cure).  Upon any termination pursuant to this Section (a) the Company shall pay to the Executive any unpaid Base Salary at the rate then in effect accrued through the effective date of termination specified in such notice.  Except as provided above, the Company shall have no further liability hereunder other than for reimbursement for reasonable business expenses incurred prior to the date of termination outlined in Sections 3.1, and the vested portion of the equity set forth in Section 2.2.

 

4.1           Termination Without Cause.  The Company may terminate this Agreement without cause at any time by giving Executive sixty (60) day prior written notice of its desire to terminate.  In the event the Company elects to terminate the Agreement pursuant to this Section 4.1, the Company shall have no further liability hereunder other than for the payment to Executive on the termination date of any unpaid Base Salary through the termination date, reimbursement of reasonable business expenses incurred prior to the termination date, payment of a lump sum of six months current salary in cash as soon as administratively feasible after the date of termination and payment of COBRA continuation coverage for a six month period.  Stock Option Grants set forth in Section 2.2 shall become fully vested upon termination under this Section 4.1.

 

4.2           Resignation by Executive.  The Executive upon delivery of notice may terminate this Agreement therefore upon not less than 30 days prior notice of such termination.  Upon receipt of such notice, the Company may, in its sole discretion, release the Executive of his duties and his employment hereunder prior to the expiration of the 30 day notice period.  Notwithstanding anything contained in this Agreement to the contrary, in the event of a termination by the Executive pursuant to this Section 4.1, the Company shall have no further liability hereunder other than the vested portion of the equity set forth in Section 2.2.

 

  

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4.3           Disability.  Notwithstanding anything contained in this Agreement to the contrary, the Company, by 30 days written notice to the Executive, shall at all times have the right to terminate this Agreement, and the Executive’s employment hereunder, if the Executive shall, as the result of mental or physical incapacity, illness or disability, fail to perform his duties and responsibilities provided for herein for a period of more than 90 days in any 12 month period.  Upon the termination pursuant to this Section, the Company shall continue (i) to pay to the Executive Base Salary at the rates then in effect for a period of 6 months after the effective date of termination (the “Separation Period”), (ii) employee benefit programs as to the Executive for the Separation Period and (iii) the Company shall be responsible for making payments on behalf of the Executive and his family to maintain coverage of health and other benefits under COBRA, for the maximum period allowed.  Except as provided above, the Company shall have no further liability hereunder (other than for reimbursement for reasonable business expenses, incurred prior to the date of termination, subject, however to the provisions of Section 3.1, and the vested portion of the equity set forth in Section 2.2.

 

4.4           Changes in Control.  For the purposes of this Agreement, a “Change of Control” shall be deemed to have taken place if : (i) any person, including a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, becomes the owner or beneficial owner of Company securities, after the date of this Agreement, having 50% or more of the combined voting power of the then outstanding securities of the Company that may be cast for the election of directors of the Company or (ii) the persons who were directors of the Company before such transactions shall cease to constitute a majority of the Board of Directors of the Company (not including the currently proposed realignment of the Board of Directors contemplated on or about the Effective Date of this Agreement), or any successor to the Company, as the direct or indirect result of or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transaction.

 

(a)      The Company and Executive hereby agree that, if Executive is affiliated with the Company on the date on which a Change of Control occurs, (the “Change of Control Date”), and this Agreement is in full force and effect, the Company (or, if Executive is affiliated with a subsidiary, the subsidiary) will continue to retain Executive and Executive will remain affiliated with the Company (or subsidiary), subject to Section 4.4(c) herein and the other terms and conditions of this Agreement,  for the period commencing on the Change of Control Date and ending on the anniversary of such date (this anniversary date shall then become the “Change of Control Termination Date”).  If after the Change of Control, Executive is requested, and, in his sole and absolute discretion, consents to change his principal business location, the Company will reimburse the Executive for his reasonable relocation expenses, including, without limitation, moving expenses, temporary living and travel expenses for a reasonable time while arranging to move his residence to the changed location, closing costs, if any, associated with the sale of his existing residence and the purchase of a replacement residence at the changed location, plus an additional amount representing a gross-up of any state or federal taxes payable by Executive as a result of any such reimbursement.  If the Executive shall not consent to change his business location, the Executive may continue to provide the services required of him hereunder from his then residence and/or business address until the Change of Control Termination Date, at which time this Agreement shall terminate, unless sooner terminated or extended as set forth herein.

 

  

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(b)      During the remaining term hereof after the Change of Control Date, the Company (or subsidiary) will (i) continue to pay Executive a salary and benefits at not less than the level applicable to Executive on the Change of Control Date, (ii) pay Executive bonuses as set forth herein, and (iii) continue employee benefit programs as to Executive at levels in effect on the Change of Control Date (but subject to such reductions as may be required to maintain such plans in compliance with applicable federal law regulating employee benefit programs).

 

(c)      The Company hereby agrees that, if Change of Control occurs prior to the termination of this Agreement, the Executive’s Stock Options and Warrants referred to in section 2.2 shall become fully vested and registered. In addition, notwithstanding the foregoing, if a Change of Control occurs, the Executive shall have a thirty (30) day period to terminate this Agreement in which case he will be paid a lump sum of six months current salary in cash as soon as administratively feasible after the date of termination and payment of COBRA continuation coverage for a six month period as payment in full hereunder.

 

5.      Death.  In the event of the death of the Executive during the Term of his employment hereunder, the Company shall pay to the personal representative of the estate of the deceased Executive any unpaid Base Salary accrued through the date of his death.  Except as provided above, the Company shall have no further liability hereunder other than for reimbursement for reasonable business expenses incurred prior to the date of the Executive’s death, subject, however to the provisions of Section 3.1, and the vested portion of the equity set forth in Section 2.2. In such case, Executive’s vesting shall be calculated as if the Executive was employed under this Agreement as of the end of the calendar year in which his death occurs.

 

6.        Consolidation, Merger or Sale of Assets.  Nothing in this Agreement shall preclude the Company from consolidating or merging into or with, or transferring all or substantially all of its assets to, another corporation which assumes this Agreement, and all obligations of the Company hereunder, in writing.  Upon such consolidation, merger, or transfer of assets and assumption, the term “the Company” as used herein, shall mean such other corporation and this Agreement shall continue in full force and effect.

