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Glossary of Terms

A

"Accredited Investor"

  1. a Canadian financial institution, or a Schedule III bank,

  2. the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada),

  3. a subsidiary of any person referred to in paragraphs (a) or (b), if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary,

  4. a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, other than a person registered solely as a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador),

  5. an individual registered or formerly registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (d),

  6. the Government of Canada or a jurisdiction of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or a jurisdiction of Canada,

  7. a municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l'île de Montréal or an intermunicipal management board in Québec;

  8. any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government,

  9. a pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada) or a pension commission or similar regulatory authority of a jurisdiction of Canada,

  10. an individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000,

  11. an individual whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year,

  12. an individual who, either alone or with a spouse, has net assets of at least $5,000,000,

  13. a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements,

  14. an investment fund that distributes or has distributed its securities only to

    1. a person that is or was an accredited investor at the time of the distribution,

    2. a person that acquires or acquired securities in the circumstances referred to in sections 2.10 of NI 45-106 [Minimum amount investment], and 2.19 of NI 45-106[Additional investment in investment funds], or

    3. a person described in paragraph (i) or (ii) that acquires or acquired securities under section 2.18 of of NI 45-106[Investment fund reinvestment],

  15. an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt,

  16. a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be,

  17. a person acting on behalf of a fully managed account managed by that person, if that person

    1. is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction, and

    2. in Ontario, is purchasing a security that is not a security of an investment fund;

    3. a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on the securities being traded,

  18. an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (a) to (d) or paragraph (i) in form and function,

  19. a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors,

  20. an investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser, or

  21. a person that is recognized or designated by the securities regulatory authority or, except in Ontario and Québec, the regulator as

    1. an accredited investor

See also the definitions for Institutional Accredited Investors, Non-Institutional Accredited Investors, and Individual Accredited Investors.

"Accredited Investor Certificate"

means the certificate completed by an Accredited Investor when registering to be a Lender on the Online Lending System.

"Accredited Investor Certification Process"

is the process by which Lenders identify the basis on which they claim Accredited Investor status.

"Accredited Investor Exemption"

means a statutory exemption from the Dealer Registration and Prospectus Requirements, as set out in section 2.3 of National Instrument 45-106.

  1. S. 2.3 The dealer registration requirement does not apply in respect of a trade in a security if the purchaser purchases the security as principal and is an accredited investor.

  2. The prospectus requirement does not apply to a distribution of a security in the circumstances referred to in subsection (1).

  3. Subject to subsection (4), for the purpose of this section, a trust company or trust corporation described in paragraph (p) of the definition of "accredited investor" in section 1.1 [the Definition section of National Instrument 45-106] is deemed to be purchasing as principal.

  4. Subsection (3) does not apply to a trust company or trust corporation registered under the laws of Prince Edward Island that is not registered or authorized under the Trust and Loan Companies Act (Canada) or under comparable legislation in another jurisdiction of Canada.

  5. For the purpose of this section, a person described in paragraph (q) of the definition of "accredited investor" in section 1.1 [the Definition section of National Instrument 45-106] is deemed to be purchasing as principal.

  6. This section does not apply to a trade in a security to a person if that person is created or used solely to purchase or hold securities as an accredited investor as described in paragraph (m) of the definition of "accredited investor" in section 1.1 [the Definition section of National Instrument 45-106].

"Active Bid"

is a Bid placed by an Active Participant on the outstanding portion of a Loan Request that is not filled in the Standing Bid Process.

"Active Participant"

means Accredited Investors participating in the Online Lending System in an active bidding process where Lenders make decisions about which Loan Requests to bid on, at what interest rates and in what amounts, subject to the Diversification Requirements and Cumulative Loss Limits.

"Active Participation"

“Active Participation” means participation by a Lender in an active Bidding Process where the Lender makes decisions about which Loan Requests to Bid on, at what Interest Rates and in what amounts, subject to the Diversification Requirements and Cumulative Loss Limits.

