Exhibit 10.5


 


COLLECTION SERVICES AGREEMENT


 


This Collection Agreement (the “Agreement”) is entered into as of the 11th
day of January, 2007 between Prosper Marketplace, Inc., a Delaware corporation
with its principal place of business at 111 Sutter Street, 22nd Floor, San
Francisco, California 94104 (“Company”), and Account Solutions Group, LLC, with
its principal place of business at  205
Bryant Woods South, Amherst, New York 14228 (hereinafter referred to as “Collector”)
(each of Company and Client, individually, the “Party”, and collectively, the “Parties).


 


WHEREAS, Collector
is a nationwide debt collection agency engaged in the business of collecting on
debts owed to creditors by consumers residing in the United States;


 


WHEREAS, Company is
an online lender engaged in the business of originating direct consumer loans
to U.S. residents and selling the loans to third parties on a servicing
retained basis;


 


WHEREAS, Company, as
duly appointed servicer of the loans pursuant to consumer loan purchase and servicing
agreements between Company and third party purchasers of the loans, desires to
engage Collector to perform collection services in connection with delinquent
loans (“Accounts”) on the terms provided in this Agreement;


 


NOW THEREFORE, in
consideration of the foregoing, other good and valuable consideration, and the
mutual terms and covenants contained herein, the Parties hereto agree as
follows:


 


1.                                      NATURE
AND SCOPE OF COLLECTION ACTIVITIES


 


Pursuant to the terms of this Agreement, the Company may, from time to
time and in its sole discretion, assign Accounts to Collector for collection of
past-due amounts. Upon receipt of an Account for collection, Collector shall use
its reasonable best efforts to collect past-due amounts on the Accounts, and
bring the Accounts current. All Accounts assigned for Collection under this
Agreement shall be at least 30 days contractually past due. Company has the
right, at any time and in its sole discretion, with or without cause, to recall
an Account from Collector. Collector’s obligation to collect past-due amounts
on Accounts shall terminate on the earlier of (i) when the delinquency is fully
cured, or (ii) when Company in its discretion exercises its right to recall the
Account. Although Company has the right to recall an assigned Account from
Collector at any time, it is Company’s desire to allow Collector to retain an
Account for at least 90 days, in order to afford Collector the opportunity to collect
the past-due amounts on the Account. Upon recall of an Account by Company,
Collector shall cease all collection activity on the subject Account, and
Company may in its sole discretion sell the Account to a third party debt buyer
in accordance with the terms of Company’s loan purchase, sale and servicing
agreements with the owners of the Accounts. Company hereby engages Collector
and Collector agrees to render to provide collection services on the terms
provided herein.


 


1

















 


2.                                      DUTIES
AND OBLIGATIONS OF COLLECTOR


 


2.1                                 Collector
shall: (i) act prudently in accordance with customary and usual third party
deficiency collection procedures for other institutional collection companies
which collect receivables similar to the Accounts; and (ii) use and exercise
that degree of skill and attention that is customary with other third party
deficiency collection companies in the industry that collect receivables in
connection with direct loans and sales contracts and that is customary for
receivables for which it provides collection services. Subject to the forgoing
standards and except as provided in this Agreement, Collector shall have the
full power and authority acting alone to do any and all things in connection
with collecting Accounts that it may deem reasonably necessary or desirable to
recover delinquent amounts.


 


2.2                                 All
collection services performed by Collector or its agents, subcontractors or
representatives shall be performed in full compliance with all applicable
federal, state and local laws, including without limitation federal and state
laws governing business practices and debt collection practices. Collector may
not use any threats, intimidation, harassment, or otherwise violate any
applicable law or regulation in performing the services under this Agreement.
Collector shall be duly licensed and bonded in all states that require
licensure and/or bonding for collection agencies.


 


2.3                                 Collector
shall immediately notify Company of Collector’s receipt of any service of
process or any inquiries by federal, state, or local governmental authorities
relating to any Account. In the event a lawsuit, administrative proceeding or
customer complaint is initiated with respect to any Account during or after
Collector takes assignment of the Account, Collector shall promptly upon
request provide Company with all documentation and information within Collector’s
possession or control affecting the subject Account. Collector shall also
cooperate with Company in the defense or response to any lawsuit,
administrative proceeding or customer complaint affecting an Account, and shall
provide declarations or documentation reasonable required by Company to assist
in Company’s defense or response, or in Company’s prosecution of any lawsuit or
proceeding. Collector shall, at the request and direction of the Company, make
all files and records available to Company and to any federal or state
regulator with regulatory authority over Company.


