Exhibit 10.2


 


LENDER
REGISTRATION AGREEMENT


(Note
Commitment, Purchase and Sale Agreement)


 


This Lender Registration
Agreement is made and entered into between you and Prosper Marketplace, Inc.
(“Prosper”, “we”, or “us”).  This
Agreement will govern all purchases of Borrower Payment Dependent Notes that
you may, from time to time, purchase from Prosper.


 


Prosper has filed with the U.S. Securities and Exchange Commission a
registration statement on Form S-1 (No.                        )
(as amended from time to time, the “Registration Statement”) to register the
continuous offering and sale of Notes issued by Prosper.  The Registration Statement includes a
prospectus related to the offering of the Notes by Prosper dated
                        
(as supplemented from time to time, the “Prospectus”).  The Registration Statement became effective
on
                            
pursuant to the rules and regulations of the U.S. Securities and Exchange
Commission under the Securities Act of 1933, as amended.  You acknowledge that the Registration
Statement has been delivered to you.  You
should read the Prospectus carefully and retain a copy for your records.


 


1.  Registration as a Prosper Lender.  You are registering as a lender in the Prosper
marketplace, so that you may be eligible to post bids on listings displayed on
Prosper’s online auction marketplace (the “platform”) and purchase from Prosper
Borrower Payment Dependent Notes (“Notes”) issued by Prosper that are dependent
for payment on payments we receive on the corresponding borrower loans
described in the listings (“borrower loans”). 
As a registered lender you also have access to the Folio Investing Note
Trader platform, where you may list Notes that you own for sale to other
Prosper lender members, and bid to purchase Notes offered for sale by other
lender members, in an auction-style bidding environment.  You agree to comply with the terms and
provisions of this Agreement, the Terms of Use of the Prosper website, and the
policies posted on the Prosper website, as amended from time to time by Prosper
in its sole discretion (collectively, the “Prosper Terms and Conditions”).


 


Your role as a Prosper “lender”
is that of a purchaser of Notes issued by Prosper, and your rights and
obligations as a purchaser or prospective purchaser of Notes are set forth
below.  Although you are referred to in
this Agreement and on the Prosper website as a “lender,” you are not actually
lending your money directly to Prosper borrowers, but are, instead, acting as
an investor and making purchase commitments for Notes and purchasing Notes from
Prosper, that are dependent for payment on payments we receive on borrower
loans.  Prosper uses the term “lender”
instead of “investor” in this Agreement and on portions of Prosper’s website
for the convenience of Prosper users who appropriately view Prosper as a
marketplace for connecting individuals who wish to borrow money, with people
who have money and the desire to have loans funded to other individuals.


 


2.  Posting of Bids.   As a registered
Prosper lender, you may post bids on listings displayed on the platform.  “Listings” are Prosper borrowers’ loan
requests that are displayed on the platform. 
Listings include the borrower’s requested loan amount, maximum offered
interest rate and corresponding yield percentage, and the minimum yield
percentage that may be bid on the listing. The yield percentage is the lender
member’s effective yield, net of servicing fees.  The minimum yield percentage applicable to
each listing is based on the Prosper Rating assigned to the listing and will be
calculated by adding the national average certificate of deposit rate that
matches the term of the loan, as published by BankRate.com, to the minimum
estimated loss rate associated with the Prosper Rating assigned to the listing, which
estimated loss rate is based on the historical performance of similar Prosper
loans.  Listings include a Prosper Rating, which is a letter
grade that may be based on a custom Prosper score that indicates the level of
risk associated with the listing and corresponds to an estimated average
annualized loss rate range for the listing. 
Listings also include other information, including but not limited to,
the borrower’s debt-to-income ratio, credit information from the borrower’s
credit report, the borrower’s group affiliation (if any), and the borrower’s
self-reported annual income range, occupation and employment status.  Borrowers are identified by a Prosper user
name but are not able to disclose their identity or contact information to
lenders.


 


Prosper lenders may ask
borrowers questions about their listings and borrowers may, but are not
required to, respond to such questions. 
Borrowers who elect to respond to a lender’s question may respond
privately, or they may elect to have the question and answer posted publicly in
the listing.  Lenders’ questions are not
posted in the listing or displayed elsewhere on our website unless the borrower
elects to answer the question and elects to make the question and answer
publicly available, in which case the question and answer appears in the
listing.  We do not verify any borrowers’
responses to lender members’ questions.


 


A bid by a lender on a
listing is the lender’s commitment to purchase from Prosper a Note in the
principal amount of the lender’s winning bid, provided that the listing has
received bids totaling the full loan amount requested in the listing.  Lenders “bid” the amount they are willing to
commit to the purchase of a Note that is dependent for payment on payments we
receive on the corresponding borrower loan, and the minimum yield percentage
they are willing to receive.  Lenders
must have funds 


 


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in the amount of the bid
on deposit in the Prosper funding account (described below).  Once a bid is placed, it is irrevocable, and
during the time a bid is a “winning” bid on the listing, the amount of the bid
is not permitted to be withdrawn from the lender’s Prosper funding
account.  Lender bids become “winning”
bids if such bids are in the group of bids for Notes that, in aggregate,
correspond to the requested loan amount and are in the lowest yield percentage
among all bids placed against the listing.


 


Types of
Bids.  You can make manual bids by browsing through listings
and placing a bid on the listing or listings that you choose.  You can also bid by making a “portfolio plan”
by indicating the aggregate amount of your funds to be bid on listings that
meet your specified criteria, the maximum amount that may be bid on one
listing, the minimum yield percentage you are willing to receive, and the
specific borrower or loan criteria (for example, Prosper Rating, borrower
income or employment characteristics, group affiliation, debt-to-income ratio,
etc.) for the listings on which you wish to bid.  You may have more than one portfolio plan in
place at one time, and you may make manual bids while one or more portfolio
plans are in place.


 


Availability
of Funds.  At the time you place a bid you must have
funds on deposit with Prosper in at least the amount of your bid, and you are
not permitted to withdraw those funds for so long as your bid is “winning” as
described in Section 3 below.  Your
funds will be placed in an FDIC-insured non-interest bearing account at Wells
Fargo Bank, N.  A.  (the “Prosper funding account”) separate from
Prosper’s own funds.  At the time you
register as a lender, you must provide your deposit account information to
facilitate electronic transfers of funds to and from the Prosper funding
account and your deposit account.  You
will not earn interest on funds in the Prosper funding account.  All of your funds in the Prosper funding
account that are not committed to winning bids are available for further
bidding.  You may at any time request
that your uncommitted funds in the Prosper funding account be returned to you,
in which case Prosper will promptly return the remaining funds to your deposit
account using the Automated Clearing House (“ACH”) network.