"Administration Fee"

means the Administration Fee payable by a Lender or Borrower as posted on the fee section of the Website.

"Affordability Rating"

is a graphic scale prepared by CommunityLend based on information provided by the Borrower and verified by CommunityLend that illustrates a Borrower's capacity to service his or her debt relative to his or her income.

"Agreement"

means, when used in the Lender Registration and Account Agreement, that agreement; when used in the Borrower Registration Agreement, means that agreement; when used in the Terms of Use, means that agreement; and, when used in the Loan Agreement, means that agreement.

"Alerts"

is a service to Lenders who wish to be Active Participants but require assistance in identifying Loan Requests. Lenders who elect this option will submit their criteria for Loan Requests and will then receive e-mail notifications of when Loan Requests meeting their criteria have been posted in the System.

"Annual Percentage Rate"

means the annual percentage rate in respect of a Loan Agreement that is determined in the manner prescribed by Applicable Laws.

"Applicable Laws"

means applicable statutes, laws, rules, regulations, whether federal, provincial or municipal, and includes Applicable Securities Laws and Applicable Non-Securities Laws.

"Applicable Non Securities Laws"

include, but are not limited to, federal and provincial financial institutions legislation, provincial consumer protection legislation, provincial consumer reporting legislation, provincial privacy and freedom of information legislation, Criminal Code provisions, federal anti-terrorism, federal anti-money laundering legislation and federal Interest Act provisions.

"Applicable Securities Laws"

means the applicable securities laws of Ontario and the regulations and rules made and forms prescribed thereunder including any orders, rulings made by securities regulators in Ontario.

"Applicable Securities Regulatory Authorities"

means the Ontario Securities Commission, the British Columbia Securities Commission.

"Application for discretionary relief"

means an application to Regulatory Authorities to obtain an exemption from one or more of the applicant's obligations under Applicable Laws.

"Arbitrator"

means the arbitrator appointed under Article 31 of the Lender Registration and Account Agreement, Article 30 of the Borrower Registration Agreement, Article 14 of the Loan Agreement, or Article 19 of the Terms of Use, or Article 8 of the Trust Agreement.

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B

"Bank"

has the meaning given that term in the Bank Act (Canada).

"Banking Validation"

means a two-stage process of validating banking information of prospective Registered Users conducted by CommunityLend.

"Benefits"

has the meaning given that term in the Trust Agreement.

"Bid"

is a commitment to Lend the amount of the Bid to the Borrower and to enter a Loan Agreement with a Borrower at a specified rate of interest as determined by the result of the auction.

"Bidder"

means a registered Lender who has a Bid matched with a Loan Request.

"Bidding Process"

is the process of Lenders placing Bids on Loan Requests.

"Borrower"

is a Registered User who may place a Loan Request on the CommunityLend website.

"Borrower Administration Fee"

means the fee set out in the

fee schedule
"Borrower Registration Agreement"

means the agreement between CommunityLend and each Borrower on the Online Lending System governing the relationship between each such Borrower and CommunityLend and setting out the parties respective rights and obligations.

"Borrower Suitability Review"

means CommunityLends assessment of the suitability of the Borrower to make Loan Requests on the Online Lending System through, among other means, the loan application process, the Initial Financial Review and the Final Financial Review.

"Business Day"

means any day, other than a Saturday or a Sunday or a day on which commercial banks in Toronto are required or authorized by law to remain closed.

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C

"Collection Agency"

means a person registered under applicable legislation, who obtains or arranges for payment of money owing to another person

"Collection Costs"

means the costs of collecting a Loan should it go into default as set out in the Fee Schedule.

"Collections Policy"

means CommunityLend’s policy governing the collection of missed payments and Delinquent Loans on behalf of the Lenders.

"Combined Bid Process"

is the process where Active Participants post Bids on Loan Requests not filled by the Standing Bid Process.

"Community"

is an online group of registered CommunityLend Lenders or Borrowers.

"Community Leader"

is a Registered User who establishes and administers a Community.