 


2.4                                 Collector
shall not have the right to commence or participate in legal proceedings to
collect any Accounts.


 


2.5                                 Collector
shall not offer or accept settlement of an Account for less than the full
balance owing on the Account.


 


2.6                                 Collector
shall not contact or communicate with any third party investor, owner or
purported owner of an Account. All communications of any kind with the owner of
an Account shall be by and through Company. If Collector is contacted by a
third party investor, owner or purported owner of an Account, Collector shall
immediately notify Company of such contact.


 


2

















 


2.7                                 Upon
receipt of assignment of an Account for collection, Collector shall use
reasonable best efforts to collect delinquent amounts on such Account. Accounts
recalled by the Company shall be transferred back to Company or to Company’s
designee by Collector at no charge to Company. When transferring an Account
back to Company or Company’s designee, Collector shall transfer to Company an
electronic confirmation that Collector has cancelled collection efforts
relating to the Account, and Collector shall delete from its records all files,
documentation and information relating to the Account, except that Collector
may retain and maintain only such Account information as is necessary to comply
with legal recordkeeping requirements applicable to Collector. Collector
acknowledges and agrees that its receipt of Accounts pursuant to this Agreement
is for purposes of collection only, and Collector shall not obtain or acquire
any ownership interest in any Accounts assigned to Collector for collection
hereunder. Collector further acknowledges and agrees that the decision to
assign an Account to Collector is in Company’s sole discretion, and Company is
not obligated to assign any minimum number of Accounts, or any Accounts at all,
to Collector under this Agreement.


 


2.8                                 Delinquent
amounts to be collected on Accounts assigned to Collector may include past-due
principal and interest, late charges, ACH fees and other authorized fees as
specified by Company at the time of assignment.


 


2.9                                 Collector
shall, prior to the commencement of any collection activities on an Account,
run a bankruptcy check on all obligors of Accounts transferred to Collector.
Collector shall notify the Company immediately upon receipt of any notification
with respect to Bankruptcy of an Account obligor, and shall forward any
documentation received by it with respect to the Bankruptcy.


 


2.10                           Collector
will notify Company immediately, in writing, of any claims or litigation filed
or threatened against Collector or Company. Collector will also maintain
complete and accurate records with respect to any complaints received in
connection with an Account. Collector shall promptly notify the Company in
writing of any imposed fines, penalties, suits or alleged violations of any law
or regulation in the performance of this Agreement.


 


2.11                           Collector
shall maintain anti-fraud, privacy, security and employee background check
programs, and allow Company to audit Collector records with respect to such
programs or Collector’s commission calculations, or any other reasonable
subject, upon written notice from Company.


 


2.12                           Collector
understands and agrees that a brief description of Collector and of Collector’s
compensation payable pursuant to this Agreement shall be displayed publicly on
Company’s web site at www.prosper.com, along with collection performance
metrics and statistics. The form of disclosure appears at
http://www.prosper.com/public/help/topics/lender-collection_agencies.aspx.
Collector shall provide Company with a description of Collector, including
Collector’s qualifications and experience in collecting receivables similar to
the Accounts, for Company to display on Company’s web site. Company may display
the description provided by Collector, or Company may in its discretion edit or
revise the


 


3

















 


description of Collector; provided, however, any revisions to the
description shall be subject to Collector’s prior approval.


 


2.13                           Collector
shall accept payments from borrowers in multiple formats, including cash,
check, wire and consumer-generated ACH. Collector shall transfer payments
received by Account obligors to Company’s designated account immediately upon
receipt and clearance from borrower, on a daily basis, in ACH or wire format. Collector
shall bear the cost of electronic transmission of funds.


 


2.14                           Collector
shall return to Company any Accounts positively identified as resulting from ID
Theft.


