Document:

Exhibit 10.1

 

BORROWER REGISTRATION AGREEMENT

 

This
Borrower Registration Agreement is made and entered into between you and
Prosper Marketplace, Inc. (“Prosper”).

 

The Prosper
marketplace is a person-to-person online credit auction platform (the “platform”)
operated by Prosper for the registration of borrowers, lenders and group
leaders, the receipt, display and matching of listings and bids for loans and
the origination, sale, servicing and collection of principal of and interest
and other charges payable on loans.  All
loans obtained by Prosper borrowers through the platform are made by WebBank, a
Utah-chartered industrial bank (“WebBank”). 
Prosper provides services to WebBank in connection with the origination
of such loans and Prosper services all loans made to Prosper borrowers through
the platform.  The following Agreement
describes the services and your rights and obligations should you elect to
register as a borrower on the platform.  Prosper and WebBank are collectively referred
to in this Agreement as “we” or “us.”

 

1.  Registration as a Prosper
Borrower.  You are registering as a borrower in the
Prosper marketplace, so that you may be eligible to post loan requests or “listings”
for display on the platform to people who may be interested in bidding against
one another in a competitive auction format to facilitate the funding of a loan
to you by WebBank.  We refer to the
people who bid on listings as “lenders” even though all loans to Prosper
borrowers obtained through the platform are made by WebBank.  You agree to comply with the terms and
provisions of this Agreement, the Terms of Use of the Prosper website, and the
Prosper Policies, as those guidelines may be amended from time to time by
Prosper in its sole discretion (collectively, the “Prosper Terms and Conditions”).

 

We
reserve the right to restrict access to the platform to individuals who meet
minimum credit guidelines and other criteria, as determined by us in our sole
discretion.

 

2.  Authorization to Obtain
Credit Report.  You authorize us to obtain a credit report
from one or more consumer credit reporting agencies.  We may use the credit report for any lawful
purpose, including but not limited to (i) for authentication purposes, to
make sure you are who you say you are, (ii) to determine how much debt you
currently have, in order to determine your debt-to-income ratio, (iii) to
obtain your credit score and assign you a Prosper Rating based in part on that
score, (iv) to obtain and display certain information and characteristics
from your credit report from one or more consumer credit reporting agencies,
including but not limited to the number, age, type and status of the credit
lines currently being reported, public records (such as bankruptcies and
judgments) and mortgage loans appearing on your credit report, and the number
of your recent requests for credit, and (v) to obtain and display on the
Folio Investing Note Trader platform certain information and characteristics
from your credit report from one or more consumer credit reporting agencies at
any time or times that a Borrower Payment Dependent Note corresponding to your
loan is offered for sale by lenders holding such Notes.  Information from your credit report will be
displayed on the Prosper website with your listings.  You authorize us to verify information in
your credit report, and you agree that Prosper may contact third parties to
verify any such information.  We will
obtain your credit report each time you post a listing, except that we may not
obtain a new credit report when you post listings within thirty (30) days
following the posting of an earlier listing.

 

3.  Listings.  You may request a loan from WebBank by posting a listing on the
platform.  The minimum and maximum loan
amounts you may request are posted on the Prosper website and are subject to
change by us at any time without notice. 
To post a listing, you must provide the amount of the loan you are
requesting and the maximum interest rate you are willing to pay.  At the time you post a listing you must also
provide your annual income, occupation and employment status.  You authorize and agree that we may display
in your listing, and in listings displayed on the Folio Investing Note Trader
platform describing Borrower Payment Dependent Notes corresponding to a loan
you obtain through the Prosper platform that is offered for sale by lenders
holding such Notes, any information from your credit file with the consumer
credit reporting agency, including but not limited to the following
information:

 

	
  (i)

  	
  Your
  Prosper Rating;

  
	
  (ii)

  	
  Your
  debt-to-income ratio, expressed as a percentage, reflecting the ratio between
  the amount of your monthly non-mortgage debt, as compared to the amount of
  monthly income that you indicated when completing your listing;

  
	
  (iii)

