Exhibit 10.3

 

CONFIDENTIAL TREATMENT

[***] indicates that text has been omitted which is the subject of a
confidential

treatment request. This text has been separately filed with the SEC.

 

 

 

 

WEBBANK

and

PROSPER MARKETPLACE, INC.

 

STAND BY
PURCHASE AGREEMENT

 

  

 

 

 

Dated as of July 1, 2016

 

 

 
 

This STAND BY PURCHASE AGREEMENT (this “Agreement”), dated as of July 1, 2016,
is made by and between WEBBANK, a Utah-chartered industrial bank having its
principal location in Salt Lake City, Utah (“Bank”), and PROSPER MARKETPLACE,
INC., a Delaware corporation, having its principal location in San Francisco,
California (“PMI”).

WHEREAS, Bank and PMI are parties to a Marketing Agreement, dated as of the date
hereof (the “Marketing Agreement”);

WHEREAS, Bank and PROSPER FUNDING LLC, a Delaware limited liability company and
a wholly-owned subsidiary of PMI, having its principal location in San
Francisco, California (“PFL”) are parties to an Asset Sale Agreement, dated as
of the date hereof (the “Asset Sale Agreement”);

WHEREAS, Bank may desire to sell to PMI certain Assets relating to Loans
originated by Bank pursuant to the Marketing Agreement, and PMI desires to
purchase from Bank the Assets that are offered, and that are not purchased by
PFL under the Asset Sale Agreement;

WHEREAS, Bank and PMI have entered into a Stand By Loan Purchase Agreement,
dated as of January 25, 2013, pursuant to which PMI agreed to purchase certain
Loans originated by Bank (as amended from time to time, the “Existing Stand By
Loan Purchase Agreement”); and

WHEREAS, as of the date hereof, the Parties desire to amend and restate the
terms of the Existing Stand By Loan Purchase Agreement.

NOW, THEREFORE, in consideration of the foregoing and the terms, conditions and
mutual covenants and agreements herein contained, and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:

1.                Definitions; Effectiveness.

(a)The terms used in this Agreement shall be defined as set forth in Schedule 1
to the Marketing Agreement. The rules of construction set forth in Schedule 1 to
the Marketing Agreement shall apply to this Agreement.

(b)This Agreement shall be effective as of August 1, 2016 (the “Effective Date”)
and, as of the Effective Date, shall supersede and replace the Existing Stand By
Loan Purchase Agreement (except that, as provided in section 1(c), the Existing
Stand By Loan Purchase Agreement will govern the purchase of Loans originated
prior to the Effective Date). This Agreement shall apply to all Loans originated
by Bank during the term of this Agreement, beginning on the Effective Date.
Loans originated on or after the Effective Date shall not be subject to the
Existing Stand By Loan Purchase Agreement.

(c)All Loans originated by Bank prior to the Effective Date shall be governed by
the terms of the Existing Stand By Loan Purchase Agreement as in effect at the
time that such Loans were originated, and shall not be subject to the terms of
this Agreement. As to such Loans, the terms of the Existing Stand By Loan
Purchase Agreement, including indemnification, shall continue to apply on the
terms set forth therein.

(d)This Agreement shall not operate so as to render invalid or improper any
action heretofore taken under the Existing Stand By Loan Purchase Agreement.

    

 

2.                Purchase of Stand By Assets; Payment to Bank; Reporting to
Bank.

(a)If PFL is obligated under the Asset Sale Agreement to purchase any Assets
from Bank on a Closing Date, then to the extent that PFL fails to purchase such
Assets (the “Stand By Assets”) on such Closing Date, Bank agrees to sell,
transfer, assign, set-over, and otherwise convey to PMI, without recourse, on
the applicable Stand By Closing Date, the Stand By Assets. On the Stand By
Closing Date, the servicing shall be released with respect to those Assets sold
as Loans and Participations with a Participation Percentage of 100%. All of the
foregoing shall be in accordance with the procedures set forth in this Section 2
of this Agreement. In consideration for Bank’s agreement to sell, transfer,
assign, set-over and convey to PMI such Stand By Assets, PMI agrees to purchase
such Stand By Assets from Bank, and PMI shall pay to Bank the Purchase Price in
accordance with subsection 2(b) of this Agreement.

(b)[***], on the Stand By Closing Date, PMI shall pay the Purchase Price for any
Stand By Assets by wire transfer of immediately available funds, to an account
designated by Bank.