 


2.15                           Collection
shall meet technology requirements of Company as set forth in Appendix B.


 


3.                                      RESPONSIBILITIES
OF COMPANY


 


3.1                                 Company
may reasonably  request Collector to
modify or supplement Collector’s duties or methods of performing those duties
provided that Collector shall be compensated by the requesting party at a
reasonable fee for any reasonable increase in expense experienced by Collector
due to such additional requests. Any such modification or supplement must be
agreed to by the parties in writing as an Amendment or Addendum to this
Agreement signed by authorized representatives of both parties as provided in
Article 12.10 herein.


 


3.2                                 Company
agrees to provide Collector with weekly notification of all direct payments
received by Company on Accounts under collection by the Collector. Company
shall, on a monthly basis, reimburse amounts due on Account payments received
directly by the Company during such time when an Account has been transferred
to Collector for collection.


 


3.3                                 Upon
assignment of Accounts to Collector, Company agrees that it will cease written
and telephonic communications with the Account debtors, other than to inform
them of additional fees, charges and payments due.


 


3.4                                 Upon
assignment of Accounts to Collector, Company will provide Collector with an
itemization of the specific delinquent amounts due on each Account.


 


3.5                                 In
performing this Agreement, including Company’s assignment of Accounts to
Collector, Company and its agents, subcontractors and/or representatives shall
fully comply with all applicable federal, state and local laws, including
without limitation the Fair Credit Reporting Act, the Gramm-Leach-Bliley Act,
and federal and state laws governing business practices and debt collection
practices.


 


4.                                      MONTHLY
REPORTING


 


On or before the tenth (10th) day of each calendar month,
Collector shall report to Company on a monthly basis in a format acceptable to
Company, the gross and net amounts collected by the


 


4

















 


Collector during the immediately preceding calendar month. This report
shall be in addition to electronic data transmissions required under the
Technology Requirements in Appendix B.


 


5.                                      COMPENSATION


 


5.1                                 In
consideration for the collection services performed by Collector hereunder,
Collector shall receive the fees as outlined in Appendix A (“Fees”). Company acknowledges
and agree that all amounts payable to Collector pursuant to this Agreement
shall be payable solely from amounts collected and that in no event shall the
Company be liable for any costs or expenses of Collector, except as provided in
Section 10 (Indemnification). By way of clarification and not limitation, there
shall be no additional fees associated with technology, licensing,
implementation, account maintenance, transmission fees, bankruptcy checks and
authentication fees, or other costs associated with the collection efforts.


 


5.2                                 Collector
will be entitled to withhold Fees from Account monies remitted directly to
Collector prior to transfer to Company so long as proper accounting for this
withholding is provided to Company. Collector shall reflect amounts collected
as well as Fees as part of the Account reporting, and additionally shall
provide monthly statements reflecting both amounts collected and Fees, as well
as report these items as part of the electronic transmissions.


 


5.3                                 Collector
shall not be entitled to collect any fees (including without limitation service
fees, insufficient funds (NSF) fees, convenience fees, wire transfer fees,
collection fees or  attorney’s fees) or
other amounts, except for the Fees described on Appendix A.


 


6.                                      REPRESENTATIONS
AND WARRANTIES OF COLLECTOR


 


6.1                                 Collector
is duly organized, validly existing and in good standing under the laws of its
state of incorporation and is duly qualified to do business, and is in good
standing in every jurisdiction in which the nature of its business requires it
to be so qualified. Collector has full corporate power and authority to enter
into this Agreement and to carry out the provisions of this Agreement.
Collector will comply with the laws of each state to the extent necessary to
perform its obligations under this Agreement.


 


6.2                                 This
Agreement and all other instruments or documents to be delivered hereunder or
pursuant hereto, and the transactions contemplated hereby, have been duly
authorized by all necessary corporate proceedings of Collector.


 


6.3                                 The
execution and delivery of this Agreement by Collector hereunder and the
compliance by Collector with all provisions of this Agreement do not conflict
with or violate any applicable law, regulation or order and do not conflict
with or result in a breach of or default under any of the terms or provisions
of any contract or agreement to which Collector is subject or by which it or
its property is bound, nor does such execution, delivery or compliance violate
the by-laws or articles of incorporation or formation of Collector.


