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Exhibit 10.7

EXECUTION VERSION
 
CONFIDENTIAL TREATMENT REQUESTED
 
WEBBANK
 
and
 
PROSPER MARKETPLACE, INC.
 
STAND BY
LOAN PURCHASE AGREEMENT

Dated as of January 25, 2013
 
 
 

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This STAND BY LOAN PURCHASE AGREEMENT (this “Agreement”), dated as of January
25, 2013 (“Effective Date”), 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 Second Amended and Restated Loan Account
Program Agreement, dated as of the Effective Date (the “Loan Account Program
Agreement”);
 
WHEREAS, Bank, PMI, 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 a Second Amended and Restated
Loan Sale Agreement (the “Loan Sale Agreement”);
 
WHEREAS, Bank desires to sell to PMI, and PMI desires to purchase from Bank
certain loan accounts originated under the Loan Account Program Agreement that
are not purchased by PFL under the Loan Sale 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. The terms used in this Agreement shall be defined as
set forth in Schedule 1; provided, however,  that any capitalized terms not
defined in Schedule 1 shall have the respective meanings attributed to such
terms under the Loan Sale Agreement. The rules of construction set forth in
Schedule 1 shall apply to this Agreement.
 
2.             Purchase of Stand By Loan Accounts; Payment to Bank; Reporting to
Bank.
 
 
(a)
If PFL is obligated under the Loan Sale Agreement to purchase any Loan Accounts
from Bank on a Closing Date, then to the extent that PFL fails to purchase such
Loan Accounts (the “Stand By Loan Accounts”) on such Closing Date, Bank agrees
to sell, transfer, assign, set-over, and otherwise convey to PMI, without
recourse and with servicing released, on each the applicable Stand By Closing
Date, the Stand By Loan Accounts.  All of the foregoing shall be in accordance
with the procedures set forth in this Section 2 of the Agreement.  In
consideration for Bank’s agreement to sell, transfer, assign, set-over and
convey to PMI such Stand By Loan Accounts, PMI agrees to purchase such Stand By
Loan Accounts 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 Loan Accounts 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
Stand By Loan Accounts purchased by PMI pursuant to this Agreement within
[*].  Such loan files shall include the application for the Stand By Loan
Account, the Loan Account Agreement, confirmation of delivery of the Loan
Account 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.

 

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3.             Ownership of Stand By Loan Accounts.
 
 
(a)
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 Loan Accounts 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 Loan Accounts 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 Loan Accounts as of each Stand By Closing
Date.

 
 
(b)
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 Loan Accounts after the
related Stand By Closing Date.

 
 
(c)
PMI may not (i) securitize the Stand By Loan Accounts, 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 Loan Accounts or any amounts owing thereunder, in each case,
without the prior written consent of Bank, which consent may be withheld or
conditioned in Bank’s sole discretion.

 
4.             Representations and Warranties of Bank. Bank hereby makes to PMI
the representations and warranties set forth in Section 4 of the Loan Sale
Agreement.
 
5.             Representations and Warranties of the Prosper Parties. PMI hereby
makes to Bank the representations and warranties set forth in Section 5 of the
Loan Sale 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 to the Obligations of Bank. The obligations
of Bank in this Agreement are subject to the satisfaction of the conditions
precedent set forth in Section 7 of the Loan Sale Agreement.
 
8.             Term and Termination.
 
 
(a)
The term of this Agreement shall be the Term of the Loan Sale Agreement, and
this Agreement shall automatically terminate upon the expiration or termination
of the Loan Sale Agreement.

 

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(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)
PML 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.

 
 
(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 Loan Accounts 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) 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, or to a Regulatory
Authority, or (iii) to any other third party as mutually agreed by the Parties.

 
 
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(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).

 
 
(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.

 
 
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(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 Loan Account Program 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 Loan Accounts under the Loan Sale Agreement or this Agreement.

 
 
(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.

 
 
(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 Indemnifialbe 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.

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

 
 
(f)
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.
 
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 Loan 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 Loan
Accounts purchased by PMI pursuant hereto retained by Bank shall be held 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.
 
 
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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 any other Party’s
continued performance under this Agreement would violate Applicable Laws, then
the affected Party shall provide written notice to each 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 Parties.  A Party may suspend performance of its obligations under this
Agreement, or require each other Party to suspend its performance of its
obligations under this Agreement, upon providing the other Parties with advance
written notice, if any event described in subsection 17(a), (b) or (c) above
occurs.
 