"CommunityLend Cautionary Statement"

means a statement of CommunityLend which warns the Visitors about risks associated with participating in the System.

"Competitive Auction" and "Competitive Auction Process"

is an auction that takes place after a Loan Request has been fully funded, in which the interest rate of a Loan Request may be bid down by successive prospective Lenders.

"Competitive Bid"

is a Bid placed in a Competitive Auction.

"Content"

means all materials displayed or otherwise accessible through the Website, including without limitation the underlying HTML, text, data, articles, design, source code, software, photos, videos, images, audio clips and other information.

"Credit Bureau"

see "Credit Reporting Agency."

"Credit History"

is the record of your past borrowing and repayment in Canada; it shows how you have dealt with your financial obligations in the past.

"Credit Information"

is information contained in a Credit Report. It includes information provided by credit grantors such as banks, finance companies, auto leasing companies, credit card companies and retailers, and can include public records from courthouses across the country and collection agencies. Credit Information includes but is not limited to the number, age, type and status of the Borrower’s credit lines, bankruptcies and judgments, mortgage loans and the number of the Borrower’s recent requests for credit.

"Credit Information Review"

is process whereby CommunityLend will collect a Borrower’s Credit Information, including all known debt repayment obligations, to allow CommunityLend to present a Credit Rating for that Borrower.

"Credit Rating"

s the rating assigned by CommunityLend to a Loan Request, which is based on the Credit Score provided by the Credit Reporting Agency and information obtained from the Borrower during the Loan Application Process as adjusted for factors such as size of Loan, Affordability Rating and Borrower’s Stability Rating, among others.

"Credit Report"

is a history of how consistently a Borrower pays his or her financial obligations.

"Credit Reporting Agency"

means a person who for gain or profit furnishes Credit Reports. A Credit Reporting Agency is also called a Credit Bureau.

"Credit Score"

is a statistical formula that translates personal information from the Borrower’s Credit Report and other sources into a three-digit score.

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D

"Dealer Registration and Prospectus Requirements"

have their respective meanings ascribed to them in National Instrument 14-101- Definitions and other Applicable Securities Laws.

"Delinquent Loan" (and "Delinquency")

means a Loan on which two consecutive monthly payments (or, in the case of a Loan repayable biweekly, three consecutive biweekly payments) have been missed.

"Designated Bank Account"

is the bank account in Canada, owned by a Borrower and over which the Borrower has the authority to direct that funds be transferred to or from the account, which a Borrower has specified be used to make Loan payments.

"Diversification Requirements"

means restrictions imposed on certain categories of Lenders as to the amount that can be invested on the Online Lending System, the percentage of funds in a Lender's Account that can be invested in any one Loan and the percentage of any one Loan that can be held.

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E

"Event of Default"

has the meaning given that term in the Loan Agreement.

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F

"Facilitated Participant"

is an Accredited Investor who places a Standing Bid in the Online Lending System.

"Facilitated Participation"

means participation by Accredited Investors in the Online Lending System using a Standing Bid.

"Failed Payment Fees"

are the reasonable charges payable by a Borrower, as set out in the Fee Schedule, that reflect the costs incurred on behalf of the Lender by CommunityLend because a pre-authorized debit or automated withdrawal the Borrower used to make a payment was refused by the Borrower's financial institution.

"Final Financial Review"

is a review that will be conducted by CommunityLend before disbursing Loan proceeds to determine the accuracy of information or whether any changes have occurred since the Initiial Financial Review, including the verification of Lender'Borrower's credentials, and further compliance checks and verification of Borrower's Credit Information.

"Final Interest Rate"

is the Offered Interest Rate in place at the time of Loan Request Closure; it is the rate at which the Loan will be funded.

"First Regular Payment"

means the first scheduled payment due under the terms of the Loan Agreement.

"First Regular Payment Date"

has the meaning given that term in the Loan Agreement.

"Forward Looking Information"

means information about prospective results of operations, financial position or cash flows, based on assumptions about future economic conditions and courses of action.