(c)To the extent that such materials are in Bank’s possession, upon PMI’s
request, Bank agrees to cause to be delivered to PMI, at PMI’s cost, loan files
on all Loans purchased by PMI pursuant to this Agreement within [***], Such loan
files shall include the application for the Loan, the Loan Agreement,
confirmation of delivery of the Loan Agreement to the Borrower, and such other
materials as PMI may reasonably require (all of which may be in electronic
form); provided that Bank may retain copies of such information as necessary to
comply with Applicable Laws. Bank, as owner of the Loan, may retain copies of
any of the foregoing, or may request copies from PMI from time to time, which
PMI agrees to provide promptly.

3.                Ownership of Stand By Assets and Loans.

(a)Bank shall retain ownership of the Loans after each Funding Date, unless and
until sold to PFL as provided in the Asset Sale Agreement or to PMI as provided
in this Agreement. PMI agrees to make entries on its books and records to
clearly indicate Bank’s ownership of the Loans as of each Stand By Closing Date.

(b)On and after each Stand By Closing Date, subject to PMI’s payment of the
Purchase Price on each such date, PMI shall be the sole owner for all purposes
(e.g., tax, accounting and legal) of the Stand By Assets purchased from Bank on
such date. Bank agrees to make entries on its books and records to clearly
indicate the sale of the Stand By Assets to PMI as of each Stand By Closing
Date. PMI agrees to make entries on its books and records to clearly indicate
the purchase of the Stand By Assets as of each Stand By Closing Date.

(c)Bank does not assume and shall not have any liability to PMI for the
repayment of any Loan Proceeds or the servicing of the Stand By Assets or
related Loans after the related Stand By Closing Date.

(d)PMI or any subsequent owner of the Stand By Assets may (i) securitize the
Stand By Assets, or any amounts owing thereunder, or (ii) issue an “asset-backed
security” (as defined under 17 C.F.R. § 229.1101(c) or Section 3(a)(77) of the
Securities Exchange Act of 1934) backed by the Stand By Assets or any amounts
owing thereunder, in each case, without the prior written consent of Bank;
provided that all of the following conditions are met:

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(1)Bank is not required to maintain any ongoing ownership interest in the Stand
By Assets after the sale thereof to PMI, Bank is not required to make or provide
any informational reports, certificates, data or filings with respect to the
securitization or other financing transaction and Bank is not required to incur
any costs or expenses in connection with such securitization or other financing
transaction unless PMI (or some other creditworthy entity reasonably acceptable
to Bank) has agreed in writing to promptly and fully reimburse Bank for such
out-of-pocket costs and expenses.

(2)Bank is not deemed to be the “securitizer,” “sponsor” or “depositor” under
any rule, regulation or order of the Securities and Exchange Commission with
respect to such transaction.

(3)Bank is not required to waive or agree to impair any of its rights or
remedies under the Program Documents.

(4)PMI agrees (i) that it shall, and that it shall require each Direct
Transferee or Affiliate of such Person to, obtain Bank’s written approval of any
identification of Bank by name in any documents related to a securitization or
other financing transaction, and any description of the Program in such
documents, and (ii) that it shall use commercially reasonable efforts to require
any subsequent transferee not covered by (i) above to obtain Bank’s written
approval of any identification of Bank by name in any documents related to a
securitization or other financing transaction, and any description of the
Program in such documents. As to any Direct Transferee (or Affiliate thereof) or
any subsequent transferee, Bank will not unreasonably withhold, delay or
condition its approval.

PMI shall include a provision in any agreement by which PMI sells or transfers
Stand By Assets requiring such Direct Transferee to comply with the terms of
this Section 3(d) to the same extent as PMI, and requiring such transferee to
include such a provision in subsequent transfers of the Stand By Assets. PMI
agrees that it shall, and that it shall require each Direct Transferee or
Affiliate of such Person to, promptly provide to Bank copies of all offering
documents and investor presentations in connection with any such transaction;
PMI shall include a provision in any agreement by which PMI sells or transfers
Stand By Assets requiring such Direct Transferee to include a provision in
subsequent transfers of the Stand By Assets that requires the subsequent
transferee to promptly provide to Bank copies of all offering documents and
investor presentations in connection with any such transaction.

 

(e)Upon request by PMI, the Bank shall provide an acknowledgement in a form
mutually agreed by the Parties regarding the satisfaction, to Bank’s knowledge,
of the conditions set forth in Section 3(d)(1)-(4).

4.                Representations and Warranties of Bank. Bank hereby makes to
PMI the representations and warranties set forth in Section 4 of the Asset Sale
Agreement.