 

7.      Restrictive Covenants.

 

7.1           Nondisclosure.  During the Term and following termination of the Executive’s employment with the Company, Executive shall not divulge, communicate, use to the detriment of the Company or for the benefit of any other person or persons, or misuse in any way, any Confidential Information (as hereinafter defined) pertaining to the business of the Company.  Any Confidential Information or data now or hereafter acquired by the Executive with respect to the business of the Company (which shall include, but not be limited to, information concerning the Company’s financial condition, prospects, technology, customers, suppliers, methods of doing business and promotion of the Company’s products and services) shall be deemed a valuable, special and unique asset of the Company that is received by the Executive in confidence and as a fiduciary.  For purposes of this Agreement “Confidential Information” means information disclosed to the Executive or known by the Executive as a consequence of or through his employment by the Company (including information conceived, originated, discovered or developed by the Executive) prior to or after the date hereof and not generally known or in the public domain, about the Company or its business.  Notwithstanding the foregoing, nothing herein shall be deemed to restrict the Executive from disclosing Confidential Information to the extent required by law.

 

  

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7.2           Books and Records.  All books, records, accounts and similar repositories of Confidential Information of the Company, whether prepared by the Executive or otherwise coming into the Executive’s possession, shall be the exclusive property of the Company and shall be returned immediately to the Company on termination of this Agreement.

 

7.3           Certain Activities.  The Executive shall not, while employed by the Company and for a period of one (1) year following the date of termination, directly or indirectly, hire, offer to hire, entice away or in any other manner persuade or attempt to persuade any officer, employee, agent, lessor, lessee, licensor, licensee or supplier of Employer or any of its subsidiaries to discontinue or alter his or its relationship with Employer or any of its subsidiaries.

 

7.4           Non-Competition.  The Executive shall not, while employed by the Company and for a period of one (1) year following the date of termination, engage or participate, directly or indirectly (whether as an officer, director, employee, partner, consultant, shareholder, lender or otherwise), in any business that manufactures, markets or sells products that directly competes with any product of the Employer that is significant to the Employer’s business based on sales and/or profitability of any such product as of the date of termination.  Nothing herein shall prohibit Executive from being a passive owner of less than 1% of any publicly-traded class of capital stock of any entity directly engaged in a competing business.

 

7.5           Property Rights; Assignment of Inventions.  With respect to information, inventions and discoveries or any interest in any copyright and/or other property right developed, made or conceived of by Executive, either alone or with others, at any time during his employment by Employer and whether or not within working hours, arising out of such employment or pertinent to any field of business or research in which, during such employment, Employer is engaged or (if such is known to or ascertainable by Executive) is considering engaging, Executive hereby agrees:

 

(a)      that all such information, inventions and discoveries or any interest in any copyright and/or other property right, whether or not patented or patentable, shall be and remain the exclusive property of the Employer;

 

(b)      to disclose promptly to an authorized representative of Employer all such information, inventions and discoveries or any copyright and/or other property right and all information in Executive’s possession as to possible applications and uses thereof;

 

(c)      not to file any patent application relating to any such invention or discovery except with the prior written consent of an authorized officer of Employer (other than Executive);

 

(d)      that Executive hereby waives and releases any and all rights Executive may have in and to such information, inventions and discoveries, and hereby assigns to Executive and/or its nominees all of Executive’s right, title and interest in them, and all Executive’s right, title and interest in any patent, patent application, copyright or other property right based thereon.  Executive hereby irrevocably designates and appoints Employer and each of its duly authorized officers and agents as his agent and attorney-in-fact to act for him and on his behalf and in his stead to execute and file any document and to do all other lawfully permitted acts to further the prosecution, issuance and enforcement of any such patent, patent application, copyright or other property right with the same force and effect as if executed and delivered by Executive; and

 

  

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(e)      at the request of Employer, and without expense to Executive, to execute such documents and perform such other acts as Employer deems necessary or appropriate, for Employer to obtain patents on such inventions in a jurisdiction or jurisdictions designated by Employer, and to assign to Employer or its designee such inventions and any and all patent applications and patents relating thereto.

 

7.6           Injunctive Relief.  The parties hereby acknowledge and agree that (a) Employer will be irreparably injured in the event of a breach by Executive of any of his obligations under this Section 6; (b) monetary damages will not be an adequate remedy for any such breach; (c) Employer will be entitled to injunctive relief, in addition to any other remedy which it may have, in the event of any such breach; and (d) the existence of any claims that Executive may have against Employer, whether under this Agreement or otherwise, will not be a defense to the enforcement by Employer of any of its rights under this Section 6.

 

7.7           Non-Exclusivity and Survival.  The covenants of the Executive contained in this Section 7 are in addition to, and not in lieu of, any obligations that Executive may have with respect to the subject matter hereof, whether by contract, as a matter of law or otherwise, and such covenants and their enforceability shall survive any termination of the Employment Term by either party and any investigation made with respect to the breach thereof by Employer at any time.

 

8.      Withholding.  Anything to the contrary notwithstanding, all payments required to be made by the Company hereunder to the Executive or the Executive’s estate or beneficiaries shall be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation.

 

9.      Arbitration.  Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration in accordance herewith, and judgment upon the award rendered by the arbitrators may be entered in any Court having jurisdiction thereof.  Venue of the arbitration shall be in Broward County, Florida.  Any controversy or claim shall be submitted to three arbitrators selected from the panels of the arbitrators of the American Arbitration Association.  The arbitrators, in addition to any award made, shall have the discretion to award the prevailing party the costs of the proceedings, together with reasonable attorneys’ fees, provided that absent such award, each party shall bear the costs of its own counsel and presentation of evidence, and each party shall share equally the cost of such arbitration proceeding.  Any award made hereunder may be docketed in a court of competent jurisdiction in Broward County, Florida, and all parties hereby consent to the personal jurisdiction of such court for purposes of the enforcement of the arbitration award.

 

10.      Binding Effect.  Except as herein otherwise provided, this Agreement shall inure to the benefit of and shall be binding upon the parties hereto, their personal representatives, successors, heirs and assigns.  The Executive may not assign his rights or benefits, or delegate any of his duties, hereunder without the prior written consent of the Company.

 

11.      Further Assurances.  At any time, and from time to time, each party will take such action as may be reasonably requested by the other party to carry out the intent and purposes of this Agreement.

 

  

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12.      Entire Agreement.  This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof.  It supersedes all prior negotiations, letters and understandings relating to the subject matter hereof.

 

13.      Amendment.  This Agreement may not be amended, supplemented or modified in whole or in part except by an instrument in writing signed by the party or parties against whom enforcement of any such amendment, supplement or modification is sought.  Notwithstanding the foregoing, the parties shall promptly amend this Agreement, to the extent necessary, pursuant to the requirements of Section 409A of the Internal Revenue Code upon the issuance of regulatory guidance. Such an amendment will be structured to provide the same economic benefit to the Executive as intended under this Agreement.

 

14.      Choice of Law.  This Agreement will be interpreted, construed and enforced in accordance with the laws of the State of Texas, without giving effect to the application of the principles pertaining to conflicts of laws.