 


Your Note
Purchase Commitment.  Whether you make manual bids or bid by
making a portfolio plan, each bid you post on the platform is a commitment and
promise to purchase a Note issued by Prosper, with the proceeds of the sale of
the Note used by Prosper to purchase the specific borrower loan described in
the listing on which the bid was made. 
Once you place a bid, you may not cancel or withdraw the bid or reduce
the amount of the bid, to the extent your bid has been matched with one or more
listings.


 


AT THE TIME YOU SUBMIT A
BID ON A LISTING, YOU ARE COMMITTING TO PURCHASE A NOTE ISSUED BY PROSPER IN
THE AMOUNT OF YOUR BID, THAT IS DEPENDENT FOR ITS PAYMENT ON PAYMENTS WE
RECEIVE ON THE BORROWER LOAN DESCRIBED IN THE LISTING, IN THE EVENT THE LISTING
RECEIVES BIDS TOTALING THE FULL AMOUNT REQUESTED BY THE BORROWER.


 


Limits on
Bids.  Lenders may bid the entire amount requested by the
borrower, or may bid a lesser amount, subject to a minimum bid amount of
$50.  If you make a portfolio plan, you
can achieve risk diversification by designing your portfolio plan to bid your
available funds in increments as low as $50 and designating in your portfolio
plan that the incremental amount is the maximum amount that may be bid on any
one listing.  The aggregate amount of all
of your bids, when added to the amount outstanding on all of your Notes, must
not exceed five million dollars ($5,000,000) for individual lenders, or fifty
million dollars ($50,000,000) for corporate or institutional lenders.  Subject to these dollar limits, there is no
limit on the amount of funds you may commit to bids on listings.


 


YOU AGREE THAT WHEN
MAKING BIDS YOU WILL NOT DISCRIMINATE AGAINST ANY BORROWER OR GROUP ON THE
BASIS OF RACE, COLOR, RELIGION, NATIONAL ORIGIN, SEX, MARITAL STATUS, AGE,
SEXUAL ORIENTATION, MILITARY STATUS, THE BORROWER’S SOURCE OF INCOME, OR ANY
OTHER BASIS PROHIBITED BY AN APPLICABLE FEDERAL, STATE OR LOCAL FAIR LENDING
LAW, INCLUDING WITHOUT LIMITATION THE EQUAL CREDIT OPPORTUNITY ACT.


 


3.  Matching of Bids and Listings.


 


a.  In order to bid on a listing, you must bid an
amount equal to or less than the current auction yield percentage for the
listing, subject to a minimum yield percentage based on the Prosper Rating
assigned to each listing.  If you bid by
making a portfolio plan, Prosper’s auction platform will automatically match
your bids with any listings that offer a yield percentage higher than your
minimum acceptable yield percentage, and otherwise meet your designated
criteria.  Unless you specify a different
bid order, bids will be matched first with listings with the least time left
for bidding.


 


b.  When you place a bid on a listing, your bid
will be compared to other lender bids placed against the listing, and will be
considered to be “winning” to the extent the yield percentage specified in your
bid is (i) lower than existing bids against the listing, or (ii) equal
to existing bids against the listing, provided the listing has not already
received a bid or bids totaling the full amount requested by the borrower.  Your bid remains outstanding on a listing
until you are outbid, or until 


 


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the listing is withdrawn
by the borrower or removed by Prosper in accordance with Section 10
below.  If you are outbid, or if the
listing is withdrawn or removed, your bid will be cancelled, and your funds
that were committed to your bid will be available for further bidding.


 


c.  If a listing gets a bid
or bids in an amount totaling the requested loan amount, the bids that are
winning bids at the time the listing expires are considered the winning bids
for the listing.


 


d.  Prosper does not warrant or guaranty that
your bids will become winning bids against any listings.  In the event some, but not all, of the funds
you bid become winning bids against a listing (for example, when you are the
last winning bidder on a listing), you are committed to purchasing a Note
issued by Prosper in the amount of the portion of your funds that is a winning
bid against the listing, and the remainder of your funds (i.e., the unmatched
funds) will remain in your Prosper funding account, available for further
bidding.


 


e.  In most instances a listing is matched with
more than one bid, and you will be one of several lenders who purchase a Note
in a series of Notes that correspond to the borrower loan described in the
listing.  Each series of Notes will
correspond to a single borrower loan, as described in the listing, originated
to a Prosper borrower member.  Payments
to the lenders who purchase the Notes are dependent on payments received on the
corresponding borrower loan.


 


f.  To safeguard your privacy rights and those of
borrowers, the identities and addresses of borrowers and lenders are not
displayed on the platform or elsewhere on the Prosper website.  Only the borrower’s Prosper screen name will
appear on Prosper borrower listings, and only your Prosper screen name will
appear with your bids.


 


4.  Funding and Sale of Borrower Loans.  Once a lender has committed to purchase a Note that is
dependent for payment on the corresponding borrower loan and the listing for
such borrower loan receives bids from lenders totaling the requested loan
amount, we proceed with the funding or sale of the corresponding borrower loan,
and with the issuance and sale of Notes to the lenders who were the winning
bidders on the listing.  You must commit
to the purchase of a Note through the platform before we will proceed with
funding of the borrower loan that corresponds to the Note you are committing to
purchase.


 


Loan funding occurs when
loan proceeds are disbursed into the borrower’s designated deposit
account.  All loans are made to Prosper
borrowers by WebBank, a Utah-chartered industrial bank (“WebBank”) from WebBank’s
own funds, and will be evidenced by a promissory note, in the form set forth on
the attached Exhibit B, naming WebBank as the payee, in the amount of the
requested loan.  Following disbursement
of loan proceeds to the borrower, the loan will be sold and assigned by WebBank
to Prosper without recourse to WebBank. 
As described in Section 5 below, Prosper uses the proceeds of the
sale of each series of Notes to purchase the corresponding borrower loan.


 


5.  Purchase and Sale of Notes.  At the time a borrower loan is purchased by Prosper,
we proceed with the issuance and sale of Notes to the lenders who were the
winning bidders on the listing.  The purchase
price for any Notes you purchase from Prosper through the platform will be the
principal amount of the Notes that you commit to purchase.  The Notes shall be issued pursuant to an
indenture (the “Indenture”) between Prosper and a trustee.  Funds in the principal amount of each Note are
transferred from each lender’s Prosper funding account to Prosper, as payment
of the purchase price for the Note. 
Prosper will use the proceeds of the sale of each series of Notes to purchase
the corresponding borrower loan from WebBank.