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5.                Representations and Warranties of the Prosper Parties. PMI
hereby makes to Bank the representations and warranties set forth in Section 5
of the Asset Sale Agreement, in each case as to PMI rather than PFL, and
provided that the representation and warranty in Section 5(a)(1) of the Asset
Sale Agreement shall be modified to reflect that PMI is a corporation with
articles of incorporation and bylaws rather than a limited liability company
with a limited liability company agreement.

6.                Minimum Liquidity Covenant. PMI shall maintain Net Liquidity
equal to or greater than [***], at all times during the term of this Agreement.

7.                Conditions Precedent. The obligations of Bank in this
Agreement are subject to the satisfaction of the conditions precedent set forth
in Section 7 of the Asset Sale Agreement. The obligations of PMI in this
Agreement are subject to the satisfaction of the conditions precedent set forth
in Section 6 of the Asset Sale Agreement.

8.                Term and Termination.

(a)The term of this Agreement shall be the Term of the Asset Sale Agreement, and
this Agreement shall automatically terminate upon the expiration or termination
of the Asset Sale Agreement.

(b)Bank shall have the right to terminate this Agreement immediately upon
written notice to PMI in any of the following circumstances:

(1)any representation or warranty made by PMI in this Agreement shall be
incorrect in any material respect and shall not have been corrected within
thirty (30) Business Days after written notice thereof has been given to PMI;

(2)PMI shall default in the performance of any obligation or undertaking under
this Agreement and such default shall continue for thirty (30) Business Days
after written notice thereof has been given to PMI; or

(3)PMI defaults on its obligation set forth in Section 6.

(c)PMI shall have the right to terminate this Agreement immediately upon written
notice to Bank in any of the following circumstances:

 

(1)any representation or warranty made by Bank in this Agreement shall be
incorrect in any material respect and shall not have been corrected within
thirty (30) Business Days after written notice thereof has been given to Bank;
or

(2)Bank shall default in the performance of any obligation or undertaking under
this Agreement and such default shall continue for thirty (30) Business Days
after written notice thereof has been given to Bank.

(d)Bank may terminate this Agreement immediately upon written notice to PMI if
PMI defaults on its obligation to make a payment to Bank as provided in Section
2 of this Agreement.

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(e)The termination of this Agreement either in part or in whole shall not
discharge any Party from any obligation incurred prior to such termination,
including any obligation with respect to Stand By Assets sold prior to such
termination.

(f)Bank may terminate this Agreement immediately upon written notice to PMI if
Bank incurs any Loss that would have been subject to indemnification under
Section 10(a) or 10(e) but for the application of Applicable Laws that limit or
restrict Bank’s ability to seek such indemnification.

(g)The terms of this Section 8 shall survive the expiration or earlier
termination of this Agreement.

9.                Confidentiality.

(a)Each Party agrees that Confidential Information of each other Party shall be
used by such Party solely in the performance of its obligations and exercise of
its rights pursuant to the Program Documents. Except as required by Applicable
Laws or legal process, no Party (the “Restricted Party”) shall disclose
Confidential Information of any other Party to third parties; provided, however,
that the Restricted Party may disclose Confidential Information of the other
Party (i) to the Restricted Party’s Affiliates, agents, representatives or
subcontractors for the sole purpose of fulfilling the Restricted Party’s
obligations under this Agreement (as long as the Restricted Party exercises
reasonable efforts to prohibit any further disclosure by its Affiliates, agents,
representatives or subcontractors), provided that in all events, the Restricted
Party shall be responsible for any breach of the confidentiality obligations
hereunder by any of its Affiliates, agents (other than a Prosper Party as agent
for Bank), representatives or subcontractors, (ii) to the Restricted Party’s
auditors, accountants and other professional advisors (provided such receiving
party is subject to confidentiality obligations at least as stringent as those
set forth herein and the Restricted Party shall be responsible for any breach of
confidentiality obligations by such receiving party), or to a Regulatory
Authority, or (iii) to any other third party as mutually agreed by the Parties.

(b)A Party’s Confidential Information shall not include information that:

(1)is generally available to the public;

(2)has become publicly known, without fault on the part of the Party who now
seeks to disclose such information (the “Disclosing Party”), subsequent to the
Disclosing Party acquiring the information;

(3)was otherwise known by, or available to, the Disclosing Party prior to
entering into this Agreement; or

(4)becomes available to the Disclosing Party on a non-confidential basis from a
Person, other than a Party to this Agreement, who is not known by the Disclosing
Party after reasonable inquiry to be bound by a confidentiality agreement with
the non-Disclosing Party or otherwise prohibited from transmitting the
information to the Disclosing Party.