 

15.      Effect of Waiver.  The failure of any party at any time or times to require performance of any provision of this Agreement will in no manner affect the right to enforce the same.  The waiver by any party of any breach of any provision of this Agreement will not be construed to be a waiver by any such party of any succeeding breach of that provision or a waiver by such party of any breach of any other provision.

 

16.      Construction.  The parties hereto and their respective legal counsel participated in the preparation of this Agreement; therefore, this Agreement shall be construed neither against nor in favor of any of the parties hereto, but rather in accordance with the fair meaning thereof.

 

17.      Severability.  The invalidity, illegality or unenforceability of any provision or provisions of this Agreement will not affect any other provision of this Agreement, which will remain in full force and effect, nor will the invalidity, illegality or unenforceability of a portion of any provision of this Agreement affect the balance of such provision.  In the event that any one or more of the provisions contained in this Agreement or any portion thereof shall for any reason be held to be invalid, illegal or unenforceable in any respect, this Agreement shall be reformed, construed and enforced as if such invalid, illegal or unenforceable provision had never been contained herein.

 

18.      No Third-Party Beneficiaries.  No person shall be deemed to possess any third-party beneficiary right pursuant to this Agreement.  It is the intent of the parties hereto that no direct benefit to any third party is intended or implied by the execution of this Agreement.

 

19.      Counterparts.  This Agreement may be executed in one or more counterparts, each of which will be deemed an original.

 

20.      Notice.  Any notice required or permitted to be delivered hereunder shall be in writing and shall be deemed to have been delivered when hand delivered, sent by facsimile with receipt confirmed or when deposited in the United States mail, postage prepaid, registered or certified mail, return receipt requested, or by overnight courier, addressed to the parties at the addresses first stated herein, or to such other address as either party hereto shall from time to time designate to the other party by notice in writing as provided herein.

 

  

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IN WITNESS WHEREOF, this Agreement has been duly signed by the parties hereto on the day and year first above written.

 

	  	
QuamTel, Inc.

	  
	  	  	  	  
	  	
By:

	
/s/ Stuart Ehrlich

	  
	  	  	
Stuart Ehrlich, C.E.O.

	  
	  	  	
December 13, 2010

	  
	  	  	  	  
	  	  	  	  
	  	  	
/s/ William McLaughlin

	  
	  	  	
William McLaughlin

	  
	  	  	
December 13, 2010

	  

 

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Exhibit 10.1

	
 

Borrower Registration Agreement

	
]

 

This Borrower Registration Agreement (this “Agreement”) is made and entered into between you and Prosper Marketplace, Inc. ("Prosper").

 

 

The Prosper marketplace is a person-to-person online credit platform (the "platform") operated by Prosper.  .All loans originated through the platform are made by WebBank, a Utah-chartered industrial bank ("WebBank"). Prosper provides services to WebBank in connection with the origination of such loans and Prosper services all loans made through the platform. The following Agreement describes those services as well as your rights and obligations should you elect to register as a borrower on the platform. Prosper and WebBank are collectively referred to in this Agreement as "we" or "us."

 

 

1. Registration as a Prosper Borrower. You are registering with Prosper as a borrower so that you can post loan requests or "listings" for display on the platform. In entering into this Agreement, you are agreeing to comply with the Terms of Use for the platform as well as any other rules or policies set forth on Prosper’s website (www.prosper.com), any of which may be amended from time to time by Prosper in its sole discretion (collectively, as amended, the "Prosper Terms and Conditions"). The Prosper Terms and Conditions are accessible via a link marked “Policies” at the bottom of the each page of Prosper’s website.

 

 

2. Authorization to Obtain Credit Report. By registering on the platform as a borrower, you authorize us to obtain a credit report from one or more consumer credit reporting agencies. We may use the credit report for any purpose that would be authorized by applicable law in connection with a credit transaction involving you and involving the extension of credit to you or review or collection of your account, including but not limited to (i) for authentication purposes, to make sure you are who you say you are, (ii) to make credit decisions; (iii) to administer the sale of Borrower Payment Dependent Notes (“Notes”) associated with your loan; (iv) to determine how much debt you currently have, in order to determine your debt-to-income ratio, (v) to obtain your credit score and assign you a Prosper Rating based in part on that score, (vi) to obtain and display information and characteristics from your credit report from one or more consumer credit reporting agencies, and (vii) to obtain and display on the Folio Investing Note Trader platform certain information and characteristics from your credit report from one or more consumer credit reporting agencies at any time or times that a Note corresponding to your loan is offered for sale by lenders holding such Notes. Information from your credit report will be displayed on the Prosper website with your listings. You authorize us to verify information in your credit report and your listing, and you agree that Prosper or WebBank may contact third parties without further notice to you to verify any such information. We may obtain your credit report each time you create a listing and at any other time that we deem it necessary in our sole discretion.

 

 

3. Listings. The platform connects individuals who wish to obtain loans with persons who wish to help fund them.  To receive a loan, a borrower member must post a loan listing on the platform. The listing is a request by the borrower member for a loan in the amount and at the interest rate specified in the listing. In order to post a listing on the platform, you must have a good faith intent to obtain and repay your loan, and your listing must be consistent with that intent.

 

 

Once a listing is posted, our lender members can make commitments to help fund all or a portion of the loan.  Each commitment is an agreement by the lender member to purchase a Note issued and sold by Prosper that is dependent for payment on the payments made by the borrower on the loan requested.  If the listing receives commitments equal to or exceeding the minimum amount required for the loan to fund, WebBank will originate a loan to the borrower member in an amount equal to the total amount of those commitments, and Prosper will sell a Note to each lender member in the amount of that lender member’s commitment.  Lender members may resell Notes they purchase to other lender members on our secondary trading platform (the “Note Trader platform”).

 

 

Information Included in Listings.  To post a listing, you must provide the amount of the loan you are requesting  as well as your annual income, occupation and employment status. The minimum and maximum loan amounts you may request are posted on the Prosper website and are subject to change by us at any

 

  

  

  

 

time without notice. We reserve the right to restrict the posting of listings on the platform to individuals who meet minimum credit guidelines and other criteria, as determined by us in our sole discretion.