 


Terms of the Notes.  The Notes shall have the terms
and conditions described in the Prospectus, the Indenture and the Note.  The Indenture and the Note are reproduced in Exhibit A
to this Agreement, and Prospectus is available for you to review on the Prosper
website.  The form of promissory note
evidencing Prosper borrower loans is reproduced in Exhibit B to this
Agreement.  The specific interest rate,
maturity and other terms of the corresponding borrower loans are described in
the Prosper borrower listings.  Subject
to the servicing standard set forth in Section 6 below, you understand and
agree that we may in our sole discretion, at any time and from time to time,
amend or waive any term of a borrower loan, and we may in our sole discretion
charge off any borrower loan that we deem uncollectible.


 


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


 


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


 


6.  Servicing and Collection of Borrower Loans. 
Prosper will service all Prosper borrower loans, both before and after
default, and will service all Notes.  In
servicing borrower loans Prosper may, in its discretion, utilize affiliated or
unaffiliated third party loan servicers, collection agencies or other agents or
contractors.


 


Prosper and any
third-party servicer servicing a borrower loan may, in its sole discretion and
subject to the servicing standard set forth in this Section, refer a borrower
loan to a collection agency at any time, or elect to initiate legal action to
collect a borrower loan, or sell a borrower loan to a third party debt buyer at
any time.  Subject to the servicing fees
described below, any amounts received by Prosper on Prosper borrower loans will
be forwarded to the holder of the Notes corresponding to the borrower loan.


 


The referral of a delinquent
borrower loan to a collection agency within five (5) business days after
it becomes thirty days past-due shall be deemed to constitute commercially
reasonable servicing and collection efforts. Prosper and any third-party
servicer servicing a borrower loan shall have the right, without your consent,
at any time and from time to time and subject to the servicing standard set
forth in this Section, to change the payment date or reduce the principal
amount or the rate of interest or the place and manner of making loan payments
on a borrower loan, or amend or waive any other term of such borrower loan, or charge off
any borrower loan that Prosper
or any third-party servicer servicing the borrower loan deems
uncollectible.


 


Servicing
Standard.  In servicing borrower loans Prosper will use
commercially reasonable efforts to service and collect the borrower loans in
accordance with industry standards customary for loans of the same general type
and character as the borrower loans.


 


Servicing
Compensation.  As compensation for servicing Prosper borrower
loans and Notes, Prosper shall be entitled to retain from payments received on
the borrower loans a servicing fee calculated by the application of an annual
servicing fee rate applied to the outstanding principal balance of the
Notes.  The current servicing fee rates
charged by Prosper are posted in the Fees  and Charges section of the Prosper website, and are subject
to change by Prosper at any time without notice.


 


Prosper’s current
servicing fee rate will be disclosed in all listings.  Servicing fees will reduce the effective
yield on Prosper borrower loans below the borrower interest rate.


 


The servicing fee on each
of your Notes will be the amount of the servicing fee in effect at the time the
listing for the loan evidenced by your Note was posted, and will remain
unchanged for the term of the Note. The servicing fee is payable monthly by
deduction from each lender’s share of a loan payment by the borrower. The
servicing fee is payable on all payments received on borrower loans
corresponding to the Notes, including without limitation partial payments made
toward a borrower’s loan. We will not pay you any non-sufficient funds fees or
collection fees we or a third-party collection agency charge, and such fees will
be retained by the party receiving the fee as additional servicing
compensation. Prosper will pay you any late fees we receive on Prosper borrower
loans.  Any prepayments received on
borrower loans will be paid ratably to the Note holders, subject to applicable
servicing fees.


 


7.  Representations and Warranties as to Notes
Sold.  Prosper makes the following representations and
warranties to you, with respect to each Note sold to you under this Agreement,
as of the date the Note is sold, assigned and transferred to you:


 


a.  Prosper has complied in all material respects
with applicable federal, state and local laws in connection with the offer and
sale of the Note.


 


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


 


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


 


d.  Prosper has made commercially reasonable
efforts to authenticate and verify the identity of the borrower obligated on
the borrower loan that corresponds to the Note.


 


e.  With regard to the listing relating to your
Note, in the event either of the following occurs: (1) a Prosper score
different from the score calculated by Prosper for the listing, or (2) Prosper
incorrectly applied its formula to determine the Prosper score, resulting in a
Prosper Rating different from the Prosper Rating that should have appeared in
the listing, the remedies in Section 8 below shall apply.  Prosper is not, however, under any obligation
to cure, indemnify or repurchase a series of Notes because of the Prosper score
or Prosper Rating for any other reason, including because the Prosper score or
Prosper Rating proved inaccurate.


 


f.  In the event of a material default under a
Note you purchase from Prosper under this Agreement that is the result of
verifiable identity theft of the named borrower’s identity, Prosper will
repurchase the Note by crediting your Prosper funding account with the
remaining unpaid principal balance of the Note. 
The determination of whether verifiable identity theft has occurred
shall be in Prosper’s sole discretion. 
We may require proof of the identity theft, such as a copy of a police
report filed by the person whose identity was wrongfully used to obtain the
fraudulently-induced borrower loan, an identity theft affidavit or a bank
verification letter (or all of the above) in order to determine that verifiable
identity theft has occurred.  Prosper
shall not be required to repurchase a Note under this subsection until such
Note is at least 120 days past-due, provided, however, that Prosper may in its
sole discretion elect to repurchase a Note at an earlier time.  You agree that repurchase of your Note by
Prosper is the sole remedy you will have with respect to any such Notes.


 


8.  Remedies; Cure and Repurchase of Loans.  In the event of a breach by Prosper of any of the
foregoing representations and warranties that materially and adversely affects
your interest in a Note sold to you under this Agreement, Prosper shall either (i) cure
the breach, if the breach is susceptible to cure, (ii) repurchase the Note
from you, or (iii) indemnify and hold you harmless against all losses
(including losses resulting from the nonpayment of the Note), damages,
expenses, legal fees, costs and judgments resulting from any claim, demand or
defense arising as a result of the breach. 
The decision whether a breach is susceptible to cure, or whether Prosper
shall cure or repurchase a Note or indemnify you with respect to the Note,
shall be in Prosper’s sole discretion. 
Upon discovery by Prosper of any such breach of the foregoing
representations and warranties requiring cure or repurchase the Note, Prosper
shall give you notice of the breach, and of Prosper’s election to cure or
repurchase the Note, no later than ninety (90) days after our discovery of the
breach.  In the event Prosper repurchases
a Note, Prosper will pay you a repurchase price equal to the remaining
outstanding principal balance of the Note as of the date of repurchase.  The repurchase price will be paid to you by
remittance into the Prosper funding account, and those funds will be available
to you for further bidding.  Upon any
such repurchase, the Note shall be transferred and assigned by you to Prosper,
in each case without recourse, and you authorize and agree that Prosper may
execute any endorsements or assignments necessary to effectuate the transfer
and assignment of the Note to Prosper. 
Prosper’s obligation to cure or repurchase a Note or indemnify you for a
breach of the foregoing representations and warranties pursuant to this Section is
your sole remedy with respect to a breach of Prosper’s representations and
warranties set forth in Section 7 above.