 


6.4                                 This
Agreement constitutes a legal, valid and binding obligation of the Collector
enforceable in accordance with its terms, except as enforceability may be
limited by


 


5

















 


bankruptcy, insolvency, reorganization, or other similar laws affecting
the enforcement of creditors’ rights generally and by equitable limitations on
the availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.


 


6.5                                 There
are no proceedings or investigations pending or, to the Collector’s knowledge,
threatened against the Collector, before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality having
jurisdiction over the Collector or its properties (i) asserting the invalidity
of this Agreement, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement, (iii) seeking any determination or
ruling that might materially and adversely affect the performance by the
Collector of its obligations under, or the validity or enforceability of, this
Agreement or (iv) that could have a material adverse effect on the Loans.


 


6.6                                 The
Collector is not required to obtain the consent of any other party or any
consent, license, approval or authorization, or registration or declaration
with, any governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this Agreement
which has not already been obtained. The Collector has in place the errors and
omissions and/or blanket crime policies required to be maintained pursuant to
Section 8.


 


6.7                                 The
representations and warranties contained in this Section shall survive the
execution of this Agreement.


 


7.                                      TERM
AND TERMINATION


 


7.1                                 Term. This
Agreement shall become effective on the date hereof and shall continue for a
period of one (1) year, unless earlier terminated as set forth.


 


7.2                                 Termination.
Either Party shall have the right to terminate this Agreement at any time
without cause upon ninety (90) days prior written notice. Each Party shall have
the right to terminate this Agreement immediately on written notice upon the
occurrence of an event of default as described in Section 9 of this Agreement.


 


7.3                                 Post-Termination
Rights. In the event of termination or expiration of this Agreement, the
Parties’ respective obligations under this Agreement shall continue in full
force and effect through the effective date of termination or expiration,
except (i) to the extent that such obligations are expressly designated to
survive termination, and (ii) that Collector shall continue its collection
efforts with respect to the Accounts assigned prior to and existing on the date
of termination for a period of ninety (90) days, and at no additional cost will
provide information to Company or Company’s designee to facilitate the recall
or ultimate sale of Accounts if necessary. Collector will provide Company a
final accounting with respect to all Accounts remaining with the Collector at
the end of the 90 day period.


 


6

















 


8.                                      ERRORS
AND OMISSIONS AND BLANKET CRIME INSURANCE


 


8.1                                 Collector
shall maintain, at its own expense, (i) an errors and omissions insurance
policy or comparable self-insurance plan and (ii) a blanket crime policy, in
each case in accordance with industry standards for receivables similar to the
Loans and with broad coverage with established insurance companies, covering
all officers, employees or other persons acting on behalf of Collector in any
capacity with regard to the Loans to handle funds, money, documents and papers
relating to the Loans. The Collector shall provide Company with evidence of
such coverage upon request. Any such insurance shall protect and insure
Collector against losses, including forgery, theft, embezzlement, fraud, errors
and omissions and negligent acts of such persons and shall be maintained in a
form and amount that would meet the requirements of prudent institutional
collection companies servicing consumer receivables.


 


8.2                                 No
provision of this Section requiring such insurance shall diminish or relieve
Collector from its duties and obligations as set forth in this Agreement. Collector
shall cause each of its sub-contractors engaged as permitted under this
Agreement, if any, to maintain a policy of insurance covering errors and
omissions which would meet the above stated requirements. Upon Company’s
request, the Collector shall cause any sub-contractor to deliver to such person
a certificate evidencing coverage under such errors and omissions and/or crime
protection policies. Notwithstanding the foregoing, the Collector will give
prompt written notice to Company if the insurance coverage maintained by the
Collector pursuant to this Section is modified or amended in any way that would
be adverse to Company.