"Forward Looking Information Requirements"

means the requirements contained in National Instrument 45-106 Section 6.5 (Forward-looking information in offering memorandum):

"If an offering memorandum is provided to a prospective purchaser, any forward- looking information included in the offering memorandum must comply with section 4A.2 of NI 51-102 and must include the disclosure described in section 4A.3 of NI 51- 102. In addition to the foregoing, FOFI or a financial outlook, each as defined in NI 51-102, included in a rights offering offering memorandum must comply with Part 4B of NI 51-102. If the forward-looking information relates to an issuer or other entity that is not a reporting issuer, section 4A.2 section 4A.3 and Part 4B of NI 51-102 apply as if the issuer or other entity were a reporting issuer."

National Instrument 51-102 Parts 4A.2, 4A.3, and 4B provide the following:

4A.2 Reasonable Basis
A reporting issuer must not disclose forward-looking information unless the issuer has a reasonable basis for the forward-looking information.

4A.3 Disclosure
A reporting issuer that discloses material forward-looking information must include disclosure that (a) identifies forward-looking information as such; (b) cautions users of forward-looking information that actual results may vary from the forward-looking information and identifies material risk factors that could cause actual results to differ materially from the forward-looking information; (c) states the material factors or assumptions used to develop forward-looking information; and (d) describes the reporting issuer's policy for updating forward-looking information if it includes procedures in addition to those described in subsection 5.8(2).

PART 4B FOFI AND FINANCIAL OUTLOOKS

4B.1 Application
(1) Subject to subsection (2), this Part applies to FOFI or a financial outlook that is disclosed by a reporting issuer.

(2) This Part does not apply to disclosure that is (a) subject to requirements in National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities or National Instrument 43-101 Standards of Disclosure for Mineral Projects; (b) made to comply with the conditions of any exemption from the requirements referred to in paragraph (a) that a reporting issuer received from a regulator or ecurities regulatory authority unless the regulator or securities regulatory authority orders that this Part applies to disclosure made under the exemption; or (c) contained in an oral statement.

4B.2 Assumptions
(1) A reporting issuer must not disclose FOFI or a financial outlook unless the FOFI or financial outlook is based on assumptions that are reasonable in the circumstances.

(2) FOFI or a financial outlook that is based on assumptions that are reasonable in the circumstances must, without limitation, (a) be limited to a period for which the information in the FOFI or financial outlook can be reasonably estimated; and (b) use the accounting policies the reporting issuer expects to use to prepare its historical financial statements for the period covered by the FOFI or the financial outlook.

4B.3 Disclosure
In addition to the disclosure required by section 4A.3, if a reporting issuer discloses FOFI or a financial outlook, the issuer must include disclosure that (a) states the date management approved the FOFI or financial outlook, if the document containing the FOFI or financial outlook is undated; and (b) explains the purpose of the FOFI or financial outlook and cautions readers that the information may not be appropriate for other purposes.

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G

"General Eligibility Requirements"

are the general requirements all potential Lenders and Borrowers must meet in order to register and participate in the Online Lending System. There are additional requirements specific to Lenders and Borrowers that must also be met.

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H

"Highest Acceptable Bid Rate"

is the Offered Interest Rate for a loan that is not fully funded. If a loan is fully funded and the Loan Request has entered into a Competitive Auction, the Highest Acceptable Bid Rate will be 0.05 % less than the current Offered Interest Rate.

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I

"Identity Verification"

is the process CommunityLend follows to verify the identification and bank account information of potential Lenders and Borrowers.

"Individual Accredited Investors"

are those falling within paragraphs (j) through (l) of the definition of Accredited Investor, namely:

  1. an individual who, either alone or with a spouse, beneficially owns, directly or indirectly, financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000,

  2. an individual whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the two most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year, and

  3. an individual who, either alone or with a spouse, has net assets of at least $5,000,000,

"Initial Disclosure Statement"

is a statement provided to Borrowers setting out the cost of borrowing, Annual Percentage Rate and other terms that form part of a Loan Agreement.

