Lender Member Registration and Note Purchase Agreement

Lender Member Registration and Note Purchase Agreement

This Lender Member Registration and Note Purchase Agreement (the "Agreement") is made and entered into by and between you (hereinafter referred to as "Lender Member" or “Note Purchaser”) and Loanio, Inc. ("Loanio," “the Company,” “we,” “us,” or “our”), for ourselves and our respective successors and permitted assigns. You agree to comply with the terms and provisions of this Agreement, the Terms of Use of the Loanio website, the Prospectus, and such other policies as are posted on the Loanio website (the "Loanio Policies"), as the same may be amended from time to time by Loanio in its sole discretion (collectively, the "Loanio Terms and Conditions"). This Agreement shall govern all purchases of Borrower Member Payment Dependent Notes (the “Notes” or “Securities”) that you may, from time to time, purchase from Loanio.

Loanio has filed a registration statement on Form S-1 (No. xxx-xxxxxxx)  (as amended from time to time, the “Registration Statement”) with the U.S. Securities and Exchange Commission to offer and sell Notes issued by Loanio. The Registration Statement includes a prospectus related to the offering of the Notes by Loanio dated xx/xx/xxxx      (as supplemented or amended from time to time, the “Prospectus”). The Registration Statement became effective on xx/xx/xxxx pursuant to the rules and regulations of the U.S. Securities and Exchange Commission under the Securities Act of 1933, as amended. You should read the Prospectus carefully and retain a copy of it for your records.

1. Definitions.

When used in this Agreement, the following terms have the following meanings:

“ Borrower Member ” or “ Borrower ” means each person who submits a Request or Revised Request for a Loan, and includes without limitation, Co-Borrowers and guarantors of any resulting Loan.

“ Borrower Loan ” or “ Loan ” means a loan to an individual Borrower Member originated through the Company’s platform on its website www.loanio.com or any successor website, but only to the extent such Borrower Loan has been financed with the proceeds of the Securities. For the purposes of clarification, a Borrower Loan shall not include any portion of an individual Borrower Loan originated through the Company’s platform that has been financed by the Company from other sources of funding.

“ Borrower Loan Net Payment ” means, with respect to each Borrower Loan, all Borrower Loan Payments net of Other Payments and Charges.

“ Borrower Loan Payment ” means, with respect to each Borrower Loan, all amounts received by the Company, and not reversed through the ACH System or by virtue of checks returned unpaid due to insufficient funds or for other reasons, in connection with the repayment of such Borrower Loan, including without limitation, all payments or prepayments of principal and interest, any late fees and any amounts received by the Company upon collection efforts.

“ Co-Borrower Member ” or “ Co-Borrower ” means a Borrower Member who serves as a co-signer, or guarantor, on a Borrower Loan, and is obligated to make payments on the loan if the primary Borrower Member becomes delinquent.

“ Corresponding Borrower Loan ” means the Borrower Loan upon which a series of Borrower Member Dependent Notes is dependent for payment.

“ Funds ” means funds belonging to a Lender Member and deposited in Loanio’s FBO account as of the time such Lender Member places a bid on a Request.

“ Loanio FBO Account ” means an FDIC-insured non-interest bearing account at JP Morgan Chase Bank, or at such other FDIC-insured institution as may be selected from time to time by Loanio in its sole discretion. Undisbursed Funds will be kept separate from Loanio's own funds and accounts at all times.

“ Failed Payments Fees ” means any fee imposed by the Company or a third-party servicer or collection

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agency in respect of a Borrower Loan when the Company’s payment request is denied for any reason, including but not limited to non-sufficient funds in the borrower’s bank account or the closing of such bank account.

“ Other Payments and Charges ” means (i) any Failed Payments Fees or fees charged to the borrower for making payments in a manner other than as provided in the Borrower Loan, which are received by the Company, a third-party servicer or collection agency in respect of such Borrower Loan, and (2) attorneys’ fees or any collection fees imposed in connection with collection efforts on a delinquent Borrower Loan by the Company, a third-party servicer or collection agency, other than late payment fees specifically included in Borrower Loan Payments.