 


9.  No Advisory
Relationship.  You
acknowledge and agree that (i) the purchase and sale of the Notes pursuant
to this Agreement is an arms-length transaction between you and Prosper; (ii) in
connection with the purchase and sale of the Notes, Prosper is not acting as
your agent or fiduciary; (iii) Prosper assumes no advisory or fiduciary
responsibility in your favor in connection with the purchase and sale of the
Notes; (iv) Prosper has not provided you with any legal, accounting,
regulatory or tax advice with respect to the Notes; and (v) you have
consulted your own legal, accounting, regulatory and tax advisors to the extent
you have deemed it appropriate.


 


10.  Prosper’s Right to Verify Information and
Cancel Funding.


 


a. 
Prosper reserves the right to verify the accuracy of all information
provided by borrowers, lenders and group leaders in connection with listings,
bids and loans.  Prosper also reserves
the right to determine in its reasonable discretion whether a registered user
is using, or has used, the Prosper website illegally or in violation of any
order, writ, injunction or decree of any court or governmental instrumentality,
for purposes of fraud or deception, or otherwise in a manner inconsistent with
the Prosper Terms and Conditions or any registration agreement between Prosper
and such user.  Prosper may conduct its
review at any time — before, during or after the posting of a listing, or before
or after the funding or Prosper’s purchase of a borrower loan or the sale of a
Note.  You agree to respond promptly to
Prosper’s requests for information in connection with your bid, accounts, or
your registration with Prosper.


 


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b. 
In the event Prosper or WebBank, prior to the funding or Prosper’s
purchase of a borrower loan, reasonably determines that a listing, or a bid for
the listing, contains materially inaccurate information (including but not
limited to unintended inaccuracies, inaccuracies resulting from errors by
Prosper, or inaccuracies resulting from changes in the borrower’s income,
residence or credit profile between the date a listing is posted and the date
the listing is to be funded) or was posted illegally or in violation of any
order, writ, injunction or decree of any court or governmental instrumentality,
for purposes of fraud or deception, or otherwise in a manner inconsistent with
the Prosper Terms and Conditions or any registration agreement, Prosper and
WebBank may refuse to post the listing or, if the listing has already been
posted, remove the listing from the Prosper marketplace and cancel all bids
against the listing.


 


c.  When a listing ends or expires with a bid or
bids totaling the loan amount requested, Prosper may conduct a “pre-funding”
review prior to the funding or Prosper’s purchase of the borrower loan.  Prosper may, at any time and in its sole
discretion, delay the funding or Prosper’s purchase  of
a borrower loan in order to enable Prosper to verify the accuracy of
information provided by borrowers, lenders and group leaders in connection with
the listing or bids against the listing, and to determine whether there are any
irregularities with respect to the listing or the bids against the listing.  Prosper may cancel or proceed with the
funding or Prosper’s purchase of  the borrower
loan, depending on the results of Prosper’s pre-funding review.  If funding is cancelled, the listing will be
removed from the Prosper marketplace and all bids against the listing will be
cancelled, and each bidder’s funds will be returned to the Prosper funding
account, available for further bidding.


 


d.  In most instances, Prosper and WebBank do not
verify the income, employment and occupation or other information provided by
borrowers in listings.  The borrower’s
income, employment and occupation in listings are self-reported, and the
borrower’s debt-to-income ratio is determined by Prosper and WebBank from a
combination of the borrower’s self-reported income and information from the
borrower’s credit report.  The credit
data that appears in Prosper
borrower listings is taken directly from a credit report obtained on the
borrower from a credit reporting agency, without any review or verification by
Prosper or WebBank.  Prosper and WebBank do not verify any
statements by borrowers in Prosper borrower listings as to how loan proceeds are to be used
and does not confirm after borrower loan funding how loan proceeds were
used.  In most instances homeownership
status in borrower listings is derived from the borrower’s credit
report, but is not verified by Prosper or WebBank; if the report reflects an
active mortgage loan, the borrower is presumed to be a homeowner.  In connection with
Prosper’s and WebBank’s identity and anti-fraud verification of borrowers,
Prosper verifies the borrower’s deposit account to determine that the borrower
is a holder of record of the account.


 


11.  No Guarantee of Returns or Payments.


 


A.  PROSPER DOES NOT WARRANT OR GUARANTEE THAT
YOU WILL RECEIVE ANY RATE OF RETURN, OR ANY MINIMUM AMOUNT OF PRINCIPAL OR
INTEREST ON ANY NOTE, OR ANY PRINCIPAL OR INTEREST AT ALL.  THE AMOUNT YOU RECEIVE ON YOUR NOTES IS
WHOLLY DEPENDENT UPON THE BORROWERS’ PAYMENT PERFORMANCE ON THE BORROWER LOANS
CORRESPONDING TO YOUR NOTES.  PROSPER
DOES NOT GUARANTEE ANY BORROWER LOANS OR NOTES PURCHASED OR SOLD THROUGH THE
PLATFORM AND DOES NOT ACT AS A GUARANTOR OF ANY LOAN PAYMENT OR PAYMENTS
BY ANY BORROWER.


 


B.  YOU FURTHER UNDERSTAND AND ACKNOWLEDGE THAT
BORROWERS MAY DEFAULT ON THE BORROWER LOANS CORRESPONDING TO YOUR NOTES,
AND THAT SUCH DEFAULTS MAY NEGATIVELY AFFECT THE AMOUNT OF PRINCIPAL AND
INTEREST YOU RECEIVE ON YOUR NOTES.


 


12.  Restrictions on Use.  Except as provided in Section 14 below, you are
not authorized or permitted to use Prosper to bid or purchase Notes for someone
other than yourself.  You must be an
owner of the deposit account you designate for electronic transfers of funds,
with authority to direct that funds be transferred to or from the account.  Although you are registering as a lender, you
may also register and participate in the Prosper marketplace as a
borrower.  If you obtain one or more
borrower loans through the platform, amounts in your Prosper funding account
are subject to set-off against any delinquent amounts owing on your loans.  Amounts in your Prosper funding account are
also subject to set-off against any shortfall resulting from ACH returns of
transfers or deposits of funds to your Prosper funding account.  You will not receive further notice in advance
of our exercise of our right to set-off amounts in your Prosper funding account
against any delinquent amounts owing on any loan or loans you obtain. Prosper
may in its sole discretion, with or without cause and with or without notice,
restrict your access to the platform or the Prosper website.