"Initial Disclosure Statement — Loan Closing Stage"

is a statement provided to Borrowers after Loan Request Closure setting out the cost of borrowing, Annual Percentage Rate and the other terms of the Loan.

"Initial Disclosure Statement — Loan Request Stage"

is a statement provided to Borrowers at the time they complete a Loan Request setting out what the cost of borrowing, Annual Percentage Rate and other terms of the Loan would be if they were to receive a Loan in the amount requested and at the initial Offered Interest Rate set out in the Loan Request.

"Instalment"

means each individual, 36 monthly or 78 biweekly payment instalment in the amount noted in the Online Lending System which a Borrower is subject to under the Loan Agreement.

"Institutional Accredited Investors"

are those described within subparagraphs (a) through (d), (f) through (i), (n) through (p), and (s) (as it pertains to categories (a) through (d)) and (t) of the definition of Accredited Investor, namely:

  1. a Canadian financial institution, or a Schedule III bank,

  2. the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada),

  3. a subsidiary of any person referred to in paragraphs (a) or (b), if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary,

  4. a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, other than a person registered solely as a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador),

  1. the Government of Canada or a jurisdiction of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or a jurisdiction of Canada,

  2. a municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l'île de Montréal or an intermunicipal management board in Québec;

  3. any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government,

  4. a pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada) or a pension commission or similar regulatory authority of a jurisdiction of Canada,

  1. an investment fund that distributes or has distributed its securities only to

    1. a person that is or was an accredited investor at the time of the distribution,

    2. a person that acquires or acquired securities in the circumstances referred to in sections 2.10 [Minimum amount investment], and 2.19 [Additional investment in investment funds], or

    3. a person described in paragraph (i) or (ii) that acquires or acquired securities under section 2.18 [Investment fund reinvestment],

  2. an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt,

  3. a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be,

  1. a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors, and

  2. an investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser.

"Interest Adjustment"

is an additional amount of interest due under the Loan Agreement if the First Regular Payment date is more than one month ( in the case of a Loan that is payable monthly), or 14 days (in the case of a Loan that is payable bi-weekly) from the date of the Loan Agreement.

"Interest Rate"

means the annual rate of interest to which the Borrower is subject under the Loan Agreement.

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L

"Lender"

means a Registered User who may place Bids on a Loan Request or Loan Requests on the Online Lending System.

"Lender Account"

is the account with CommunityLend which allows a Lender to place a Bid on a Borrower's Loan Request, and includes the Lender Funds.

"Lender Funds"

means the funds held to a Lender's credit in the Trust Account and the principal amount of the Lender's outstanding Loans.

"Loan"

means an unsecured loan between a Borrower and Lender.

"Loan Agreement"

is the agreement setting out the terms and conditions of a Loan between a Borrower and Lender.

"Loan Application"

means an online process whereby the Borrower provides information as to his or her financial assets, liabilities, income and expenditures and the amount, purpose, interest rate and other information for their Loan Request.

"Loan Closing Process"

has the meaning given that term in the Lender Registration and Account Agreement.

"Loan Rate"

is the rate at which a Loan will be funded; it is equal to the Final Interest Rate at the time of Loan Request Closure.

"Loan Request"

is a Borrower's request to borrow that is displayed on the Online Lending System.

"Loan Request Closure"

means that a Loan Request has been closed for further bidding.

"Loan Request Withdrawal Fee"

is the fee that will be charged to the Borrower's bank account per

Fees page
"Loan Status Information"

is the display of current Loans on the Restricted Pages, including User Name, the amount, purpose and interest rate of the Loan, the Credit Rating, and whether the Loan is in default.

"LRAA"

means the Lender Registration and Account Agreement.

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M

"Minimum Interest Rate"

is the interest rate assigned to a Credit Rating by CommunityLend based on risk, size of Loan, probability of loss, alternative investment options and other factors; Borrowers will not be able to post a Loan Request with an Offered Interest Rate lower than the Minimum Interest Rate for his or her particular Credit Rating.