 


9.                                      EVENTS
OF DEFAULT


 


If any one of the following events (“Events of Default”) shall occur
and be continuing:


 


(a)  Any failure by either Party
to deliver to the other Party any proceeds or payment required to be so
delivered under the terms of this Agreement that shall continue unremedied for
a period the of  five (5) Business Days
after the earlier of (i) knowledge by 
defaulting Party of such failure; or (ii) receipt of written notice by
the defaulting Party of such failure from the aggrieved Party


 


(b)  Failure on the part of
either Party to observe or to perform in any material respect any other
covenants or agreements set forth in this Agreement, which failure shall
continue unremedied for a period of thirty (30) days after the date on which
written notice of such failure shall have been received by  the defaulting Party from the aggrieved
Party;


 


(c)  A breach of any representation
or warranty made in this Agreement that is not cured in all material respects
within thirty (30) consecutive days after the earlier of (i) receipt of written
notice of such breach from the aggrieved Party ; or (ii) upon discovery  by the Party in breach;


 


(d)  A voluntary or involuntary
petition for bankruptcy concerning Collector is filed under Title 11 of
the United States Code, the Collector makes a general assignment for the
benefit of creditors or commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any


 


7

















 


jurisdiction whether now or hereafter in effect relating to the
Collector, or a custodian is appointed for, or takes charge of, all or any
substantial part of the property of the Collector; or


 


(e)  Any representation,
warranty, certification or statement made by the either Party in this Agreement
or in any certificate or report delivered by it pursuant to this Agreement
shall prove to have been incorrect in any material respect when made or deemed
made and such error shall not be cured in all material respects within thirty
(30) consecutive days after the earlier of (i) receipt of written notice of
such error from the aggrieved Party or (ii) upon discovery by the Party which
made the representation, warranty, certification or statement;


 


then, and in each and every case and so long as such event of default
shall not have been remedied,  either
Party may terminate all of the rights and obligations of the other Party under
this Agreement. In addition to the indemnification rights and the right to
terminate this Agreement as provided herein, the Parties agree that upon the
happening of any of the foregoing events of default, either Party may avail
itself of any other relief to which it may be legally or equitably entitled.


 


10.                               INDEMNIFICATION


 


10.1                           Collector
agrees to indemnify and hold Company and its respective officers, directors
employees and agents (each an “Indemnified Party”), harmless from and against
any and all claims, damages, losses, liabilities, penalties, fines,
forfeitures, legal fees and related costs, judgments and any other costs, fees
and expenses, including reasonable legal fees and expenses (collectively, “Losses”)
that such Indemnified Party may sustain in any way related to the negligence or
misconduct of Collector (or any person hired by the Collector) in its
performance under the terms of this Agreement, or arising from any breach of
the representations and warranties of Collector, provided, however,
that Collector shall not be required to indemnify  Company against any Losses that the Company
may sustain in any way related to errors in such accounting and servicing records
and other documentation provided to the Collector by Company or third party
retained by Company. Collector shall immediately notify Company if a claim is
made by a third party with respect to this Agreement or any of the Loans.


 


10.2                           Collector
may accept and reasonably rely on all accounting and servicing records and
other documentation provided to Collector by or at the direction of Company. Company
acknowledges and agrees that Collector, its respective officers, directors,
employees and agents (each a “Collector Indemnitee”), shall be held harmless
and indemnified from and against any and all claims, losses, liabilities,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that Collector may sustain in any way related to
the negligence or misconduct of Company (or any person hired by the Company) in
its performance under the terms of this Agreement, or arising from any breach
of the representations and warranties of Company, or relating to Company’s
unauthorized use of or reference to Collector on Company’s website, or in any
way related to the negligence or misconduct of the Company with respect to the
origination of the Loans.


 


10.3                           This
right to indemnification shall survive the termination of this Agreement.


 


8

















 


11.                               CONFIDENTIALITY


 


11.1                           Confidential Information. Each Party and their respective affiliates, directors, officers, employees,
authorized representatives, agents and advisors (including without
limitation, attorneys, accountants, consultants, bankers and financial
advisors) shall keep confidential all
information concerning the other Party’s proprietary business procedures,
products, services, operations, marketing materials, fees, policies or plans
and all Nonpublic Personal Information of the other Party that is
received or obtained during the negotiation or performance of the Agreement,
whether such information is oral or written, and whether or not labeled as
confidential by such Party (collectively “Confidential Information”). “Nonpublic
Personal Information” shall include all personally identifiable financial
information and any list, description or other grouping of consumers, and
publicly available information pertaining to them, that is derived using any
personally identifiable financial information that is not publicly available,
and shall further include all “nonpublic personal information” as defined by
federal regulations implementing the Gramm-Leach-Bliley Act, as amended from time
to time. “Personally identifiable financial information” means any information
a consumer provides to a Party in order to obtain a financial product or
service, any information a Party otherwise obtains about a consumer in
connection with providing a financial product or service to that consumer, and
any information about a consumer resulting from any transaction involving a
financial product or service between a Party and a consumer. Personally
identifiable information may include, without limitation, a consumer’s first
and last name, physical address, zip code, email address, phone number, social
security number, birth date, and any other information that itself identifies
or when tied to the above information, may identify a consumer.