  	
  Whether
  you own a home;

  
	
  (iv)

  	
  The
  number of accounts on which you are currently late on a payment;

  
	
  (v)

  	
  The
  total past-due amount you owe on all delinquent and charged-off accounts;

  
	
  (vi)

  	
  The
  number of 90+ days past due delinquencies on your credit report in the last 7
  years;

  
	
  (vii)

  	
  The
  number of negative public records (e.g., bankruptcies, liens, and judgments)
  on your credit report over the last 12 months, and over the last 10 years;

  
	
  (viii)

  	
  The
  month and year your first recorded credit line (e.g., revolving, installment,
  or mortgage credit) was opened;

  

 

1

 

	
  (ix)

  	
  The
  total number of credit lines appearing on your credit report, along with the
  number that are open and current;

  
	
  (x)

  	
  The
  total balance on all of your open revolving credit lines;

  
	
  (xi)

  	
  Your
  bankcard utilization ratio, expressed as a percentage, reflecting the ratio
  of the total balance used, to the aggregate credit limit on, all of your open
  bankcards; and

  
	
  (xii)

  	
  The
  number of inquiries made by creditors to your credit report in the last six
  months.

  

 

Listings may also display your self-reported
occupation, employment status and range of income.  If
you are a member of a Prosper group when you post a listing, the listing will
also identify your group; however, you do not have to be a member of a group to
post a listing.  You may also create a
network of Prosper friends, and if one or more of your Prosper friends or your
fellow group members bid on your listing, your listing will reflect that the
bid was made by a fellow group member or a Prosper friend.  Your Prosper friends who bid on your listing
may also write a recommendation that will be displayed in your listing.  Prosper friends do not guarantee payments on
your loan, and bids and recommendations of your listing from your Prosper
friends do not obligate the individual making the bid or recommendation to
guarantee or make any payments on your loan.

 

You
may not include any personally identifying information, including, without
limitation, your name, address, phone number, email address, Social
Security number or driver’s license number, or your bank account or credit card
numbers in your listing or on
your Prosper member web page, or elsewhere on the Prosper Website.  Listings that include this information are
subject to cancellation by Prosper, or deletion or redaction by Prosper of the
personally identifying information, although Prosper is under no obligation to
take such actions and you include such information solely at your own risk.

 

Prosper
lenders may ask you questions about your loan listing and you may, but are not
required to, respond to such questions. 
If you do elect to respond to a lender’s question you may respond
privately, or you 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 you elect to
answer the question and elect to make the question and answer publicly
available, in which case the question and answer appears in the listing.

 

Borrower
listings are displayed on the platform. 
This means that people who visit the Prosper website will be able to
view your listing, and see your Prosper Rating, your debt-to income ratio and
other information, provided, however, that certain information concerning your
credit history will only be viewable by registered Prosper lenders.  Upon your submission of a listing, you
authorize Prosper to display the listing on the platform for purposes of
obtaining a loan and for enabling Prosper lenders who own Borrower Payment
Dependent Notes (described in Section 5 below) corresponding to your loan
to offer such Notes for sale to other lenders at any time while your loan is
outstanding.  You authorize and agree
that Prosper may obtain and display updated information from your credit file
with one or more consumer credit reporting agencies, as well as information
about the payment history and status of your loan, on the Folio Investing Note
Trader platform at any time or times that a Borrower Payment Dependent Note
corresponding to your loan is offered for sale by lenders holding such
Notes.  To facilitate bids for your
listing or for listings posted by lenders offering to sell a Borrower Payment
Dependent Note corresponding to your loan. 
To facilitate bids for your listing, Prosper may forward the listing by
email to third parties, including but not limited to registered Prosper
lenders, and may display the listing in promotional, advertising and marketing
materials, and you authorize Prosper to do so.