 “ Promissory Note ” means the documentation executed and delivered by a Borrower(s) evidencing a Loan made by Loanio (or a third party originator and then sold to Loanio with no recourse) to such Borrower(s) following the matching of your bid(s) with the Borrower’s Request or Revised Request.

“ Request ” or “ Posting ” means a current and valid Loan request of a Borrower that has been submitted to or approved by Loanio, or a third party loan originator, complies with the Loanio Terms and Conditions and is listed on the Loanio website, including the Borrower’s desired Loan amount, offered interest rate, the Loanio credit grade, and such other information as Loanio shall require from time to time.

“ Revised Request, ” “ Revised Posting, ” or “ Partial Funding Feature ” means a Request which has been amended by a Borrower in accordance with the Loanio Terms and Conditions and upon the request and approval of Loanio or a third party loan originator. When a Borrower has a posted Request, and as of the end of the duration of such Request at least a certain minimum portion (as specified by Loanio from time to time in its discretion) of such Request but less than the full requested Loan amount specified in such Request has been bid, then Loanio may grant such Borrower the option to revise the Loan amount of his/her Request to such lower, covered amount. If the Borrower elects to accept this option, the amended Request is the Revised Request, and replaces the original Request.

“ Servicing Fee ” is a fee payable by Lender Members to Loanio with respect to the servicing of each Borrower Loan and its corresponding Note issued to the Lender Member. It is calculated by multiplying a then-current annual Servicing Fee rate to the outstanding principal balance of the Notes. Current Servicing Fee rates are posted in the "Lender Rates and Fees" section of the Loanio website, and are subject to change by Loanio at any time without notice.

2. Registration as a Lender Member/Note Purchaser; Loanio Right to Deny Access.

You are registering as a Lender Member/Note Purchaser in the Loanio website, so as to become eligible to place bids on the Loanio website and purchase from Loanio Borrower Member Payment Dependent Notes issued by Loanio that are dependent for payment based on payments Loanio receives on the corresponding borrower loans described in the postings (“Borrower Loans”).

Although you are referred to in this Agreement and on the website as a “Lender” or “Lender Member,”  you are not lending your money directly to Loanio Borrower Members, but are instead investing by making commitments to purchase, and subsequently purchasing Notes that are dependent for payment on payments received by Loanio on the corresponding Borrower Loans. Loanio uses the term “Lender” or “Lender Member” simply for ease of reference and convenience to members. Thus, each time you (the “Lender Member” or “Note Purchaser”) bid, you are making a commitment to purchase all or part of a Note that corresponds to a specific Borrower Loan that may be originated by Loanio (or another licensed loan originator and subsequently purchased by Loanio).

Loanio reserves the right, in its sole discretion, with or without cause and with or without notice, to deny access or continuing access to the Loanio website or any of its services to any person, and/or to limit access to the Loanio website or any of its services to persons who meet or do not meet specific guidelines and other criteria, as determined by Loanio in its sole discretion from time to time.

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3. Posting of Bids.

After you register, you may post bids on Borrower Requests listed by Borrower Members on the Loanio website, subject to the terms of this Agreement and the other Loanio Terms and Conditions. Borrower Members are identified by a Loanio user name but are not allowed to disclose their identity or contact information to Lender Members or any other members of the website.

A bid by a Lender Member is the Lender Member’s commitment to purchase a Note issued by Loanio in the principal amount of the Lender Member’s bid, in the event the posting receives an amount of bids totaling the amount of the Borrower Member’s requested Loan, or a sufficient portion thereof so that the Borrower Member can choose to take such lesser Loan amount and issue a Revised Request. Lender Members "bid" the amount they are willing to commit to the purchase of the Note that is solely dependent for payment on the payments Loanio receives on the corresponding borrower loan, and the lowest interest rate they are willing to receive.

Lender Members must have funds in the amount of the bid on deposit in the Loanio FBO Account, and such funds must remain on deposit for the entire time that bid is a "winning" bid on the Request or Revised Request.