(c)Upon written request or upon the termination of this Agreement, each Party
shall, within thirty (30) days, return to each other Party all Confidential
Information of the other Party in its possession that is in written form,
including by way of example, but not limited to, reports, plans, and manuals;
provided, however, that each Party may maintain in its possession all such
Confidential Information of each other Party required to be maintained under
Applicable Laws relating to the retention of records for the period of time
required thereunder or stored on such Party’s network as part of standard
back-up procedures (provided that such information shall remain subject to the
confidentiality provisions of this Section 9).

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(d)In the event that a Restricted Party is requested or required (by oral
questions, interrogatories, requests for information or documents, subpoena,
civil investigative demand or similar process) to disclose any Confidential
Information of any other Party, the Restricted Party shall provide such other
Party with prompt notice of such request(s) so that the other Party may seek an
appropriate protective order or other appropriate remedy and/or waive the
Restricted Party’s compliance with the provisions of this Agreement. In the
event that the other Party does not seek such a protective order or other
remedy, or such protective order or other remedy is not obtained, or the other
Party grants a waiver hereunder, the Restricted Party may furnish that portion
(and only that portion) of the Confidential Information of the other Party which
the Restricted Party is legally compelled to disclose and shall exercise such
efforts to obtain reasonable assurance that confidential treatment shall be
accorded any Confidential Information of the other Party so furnished as the
Restricted Party would exercise in assuring the confidentiality of any of its
own Confidential Information.

(e)The terms of this Section 9 shall survive the expiration or earlier
termination of this Agreement.

10.             Indemnification.

(a)PMI agrees to defend, indemnify, and hold harmless Bank and its Affiliates,
and the officers, directors, employees, representatives, shareholders, agents
and attorneys of such entities (the “Indemnified Parties”) from and against any
and all claims, actions, liability, judgments, damages, costs and expenses,
including reasonable attorneys’ fees (“Losses”) to the extent arising from
Bank’s participation in the Program as contemplated by this Agreement (including
Losses arising from a violation of Applicable Laws or a breach by PMI or its
agents or representatives of any of PMI’s representations, warranties,
obligations or undertakings under this Agreement), unless such Loss results from
(i) the gross negligence or willful misconduct of Bank, or (ii) Bank’s failure
to timely transfer the Funding Amount to the extent required under Section 6(b)
of the Marketing Agreement, provided that PMI or PFL, as applicable is not in
breach of any of its obligations under the Program Documents, including, but not
limited to, PMI’s or PFL’s obligations with respect to the purchase of Assets
under the Asset Sale Agreement or this Agreement, or (iii) Excluded Servicing
Losses.

(b)To the extent permitted by Applicable Laws, any Indemnified Party seeking
indemnification hereunder shall promptly notify PMI, in writing, of any notice
of the assertion by any third party of any claim or of the commencement by any
third party of any legal or regulatory proceeding, arbitration or action, or if
the Indemnified Party determines the existence of any such claim or the
commencement by any third party of any such legal or regulatory proceeding,
arbitration or action, whether or not the same shall have been asserted or
initiated, in any case with respect to which PMI is or may be obligated to
provide indemnification (an “Indemnifiable Claim”), specifying in reasonable
detail the nature of the Loss and, if known, the amount or an estimate of the
amount of the Loss; provided, that failure to promptly give such notice shall
only limit the liability of PMI to the extent of the actual prejudice, if any,
suffered by PMI as a result of such failure. The Indemnified Party shall provide
to PMI as promptly as practicable thereafter information and documentation
reasonably requested by PMI to defend against the Indemnifiable Claim.

  6 

 