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 any 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 any 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, not to exceed the maximum amount per visit of [*].
 
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.
 

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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 any 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.
 
23.           Brokers.  None 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
any 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 among 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 all 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.
 
 
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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 greatest of
[*].  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.  The “Monthly Loan Total” means, for a calendar month,
the sum of the principal amounts of all Loan Accounts funded by Bank during such
calendar month.

 
 
(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)
[*].  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.

 
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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:
/s/ Kelly M. Barnett   

Name:
Kelly M. Barnett   

Title:
   

 
PROSPER MARKETPLACE, INC.
     
By:
/s/ Stephan P. Vermut   

Name:
Stephan P. Vermut   

Title:
CEO   

 
 
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Schedule 1
 
Definitions
 
 
(a)
“Agreement” has the meaning set forth in the introductory paragraph.

 
 
(b)
“Cash” means money, currency or a credit balance in any demand or deposit
account (but “Cash” shall exclude any amounts that would not be considered
“cash” under generally accepted accounting principles).

 
 
(c)
“Cash Equivalents” means, as of the date of determination, (a) marketable
securities (1) issued directly and unconditionally guaranteed as to interest and
principal by the United States Government, or (2) issued by any agency of the
United States the obligations of which are backed by the full faith and credit
of the United States, in each case maturing within one year after such date; (b)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrument thereof, in
each case maturing within one year after such date and having, at the time of
the acquisition, a rating of at least A-1 from S&P or at least P-1 from Moody’s;
(c) commercial paper maturing no more than one year from the date of creation
and having a rating of at least A-1 from S&P or at least P-1 from Moody’s; and
(d) shares of any money market fund that (1) has substantially all of its assets
invested continuously in the types of investments referred to in clauses (a) and
(b) above, (2) has assets of not less than $500,000,000, and (3) has the highest
rating obtainable from either S&P or Moody’s.

 
 
(d)
“Claim Notice” shall have the meaning set forth in subsection 10(c).

 
 
(e)
“Disclosing Party” shall have the meaning set forth in subsection 9(b)(2).

 
 
(f)
“Effective Date” shall have the meaning set forth in the introductory paragraph
of this Agreement.

 
 
(g)
“Indemnifiable Claim” shall have the meaning set forth in subsection 10(b).

 
 
(h)
“Indemnified Parties” shall have the meaning set forth in subsection 10(a).

 
 
(i)
“Losses” shall have the meaning set forth in subsection 10(a).

 
 
(j)
“Net Liquidity” means, as of the date of determination, the sum of unrestricted
Cash and Cash Equivalents of PMI.

 
 
(k)
“Party” means PMI or Bank and “Parties” means PMI and Bank.

 
 
(l)
“Restricted Party” shall have the meaning set forth in subsection 9(a).

 
 
(m)
“Stand By Closing Date” means, with respect to any Closing Date, the Business
Day immediately following such Closing Date.

 
 
(n)
“Stand By Loan Account” shall have the meaning set forth in subsection 2(a).

 
 
 

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II.           Construction
 
As used in this Agreement:

 
(a)
All references to the masculine gender shall include the feminine gender (and
vice versa);

 
(b)
All references to “include,” “includes,” or “including” shall be deemed to be
followed by the words “without limitation”;

 
(c)
References to any law or regulation refer to that law or regulation as amended
from time to time and include any successor law or regulation;

 
(d)
References to “dollars” or “$” shall be to United States dollars unless
otherwise specified herein;

 
(e)
Unless otherwise specified, all references to days, months or years shall be
deemed to be preceded by the word “calendar”;

 
(f)
All references to “quarter” shall be deemed to mean calendar quarter; and

 
(g)
The fact that a Party has provided approval or consent shall not mean or
otherwise be construed to mean that: (i) such Party has performed any due
diligence with respect to the requested or required approval or consent, as
applicable; (ii) such Party agrees that the item or information for which the
other Party seeks approval or consent complies with any Applicable Laws; (iii)
such Party has assumed the other Party’s obligations to comply with all
Applicable Laws arising from or related to any requested or required approval or
consent; or (iv) except as otherwise expressly set forth in such approval or
consent, such Party’s approval or consent impairs in any way such Party’s rights
or remedies under the Agreement, including indemnification rights for PMI’s or
PFL’s failure to comply with all Applicable Laws.

 
 
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