"Misrepresentation"

means an untrue statement of material fact, or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it was made.

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N

"Non-institutional Accredited Investors"

are those that are described within paragraphs: (e), (m), (q), (r), (u) & (v) of the definition of Accredited Investor and (t) as it pertains to these categories. Namely:

  1. an individual registered or formerly registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (d),

  1. a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements,

  1. a person acting on behalf of a fully managed account managed by that person, if that person

    1. is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction, and

    2. in Ontario, is purchasing a security that is not a security of an investment fund;

    3. a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on the securities being traded,

  2. an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (a) to (d) or paragraph (i) in form and function,

  1. a person that is recognized or designated by the securities regulatory authority or, except in Ontario and Québec, the regulator as

    1. an accredited investor, or

    2. an exempt purchaser in Alberta or British Columbia after this Instrument comes into force.

  2. a person that is recognized or designated by the securities regulatory authority or, except in Ontario and Quebec, the regulator as

    1. an accredited investor, or

    2. an exempt purchaser in Alberta or British Columbia after this Instrument comes into force, and

  1. an investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser.

"Notice of Arbitration"

means the written notice containing a concise description of the matter submitted for arbitration which is provided to CommunityLend by a party desiring arbitration under either Article 30 of the Lender Registration and Account Agreement or Article 30 of the Borrower Registration Agreement.

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O

"Offer Period"

is the period of time a Loan Request is open for bids, to a maximum of 14 days.

"Offered Interest Rate"

is the interest rate at which the Loan is currently offered; the "initial Offered Interest Rate" is the interest rate set out in a Loan Request when it is first posted.

"Offering Memorandum"

means, in the Ontario Securities Act,

a disclosure document used in connection with securities issued in reliance on prospectus exemptions under securities legislation. It is a document, together with any amendments to that document, purporting to describe the business and affairs of an issuer that has been prepared primarily for delivery to and review by a prospective purchaser so as to assist the prospective purchaser to make an investment decision in respect of securities being sold in a distribution to which section 53 would apply but for the availability of one or more of the exemptions contained in Ontario securities law, but does not include a document setting out current information about an issuer for the benefit of a prospective purchaser familiar with the issuer through prior investment or business contacts.

"Online Lending System"

is CommunityLend's online peer-to-peer lending service which brings together Borrowers and Lenders in an interactive online web-based environment for the entering into of unsecured Loans.

"Orderly Payment of Debt"

has the meaning given that term in Applicable Laws.

"Outstanding Principal"

means the Principal Amount less all amounts that CommunityLend has allocated from Borrower's payments towards the repayment of the Principal Amount.

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P

"Partial Bid"

means a Bid that is reduced by the Online Lending System from the Bid submitted by the Lender in order that only part of the Bid can be placed.

"Penalties"

means the penalties that result from a failure to comply with Applicable Securities Laws:

Ontario Securities Act, s. 122(1):

Every person or company that,

  1. makes a statement in any material, evidence or information submitted to the Commission, a Director, any person acting under the authority of the Commission or the Executive Director or any person appointed to make an investigation or examination under this Act that, in a material respect and at the time and in the light of the circumstances under which it is made, is misleading or untrue or does not state a fact that is required to be stated or that is necessary to make the statement not misleading;

  2. makes a statement in any application, release, report, preliminary prospectus, prospectus, return, financial statement, information circular, take-over bid circular, issuer bid circular or other document required to be filed or furnished under Ontario securities law that, in a material respect and at the time and in the light of the circumstances under which it is made, is misleading or untrue or does not state a fact that is required to be stated or that is necessary to make the statement not misleading; or

  3. contravenes Ontario securities law, is guilty of an offence and on conviction is liable to a fine of not more than $5 million or to imprisonment for a term of not more than five years less a day, or to both. 1994, c. 11, s. 373; 2002, c. 22, s. 181 (1).