(c)PMI shall have ten (10) days after receipt of any notification of an
Indemnifiable Claim (a “Claim Notice”) to notify the Indemnified Party of PMI’s
election to assume the defense of the Indemnifiable Claim and, through counsel
of its own choosing, and at its own expense, to commence the settlement or
defense thereof, and the Indemnified Party shall cooperate with PMI in
connection therewith if such cooperation is so requested and the request is
reasonable; provided that PMI shall hold the Indemnified Party harmless from all
its reasonable out-of-pocket expenses, including reasonable attorneys’ fees,
incurred in connection with the Indemnified Party’s cooperation; provided,
further, that if the Indemnifiable Claim relates to a matter before a Regulatory
Authority, the Indemnified Party may elect, upon notice to PMI, to assume the
defense of the Indemnifiable Claim at the cost of and with the cooperation of
PMI. If PMI assumes responsibility for the settlement or defense of any such
claim, (i) PMI shall permit the Indemnified Party to participate at the
Indemnified Party’s expense in such settlement or defense through counsel chosen
by the Indemnified Party; provided that, in the event that both PMI and the
Indemnified Party are defendants in the proceeding and the Indemnified Party
shall have reasonably determined and notified PMI that representation of both
parties by the same counsel would be inappropriate due to the actual or
potential differing interests between them, then the fees and expenses of one
such counsel for all Indemnified Parties in the aggregate shall be borne by PMI;
and (ii) PMI shall not settle any Indemnifiable Claim without the Indemnified
Party’s consent.

(d)If PMI does not notify the Indemnified Party within ten (10) days after
receipt of the Claim Notice that it elects to undertake the defense of the
Indemnifiable Claim described therein, or if PMI fails to contest vigorously any
such Indemnifiable Claim, or if the Indemnified Party elects to control the
defense of an Indemnifiable Claim as permitted by Section 10(c), then, in each
case, the Indemnified Party shall have the right, upon notice to PMI, to
contest, settle or compromise the Indemnifiable Claim in the exercise of its
reasonable discretion; provided that the Indemnified Party shall notify PMI
prior thereto of any compromise or settlement of any such Indemnifiable Claim.
No action taken by the Indemnified Party pursuant to this paragraph (d) shall
deprive the Indemnified Party of its rights to indemnification pursuant to this
Section 10.

(e)PMI agrees to defend, indemnify, and hold harmless PFL, Bank and their
respective Affiliates, and the officers, directors, employees, representatives,
shareholders, agents and attorneys of such entities (the “PMI Indemnified
Parties”) from and against any and all claims, actions, liability, judgments,
damages, costs and expenses, including reasonable attorneys’ fees (“PMI Losses”)
to the extent arising from (I) Securitization Losses or (II) PMI’s actions or
nonperformance under the Asset Sale Agreement (including actions or
nonperformance of PFL’s obligations), but solely in its various capacities as
corporate administrator, loan servicer or platform administrator on behalf of
PFL, as contemplated by the Program Documents (including PMI Losses arising from
a violation of Applicable Laws or a breach by PMI or its agents or
representatives of any of PMI’s representations, warranties, obligations or
undertakings under applicable the Program Documents, but solely in its various
capacities as corporate administrator, loan servicer or platform administrator),
unless such PMI Loss results from (i) in the case of indemnification of PFL or
its Affiliates, and the officers, directors, employees, representatives,
shareholders, agents and attorneys of such entities, (A) the gross negligence or
willful misconduct of PFL, (B) a breach by PFL of any of PFL’s representations,
warranties, obligations or undertakings under this Agreement, or (C) a breach by
PFL of any of PFL’s other representations, warranties, obligations or
undertakings under this Agreement, and (ii) in the case of indemnification of
Bank or its Affiliates, and the officers, directors, employees, representatives,
shareholders, agents and attorneys of such entities, (A) the gross negligence or
willful misconduct of Bank, or (B) Bank’s failure to timely transfer the Funding
Amount to the extent required under Section 6(b) of the Loan Account Program
Agreement, provided that the Prosper Parties are not in breach of any of their
respective obligations under the Program Documents, and (iii) Excluded Servicing
Losses.

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(f)To the extent permitted by Applicable Laws, any PMI Indemnified Party seeking
indemnification hereunder shall promptly notify PMI, in writing, of any notice
of the assertion by any third party of any claim or of the commencement by any
third party of any legal or regulatory proceeding, arbitration or action, or if
the PMI Indemnified Party determines the existence of any such claim or the
commencement by any third party of any such legal or regulatory proceeding,
arbitration or action, whether or not the same shall have been asserted or
initiated, in any case with respect to which PMI is or may be obligated to
provide indemnification (a “PMI Indemnifiable Claim”), specifying in reasonable
detail the nature of the PMI Loss and, if known, the amount or an estimate of
the amount of the PMI Loss; provided, that failure to promptly give such notice
shall only limit the liability of PMI to the extent of the actual prejudice, if
any, suffered by PMI as a result of such failure. The PMI Indemnified Party
shall provide to PMI as promptly as practicable thereafter information and
documentation reasonably requested by PMI to defend against the PMI
Indemnifiable Claim.