 


13.  Financial
Suitability Representations and Warranties. 
You represent and warrant that you satisfy the applicable
minimum financial suitability standards and maximum investment limits,
established for the platform or the Note Trader platform (or as set forth in a
supplement to the Prospectus for residents of the state in which you reside),
and you agree to provide any additional documentation reasonably requested by
us, as may be required by the securities administrators of certain states, to
confirm that you meet such minimum financial suitability standards and maximum
investment limits.  You understand that
the Notes will not be listed on any securities exchange, that there may be no,
or only 


 


6

















 


a limited, Note Trader platform for the Notes, that any trading of Notes
must be conducted in accordance with federal and applicable state securities
laws and that Note purchasers should be prepared to hold the Notes they
purchase until the Notes mature.


 


14.  Your Other Representations and
Warranties.  You warrant and represent to Prosper, as of the
date of this Agreement and as of any date that you commit to purchase Notes, that (i) you have
received the Prospectus, the Indenture, and the form of the Note; (ii) you have the legal competence and
capacity to execute and perform this Agreement and that you have duly
authorized, executed and delivered this Agreement; and (iii) in
connection with this Agreement you have complied in all material respects with
applicable federal, state and local laws.  In addition,
if you are entering into this Agreement on behalf of a corporation, partnership, limited liability company or other entity (“institution”),
you warrant and represent that (i) you have all necessary power and authority to execute and perform
this Agreement on such institution’s behalf; (ii) the execution and performance of this Agreement will not violate
any provision in the institution’s charter documents, by-laws, indenture of
trust or partnership agreement, or other constituent agreement or instrument
governing the formation or administration of your institution; and (iii) the execution and performance of this
Agreement will not constitute or result in a breach or default under, or
conflict with, any order, ruling or regulation of any court or other tribunal
or of any governmental commission or agency, or any agreement or other
undertaking to which the institution is a party or by which it is bound.


 


15.  Prosper’s
Representations and Warranties.  Prosper
represents and warrants to you, as of the date of this Agreement and as of any
date that you commit to purchase Notes, that: (a) it is duly organized and
is validly existing as a corporation in good standing under the laws of
Delaware and has corporate power to enter into and perform its obligations
under this Agreement; (b) this Agreement has been duly authorized,
executed and delivered by Prosper; (c) the Indenture has been duly
authorized by Prosper and qualified under the Trust Indenture Act of 1939 and
constitutes a valid and binding agreement of Prosper, enforceable against
Prosper in accordance with its terms, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency or similar laws.


 


16.  Recommendations from Prosper Friends.  Prosper allows borrowers to create a network of
Prosper friends, and obtain bids and recommendations of listings from one or
more of the borrower’s designated Prosper friends.  Recommendations accompanying bids from
borrowers’ Prosper friends are displayed with borrowers’ listings.  Prosper friends do not guarantee payments on
any Note or on any corresponding borrower loan, and a bid or recommendation
from a borrower’s Prosper friend does not obligate the individual making the
bid or recommendation to guarantee or make any payments on any Note or on any
corresponding borrower loan.


 


17.  Prohibited Activities.  You agree that you will not do the following, in
connection with any listings, bids, Notes, borrower loans or other transactions
involving or potentially involving Prosper:


 


a.  Represent yourself to any person, as a
director, officer or employee of Prosper, or WebBank, unless you are such
director, officer or employee;


 


b.  Charge, or attempt to charge, any Prosper
borrower any fee in exchange for your agreement to bid on or recommend a
borrower’s listing, or propose or agree to accept any fee, bonus, additional
interest, kickback or thing of value of any kind, in exchange for your
agreement to bid on or recommend a borrower’s listing;


 


c.  Engage in any activities that require a
license as a loan broker, credit services organization, credit counselor,
credit repair organization, lender or other regulated entity, including but not
limited to soliciting loans or loan applications, quoting loan terms and rates,
counseling borrowers on credit issues or loan options, in connection with any
Prosper loan;


 


d.  Take any action on your own to collect, or
attempt to collect from any borrower, directly or through any third
party, any amount
owing under any of your Notes or on any of the borrower loans that correspond
to your Notes;


 


e.  Bring a lawsuit or other legal proceeding
against any borrower on any borrower loan;


 


f.  Contact borrowers on any borrower loans corresponding
to your Notes without the borrower’s consent;


 


g.  Contact any collection agency or law firm to
which any borrower loan corresponding to your Note has been referred for
collection;


 


h.  Include or display any personally identifying
information, including, without limitation, name, address, phone
number, email address, Social Security number or driver’s license number, or
bank account or credit card numbers of any


 


7
















 


Prosper member on your
Prosper member web page, or elsewhere on or off of the Prosper website,
including but not limited to on any forum, blog or website;


 


i.  Contact a borrower, group leader or Prosper
friend or take any action to collect, or attempt to collect, any amount from
any group leader or any of the borrower’s Prosper friends that provided a
recommendation of a listing relating to any borrower loans corresponding to
your Notes, or take any action that directly or indirectly suggests that any
borrower’s group leader or Prosper friend is obligated in any way on a borrower
loan corresponding to any Note; or


 


j.  Violate any applicable federal, state or
local laws, including but not limited to, the Equal Credit Opportunity Act and
other fair lending laws, Truth in Lending Act, Fair Credit Reporting Act, Fair
Debt Collection Practices Act, Federal Trade Commission Act, federal or state
consumer privacy laws, state usury or loan fee statutes, state licensing laws,
or state unfair and deceptive trade practices statutes.


 


18.  Tax Treatment.  The parties agree that the Notes
are intended to be indebtedness of Prosper that have original issue discount for U.S.
federal income tax purposes.  You agree
that you will not take any position inconsistent with such treatment of the
Notes for tax, accounting, or other purposes, unless required by law.  You further acknowledge that the Notes will
be subject to the original issue discount rules of the Internal Revenue
Code of 1986, as amended, as described in the Prospectus.  You acknowledge that you are prepared to bear
the risk of loss of your entire purchase price for any Notes you purchase.


 


19.  Termination of Registration.  Prosper may in its sole discretion, with or without
cause, terminate this Agreement by giving you notice as provided below.  In addition, upon our reasonable
determination that you committed fraud or made a material misrepresentation in
connection with a listing, bid or loan, performed any prohibited activity, or
otherwise failed to abide by the terms of this Agreement or the Prosper Terms
and Conditions, Prosper may, in its sole discretion, immediately and without
notice, take one or more of the following actions: (i) terminate or
suspend your right to bid or otherwise participate in the Prosper marketplace; (ii) terminate
this Agreement and your registration with Prosper.  Upon termination of this Agreement and your
registration with Prosper, any bids you have placed on the platform shall
terminate, and will be removed from the platform immediately.  Any Notes you purchase from Prosper prior to
the effective date of termination shall remain in full force and effect in
accordance with their terms.