 


11.2                           Use
of Confidential Information. The Parties shall use Confidential Information
only as necessary to perform the Agreement, provided however, that the Parties
may use Confidential Information that is Nonpublic Personal Information in a
manner consistent with the direction of the consumer to which it relates. For
as long as Confidential Information is in possession of a Party, such Party
shall take reasonable steps, at least substantially equivalent to the steps it
takes to protect its own proprietary information, to prevent the use,
duplications or disclosure of Confidential Information, provided, however, that
a Party may disclose Confidential Information (i) to its employees or agents
who are directly involved in negotiating or performing the Agreement and who
are apprised of their obligations under this Addendum and directed by the
receiving Party to treat such information confidentially, or (ii) as required
by law or by a supervising regulatory agency of a receiving Party. Neither
Party shall disclose, share, rent, sell or transfer to any third party any
Confidential Information except as necessary to perform the Agreement;
provided, however, that if either Party discloses, shares, rents, sells or
transfers Nonpublic Personal Information to any third party, the disclosing
Party shall (i) prohibit each third party recipient of Nonpublic Personal
Information from disclosing, sharing, renting, selling or transferring such
Nonpublic Personal Information to any other third party except as necessary to
perform the Agreement, and (ii) require each third party recipient of Nonpublic
Personal Information to comply with the requirements of this Section. The
Parties’ rights and obligations under this Section shall survive termination of
the Agreement indefinitely.


 


9

















 


11.3                           Privacy
Policies. Each Party’s Privacy Notices and Privacy Policies are consistent
with the Federal Trade Commission’s procedures, rules and regulations, as
applicable and as amended from time to time, and comply with acceptable trade
practices and the instructions of the consumer whose Nonpublic Personal
Information is involved. Neither Party’s Privacy Notices and Privacy Policies
conflict with such Party’s obligations under the Agreement.


 


11.4                           Return
of Information. Upon the termination or expiration of the Agreement, or at
any time upon the request of the disclosing Party, the other Party shall
promptly return all Confidential Information received in connection with the
transaction, and shall promptly destroy such materials containing such
information (and any copies, extracts, and summaries thereof) and shall further
provide the other Party with written confirmation of such return or destruction
upon request; provided, however, that this Section shall not apply to: (i)
Nonpublic Personal Information received by a Party in accordance with the terms
of the Agreement, for the sole purpose of performing the Agreement, or (ii)
system notes of Collector relating to Accounts, provided, however, that Company
shall have the right to access such notes upon reasonable request by Company to
Collector.


 


11.5                           Indemnity;
Remedies. In the event a Party discovers that Confidential Information has
been used in an unauthorized manner or disclosed in violation of this Section,
the Party discovering the unauthorized use or disclosure shall immediately
notify the other Party of such event, and the disclosing Party shall indemnify
and hold the other Party harmless from all claims, damage, liability, costs and
expenses (including court costs and reasonable attorneys’ fees) arising or
resulting from the unauthorized use or disclosure. In addition, the
non-disclosing Party shall be entitled to all other remedies available at law
or equity, including injunctive relief.


 


12.                               MISCELLANEOUS


 


12.1                           Subcontractors.
Neither Party may subcontract its obligations hereunder to a third party
without the prior express written consent of the other, except that such
written consent is not required for those subcontractors that may be necessary
to perform certain delegable obligations of this Agreement (“Necessary
Subcontractors”), including but not limited to the subcontractor Collector uses
to generate and issue collection letters to consumers  and the subcontractor that provides Collector
its software for collections. The Parties shall remain responsible for
obligations, services and functions performed by such Necessary Subcontractors
(and their subcontractors) to the same extent as if such obligations, services
and functions were performed by the Parties. Collector shall, upon Company’s
request, provide Company with the identity of all subcontractors directly
related to collection efforts on Accounts. Compensation payable under this
Agreement shall not be increased if Necessary Subcontractors or other subcontractors
are used in connection with collection of an Account.