Lender Member bids are deemed to be "winning" bids if such bids are a part of the group of bids that total the amount of the requested Loan and have the lowest interest rate out of all bids placed against the Request. Once a bid is made by a Lender Member it may not be rescinded and is irrevocable.

a.

Selective Bidding. You can bid selectively and manually by browsing through postings and placing a bid on the posting or postings that you choose. You may also choose to use our auto bidding tools to create a portfolio of loans that we will automatically place bids on your behalf.

b.

Funds in the Loanio FBO Account. At the time you post a bid Loanio must have Funds from you in at least the amount of your bid(s). You may not withdraw such Funds so long as your bid is a "winning" bid as described herein. When you register as a Lender Member, you must provide your deposit checking account information to facilitate electronic transfers of Funds to and from the Loanio FBO Account and your deposit checking account. The Loanio FBO Account is non-interest bearing and as such you will not earn interest on Funds.

All Funds in the Loanio FBO Account that are not committed to winning bids are available for further bidding by you. You may at any time request that your uncommitted Funds in the Loanio FBO Account be returned to you. Promptly upon its receipt of such request, Loanio will return the remaining Funds to your deposit checking account, provided that you have provided the correct information regarding such account so as to permit the transfer from Loanio in the ordinary course of business.

c.

Your Note Purchase Commitment. Each bid you post on the Loanio website is a commitment and promise to purchase a Note issued by Loanio, with the proceeds of the sale of the Note used by Loanio to fund the specific borrower loan (or for Loanio to alternatively purchase the borrower loan from a third party loan originator), on which the bid was made. Once a bid is placed by or for you, you may not cancel or withdraw the bid or reduce the amount of the bid, to the extent your bid has already been matched or selected to be matched with one or more Requests and/or Revised Requests.

AT THE TIME YOU SUBMIT A BID ON A REQUEST, YOU ARE COMMITTING TO PURCHASE THE NOTE (OR NOTES) THAT IS (ARE) DEPENDENT FOR ITS PAYMENT ON PAYMENTS RECEIVED BY LOANIO ON THE CORRESPONDING BORROWER LOAN REQUEST, IN THE EVENT THAT ALL OR A PORTION OF YOUR BID IS MATCHED WITH THAT REQUEST OR REVISED REQUEST AND THE LOAN IS ORIGINATED.

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d.

Limitations Regarding Bids; Non-Discrimination. Lender Members must bid a minimum of $20.00 per loan request, and may bid up to the entire amount of any Borrower Loan being requested. If you are an Individual Lender Member, you may not have more than five million dollars ($5,000,000) committed to the aggregate total amount of all of your bids, plus the amount outstanding on all of your Notes. A Corporate or institutional Lender Member may not have more than fifty million dollars ($50,000,000) committed to their aggregate total amount of bids, plus the amount outstanding on all of that entity’s Notes.

WHEN MAKING BIDS, YOU MUST NOT AND WILL NOT DISCRIMINATE AGAINST ANY BORROWER ON THE BASIS OF RACE, COLOR, MARITAL STATUS, SEXUAL ORIENTATION, RELIGION, NATIONAL ORIGIN, SEX, AGE, MILITARY STATUS, THE BORROWER’S SOURCE(S) OF INCOME (e.g., PUBLIC ASSISTANCE PROGRAMS), PRIOR EXERCISE OF RIGHTS UNDER THE CONSUMER CREDIT PROTECTION ACT, OR ANY OTHER BASIS AS MAY BE PROHIBITED BY APPLICABLE LOCAL, STATE OR FEDERAL LAW, INCLUDING WITHOUT LIMITATION THE FEDERAL EQUAL CREDIT OPPORTUNITY ACT.

4. Matching of Bids and Requests.

a.

Bid Requirements. You must bid an interest rate equal to or less than the current auction interest rate of the Request for all or a portion of your bid to be matched with that Request.

b.