 


20.  Indemnification.  In addition to your indemnification obligations set
forth in Prosper’s Terms and Conditions, you agree to indemnify, defend,
protect and hold harmless Prosper and its officers, directors, shareholders,
employees and agents against all claims, liabilities, actions, costs, damages,
losses, demands and expenses of every kind, known or unknown, contingent or
otherwise, (i) resulting from any material breach of any obligation you
undertake in this Agreement, including but not limited to your obligation to
comply with any applicable laws; (ii) relating to the contents of your
Prosper member web page, your own website or your business; (iii) resulting
from your acts, omissions and representations (and those of your employees,
agents or representatives) relating to Prosper; or (iv) asserted by third
parties against Prosper alleging that the trademarks, trade names, logos or
branding you use, display, link to or advertise infringes upon the intellectual
property rights of any such third party. 
Your obligation to indemnify Prosper shall survive termination of this
Agreement, regardless of the reason for termination.


 


21.  Prosper’s Right to Modify Terms.  Prosper has the right to change any term or provision
of this Agreement or the Prosper Terms and Conditions.  Prosper will give you notice of material
changes to this Agreement, or the Prosper Terms and Conditions, in the manner
set forth in Section 23.  You
authorize Prosper to correct obvious clerical errors appearing in information
you provide to Prosper, without notice to you, although Prosper expressly
undertakes no obligation to identify or correct such errors.  This Agreement, along with the Indenture,
Notes and Prosper Terms and Conditions, represent the entire agreement between
you and Prosper regarding your participation as a lender on the platform, and
supersede all prior or contemporaneous communications, promises and proposals,
whether oral, written or electronic, between you and Prosper with respect to
your involvement as a lender on the platform.


 


22.  Member Web Page Display and
Content.  You may, but are not required to, maintain a “Prosper
member web page” on the Prosper website, where you can post photos, content,
logos or links to websites.  If you elect
to do so, you authorize Prosper to display on the Prosper website all such
material you provide to Prosper.  Any
material you display on your member page must conform to the Prosper Terms
and Conditions, as amended from time to time, and material you display or link
to must not (i) infringe on Prosper’s or any third party’s copyright,
patent, trademark, trade secret or other proprietary rights or right of
publicity or privacy; (ii) violate any applicable law, statute, ordinance
or regulation; (iii) be defamatory or libelous; (iv) be lewd,
hateful, violent, pornographic or obscene; (v) violate any laws regarding
unfair competition, anti-discrimination or false advertising; (vi) promote
violence or contain hate speech; (vii) contain viruses, trojan horses,
worms, time bombs, cancelbots or other similar harmful or deleterious
programming routines.


 


8

















 


23.  Notices. 
All
notices and other communications hereunder shall be given by email to your
registered email address or will be posted on the Prosper website, and shall be deemed
to have been duly given and effective upon transmission or posting.  All notices, required disclosures
and other communications to you from the trustee under the Indenture relating
to Notes you purchase or own will be transmitted to you by e-mail to your registered e-mail
address or mailed to you at the address as it appears on the registration books of
the Registrar under the Indenture. 
You can
contact us by sending an email to support@prosper.com or calling us toll-free
at (866) 615-6319.  You also agree to
notify us if your registered email address changes, and you agree to update
your registered residence address on the Prosper website if you change your
residence.


 


24.  No Warranties.  EXCEPT FOR THE REPRESENTATIONS CONTAINED IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES TO THE OTHER
PARTY, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE.


 


25.  Limitation on Liability.  IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER
PARTY FOR ANY LOST PROFITS OR SPECIAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE
DAMAGES, EVEN IF INFORMED OF THE POSSIBILITY OF SUCH DAMAGES.  FURTHERMORE, NEITHER PARTY MAKES ANY
REPRESENTATION OR WARRANTY TO THE OTHER REGARDING THE EFFECT THAT THE AGREEMENT
MAY HAVE UPON THE FOREIGN, FEDERAL, STATE OR LOCAL TAX LIABILITY OF THE
OTHER.


 


26.  Miscellaneous.  The parties acknowledge that
there are no third party beneficiaries to this Agreement.  You may not assign, transfer, sublicense or otherwise
delegate your rights under this Agreement to another person without Prosper’s
prior written consent.  Any such
assignment, transfer, sublicense or delegation in violation of this Section shall
be null and void.  This Agreement shall
be governed by the laws of the State of New York.  Any waiver of a breach of any provision of
this Agreement will not be a waiver of any other subsequent breach.  Failure or delay by either party to enforce
any term or condition of this Agreement will not constitute a waiver of such
term or condition.  If any part of this
Agreement is determined to be invalid or unenforceable under applicable law,
then the invalid or unenforceable provision will be deemed superseded by a
valid enforceable provision that most closely matches the intent of the
original provision, and the remainder of the Agreement shall continue in
effect.  The parties agree to
execute and deliver such further documents and information as may be reasonably
required in order to effectuate the purposes of this Agreement.


 


9

















 


EXHIBIT A


 


INDENTURE


 


10

















 


EXHIBIT B


 


PROMISSORY
NOTE


 


Borrower Address:
                                                                                            .


 


1.  Promise to Pay.  In return for a loan I have received, I promise to pay
WebBank, a Utah-chartered Industrial Bank (“you”) the principal sum of 
                                      
Dollars
($                    ),
together with interest thereon commencing on the date of funding at the rate of
         percent
(        %) per annum simple
interest.  I understand that references
in this Note to you shall also include any person to whom you transfer this
Note.


 


2.  Payments. 
This Note
is payable in        monthly installments of
$                      
each, consisting of principal and interest, commencing on the
                
day of                           ,
and continuing until the final payment date of
                                    ,
which is the maturity date of this Note. 
The final payment shall consist of the then remaining principal, unpaid
accrued interest and other charges due under this Note.  All payments will be applied first to any
unpaid fees incurred as a result of failed automated payments or returned
checks or bank drafts as provided in Paragraph 11, then to any late charges
then due, then to interest then due and then to principal.  No unpaid interest or charges will be added
to principal.


 


3.  Interest. 
Interest
will be charged on unpaid principal until the full amount of principal has been
paid.  Interest under this Note will
accrue daily, on the basis of a 365-day year. 
If payments are paid after the scheduled due date, a greater portion of
the payment will be applied to accrued interest, a lesser portion (if any) will
be applied to principal reduction, and the loan will not amortize as originally
scheduled, resulting in a higher final payment amount.  The interest rate I will pay will be the rate
I will pay both before and after any default.


 


4.  Late Charge. 
If the full
amount of any monthly payment is not made by the end of fifteen (15) calendar
days after its due date, I will pay you a late charge
of                            .  I will pay this late charge promptly but only
once on each late payment.


 


5.  Waiver of Defenses.  Except as otherwise provided in this Note, you are not
responsible or liable to me for the quality, safety, legality, or any other
aspect of any property or services purchased with the proceeds of the
loan.  If I have a dispute with any
person from whom I have purchased such property or services, I agree to settle
the dispute directly with that person.