 

You
authorize Prosper to verify your residence, income, occupation and any other
information you provide in connection with a listing or your registration as a
borrower, and you agree that Prosper may contact third parties to verify
information you provide.  If such
information changes after you post a listing but before the listing expires,
you must either (i) promptly notify Prosper of the change, or (ii) withdraw
your listing.  For example, if, while
your listing is displayed on the platform, your state of residence changes or
the annual income amount you provided to Prosper when you submitted your
listing decreases materially, you must either notify Prosper of the change, or
withdraw the listing.  If you elect to
withdraw your listing as a result of a change, you may (but are not required
to) post a new listing containing the updated information.  You cannot edit or amend your listing once it
is posted on the platform; however, you have the right to withdraw your listing
at any time prior to expiration of the listing, and you may post another
listing if you desire.  Prosper reserves
the right, in its sole discretion, to limit the number of listings you post or
attempt to post on the platform.

 

Your
listing is a request for a loan from WebBank in the amount specified in the
listing, at an interest rate equal to the maximum interest rate set forth in
your listing.  If your listing is matched
with lender bids totaling the amount of your requested loan, the interest rate
on your loan may be lower than the maximum rate you specified, but it will
never be higher.  You will not receive a
loan in an amount less than the amount specified in your listing, even if one
or more bids match a portion of your requested loan amount.  In
order to post a listing on the platform you must have a good faith intent to
obtain and repay your loan and your listing must be consistent with that
intent.

 

You
have the right to withdraw your listing at any time prior to expiration of the
listing.  If your
listing receives a lender bid in, or lender bids totaling, the amount of your
requested loan, you may receive
a loan from WebBank in the amount you requested, subject 

 

2

 

to
our right to verify information you provided in connection with your listing
and your registration as a Prosper user and our other rights as described in Section 4
below. If a loan is made to you, you do not have any right to rescind the loan.

 

Number of Listings.  Prosper reserves the right, in its sole
discretion, to limit the number of listings you post or attempt to post on the
platform.  You may have only one listing
outstanding at a time.

 

Duration of Listings.  When you post a listing, your listing will be
displayed on the platform for seven (7) days or for such other time period
that we may in our sole discretion establish and amend from time to time.  However, if your listing receives a lender bid in,
or lender bids totaling, the
full amount of your requested loan prior to expiration of your listing, you may
elect to end your listing early – you need not wait until your listing
expires.  You may also designate your
listing for “automatic funding,” in which case your listing will end and no
further bids on your listing will be accepted toward your listing as soon as
your listing receives a bid or bids totaling
the full amount of your requested loan. 
We reserve the right to make the automatic funding feature available
only to borrowers with certain Prosper Ratings or other credit characteristics.  When you post a listing, it will be displayed
on the platform along with all other listings until you end the listing or the
listing expires, or until the listing is withdrawn by you or by us as provided
in Section 4 below.

 

Additional Loans.  Subject to eligibility requirements that we
may in our sole discretion establish and amend from time to time, you may have
up to two loans outstanding at any one time, provided that the aggregate
outstanding principal balance of your loans does not exceed the maximum loan
amount for your state of residence.  To
be eligible to post a listing for a second loan, you must be current on your
existing loan, and you must have a record of on-time monthly loan payment
performance, within such guidelines as may be established and amended from time
to time by us in our sole discretion. 
You may not post a listing for a second loan until a specified number of
months has elapsed since the date you obtained your existing loan.  The guidelines and eligibility requirements
for second loans are posted on the Prosper website and are subject to change by
us in our sole discretion at any time without notice.

 

Prohibited Activities.  You agree that you will not, in connection
with any listings, bids, loans or other transactions involving or potentially
involving Prosper or WebBank, (i) make any false, misleading or deceptive
statements or omissions of material fact in your listing; (ii) misrepresent
your identity, or describe, present or portray yourself as a person other than
yourself, whether in a narrative description or a photo in your listing; (iii) give
to or receive from, or offer or agree to give to or receive from any Prosper
lender or other person any fee, bonus, additional interest, kickback or thing
of value of any kind in connection with a requested or existing loan or in
exchange for such person’s bid, recommendation, or offer or agreement to bid on
or recommend your listing; or (iv) represent yourself to any person, as a
director, officer or employee, of Prosper or WebBank, unless you are such
director, officer or employee.