 

 

You authorize and agree that we may display in your listing any information from the credit report we obtain pursuant to Section 2 above, including but not limited to the following information:

 

 

(i) Your Prosper Rating, which is calculated by Prosper but based on information from your credit report;

 

 

(ii) Your debt-to-income ratio, expressed as a percentage, reflecting the ratio between the amount of your monthly non-mortgage debt, as compared to the amount of monthly income that you indicated when completing your listing;

 

 

(iii) Whether you own a home;

 

 

(iv) The number of accounts on which you are currently late on a payment;

 

 

(v) The total past-due amount you owe on all delinquent and charged-off accounts;

 

 

(vi) The number of 90+ days past due delinquencies on your credit report;

 

 

(vii) The number of negative public records (e.g., bankruptcies, liens, and judgments) on your credit report over the last 12 months, and over the last 10 years;

 

 

(viii) The month and year the oldest account on your credit report (e.g., revolving, installment, or mortgage credit) was opened;

 

 

(ix) The total number of credit lines appearing on your credit report, along with the number that are open and current;

 

 

(x) The total balance on all of your open revolving credit lines;

 

 

(xi) Your bankcard utilization ratio, expressed as a percentage, reflecting the ratio of the total balance used, to the aggregate credit limit on, all of your open bankcards; and

 

 

(xii) The number of inquiries made by creditors to your credit report in the last six months.

 

 

In addition, you authorize and agree that we may display any of the above information in a listing for a Note corresponding to your loan on the Note Trader platform, and that we may display updated information from your credit report, as well as information about the payment history and status of your loan, in any such listing.

 

 

Listings on either platform may also display any information we ask you to provide, including, without limitation, your self-reported occupation, employment status and range of income. You authorize Prosper to verify your residence, income, employment and any other information you provide in connection with a listing or your registration as a borrower, and you agree that Prosper may contact third parties to verify information you provide. If any such information changes after you post a listing but before the listing expires, you must either (i) promptly notify Prosper of the change, or (ii) withdraw your listing.

 

 

You may not include any personally identifiable information, including, without limitation, your name, address, phone number, email address, Social Security number, driver's license number, bank account number or credit card number, in your listing or on your Prosper member web page, or elsewhere on the Prosper Website. Listings that include any personally identifiable information are subject to cancellation by Prosper, or deletion or redaction by Prosper of the personally identifying information, although Prosper is under no obligation to take such actions and you include such information solely at your own risk.

 

 

Prosper lender members may ask you questions about your loan listing and you may, but are not required to, respond to such questions. If you elect to respond to a lender member's question, you may respond privately, or you may elect to have the question and answer posted publicly in the listing. Lender members' questions are not posted in the listing or displayed elsewhere on our website unless you elect to answer the question and make the question and answer publicly available.

 

 

If you are a member of a Prosper group when you post your listing, the listing will also identify your group. You do not have to be a member of a group to post a listing, however. You may also create a network of Prosper friends, and if one or more of your Prosper friends or your fellow group members commits to help fund your listing, your listing will reflect that the commitment was made by a fellow group member or a Prosper friend. Your Prosper friends who commit to help fund your listing may also write a recommendation that will be displayed in your listing. Prosper friends do not guarantee payments on your loan, and commitments to help fund your listing  or recommendations of your listing from your Prosper friends do not obligate the individual making the commitment or recommendation to guarantee or make any payments on your loan.

 

  

  

  

 

Any person who visits the Prosper website will be able to view your listing and see your Prosper Rating as well as certain information about the loan you have requested; provided, however, that information from your credit report will only be viewable by lender members.

 

 

Partial Funding.  When creating a loan listing, you may opt for partial funding, which means your loan will be funded if it receives commitments totaling less than the full amount of your requested loan but equal to or exceeding 70% of that amount (subject to the loan size minimum). Each loan listing will indicate whether the borrower member has opted for partial funding as well as the minimum amount required for the loan to fund.  The current percentage threshold for partial funding is 70%, but Prosper may change that threshold from time to time.  Any such change will only affect listings created after the change is made

 

 

Duration of Listings. A listing will expire on the earlier of (a) the first day in which it has received commitments equal to the full amount of the loan requested or (b) 14 days after being posted, unless the listing is withdrawn by you or cancelled by us prior to either of those events.

 

 

WITHDRAWAL OF LISTINGS.  IF YOU POST A LISTING, YOU HAVE THE RIGHT TO WITHDRAW IT AT ANY TIME PRIOR TO The EXPIRATION OF THE LISTING PERIOD AS DESCRIBED ABOVE. AFTER THE LISTING PERIOD EXPIRES, YOU WILL NO LONGER HAVE THE RIGHT TO WITHDRAW YOUR LISTING. IF A LOAN IS MADE TO YOU, YOU DO NOT HAVE ANY RIGHT TO RESCIND THE LOAN.

 

 

If you elect to withdraw your listing, you may (but are not required to) post a new listing containing the updated information. Prosper reserves the right, in its sole discretion, to limit the number of listings you post or attempt to post on the platform.

 

 

Additional Loans. The guidelines and eligibility requirements for additional loans are posted on the Prosper website and are subject to change by us in our sole discretion at any time without notice. Subject to these requirements, you may have up to two loans outstanding at any one time, provided that the aggregate outstanding principal balance of your loans does not exceed the maximum loan amount then in effect. You may not post a listing for a second loan unless you meet the eligibility requirements then in effect as of the date of such posting.

 

 

Prohibited Activities. You agree that you will not, in connection with any listings, lender commitments, loans or other transactions involving or potentially involving Prosper or WebBank, (i) make any false, misleading or deceptive statements or omissions of material fact; (ii) misrepresent your identity, or describe, present or portray yourself as a person other than yourself; (iii) give to or receive from, or offer or agree to give to or receive from, any Prosper lender or other person any fee, bonus, additional interest, kickback or thing of value of any kind, including in exchange for such person's commitment, recommendation, or offer or agreement to recommend or make a commitment with respect to your listing; (iv) represent yourself to any person as a director, officer or employee of Prosper or WebBank, unless you are such director, officer or employee; or (v) use any loan proceeds for postsecondary educational expenses (i.e., tuition, fees, required equipment or supplies, or room and board) at a college/university/vocational school, as the term “postsecondary educational expenses” is defined in Federal Reserve Board Regulation Z, 12 C.F.R. § 226.26(b)(3).

 

 

4. Right to Verify Information and Cancel Funding.

 

 

a. We reserve the right to verify the accuracy of all information provided by borrowers, lenders and group leaders in connection with listings, lender commitments and loans. We also reserve the right to determine in our sole discretion whether a registered user is using, or has used, the Prosper website illegally or in violation of any order, writ, injunction or decree of any court or governmental instrumentality, for purposes of fraud or deception, or otherwise in a manner inconsistent with the Prosper Terms and Conditions or any agreement between Prosper or WebBank and such user. We may conduct our review at any time - before, during or after the posting of a listing, or before or after the funding of a loan. You agree to respond promptly to our requests for information in connection with any such review by Prosper.