 


6.  Certification; Exception to Waiver.  I certify that, to my knowledge, the proceeds of this
loan will not be applied in whole or part to purchase property or services from
any person to whom any interest this loan may be assigned.  If, notwithstanding the preceding sentence,
any person from whom I have purchased such property acquires any interest in
this loan, then Paragraph 5 will not apply to the extent of that person’s
interest, even if that person later assigns that person’s interest to another
person.


 


7.  Method of Payment.  I will pay the principal, interest, and any late
charges or other fees on this loan when due. 
Those amounts are called “payments” in this Note.  To ensure that my payments are processed in a
timely and efficient manner, you have given me the choice of making my monthly
payments (i) by automated withdrawal from an account that I designate
using an automated clearinghouse (ACH) or other electronic fund transfer, or (ii) by
bank drafts drawn by you on my behalf on my account each month; and I have
chosen one of these methods.  If I close
my account or if my account changes or is otherwise inaccessible such that you
are unable to withdraw my payments from that account or draw bank drafts on the
account, I will notify you at least three (3) days prior to any such
closure, change or inaccessibility of my account, and authorize you to withdraw
my payments from, or draw bank drafts on, another account that I designate.


 


With regard to payments
made by automatic withdrawals from my account, I have the right to (i) stop
payment of a preauthorized automatic withdrawal, or (ii) revoke my prior
authorization for automatic withdrawals with regard to all further loan
payments, by notifying the financial institution where my account is held,
orally or in writing at least three (3) business days before the scheduled
date of the transfer.  I agree to notify
you orally or in writing, at least three (3) business days before the
scheduled date of the transfer, of the exercise of my right to stop a payment
or to revoke my prior authorization for further automatic withdrawals.


 


8.  Default and Remedies.  If I fail to make any payment when due in the manner
required by Paragraph 7, I will be in default and you may at your option
accelerate the maturity of this Note and declare all principal, interest and
other charges due under this Note immediately due and payable.  If you exercise the remedy of acceleration
you will give me at least 30 days prior notice of acceleration.


 


11

















 


9.  Prepayments. 
I may
prepay this loan in full or in part at any time without penalty.


 


10.  Waivers. 
You may
accept late payments or partial payments, even though marked “paid in full,”
without losing any rights under this Note, and you may delay enforcing any of
your rights under this Note without losing them.  You do not have to (a) demand payment of
amounts due (known as “presentment”), (b) give notice that amounts due
have not been paid (known as “notice of dishonor”), or (c) obtain an
official certification of nonpayment (known as “protest”).  I hereby waive presentment, notice of
dishonor and protest.  Even if, at a time
when I am in default, you do not require me to pay immediately in full as
described above, you will still have the right to do so if I am in default at a
later time.  Neither your failure to
exercise any of your rights, nor your delay in enforcing or exercising any of
your rights, will waive those rights. 
Furthermore, if you waive any right under this Note on one occasion,
that waiver will not operate as a waiver as to any other occasion.


 


11.  Insufficient Funds Charge.  If I attempt to make a monthly payment, whether by
check or bank draft or by automated withdrawal from my designated account, and
the payment is unable to be made due to (i) insufficient funds in my
account, (ii) the closure, change or inaccessibility of my account without
my having notified you as provided in Paragraph 7, or (iii) for any other
reason (other than an error by you), I will pay you an additional fee of
$             for
each check or bank draft returned or failed automated withdrawal, unless
prohibited by applicable law.


 


12.  Attorneys’ Fees.  To the extent permitted by law, I am liable to you for
your legal costs if you refer collection of your loan to a lawyer who is not
your salaried employee.  These costs may
include reasonable attorneys’ fees as well as costs and expenses of any legal
action.


 


13.  Loan Charges. 
If a law,
which applies to this loan and which sets maximum loan charges, is finally
interpreted so that the interest or other loan charges collected or to be
collected in connection with this loan exceed the permitted limits, then: (a) any
such loan charge shall be reduced by the amount necessary to reduce the charge
to the permitted limit; and (b) any sums already collected from me which
exceeded permitted limits will be refunded to me.  You may choose to make this refund by
reducing the principal I owe under this Note or by making a direct payment to
me.


 


14.  Assignment. 
I may not
assign any of my obligations under this Note without your written
permission.  You do not have to give me
your permission.  You may assign this
Note at any time without my permission. 
Unless prohibited by applicable law, you may do so without telling
me.  My obligations under this Note apply
to all of my heirs and permitted assigns. 
Your rights under this Note apply to each of your successors and
assigns.


 


15.  Notices. 
All
notices and other communications hereunder shall be given in writing and shall
be deemed to have been duly given and effective (i) upon receipt, if
delivered in person or by facsimile, email or other electronic transmission, or
(ii) one day after deposit prepaid for overnight delivery with a national
overnight express delivery service. 
Unless a different address is provided for in a different Paragraph of
this Note, notices to me must be properly addressed to my registered email
address or to my address set forth above unless I provide you with a different
address for notice by giving notice pursuant to this Paragraph, and notices to
you must be addressed to support@prosper.com or to Prosper Marketplace, Inc.,
111 Sutter Street, 22nd Floor, San Francisco, CA
94104, Attention: Customer Service.


 


16.  Governing Law.   This Note is
governed by federal law and, to the extent that state law applies, the laws of
the State of Utah.


 


17.  Miscellaneous.   No provision of this Note shall be modified or limited
except by a written agreement signed by both you and me.  The unenforceability of any provision of this
Note shall not affect the enforceability or validity of any other provision of
this Note.


 


18.  Arbitration. 
RESOLUTION OF DISPUTES:  I HAVE READ THIS PROVISION CAREFULLY, AND UNDERSTAND
THAT IT LIMITS MY RIGHTS IN THE EVENT OF A DISPUTE BETWEEN YOU AND ME.  I UNDERSTAND THAT I HAVE THE RIGHT TO REJECT
THIS PROVISION, AS PROVIDED IN PARAGRAPH (i) BELOW.


 


(a)   In this Resolution of Disputes provision:


 


(i)   “I,” “me” and “my” mean the borrower under
this Note, as well as any person claiming through the borrower;


 


12

















 


(ii)   “You” and “your” mean WebBank, any person servicing
this Note for WebBank, and any subsequent holders of this Note or any interest
in this Note, and each of their respective parents, subsidiaries, affiliates,
predecessors, successors, and assigns, as well as the officers, directors, and
employees of each of them; and


 


(iii)   “Claim” means any dispute, claim, or
controversy (whether based on contract, tort, intentional tort, constitution,
statute, ordinance, common law, or equity, whether pre-existing, present, or
future, and whether seeking monetary, injunctive, declaratory, or any other
relief) arising from or relating to this Note or the relationship between you
and me (including claims arising prior to or after the date of the Note), and
includes claims that are brought as counterclaims, cross claims, third party
claims, or otherwise and disputes about the validity or enforceability of this
Agreement or the validity or enforceability of this Resolution of Disputes
provision.