Winning, Pending, and Outbid Bids. When you place a bid on a Request, your bid will be compared to other Lender Member bids placed against the Request, and will be considered to be "winning" in the event that the interest rate in your bid is (i) lower than all other existing bids against the Request, or (ii) is equal to all other existing bids against the Request, as long as the Request has not already received a bid or bids totaling the full amount of the requested Loan. Your bid shall remain outstanding, and therefore "pending" on a Request until you are outbid, or until the Request is withdrawn by the Borrower Member or removed by Loanio. Your bid will be cancelled in the event it is outbid, the Request is withdrawn or removed by Loanio, or cancelled by the Borrower Member. At the time the bid is cancelled, your funds previously committed to that bid will immediately become available again for you to bid on other loan Requests.

c.

If a Request gets a bid or bids in an amount totaling that of the Borrower Member’s requested Loan, or a sufficient portion thereof that the Borrower Member is given the opportunity to issue a Revised Request and chooses to do so, the bids that are winning bids at the time the Request/Revised Request expires are matched with the Request or Revised Request, as applicable, and Loanio will make a Loan (or instruct its loan originator to disburse the loan) in the requested Loan amount to the Borrower Member who posted the Request/Revised Request, subject to Loanio’s right to verify information as described in Section 10 below.

d.

LOANIO DOES NOT WARRANT, GUARANTY, OR OTHERWISE PROMISE THAT ANY OF YOUR BIDS WILL BE MATCHED WITH ANY REQUEST. IN THE EVENT THAT SOME, BUT NOT ALL, OF THE FUNDS FROM YOUR BIDS ARE MATCHED WITH A REQUEST, YOU AGREE TO PURCHASE THE NOTE ISSUED BY LOANIO RESULTING FROM THAT PORTION OF YOUR FUNDS BEING MATCHED WITH THE REQUEST/ REVISED REQUEST. IN THE EVENT THAT THERE ARE ANY "UNMATCHED" FUNDS (REMAINING PORTIONS OF YOUR BIDS THAT WERE OUTBID OR CANCELLED), THEY WILL IMMEDIATELY BECOME AVAIALABLE TO YOU TO BID ON OTHER LOAN REQUESTS.

e.

The identity and address of the Borrower will be withheld from you, and your identity as a Lender Member will be withheld from the Borrower Member(s). Only the Borrower Member’s Loanio user name will appear on Requests/Revised Requests and Notes for your review, and only your Loanio user name will appear with your bids and subsequent Notes for others to review.

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f.

Each series of Notes issued by Loanio will correspond to a single borrower loan originated to a Borrower. Payments to Lender Members who purchase Notes are solely dependent upon payments received from Loanio on the corresponding borrower loan.

5. Multiple Lender Members/Note Purchaser.

A Borrower Member’s Request/Revised Request may be matched with one or more bids; therefore, you may be one of a few or many Lender Members/Note Purchasers who purchase a Note in a series of Notes that correspond to the Borrower Loan described in the posting.

6. Funding of Borrower Loans; Servicing of Borrower Loans.

a.

Once a loan posting has expired, has the requisite winning bids as outlined above, and has been internally approved for origination, Loanio proceeds with the funding of the corresponding borrower loan, and with the issuance and sale of the Notes to the Lender Members who were winning bidders on the posting/request. Funding is completed when the borrower’s loan is disbursed to their bank account. All borrower loans are either originated by Loanio, or originated by a third party loan originator and then sold to Loanio, without recourse and are evidenced by a Promissory Note in the form attached in Exhibit A. Loanio uses the proceeds of each sale of each series of Notes to fund and originate the corresponding borrower loan (or purchase an originated loan from a third party loan originator).

b.

Servicing Standard. In servicing the borrower loans, Loanio shall make commercially reasonable efforts to seek to maximize the recovery of principal and interest on the loans, and shall use the same care, prudence and diligence with which prudent lending institutions service similar assets. Loanio may, in its sole discretion, utilize affiliated or unaffiliated third party loan servicers, collection agencies, or other agents and contractors to perform servicing duties.

c.