 

 

b. In the event we determine, prior to funding a loan, that a listing, or a lender commitment for the listing, contains materially inaccurate information (including but not limited to unintended inaccuracies, inaccuracies resulting from errors by Prosper, or inaccuracies resulting from changes in the borrower's income, residence or credit profile between the date a listing is posted and the date the listing is to be funded) or was posted

 

  

  

  

 

illegally, in violation of any order, writ, injunction or decree of any court or governmental instrumentality, for purposes of fraud or deception, or otherwise in a manner inconsistent with the Prosper Terms and Conditions or any member agreement, we may refuse to post the listing or, if the listing has already been posted, remove the listing from the platform and cancel all lender commitments with respect to the listing.

 

 

c. When a listing receives commitments equal to or exceeding the minimum amount required for the loan to fund, we may conduct a "pre-funding" review prior to funding the loan. Loan funding occurs when loan proceeds are disbursed into the borrower's designated deposit account. We may, at any time and in our sole discretion, delay funding of a loan (i) in order to enable us to verify the accuracy of information provided by borrowers, lenders and group leaders in connection with the listing or lender commitments made with respect to the listing; (ii) to determine whether there are any irregularities with respect to the listing or the lender commitments; or (iii) if we become aware of information concerning the borrower member or the listing during our pre-funding review, as a result of which we determine, in our sole discretion, that the likelihood of the borrower not  making payments on the loan is materially greater than would be expected based on the assigned Prosper Rating . We may cancel or proceed with funding the loan, depending on the results of our pre-funding review. If funding is cancelled, the listing will be removed from the platform and all lender commitments against the listing will be cancelled,. In the event we cancel funding of a loan, Prosper will notify the borrower, group leader (if any), and all lenders who made commitments with respect to the listing of such cancellation.

 

 

5. Matching of Lender Commitments and Listings; Loan Funding.

 

 

a. Prosper lender members will be able to view your listing and commit funds to purchase Notes issued by Prosper, the payments on which will be dependent on payments Prosper receives on your loan. In other words, the Prosper lenders who committed funds will receive payments on their Notes only to the extent you make payments on your loan.

 

 

b. A match of your listing with one or more lender commitments equal to or exceeding the minimum amount required for the loan to fund, will result in a loan from WebBank to you, subject to our right to verify information as described above. The loan will be evidenced by a Promissory Note in the form set forth on the attached Exhibit A. Loan proceeds are disbursed into your designated deposit account. The loan will be sold by WebBank to Prosper, and Prosper will service the loan.

 

 

c. We do not warrant or guaranty that your listing will be matched with any lender commitments. Your listing must receive one or more lender commitments equal to or exceeding the minimum amount required for the loan to fund in order for a loan to be made.

 

 

d. To safeguard your privacy rights, your name and address will not be included in your listing. Only your Prosper screen name will appear on your listing, and only the screen name of the lenders will appear with lender commitments.

 

 

e. IF YOUR LISTING RECEIVES SUFFICIENT LENDER COMMITMENTS TO FUND, AND YOU DO NOT WITHDRAW YOUR LISTING PRIOR TO EXPIRATION OF THE LISTING PERIOD, YOU HEREBY AUTHORIZE PROSPER TO ACT AS YOUR AUTHORIZED AGENT TO EXECUTE A PROMISSORY NOTE ON YOUR BEHALF IN THE FORM SET FORTH ON THE ATTACHED EXHIBIT A IN FAVOR OF WEBBANK.

 

 

6. Compensation. If you receive a loan, you must pay WebBank an origination fee. The current fee amounts are posted in the Borrower section of the Help pages on the Prosper website, and are subject to change by us at any time without notice; provided, however, that any such change in fees will only apply to listings posted after the change is made. The origination fee is paid by the borrower out of the loan proceeds at the time a loan is funded, so that the net amount of loan proceeds you receive will be less than the full amount of your loan.

 

 

7. Making Your Loan Payments. At the time you register as a borrower, you must provide your deposit account information to facilitate transfers of funds to and from your deposit account. You agree to make your loan payments by automated withdrawals from your designated account, or by the use of bank drafts drawn on your designated account. At the time you create your listing, you will be asked to choose the method of making your loan payments, and your loan payments will be made by the payment method you choose.

 

  

  

  

 

Prosper will act as the servicer for all loans you obtain through the platform, and all communications regarding your loan must be made to Prosper.

 

 

8. Group Membership. Groups on Prosper may be rated according to the collective payment performance of the group's members. Therefore, if you are a member of a group, your failure to make loan payments when due, or the failure of another group member to make loan payments when due, may have a negative effect on your group's rating.

 

 

9. Collection & Reporting of Delinquent Loans. In the event you do not make your loan payments on time, WebBank or any subsequent owner of the loan will have all remedies authorized or permitted by the Promissory Note and applicable law. In addition, if you fail to make timely payments on your loan, your loan may be referred to a collection agency for collection. Prosper may report loan payment delinquencies in excess of thirty (30) days to one or more credit reporting agencies in accordance with applicable law. Subject to limitations of applicable law, you authorize and agree that Prosper or a collection agency may contact you at any or all of the telephone numbers you provide to Prosper at or after registration, or any of your other telephone numbers.

 

 

10. No Guarantee. NEITHER PROSPER NOR WEBBANK WARRANTS OR GUARANTEES (1) THAT YOUR LISTING WILL BE MATCHED WITH ANY LENDER COMMITMENTS, OR (2) THAT YOU WILL RECEIVE A LOAN AS A RESULT OF POSTING A LISTING.

 

 

11. Restrictions on Use. You are not authorized or permitted to use the Prosper website to obtain, or attempt to obtain, a loan for someone other than yourself. You must be an owner of the deposit account you designate for electronic transfers of funds, with authority to direct that loan payments be made from the account. Your designated account will be the account into which loan proceeds will be deposited, and from which loan payments will be made. Although you are registering as a borrower, you may also register and participate on the platform as a lender or as a group leader. If you participate on the platform as a lender, any amounts in your Prosper funding account are subject to set-off against any delinquent amounts owing on any loans you obtain as a Prosper borrower. You will not receive further notice in advance of our exercising our right to set-off amounts in your Prosper funding account against any delinquent amounts owing on any loans you obtain. If you obtain a loan and fail to pay your loan in full, whether due to default, bankruptcy or other reasons, you will not be eligible to post any further listings or re-register with Prosper as a borrower, lender or group leader. Prosper may in its sole discretion, with or without cause and with or without notice, restrict your access to the Prosper website or platform.

 

 

12. Authority. You warrant and represent that you have the legal competence and capacity to execute and perform this Agreement.