 


12.2                           No
Agency Relationship. The relationship between Company and Collector shall
not be construed as a joint venture, partnership or principal-agent
relationship, and under no circumstances shall any of the employees of one
Party be deemed to be employees of the other Party for any purpose. This
Agreement shall not be construed as authority for either Party to act for the
other in any agency or any other capacity, except as expressly set forth in
this Agreement.


 


10

















 


12.3                           Waivers;
Cumulative Remedies. No failure or delay on the part of Company to insist
upon the strict performance of any term or condition under this Agreement or to
exercise any right or remedy available under this Agreement at law or in
equity, shall imply or otherwise constitute a waiver of such right or remedy,
and no single or partial exercise of any right or remedy by any Party will
preclude exercise of any other right or remedy. All rights and remedies
provided in this Agreement are cumulative and not alternative; and are in
addition to all other available remedies at law or in equity.


 


12.4                           Further
Assurances. Each Party agrees, if reasonably requested by the other Party,
to execute and deliver such additional documents or instruments and take such
further actions as may be reasonably necessary to effect the transactions
contemplated by this Agreement.


 


12.5                           Notices. All notices and other communications required or permitted to be given
under this Agreement shall be in writing and shall be deemed given (i)
three business days after being deposited in the U.S. mail, first class,
postage prepaid, (ii) upon transmission, if sent by facsimile transmission, or
(iii) upon delivery, if served personally or sent by any generally recognized
overnight delivery service, to the following addresses:


 


	
   

  	
  To the Collector:

  	
  Account Solutions Group, LLC

  
	
   

  	
   

  	
  205 Bryant Woods South

  
	
   

  	
   

  	
  Amherst, NY 14228

  
	
   

  	
   

  	
  Attn:  Dennis Cardarella

  
	
   

  	
   

  	
  Fax no. (716) 564-4440

  
	
   

  	
   

  	
   

  
	
   

  	
  To Company:

  	
  Prosper Marketplace, Inc.

  
	
   

  	
   

  	
  111 Sutter Street, 22nd Floor

  
	
   

  	
   

  	
  San Francisco, CA 94104

  
	
   

  	
   

  	
  Attn: Nancy Satoda, Director of Credit Risk

  
	
   

  	
   

  	
  Fax no. (415) 362-7233

  
	
   

  	
   

  	
  With a copy to Edward A. Giedgowd, General Counsel, at the same fax number.

  



 


The timing and content of any advertisements,
announcements, press releases or other promotional activity relating to this
Agreement, and the use of each other’s name or trademarks shall be subject to
the prior approval of both Parties.


 


12.6                           Assignment.
Neither Party may transfer or assign all or a portion of its rights,
obligations and duties under this Agreement to unless the other Party has
consented to such transfer or assignment.


 


12.7                           Limitation
of Liability. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY UNDER THIS AGREEMENT FOR ANY
DAMAGES OR CLAIMS FOR LOST PROFITS OR CONSEQUENTIAL, INCIDENTAL OR PUNITIVE
DAMAGES.


 


11

















 


12.8                           Waiver
of Jury Trial. EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.


 


12.9                           Entire
Agreement. This Agreement, including any exhibits or other documents
attached hereto or referenced herein, each of which is hereby incorporated into
this Agreement and made an integral part hereof, constitutes the entire
agreement between the Parties relating to the subject matter hereof and there
are no representations, warranties or commitments except as set forth herein. This
Agreement supersedes all prior understandings, negotiations and discussions,
written or oral, of the Parties relating to the transactions contemplated by
this Agreement.


 


12.10                     Modification. No change to this Agreement shall be valid unless in writing and signed
by authorized representatives of both parties.


 


12.11                     Governing
Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.


 


12.12                     Provisions
Severable. If any provision of this Agreement shall be or become wholly or
partially invalid, illegal or unenforceable, such provision shall be enforced
to the extent that its legal and valid and the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired.