"Pre-Authorized Debit/Pre-Authorized Credit (PAD/PAC) Form"

is a form a Borrower or Lender must sign in order to authorize CommunityLend to debit or credit the Borrower's or Lender's Designated Bank Account.

"Public Pages"

means those areas of the CommunityLend website that are viewable by Visitors and Registered Users.

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R

"Registered User"

means a Borrower or Lender registered to use the Online Lending System and who has entered into a Registration Agreement and has satisfied all the conditions subsequent to be a Registered User.

"Registration Agreements"

means, in the case of a Borrower, the Borrower Registration Agreement and, in the case of a Lender, the Lender Registration and Account Agreement.

"Regular Payment"

means a regularly scheduled payment as set out in the Loan Agreement.

"Regular Payment Date"

means the date noted in the Online Lending System for the first payment by the Borrower to the Lender under the Loan Agreement.

"Regulatory Authority"

means a government body formed or mandated under the terms of a legislative act to ensure compliance with the provisions of the act, and in carrying out its purpose.

"Report of Trade"

means the report of trade referred to in the Report of Trade Requirements.

"Restricted Pages"

means those areas of the Website that are only accessible by Registered Users.

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S

"Secret Interest Rate"

is the lowest interest rate a Lender is willing to accept on a Loan; a Lender specifies a Secret Interest Rate in each Bid.

"Servicing Duties"

are the duties undertaken by us to service and administer the Loans and the Loan Agreements on behalf of Lenders as described in Article 8 (Servicing the Loans) of the Lender Registration and Account Agreement.

"Servicing Rights"

are the power and authority granted to CommunityLend to service and administer the Loans and the Loan Agreements on behalf of Lenders.

"Stability Rating"

is a graphic scale completed by CommunityLend based on information provided by a Borrower that represents life factors( such as employment tenure, number of years at current residence and marital status) that provides to Lenders a perspective on the Borrower's creditworthiness.

"Standard Form Loan Agreement"

is the form of loan agreement used at CommunityLend to evidence loans between Lenders and Borrowers.

"Standing Bid"

is a bidding instruction completed by a Lender specifying a set of criteria and a maximum amount under which a Lender authorizes the Online Lending System to automatically place Bids on his or her behalf in respect of Loan Requests posted by Borrowers.

"Standing Bid Process"

is a process where the Online Lending System automatically matches Standing Bids with Loan Requests that meet the criteria specified in the Standing Bid.

"Statutory Rights of Action and to Rescission for Misrepresentations in Offering Memorandum"

means under the Ontario Securities Act, s. 130.1(1), the following:

130.1 (1) Where an offering memorandum contains a misrepresentation, a purchaser who purchases a security offered by the offering memorandum during the period of distribution has, without regard to whether the purchaser relied on the misrepresentation, the following rights:

  1. The purchaser has a right of action for damages against the issuer and a selling security holder on whose behalf the distribution is made.

  2. If the purchaser purchased the security from a person or company referred to in paragraph 1, the purchaser may elect to exercise a right of rescission against the person or company. If the purchaser exercises this right, the purchaser ceases to have a right of action for damages against the person or company. and Right of action for damages: OSC Rule 45-501, s. 6.2:

s. 6.2 Right of action for damages and right of rescission –

  1. The rights referred to in section 130.1 of the Act apply in respect of an offering memorandum delivered to a prospective purchaser.

  2. Despite subsection (1), the rights referred to in section 130.1 of the Act do not apply in respect of an offering memorandum delivered to a prospective purchaser in connection with a distribution made in reliance on the exemption from the prospectus requirement in section 2.3 of NI 45-106 [Accredited investor] if the prospective purchaser is

    1. a Canadian financial institution or a Schedule III bank,

    2. the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada), or

    3. a subsidiary of any person referred to in paragraphs (a) and (b), if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary.

and Disclosure of right of action for damages: OSC Rule 45-501, s. 6.3;

6.3 Description of rights in offering memorandum - If a selling security holder delivers an offering memorandum to a prospective purchaser in connection with a distribution to which the rights referred to in section 130.1 of the Act apply, the rights must be described in the offering memorandum.