 

 

13. Termination of Registration. Prosper may, in its sole discretion, with or without cause, terminate this Agreement at any time by giving you notice as provided below. In addition, upon Prosper's determination that you committed fraud or made a material misrepresentation in connection with a listing, lender commitment or loan, performed any prohibited activity, or otherwise failed to abide by the terms of this Agreement or the Prosper Terms and Conditions, Prosper may, in its sole discretion, immediately and without notice, take one or more of the following actions: (i) terminate or suspend your right to post listings or otherwise participate on the platform; or (ii) terminate this Agreement and your registration with Prosper. Upon termination of this Agreement and your registration with Prosper, any listings you have posted on the platform shall be cancelled, and will be removed from the platform immediately. Any loans you obtain prior to the effective date of termination resulting from listings you had placed on the platform shall remain in full force and effect in accordance with their terms.

 

 

14. Prosper's Right to Modify Terms. Prosper has the right to change any term or provision of this Agreement or the Prosper Terms and Conditions. Prosper will give you notice of material changes to this Agreement, or the Prosper Terms and Conditions, in the manner set forth in Section 16. You authorize Prosper to correct obvious clerical errors appearing in information you provide to Prosper, without notice to you, although Prosper expressly undertakes no obligation to identify or correct such errors. This Agreement, along with the Prosper Terms and Conditions, represents the entire agreement between you and Prosper regarding your participation as a borrower on the platform, and supersedes all prior or contemporaneous communications, promises and proposals, whether oral, written or electronic, between you and Prosper with respect to your involvement as a borrower on the platform.

 

  

  

  

 

15. Member Web Page Display and Content. You may, but are not required to, maintain a "Prosper member web page" on the Prosper website, where you can post content, logos or links to websites. If you elect to do so, you authorize Prosper to display on the Prosper website all such material you provide to Prosper. Any material you display on your member page must conform to the Prosper Terms and Conditions, and material you display or link to must not (i) infringe on Prosper's or any third party's copyright, patent, trademark, trade secret or other proprietary rights or right of publicity or privacy; (ii) violate any applicable law, statute, ordinance or regulation; (iii) be defamatory or libelous; (iv) be lewd, hateful, violent, pornographic or obscene; (v) violate any laws regarding unfair competition, anti-discrimination or false advertising; (vi) promote violence or contain hate speech; or (vii) contain viruses, trojan horses, worms, time bombs, cancelbots or other similar harmful or deleterious programming routines. You may not include or display any personally identifying information of any Prosper member on your Prosper member web page or elsewhere on the Prosper website, including, without limitation, any Prosper member’s name, address, phone number, email address, Social Security number,, driver's license number, bank account number or credit card number.

 

 

16. Notices. All notices and other communications hereunder shall be given by email to your registered email address or will be posted on the Prosper website, and shall be deemed to have been duly given and effective upon transmission or posting. You can contact us by sending an email to support@prosper.com or calling us toll-free at (866) 615-6319. You agree to notify Prosper if your registered email address changes, and you agree to update your registered residence address, mailing address and telephone number on the Prosper website if any of those items changes.

 

 

17. No Warranties. EXCEPT FOR THE REPRESENTATIONS CONTAINED IN THIS AGREEMENT, PROSPER DOES NOT MAKE ANY REPRESENTATIONS OR WARRANTIES TO YOU OR ANY OTHER PARTY WITH REGARD TO YOUR USE OF THE PROSPER WEBSITE OR THE PLATFORM, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

 

 

18. Limitation on Liability. IN NO EVENT SHALL ANY PARTY TO THIS AGREEMENT BE LIABLE TO ANY OTHER PARTY FOR ANY LOST PROFITS OR SPECIAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES, EVEN IF INFORMED OF THE POSSIBILITY OF SUCH DAMAGES. FURTHERMORE, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY TO ANY OTHER PARTY REGARDING THE EFFECT THAT THE AGREEMENT MAY HAVE UPON THE FOREIGN, FEDERAL, STATE OR LOCAL TAX LIABILITY OF THE OTHER.

 

 

19. Miscellaneous. You may not assign, transfer, sublicense or otherwise delegate your rights under this Agreement to another person without Prosper's prior written consent. Any such assignment, transfer, sublicense or delegation in violation of this Section shall be null and void. This Agreement shall be governed by federal law and, to the extent that state law applies, the laws of the State of Utah. Any waiver of a breach of any provision of this Agreement will not be a waiver of any other breach. Failure or delay by either party to enforce any term or condition of this Agreement will not constitute a waiver of such term or condition. If any part of this Agreement is determined to be invalid or unenforceable under applicable law, then the invalid or unenforceable provision will be deemed superseded by a valid enforceable provision that most closely matches the intent of the original provision, and the remainder of the Agreement shall continue in effect. WebBank is not a party to this Agreement, but you agree that WebBank is a third-party beneficiary and is entitled to rely on the provisions of this Agreement, including without limitation your representations, covenants and agreements herein. There are no third party beneficiaries to this Agreement other than WebBank.

 

 

EXHIBIT A

PROMISSORY NOTE

 

Borrower Address: ______________________________________________.

 

 

1. Promise to Pay. In return for a loan I have received, I promise to pay WebBank, a Utah-chartered Industrial Bank ("you") the principal sum of ___________________ Dollars ($__________), together with interest thereon commencing on the date of funding at the rate of ____ percent (____%) per annum simple

 

  

  

  

 

interest. I understand that references in this Promissory Note (“Note”) to you shall also include any person to whom you transfer this Note.

 

 

2. Payments. This Note is payable in ___ monthly installments of $___________ each, consisting of principal and interest, commencing on the ________ day of _____________, and continuing until the final payment date of __________________, which is the maturity date of this Note. The final payment shall consist of the then remaining principal, unpaid accrued interest and other charges due under this Note. All payments will be applied first to any unpaid fees incurred as a result of failed automated payments or returned bank drafts or checks, as provided in Paragraph 11; then to any charges for making payments other than as provided in this Note; then to any late charges then due; then to any interest then due; and then to principal. No unpaid interest or charges will be added to principal.

 

 

3. Interest. Interest will be charged on unpaid principal until the full amount of principal has been paid. Interest under this Note will accrue daily, on the basis of a 365-day year. If payments are made on time, my final payment will be in the amount of a regular monthly payment.  Because of the daily accrual of interest and the effect of rounding, my final payment may be more or less than my regular payment.  I acknowledge that, if I make my payments after the scheduled due date, this Note will not amortize as originally scheduled, which may result in a substantially higher final payment amount. The interest rate I will pay will be the rate I will pay both before and after any default.

 

 

4. Late Charge. If the full amount of any monthly payment is not made by the end of fifteen (15) calendar days after its due date, I will pay you a late charge of______________. I will pay this late charge promptly but only once on each late payment.

 

 

5. Waiver of Defenses. Except as otherwise provided in this Note, you are not responsible or liable to me for the quality, safety, legality, or any other aspect of any property or services purchased with the proceeds of my loan. If I have a dispute with any person from whom I have purchased such property or services, I agree to settle the dispute directly with that person.