(g)PMI shall have ten (10) days after receipt of any notification of a PMI
Indemnifiable Claim (a “PMI Claim Notice”) to notify the PMI Indemnified Party
of PMI’s election to assume the defense of the PMI Indemnifiable Claim and,
through counsel of its own choosing, and at its own expense, to commence the
settlement or defense thereof, and the PMI Indemnified Party shall cooperate
with PMI in connection therewith if such cooperation is so requested and the
request is reasonable; provided that PMI shall hold the PMI Indemnified Party
harmless from all its reasonable out-of-pocket expenses, including reasonable
attorneys’ fees, incurred in connection with the PMI Indemnified Party’s
cooperation; provided, further, that if the PMI Indemnifiable Claim relates to a
matter before a Regulatory Authority, the PMI Indemnified Party may elect, upon
notice to PMI, to assume the defense of the PMI Indemnifiable Claim at the cost
of and with the cooperation of PMI. If PMI assumes responsibility for the
settlement or defense of any such claim, (i) PMI shall permit the PMI
Indemnified Party to participate at the PMI Indemnified Party’s expense in such
settlement or defense through counsel chosen by the PMI Indemnified Party;
provided that, in the event that both PMI and the PMI Indemnified Party are
defendants in the proceeding and the PMI Indemnified Party shall have reasonably
determined and notified PMI that representation of both parties by the same
counsel would be inappropriate due to the actual or potential differing
interests between them, then the fees and expenses of one such counsel for all
PMI Indemnified Parties in the aggregate shall be borne by PMI; and (ii) PMI
shall not settle any PMI Indemnifiable Claim without the PMI Indemnified Party’s
consent.

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(h)If PMI does not notify the PMI Indemnified Party within ten (10) days after
receipt of the PMI Claim Notice that it elects to undertake the defense of the
PMI Indemnifiable Claim described therein, or if PMI fails to contest vigorously
any such PMI Indemnifiable Claim, or if the PMI Indemnified Party elects to
control the defense of an PMI Indemnifiable Claim as permitted by Section 10(g),
then, in each case, the PMI Indemnified Party shall have the right, upon notice
to PMI, to contest, settle or compromise the PMI Indemnifiable Claim in the
exercise of its reasonable discretion; provided that the PMI Indemnified Party
shall notify PMI prior thereto of any compromise or settlement of any such PMI
Indemnifiable Claim. No action taken by the PMI Indemnified Party pursuant to
this paragraph (h) shall deprive the PMI Indemnified Party of its rights to
indemnification pursuant to this Section 10.

(i)All amounts due under this Section 10 shall be payable not later than ten
(10) days after written demand therefor.

(j)The terms of this Section 10 shall survive the expiration or earlier
termination of this Agreement.

11.             Assignment. This Agreement and the rights and obligations
created under it shall be binding upon and inure solely to the benefit of the
Parties and their respective successors, and permitted assigns. None of the
Parties shall be entitled to assign or transfer any rights or obligations under
this Agreement (including by operation of law) without the prior written consent
of the other Parties, which shall not be unreasonably withheld or delayed. No
assignment made in conformity with this Section 11 shall relieve a Party of its
obligations under this Agreement.

12.             Third Party Beneficiaries. Nothing contained herein shall be
construed as creating a third-party beneficiary relationship between any Party
and any other Person, except that PFL is an express third party beneficiary of
Sections 10(e) through 10(j).

13.             [Intentionally Omitted].

14.             Notices. All notices and other communications that are required
or may be given in connection with this Agreement shall be provided in
accordance with the Asset Sale Agreement.

15.             Relationship of Parties. The Parties agree that in performing
their respective responsibilities pursuant to this Agreement, they are in the
position of independent contractors. This Agreement is not intended to create,
nor does it create and shall not be construed to create, a relationship of
partner or joint venturer or any association for profit between Bank and PMI.

16.             Retention of Records. Any Records with respect to Stand By
Assets purchased by PMI pursuant hereto retained by Bank shall be held for
itself and as custodian for the account of Bank and PMI as owners thereof. Bank
shall provide copies of Records to PMI upon reasonable request of PMI.