Servicing Fee Compensation. Loanio shall be entitled to retain a Servicing Fee from payments received on the borrower loans, as compensation for servicing the loans and Notes. The current servicing fee structure and rates are posted on the Loanio website in the “Lender Member Rates and Fees” section and are subject to change by Loanio at any time without notice.

7. Purchase, Sale, and Terms of Notes.

At the time a borrower loan is originated (or purchased from a loan originator) by Loanio, we proceed with the issuance and sale of the Notes to the Lender Members who had winning bids on the Request. The purchase price for any Notes that you purchase from Loanio through the platform will be the principal amount of the Notes you commit to purchase. The Notes shall be issued pursuant to an indenture (the “Indenture”) between Loanio and a trustee. Funds in the principal amount of each Note are transferred from each Lender Member’s sub-account to Loanio, as payment of the purchase price for the Note. Loanio will use the proceeds of the sale of each series of Notes to fund (or purchase from a loan originator) the corresponding borrower loan.

The terms and conditions of the Notes are described in the Prospectus, the Indenture, and the Note. A copy of the Indenture and Note are provided in Exhibit B of this Agreement. The form of the Promissory Note evidencing Loanio borrower loans is provided in Exhibit A of this Agreement. The specific interest rate, maturity and other terms of the corresponding borrower loans are described in the Requests or Revised Requests on the platform.

You agree and understand that subject to Section 6, we may in our sole discretion, at any time and/or from time to time, amend or waive any term of a borrower loan, and we may in our sole discretion charge off any borrower loan that we deem uncollectible.

PAYMENT ON THE NOTES, IF ANY, DEPENDS ENTIRELY ON THE RECEIPT OF PAYMENTS BY LOANIO FROM THE CORRESPONDING BORROWER LOAN.  LOANIO

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DOES NOT GUARANTEE OR WARRANT IN ANY MANNER THAT YOU WILL RECEIVE ALL OR ANY PORTION OF THE PRINCIPAL OR INTEREST YOU EXPECT TO RECEIVE ON ANY NOTE OR REALIZE ANY PARTICULAR OR EXPECTED RATE OF RETURN.  THE AMOUNT YOU RECEIVE ON YOUR NOTE, IF ANY, IS SPECIFICALLY RESTRICTED TO PAYMENTS MADE BY US EQUAL TO THE PAYMENTS MADE BY THE BORROWER UNDER A BORROWER LOAN TO WHICH YOU COMMITTED, NET OF SERVICING AND OTHER FEES ON ALL BORROWER PAYMENTS.  DOES NOT MAKE ANY REPRESENTATIONS AS TO A BORROWER’S ABILITY TO PAY AND DOES NOT ACT AS A GUARANTOR OF ANY CORRESPONDING BORROWER LOAN PAYMENT OR PAYMENTS BY ANY BORROWER.

YOU AGREE AND UNDERSTAND THAT BORROWERS MAY DEFAULT ON THEIR PAYMENT OBLIGATIONS UNDER THE BORROWER LOANS AND THAT SUCH DEFAULTS WILL REDUCE THE AMOUNTS, IF ANY, YOU MAY RECEIVE UNDER THE TERMS OF ANY NOTES YOU HOLD THAT CORRESPOND TO THOSE BORROWER LOANS.

8. Collection of Delinquent Loans.

Loanio or a third-party servicer shall use commercially reasonable efforts to service and collect the Borrower Loan corresponding to such series, in good faith, accurately and in accordance with industry standards customary for servicing loans such as the Borrower Loans.  Notwithstanding the generality of the foregoing, (1) referral of a delinquent Borrower Loan to a collection agency, or the Company’s in-house collections department, on the 31st day of its delinquency shall be deemed to constitute commercially reasonable servicing and collection efforts; and (2) the Company and any third-party servicer of a Borrower Loan shall have the right, at any time and from time to time and subject to the foregoing servicing standard, to change the Stated Maturity of the principal of, or any installment of principal or interest on, any Borrower Loan, or reduce the principal amount thereof or the rate of interest thereon or change the Place of Payment where, or change the coin or currency in which, any installment of principal and interest on any such Security is payable or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof, or amend or waive any term of such Borrower Loan, or write off and cancel such Borrower Loan without the consent of any Holder of any Securities of the series corresponding to such Borrower Loan.