 


12.13                     Counterparts.
This Agreement may be executed in two or more counterparts, each of which
together shall be deemed an original, but all of which shall constitute one and
the same instrument.


 


12.14                     Binding
Effect. This Agreement shall be binding upon and shall inure to the benefit
of the Parties hereto and their respective successors and assigns.


 


 [SIGNATURE PAGE TO FOLLOW]


 


12

















 


IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed as of the date first written above.


 


 


COLLECTOR:


 


ACCOUNT SOLUTIONS GROUP, LLC


 


 


	
  By:

  	
    /s/ LANCE DELLAMEA

  	
   

  
	
  Name:

  	
  Lance DellaMea

  	
   

  
	
  Its:

  	
  Senior Vice President

  	
   

  
					



 


 


COMPANY:


 


PROSPER MARKETPLACE, INC.


 


 


	
  By:

  	
    /s/
  CHRISTIAN A. LARSEN

  	
   

  
	
  Name:

  	
  Christian A. Larsen

  	
   

  
	
  Its:

  	
  CEO & President

  	
   

  
					



 


13

















 


APPENDIX A


 


Fees:


 


Collector shall receive a percentage (the “Collection Fee Percentage”)
of any amounts due (whether past due or due for the current period) that are
collected and received by Collector on an Account. The Collection Fee
Percentage shall be 15% with respect to amounts received during the first
thirty (30) days following the date an Account is assigned to Collector; on the
31st day after the date an Account is assigned to Collector, the Collection
Fee Percentage shall be reduced by 70%, and on the 61st day after
the date an Account is assigned to Collector, the then-applicable Collection
Fee Percentage shall again be reduced by 70%, as set forth in the following
table. The Collection Fee Percentage corresponding to the time period in which
collections are received by Collector shall apply to such collections.




	
  Time Period When Collections are Received

  	
   

  	
  Collection Fee Percentage

  	
   

  
	
  Within 30 days following receipt of an
  Account

  	
   

  	
  15.00

  	
  %

  
	
  31 to 60 days following receipt of an
  Account

  	
   

  	
  10.50

  	
  %

  
	
  61 days or more following receipt of an
  Account

  	
   

  	
  7.35

  	
  %

  



 


Regardless of which time period amounts are collected, the Collection
Fee Percentages shown above shall be increased by 5% for any collections which
bring an Account current.


 


For example, if an Account with a past-due amount of $120 is assigned
to Collector on November 10, 2006, and Collector receives $100 on December 3,
2006, Collector’s Fee would be $15 ($100 x 15%). However, if Collector receives
$120 on December 3, 2006 (thereby bringing the Account current), Collector’s
Fee would be $24 ($120 x 20%).


 


14

















 


Appendix B


 


Technology Requirements


 


•                    Technology requirements may be
modified by the mutual written consent of the Parties.


 


•                    Data transmissions to and from Company
will occur via a secure FTP server on a daily batch basis using a Company
approved format.


 


•                    “Diff” files on Company Account information
to be transmitted from Collector to Company daily. Complete Account information
to be transmitted on a weekly basis.


 


•                    Borrower Account information to be
maintained will include, among other items, number and mode of contact
attempts, successful contacts and content of interaction, and repayment
information.


 


•                    Collector to maintain appropriate
firewalls, anti-virus and encryption standards for the protection of Account information.


 


•                    Collection agents computer systems
to operate under lockdown, with no printing and downloading capabilities
available at agent terminals. Appropriate security measures to be followed with
respect to information security.


 


•                    Collector to host all Account database
information domestically, and all Account records to remain onshore.


 


•                    Collector to keep current and
provide to Company with written documentation of the Disaster Recovery,
Security and Security Audit programs to be implemented on Company Accounts.


 


•                    Company to have ability to conduct
an onsite audit of Collector facilities and practices on a reasonable, periodic
basis.


 


•                    Collector to maintain records of
all collection attempts, all collection e-mails sent to or received from
borrower, and  system notes of all phone
conversations.


 


•                    Collector to notify Company
immediately if a security breach is detected or suspected.


 


15