17.             Agreement Subject to Applicable Laws. If (a) any Party has been
advised by legal counsel of a change in Applicable Laws or any judicial decision
of a court having jurisdiction over such Party or any interpretation of a
Regulatory Authority that, in the view of such legal counsel, would have a
materially adverse effect on the rights or obligations of such Party under this
Agreement or the financial condition of such Party, (b) any Party receives a
request of any Regulatory Authority having jurisdiction over such Party,
including any letter or directive of any kind from any such Regulatory
Authority, that prohibits or restricts such Party from carrying out its
obligations under this Agreement, or (c) any Party has been advised by legal
counsel that there is a material risk that such Party’s or the other Party’s
continued performance under this Agreement would violate Applicable Laws, then
the affected Party shall provide written notice to the other Party of such
advisement or request and the Parties shall meet and consider in good faith any
modifications, changes or additions to the Program or the Program Documents that
may be necessary to eliminate such result. Notwithstanding any other provision
of the Program Documents, including Section 8 hereof, if the Parties are unable
to reach agreement regarding such modifications, changes or additions to the
Program or the Program Documents within [***] after the Parties initially meet,
any Party may terminate this Agreement upon [***] prior written notice to the
other Party. A Party may suspend performance of its obligations under this
Agreement, or require the other Party to suspend its performance of its
obligations under this Agreement, upon providing the other Party with advance
written notice, if any event described in subsection 17(a), (b) or (c) above
occurs.

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18.             Expenses.

(a)Each Party shall bear the costs and expenses of performing its obligations
under this Agreement, unless expressly provided otherwise in the Program
Documents.

(b)Each Party shall be responsible for payment of any federal, state, or local
taxes or assessments associated with the performance of its obligations under
this Agreement.

19.             Examination. Each Party agrees to submit to any examination that
may be required by a Regulatory Authority having jurisdiction over the other
Party, during regular business hours and upon reasonable prior notice, and to
otherwise provide reasonable cooperation to such other Party in responding to
such Regulatory Authority’s inquiries and requests related to the Program.

20.             Inspection; Reports. Each Party, upon reasonable prior notice
from the other Party, agrees to submit to an inspection of its books, records,
accounts, and facilities relevant to the Program, from time to time, during
regular business hours subject to the duty of confidentiality such Party owes to
its customers and banking secrecy and confidentiality requirements otherwise
applicable to such Party under Applicable Laws. All expenses of inspection shall
be borne by the Party conducting the inspection. Notwithstanding the obligation
of each Party to bear its own expenses of inspection, PMI shall reimburse Bank
for reasonable out of pocket expenses incurred by Bank in the performance of
periodic on site reviews of PMI’s financial condition, operations and internal
controls.

21.             Governing Law; Waiver of Jury Trial. This Agreement shall be
interpreted and construed in accordance with the laws of the State of Utah,
without giving effect to the rules, policies, or principles thereof with respect
to conflicts of laws. THE PARTIES HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING HEREUNDER. The
terms of this Section 21 shall survive the expiration or earlier termination of
this Agreement.

22.             Manner of Payments. Unless the manner of payment is expressly
provided herein, all payments under this Agreement shall be made by wire
transfer to the bank accounts designated by the respective Parties.
Notwithstanding anything to the contrary contained herein, no Party shall fail
to make any payment required of it under this Agreement as a result of a breach
or alleged breach by the other Party of any of its obligations under this
Agreement or any other agreement, provided that the making of any payment
hereunder shall not constitute a waiver by the Party making the payment of any
rights it may have under the Program Documents or by law.

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23.             Brokers. Neither of the Parties has agreed to pay any fee or
commission to any agent, broker, finder, or other person for or on account of
services rendered as a broker or finder in connection with this Agreement or the
transactions contemplated hereby that would give rise to any valid claim against
the other Party for any brokerage commission or finder’s fee or like payment.

24.             Entire Agreement. The Program Documents, including this
Agreement and its schedules and exhibits (all of which schedules and exhibits
are hereby incorporated into this Agreement), constitute the entire agreement
between the Parties with respect to the subject matter hereof, and supersede any
prior or contemporaneous negotiations or oral or written agreements with regard
to the same subject matter.

25.             Amendment and Waiver. This Agreement may be amended only by a
written instrument signed by both of the Parties. The failure of a Party to
require the performance of any term of this Agreement or the waiver by a Party
of any default under this Agreement shall not prevent a subsequent enforcement
of such term and shall not be deemed a waiver of any subsequent breach. All
waivers must be in writing and signed by the Party against whom the waiver is to
be enforced.

26.             Severability. Any provision of this Agreement which is deemed
invalid, illegal or unenforceable in any jurisdiction, shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining portions hereof in
such jurisdiction or rendering such provision or any other provision of this
Agreement invalid, illegal, or unenforceable in any other jurisdiction.