9. Representations and Warranties as to Notes Sold.

With respect to each Note sold to you under this Agreement, as of the date the Note is sold, assigned and transferred to you, Loanio makes the following representations and warranties:

a.

The Note has been duly authorized and, following electronic execution, your payment of the purchase price, and authentication and delivery to you, will constitute valid and binding obligations of Loanio enforceable against Loanio in accordance with their terms, except that enforcement of a Note may be limited by applicable bankruptcy, insolvency, or similar laws;

b.

Loanio has complied with all applicable local, state, and federal laws in connection with the offer and sale of the Note;

c.

The proceeds of the Note’s corresponding borrower loan have been fully disbursed to the borrower or the borrower’s designated payee prior to your purchase of the Note.

d.

Loanio has made commercially reasonable efforts to authenticate and verify the identity of the borrower on the Note’s corresponding borrower loan.

e.

For any Note you purchase from Loanio under this Agreement that is the result of verifiable identity theft of the named borrower’s identity, Loanio will repurchase the Note by crediting your Loanio account with the remaining unpaid principal balance of the Note.  The determination of whether verifiable identity theft has occurred shall be in Loanio’s sole discretion.  We may require

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proof of the identity theft, such as a copy of a police report filed by the person whose identity was wrongfully used to obtain the fraudulently-induced borrower loan, an identity theft affidavit or a bank verification letter (or all of the above) in order to determine that verifiable identity theft has occurred. You agree that repurchase of your Note by Loanio is the sole remedy you will have with respect to any such Note.

10. Remedies.

In the event of a material breach by Loanio of any of the foregoing representations and warranties that materially and adversely affects your interest in a Note sold to you under this Agreement, Loanio shall either (i) cure the defect in the Note, if Loanio determines the defect is susceptible to cure (ii) repurchase the Note from you, or (iii) indemnify and hold you harmless from and against any and all losses (including losses resulting from the delinquency or nonpayment of the Loan), damages, expenses, legal fees, costs and judgments resulting from any claim, demand or defense arising as a result of the defect in the Note. The decision whether a defective Note is susceptible to cure, or whether Loanio shall cure or repurchase a Note or indemnify you with respect to the Note, shall be in Loanio's sole discretion.

Upon discovery by Loanio of any such material breach of the foregoing Loanio representations and warranties, Loanio shall give you notice of the material breach, and of Loanio's election to cure or repurchase the Note, or provide indemnity with respect to the Note, no later than ninety (90) days after Loanio’s discovery of the material breach. In the event Loanio elects to repurchase a Note, Loanio will pay you a repurchase price equal to the outstanding principal balance of the Note as of the date of repurchase, plus any accrued but unpaid interest on the principal balance as of the date of repurchase at the interest rate set forth in the Note; provided, however, that (i) in the event Loanio repurchases a Note within three (3) days of disbursement of Loan proceeds to the Borrower, no interest will be deemed to have accrued, and therefore no interest will be paid to you. The repurchase price will be paid to you by remittance into the Loanio FBO Account, and those funds will be available to you for further bidding. Upon any such repurchase, the Note shall be transferred and assigned by you to Loanio, in each case without recourse, and Loanio in its capacity as servicer of the Note on your behalf shall execute any endorsements or assignments necessary to effectuate the transfer and assignment of the Note to Loanio. Upon repurchase of a Note, Loanio shall be subrogated to all rights previously possessed by the Note Purchaser, and may exercise any remedies authorized or permitted under the Note and applicable law.

LOANIO’S OBLIGATION TO CURE OR REPURCHASE A NOTE, OR TO INDEMNIFY YOU, IS YOUR SOLE AND EXCLUSIVE REMEDY WITH RESPECT TO A BREACH OF LOANIO’S REPRESENTATIONS AND WARRANTI