 


(b)   Any Claim between you and me shall be
resolved, upon the election of either you or me, by binding arbitration
administered by the National Arbitration Forum (“NAF”), under its Code of
Procedure (“Rules”).  I can obtain the Rules and
other information about initiating arbitration by contacting the NAF at P.O. 
Box 50191, Minneapolis, MN 55405, or at www.adrforum.com.  Your address for serving any arbitration
demand or claim is WebBank, c/o Prosper Marketplace, Inc., 111 Sutter
Street, 22nd Floor, San Francisco, CA 94104, Attention:
Legal Department.


 


(c)   Claims will be arbitrated by a single,
neutral arbitrator, who shall be a retired judge or a lawyer with at least ten
years experience.  You agree not to
invoke your right to elect arbitration of an individual Claim filed by me in a
small claims or similar court (if any), so long as the Claim is pending on an
individual basis only in such court.


 


(d)   You will pay all filing and administration
fees charged by the NAF and arbitrator fees up to $1,000, and you will consider
my request to pay any additional arbitration costs.  If an arbitrator issues an award in your
favor, I will not be required to reimburse you for any fees you have previously
paid to the NAF or for which you are responsible.  If I receive an award from the arbitrator,
you will reimburse me for the fees paid by me to the NAF.  Each party shall bear its own attorney’s,
expert’s and witness fees, which shall not be considered costs of arbitration;
however, if a statute gives me the right to recover these fees, or fees paid to
the NAF, then these statutory rights will apply in arbitration.


 


(e)   Any in-person arbitration hearing will be
held in the city with the federal district court closest to my residence, or in
such other location as the parties may mutually agree.  The arbitrator shall apply applicable substantive
law consistent with the Federal Arbitration Act, 9 U.S.C.  § 1-16, and, if requested by either
party, provide written reasoned findings of fact and conclusions of law.  The arbitrator shall have the power to award
any relief authorized under applicable law. 
Any appropriate court may enter judgment upon the arbitrator’s
award.  The arbitrator’s decision will be
final and binding except that: (1) any party may exercise any appeal right
under the FAA; and (2) any party may appeal any award relating to a claim
for more than $100,000 to a three-arbitrator panel appointed by the NAF, which
will reconsider de novo any aspect of the appealed award.  The panel’s decision will be final and
binding, except for any appeal right under the FAA.  Unless applicable law provides otherwise, the
appealing party will pay the appeal’s cost, regardless of its outcome.  However, you will consider any reasonable
written request by me for you to bear the cost.


 


(f)   Neither you nor I shall have the right to
participate as a representative or member of any class of claimants in
arbitration, and you and I further agree that claims of third parties shall not
be joined in any arbitration between you and me, without the express written
consent of both you and me.  Only the
claims of or against persons relating to a single Note or listing (such as
holders of Notes relating to a single listing) may be joined in a single
arbitration.  The validity and effect of
this paragraph (f) shall be determined exclusively by a court, and not by the
NAF or any arbitrator.  The arbitrator
shall have no power to arbitrate any Claims on a class action basis or Claims
brought in a purported representative capacity on behalf of the general public,
other borrowers, or other persons similarly situated.


 


(g)   If any portion of this Resolution of Disputes
provision is deemed invalid or unenforceable for any reason, it shall not
invalidate the remaining portions of this provision.  However, if paragraph (f) of this
Resolution of Disputes provision is deemed invalid or unenforceable in whole or
in part, then this entire Resolution of Disputes provision shall be deemed
invalid and unenforceable.  The terms of
this Resolution of Disputes provision will prevail if there is any conflict
between the Rules and this provision.


 


(h)   THE PARTIES
ACKNOWLEDGE AND AGREE THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS RESOLUTION OF
DISPUTES PROVISION, THEY ARE WAIVING ALL RIGHTS TO A TRIAL BY COURT OR JURY AS
A MEANS OF RESOLVING ANY DISPUTES ARISING OUT OF OR RELATING TO THIS
AGREEMENT.  THEY ACKNOWLEDGE THAT
ARBITRATION WILL LIMIT THEIR LEGAL RIGHTS, INCLUDING THE RIGHTS TO PARTICIPATE
IN A CLASS ACTION, THE RIGHT TO A JURY TRIAL, THE RIGHT TO CONDUCT FULL
DISCOVERY, AND THE RIGHT TO APPEAL (EXCEPT AS PERMITTED IN PARAGRAPH (e) OR
UNDER THE FEDERAL ARBITRATION ACT).


 


13

















 


(i)   I understand that I may reject this
Resolution of Disputes provision, in which case neither you nor I will have the
right to elect arbitration.  Rejection of
this provision will not affect the remaining parts of this Agreement.  To reject this Resolution of Disputes
provision, I must send us written notice of my rejection within 30 days after
the date that this Note was made.  I must
include my name, address, and account number. 
The notice of rejection must be mailed to WebBank, c/o Prosper
Marketplace, Inc., 111 Sutter Street, 22nd Floor, San Francisco, CA 94104, Attention:
Legal Department.  This is the only way
that I can reject this Resolution of Disputes provision.


 


(j)   The parties acknowledge and agree that this
arbitration agreement is made pursuant to a transaction involving interstate
commerce and shall be governed by the Federal Arbitration Act.  This Resolution of Disputes provision shall
survive the termination of this Note and the repayment of any or all amounts
borrowed.


 


Arizona Residents: Notice: I understand that I may request
that the initial disclosures prescribed in the Truth in Lending Act (15 United
States Code sections 1601 through 1666j) be provided in Spanish before signing
any loan documents.


 


Aviso
Para Prestatarios En Arizona: Puedo solicitar que las
divulgaciones iniciales prescritas en la Ley  Truth in Lending Act (15 Código
de los Estados Unidos secciones 1601 hasta 1666j) sean proporcionadas en
español antes de firmar cualesquiera documentos de préstamos.


 


Missouri Residents: Oral agreements or commitments to loan
money, extend credit or to forbear from enforcing repayment of a debt including
promises to extend or renew such debt are not enforceable.  To protect me (borrower) and you (creditor)
from misunderstanding or disappointment, any agreements we reach covering such
matters are contained in this writing, which is the complete and exclusive
statement of the agreement between us, except as we may later agree in writing
to modify it.


 


By signing this
Note, I acknowledge that I (i) have read and understand all terms and
conditions of this Note, (ii) agree to the terms set forth herein, and (iii) acknowledge
receipt of a completely filled-in copy of this Note.


 


	
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  [Borrower]

  
	
   

  	
   

  	
   

  
	
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