"Suitability Information"

means appropriate know your client ("KYC") and suitability information provided to CommunityLend as to a Lender's investment objectives, investment knowledge and experience, risk tolerance, investment time horizon, current investment holdings, employment status, income, net worth and any other information which is pertinent to CommunityLend meeting its obligations as a Portfolio Manager/ Exempt Market Dealer and in order for CommunityLend to determine the suitability of investments on the Online Lending System.

"Suitability Requirement"

means the requirement of CommunityLend under applicable Securities Laws to seek certain information about Lenders.

30(4) For the purposes of subsection (1), but without limiting the requirements of that subsection, each dealer, investment counsel and portfolio manager shall make those enquiries that

  1. will enable the dealer, investment counsel or portfolio manager, as the case may be, to establish (i) the identity and, if applicable, the credit worthiness of each client, and (ii) the reputation of the client if information known to the dealer, investment counsel or portfolio manager causes doubt as to whether the client is of good reputation, and

  2. subject to subsection (7), are appropriate in view of the nature of the client's investment and of the type of transaction being effected for his account, in order to determine (i) the general investment needs and objectives of that client, and (ii) the suitability of a proposed purchase, sale or trade for that client.

In Ontario, see Section 1.5 of Ontario Securities Commission Rule 31-505 – Conditions of Registration:

1.5 Know your Client and Suitability

  1. A person or company that is registered as a dealer or adviser and an individual that is registered as a salesperson, officer or partner of a registered dealer or as an officer or partner of a registered adviser shall make such enquiries about each client of that registrant as

    1. subject to section 1.6, enable the registrant to establish the identity and the creditworthiness of the client, and the reputation of the client if information known to the registrant causes doubt as to whether the client is of good reputation; and

    2. subject to section 1.7, are appropriate, in view of the nature of the client's investments and of the type of transaction being effected for the client's account, to ascertain the general investment needs and objectives of the client and the suitability of a proposed purchase or sale of a security for the client.

  2. Despite paragraph (1)(a) a registrant is not required to make enquiries as to the creditworthiness of a client if the registrant is not financing the acquisition of securities by the client.

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T

"Term"

means the three years commencing on the date of the Loan Agreement and ending on the earlier of the date that is 1095 days (or 1096 days if a leap day occurs after the commencement of the Loan Agreement) from the date of the Loan Agreement or the date on which, pursuant to Article 8 of the Loan Agreement, the Borrower has prepaid the Outstanding Principal.

"Third-Party Websites"

means any website or part thereof which is hyperlinked or to which a Registered User or Visitor is referred which is not the Website.

"Total Debt Servicing Ratio"

is a debt service measure that shows the percentage of gross annual income required to cover payments associated with housing and all other debts and obligations, such as car loans and credit cards.

"Trade-mark"

means certain names, words, titles, phrases, logos, icons, graphics or designs owned by CommunityLend, or trade names and trademarks of third parties and used under license by CommunityLend.

"Trust Account"

is the trust account maintained at BMO Bank of Montreal

"Trust Agreement"

means the Agreement and related documents between CommunityLend Inc. and each Lender that set out the terms on which the Trust Account is administered in respect of each Lender.

"Trustee"

means CommunityLend acting as bare trustee in accordance with the trust Agreement

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U

"User Name"

is the screen name used by Lenders and Borrowers in order to maintain their anonymity.

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V

"Visitor"

means a person who visits the CommunityLend Website but is not a Borrower or Lender. Visitors are only able to view the Public Pages of the Website.

"Vouches"

are references: people who know the Borrower may vouch for them and explain why. Vouches are NOT guarantees of payment by the people vouching.

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W

"Website"

means the website operated by CommunityLend with the universal resource locator (or URL) www.communitylend.com which comprises the Public Pages and the Restricted Pages.

"Winning Bid"

is a Bid that is in place on a fully funded Loan Request at the time of the Loan Request Closure.

© 2006–2012 CommunityLend.