 

 

6. Certification; Exception to Waiver. I certify that the proceeds of my loan will not be applied in whole or in part to postsecondary educational expenses (i.e., tuition, fees, required equipment or supplies, or room and board) at a college/university/vocational school, as the term “postsecondary educational expenses” is defined in Federal Reserve Board Regulation Z, 12 C.F.R. § 226.26(b)(3). I further certify that, to my knowledge, the proceeds of my loan will not be applied in whole or part to purchase property or services from any person to whom any interest in this Note may be assigned. If, notwithstanding the preceding sentence, any person from whom I have purchased such property acquires any interest in this Note, then Paragraph 5 will not apply to the extent of that person's interest, even if that person later assigns that person's interest to another person.

 

 

7. Method of Payment. I will pay the principal, interest, and any late charges or other fees on this Note when due. Those amounts are called "payments" in this Note. To ensure that my payments are processed in a timely and efficient manner, you have given me the choice of making my monthly payments (i) by automated withdrawal from an account that I designate using an automated clearinghouse (ACH) or other electronic fund transfer, or (ii) by bank drafts drawn by you on my behalf on my account each month; and I have chosen one of these methods. If I close my account or if my account changes or is otherwise inaccessible such that you are unable to withdraw my payments from that account or draw bank drafts on the account, I will notify you at least three (3) days prior to any such closure, change or inaccessibility of my account, and authorize you to withdraw my payments from, or draw bank drafts on, another account that I designate.

 

 

With regard to payments made by automatic withdrawals from my account, I have the right to (i) stop payment of a preauthorized automatic withdrawal, or (ii) revoke my prior authorization for automatic withdrawals with regard to all further payments under this Note, by notifying the financial institution where my account is held, orally or in writing at least three (3) business days before the scheduled date of the transfer. I agree to notify you orally or in writing, at least three (3) business days before the scheduled date of the transfer, of the exercise of my right to stop a payment or to revoke my prior authorization for further automatic withdrawals.

 

  

  

  

 

8. Default and Remedies. If I fail to make any payment when due in the manner required by Paragraph 7, I will be in default and you may at your option accelerate the maturity of this Note and declare all principal, interest and other charges due under this Note immediately due and payable. If you exercise the remedy of acceleration you will give me at least thirty (30) days prior notice of acceleration.

 

 

9. Prepayments. I may prepay this Note in full or in part at any time without penalty.

 

 

10. Waivers. You may accept late payments or partial payments, even though marked "paid in full," without losing any rights under this Note, and you may delay enforcing any of your rights under this Note without losing them. You do not have to (a) demand payment of amounts due (known as "presentment"), (b) give notice that amounts due have not been paid (known as "notice of dishonor"), or (c) obtain an official certification of nonpayment (known as "protest"). I hereby waive presentment, notice of dishonor and protest. Even if, at a time when I am in default, you do not require me to pay immediately in full as described above, you will still have the right to do so if I am in default at a later time. Neither your failure to exercise any of your rights, nor your delay in enforcing or exercising any of your rights, will waive those rights. Furthermore, if you waive any right under this Note on one occasion, that waiver will not operate as a waiver as to any other occasion.

 

 

11. Insufficient Funds Charge. If I attempt to make a payment, whether by automated withdrawal from my designated account or by other means, and the payment cannot be made due to (i) insufficient funds in my account, (ii) the closure, change or inaccessibility of my account without my having notified you as provided in Paragraph 7, or (iii) for any other reason (other than an error by you), I will pay you an additional fee of $______ for each returned or failed automated withdrawal, bank draft or other item, unless prohibited by applicable law.

 

 

12. Attorneys' Fees. To the extent permitted by law, I am liable to you for your legal costs if you refer collection of my loan to a lawyer who is not your salaried employee. These costs may include reasonable attorneys' fees as well as costs and expenses of any legal action.

 

 

13. Loan Charges. If a law that applies to my loan and sets maximum loan charges is finally interpreted so that the interest or other loan charges collected or to be collected in connection with my loan exceed the permitted limits, then: (a) any such loan charge shall be reduced by the amount necessary to reduce the charge to the permitted limit; and (b) any sums already collected from me that exceeded permitted limits will be refunded to me. You may choose to make this refund by reducing the principal I owe under this Note or by making a direct payment to me.

 

 

14. Assignment. I may not assign any of my obligations under this Note without your written permission. You do not have to give me your permission. You may assign this Note at any time without my permission. Unless prohibited by applicable law, you may do so without telling me. My obligations under this Note apply to all of my heirs and permitted assigns. Your rights under this Note apply to each of your successors and assigns.

 

 

15. Notices. All notices and other communications hereunder shall be given in writing and shall be deemed to have been duly given and effective (i) upon receipt, if delivered in person or by facsimile, email or other electronic transmission, or (ii) one day after deposit prepaid for overnight delivery with a national overnight express delivery service. Except as expressly provided otherwise in this Note, notices to me may be addressed to my registered email address or to my address set forth above unless I provide you with a different address for notice by giving notice pursuant to this Paragraph, and notices to you must be addressed to WebBank at support@prosper.com or c/o Prosper Marketplace, Inc., 111 Sutter Street, 22nd Floor, San Francisco, CA 94104, Attention: Customer Service.

 

 

16. Governing Law. This Note is governed by federal law and, to the extent that state law applies, the laws of the State of Utah.

 

 

17. Miscellaneous. No provision of this Note shall be modified or limited except by a written agreement signed by both you and me. The unenforceability of any provision of this Note shall not affect the enforceability or validity of any other provision of this Note.

 

  

  

  

 

18. Arbitration. RESOLUTION OF DISPUTES: I HAVE READ THIS PROVISION CAREFULLY, AND UNDERSTAND THAT IT LIMITS MY RIGHTS IN THE EVENT OF A DISPUTE BETWEEN YOU AND ME. I UNDERSTAND THAT I HAVE THE RIGHT TO REJECT THIS PROVISION, AS PROVIDED IN PARAGRAPH (i) BELOW.

 

 

(a) In this Resolution of Disputes provision:

 

 

(i) "I," "me" and "my" mean the promisor under this Note, as well as any person claiming through me;

 

 

(ii) "You" and "your" mean WebBank, any person servicing this Note for WebBank, and any subsequent holders of this Note or any interest in this Note, and each of their respective parents, subsidiaries, affiliates, predecessors, successors, and assigns, as well as the officers, directors, and employees of each of them; and

 

 

(iii) "Claim" means any dispute, claim, or controversy (whether based on contract, tort, intentional tort, constitution, statute, ordinance, common law, or equity, whether pre-existing, present, or future, and whether seeking monetary, injunctive, declaratory, or any other relief) arising from or relating to this Note or the relationship between you and me (including claims arising prior to or after the date of the Note), and includes claims that are brought as counterclaims, cross claims, third party claims or otherwise, as well as disputes about the validity or enforceability of this Agreement or the validity or enforceability of this Section 18.