27.             Interpretation. The Parties acknowledge that each Party and its
counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments thereto, and the same shall be construed neither for nor against
any Party, but shall be given a reasonable interpretation in accordance with the
plain meaning of its terms and the intent of the Parties.

28.             Jurisdiction; Venue. The Parties consent to the personal
jurisdiction and venue of the federal and state courts in Salt Lake City, Utah
for any court action or proceeding. The terms of this Section 28 shall survive
the expiration or earlier termination of this Agreement.

29.             Headings. Captions and headings in this Agreement are for
convenience only and are not to be deemed part of this Agreement.

30.             Counterparts. This Agreement may be executed and delivered by
the Parties in any number of counterparts, and by different parties on separate
counterparts, each of which counterpart shall be deemed to be an original and
all of which counterparts, taken together, shall constitute but one and the same
instrument. 

31.             Collateral Account.

(a)PMI shall provide Bank with cash collateral to secure all PMI’s obligations
under the Program Documents, which Bank shall deposit in a deposit account
(“Collateral Account”) at Bank. The Collateral Account shall be a deposit
account at Bank, segregated from any other deposit account of PMI or Bank, that
shall hold only the funds provided by PMI to Bank as collateral. At all times,
PMI shall maintain funds in the Collateral Account equal to the Required Balance
(as defined below). The Required Balance shall be calculated monthly as of the
first day of each calendar month during the Term. In the event the actual
balance in the Collateral Account is less than the Required Balance, PMI shall,
within [***] following notice of such deficiency, make a payment into the
Collateral Account in an amount equal to the difference between the Required
Balance and the actual balance in such account. In this Agreement, “Required
Balance” means the greater of: (i) [***], or (ii) [***].

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(b)To secure all PMI’s obligations under the Program Documents (including PMI’s
obligations under the prior versions of the Program Documents in effect prior to
the Effective Date), PMI hereby grants Bank a security interest in all of PMI’s
right, title and interest in and to the Collateral Account and all sums now or
hereafter on deposit in or payable or withdrawable from the Collateral Account
and the proceeds of any of the foregoing (collectively, the “Collateral”), and
agrees to take such steps as Bank may reasonably require to perfect or protect
such first priority security interest. PMI represents that, as of the date of
this Agreement, the Collateral is not subject to any claim, lien, security
interest or encumbrance (other than the interest of Bank). PMI shall not allow
any other Person to have any claim, lien, security interest, or encumbrance on
the Collateral. Bank shall have all of the rights and remedies of a secured
party under Applicable Laws with respect to the Collateral and the funds therein
or proceeds thereof, and shall be entitled to exercise those rights and remedies
in its discretion.

(c)The Collateral Account shall be a money market deposit account and shall bear
interest. The annual interest rate shall be adjusted monthly as of the first day
of each month during the Term, and shall be equal to the greater of (i) [***];
or (ii) [***]. The interest shall be paid monthly and credited to the Collateral
Account no less frequently than quarterly, and shall be computed based on the
average daily balance of the Collateral Account for the prior month.

(d)Without limiting any other rights or remedies of Bank under this Agreement,
Bank shall have the right to withdraw amounts from the Collateral Account to
fulfill any obligations of PMI under the Program Documents on which PMI has
defaulted, at any time. Bank may withdraw amounts from the Collateral Account if
any obligations of PMI remain unpaid for [***] after the due date for payment.
To the extent that Bank has withdrawn amounts from the Collateral Account and
such amounts are subsequently paid directly to Bank, Bank shall restore such
amounts to the Collateral Account within [***] after receipt of the amounts paid
directly to Bank. PMI shall not have any right to withdraw amounts from the
Collateral Account. In the event the actual balance in the Collateral Account is
more than the Required Balance calculated for a particular month, then, within
[***] after the Required Balance is calculated, at PMI’s option, PMI may provide
to Bank a report setting forth the calculation for the Required Balance and the
extent to which the actual amount held in the Collateral Account at such time
exceeds the Required Balance. Within [***] after receipt of such a report from
PMI, Bank shall withdraw from the Collateral Account any amount held therein
that exceeds the Required Balance as of the date of such report and pay such
amount to an account designated by PMI.

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  (e) Bank shall release any funds remaining in the Collateral Account on latest
to occur of: [***].

  (f) This Section 31 shall survive the expiration or termination of this
Agreement.

 

 

[Signature Page Follows]

 

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized officers as of the date first written above.

 

WEBBANK

By: 

Kelly Barnett

President

 

 

PROSPER MARKETPLACE, INC.

 

By: 

Aaron Vermut

Chief Executive Officer

 

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