 

 

(b) Any Claim shall be resolved, upon the election of either you or me, by binding arbitration administered by the American Arbitration Association or JAMS, under the applicable arbitration rules of the administrator in effect at the time a Claim is filed ("Rules"). If I file a claim, I may chose the administrator; if you file a claim, you may chose the administrator, but you agree to change to the other permitted administrator at my request (assuming that the other administrator is available). I can obtain the Rules and other information about initiating arbitration by contacting the American Arbitration Association at 1633 Broadway, 10th Floor, New York, NY 10019, (800) 778-7879, www.adr.org; or by contacting JAMS at 1920 Main Street, Suite 300, Irvine, CA 92614, (949) 224-1810, www.jamsadr.com. Your address for serving any arbitration demand or claim is WebBank, c/o Prosper Marketplace, Inc., 111 Sutter Street, 22nd Floor, San Francisco, CA 94104, Attention: Legal Department.

 

 

(c) Claims will be arbitrated by a single, neutral arbitrator, who shall be a retired judge or a lawyer with at least ten years experience. You agree not to invoke your right to elect arbitration of an individual Claim filed by me in a small claims or similar court (if any), so long as the Claim is pending on an individual basis only in such court.

 

 

(d) You will pay all filing and administration fees charged by the administrator and arbitrator fees up to $1,000, and you will consider my request to pay any additional arbitration costs. If an arbitrator issues an award in your favor, I will not be required to reimburse you for any fees you have previously paid to the administrator or for which you are responsible. If I receive an award from the arbitrator, you will reimburse me for any fees paid by me to the administrator or arbitrator. Each party shall bear its own attorney's, expert's and witness fees, which shall not be considered costs of arbitration; however, if a statute gives me the right to recover these fees, or fees paid to the administrator or arbitrator, then these statutory rights will apply in arbitration.

 

 

(e) Any in-person arbitration hearing will be held in the city with the federal district court closest to my residence, or in such other location as the parties may mutually agree. The arbitrator shall apply applicable substantive law consistent with the Federal Arbitration Act, 9 U.S.C. § 1-16, and, if requested by either party, provide written reasoned findings of fact and conclusions of law. The arbitrator shall have the power to award any relief authorized under applicable law. Any appropriate court may enter judgment upon the arbitrator's award. The arbitrator's decision will be final and binding except that: (1) any party may exercise any appeal right under the FAA; and (2) any party may appeal any award relating to a claim for more than $100,000 to a three-arbitrator panel appointed by the administrator, which will reconsider de novo any aspect of the appealed award. The panel's decision will be final and binding, except for any appeal right under the FAA. Unless applicable law provides otherwise, the appealing party will pay the appeal's cost, regardless of its outcome. However, you will consider any reasonable written request by me for you to bear the cost.

 

  

  

  

 

(f) Neither you nor I shall have the right to participate as a representative or member of any class of claimants in arbitration, and you and I further agree that claims of third parties shall not be joined in any arbitration between you and me, without the express written consent of both you and me. Only the claims of or against persons relating to a single Note or listing (such as holders of Notes relating to a single listing) may be joined in a single arbitration. The validity and effect of this paragraph (f) shall be determined exclusively by a court, and not by the administrator or any arbitrator. The arbitrator shall have no power to arbitrate any Claims on a class action basis or Claims brought in a purported representative capacity on behalf of the general public, other borrowers, or other persons similarly situated.

 

 

(g) If any portion of this Section 18 is deemed invalid or unenforceable for any reason, it shall not invalidate the remaining portions of this section. However, if paragraph (f) of this Section 18 is deemed invalid or unenforceable in whole or in part, then this entire Section 18 shall be deemed invalid and unenforceable. The terms of this Section 18 will prevail if there is any conflict between the Rules and this section.

 

 

(h) THE PARTIES ACKNOWLEDGE AND AGREE THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 18, THEY ARE WAIVING ALL RIGHTS TO A TRIAL BY COURT OR JURY AS A MEANS OF RESOLVING ANY DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT. THEY ACKNOWLEDGE THAT ARBITRATION WILL LIMIT THEIR LEGAL RIGHTS, INCLUDING THE RIGHTS TO PARTICIPATE IN A CLASS ACTION, THE RIGHT TO A JURY TRIAL, THE RIGHT TO CONDUCT FULL DISCOVERY, AND THE RIGHT TO APPEAL (EXCEPT AS PERMITTED IN PARAGRAPH (e) OR UNDER THE FEDERAL ARBITRATION ACT).

 

 

(i) I understand that I may reject the provisions of this Section 18, in which case neither you nor I will have the right to elect arbitration. Rejection of this Section 18 will not affect the remaining parts of this Agreement. To reject this Section 18, I must send you written notice of my rejection within 30 days after the date that this Note was made. I must include my name, address, and account number. The notice of rejection must be mailed to WebBank, c/o Prosper Marketplace, Inc., 111 Sutter Street, 22nd Floor, San Francisco, CA 94104, Attention: Legal Department. This is the only way that I can reject this Section 18.

 

 

(j) The parties acknowledge and agree that this arbitration agreement is made pursuant to a transaction involving interstate commerce and shall be governed by the Federal Arbitration Act. This Section 18 shall survive the termination of this Note and the repayment of any or all amounts borrowed.

 

 

Arizona Residents: Notice: I understand that I may request that the initial disclosures prescribed in the Truth in Lending Act (15 United States Code sections 1601 through 1666j) be provided in Spanish before signing any loan documents.

 

 

Aviso Para Prestatarios En Arizona: Puedo solicitar que las divulgaciones iniciales prescritas en la Ley Truth in Lending Act (15 Código de los Estados Unidos secciones 1601 hasta 1666j) sean proporcionadas en español antes de firmar cualesquiera documentos de préstamos.

 

 

Missouri Residents: Oral agreements or commitments to loan money, extend credit or to forbear from enforcing repayment of a debt, including promises to extend or renew such debt, are not enforceable. To protect me (borrower) and you (creditor) from misunderstanding or disappointment, any agreements we reach covering such matters are contained in this writing, which is the complete and exclusive statement of the agreement between us, except as we may later agree in writing to modify it.

 

 

By signing this Note, I acknowledge that I (i) have read and understand all terms and conditions of this Note, (ii) agree to the terms set forth herein, and (iii) acknowledge receipt of a completely filled-in copy of this Note.

 

 

Date: _______________

 

 

_________________________________

 

 

[Borrower]

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