 

4.  Right to Verify Information
and Cancel Funding.

 

a.  We reserve the right to verify the accuracy
of all information provided by borrowers, lenders and group leaders in
connection with listings, bids and loans. 
We also reserve the right to determine in our sole 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 agreement between
Prosper or WebBank and such user.  We may
conduct our review at any time — before, during or after the posting of a
listing, or before or after the funding of a loan.  You agree to respond promptly to our requests
for information in connection with your listing, accounts, or your registration
with Prosper.

 

b.  In the event we determine, prior to funding a
loan, 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, we may refuse to post the listing or, if the listing has already
been posted, remove the listing from the platform and cancel all bids against
the listing.

 

c.  When a listing ends or expires with a bid or
bids totaling the amount of a borrower’s requested loan, we may conduct a “pre-funding”
review prior to funding the loan.  Loan funding occurs when loan proceeds are disbursed into the borrower’s
designated deposit account.  We may, at any
time and in our sole discretion, delay funding of a loan in order to enable us
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 

 

3

 

determine
whether there are any irregularities with respect to the listing or the bids
against the listing.  We may cancel or
proceed with funding the loan, depending on the results of our pre-funding
review.  If funding is cancelled, the
listing will be removed from the platform 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. 
In the event we cancel funding of a loan, Prosper will notify the
borrower, group leader (if any), and all bidders for the listing of our
determination to cancel funding of the loan.

 

5.  Matching of Bids and
Listings; Loan Funding.

 

a.  Registered Prosper lenders will be able to
review your listing and may commit funds to purchase, in various amounts,
Borrower Payment Dependent Notes (“Notes”) that Prosper may issue to lenders
who, as winning bidders for your listing, commit funds to facilitate the
funding of your loan.  The Notes Prosper
issues to these lenders will be dependent for payment on payments we receive
from you on your loan.  This means that
the Prosper lenders who facilitated the funding of your loan will receive
payments on their Notes only to the extent you make payments on your loan.  You acknowledge and agree that a lender’s
commitment to purchase a Note corresponding to all or a portion of your loan
from us does not confer any rights to you. 
You also acknowledge and agree that Prosper lenders make their own
decisions whether to commit funds toward your loan.

 

b.  Prosper’s auction platform will automatically
match your listing with any bids that specify a minimum interest rate equal to
or below the maximum interest rate you would accept.  Bids are first matched with borrower listings
with the highest offered interest rates above the bidder’s minimum interest
rate, and thereafter the bids are matched to borrower listings with
incrementally lower offered interest rates. 
Most listings are matched with multiple lender bids.

 

c.  A match of your listing with one or more bids
in the full amount of your requested loan results in a loan from WebBank to
you, subject to our right to verify information as provided in this
Agreement.  The loan will be evidenced by
a Promissory Note in the form set forth on the attached Exhibit A.  Loan proceeds are disbursed into your
designated deposit account.  After loan funding, the loan will be sold by
WebBank to Prosper, and Prosper will service the loan.

 

d.  We do not warrant or guaranty that your listing
will be matched with any bids.  Your
listing must receive a bid in, or bids totaling, the entire amount of your
requested loan in order for a loan to be made. 
You will not receive a loan if only a portion (even a substantial
portion) of your requested loan amount is matched with a bid or bids.

 

e.  To safeguard your privacy rights, on listings
your name and address will be shielded from the view of bidders and prospective
bidders.  Only your Prosper screen name
will appear on listings, and only the screen name of the bidders will appear
with bids.

 

6.  Compensation.  If you receive a loan, you must pay WebBank an origination fee.  The current fee amounts are posted in the Fees and Charges section of the Prosper website, and are
subject to change by us at any time without notice.  The fee is paid by the borrower out of the loan
proceeds at the time a loan is funded, so that the net amount of loan proceeds
you receive will be less than
the full amount of your loan.

 

7.  Making Your Loan
Payments.  At the time you register as a borrower, you
must provide your deposit account information to facilitate transfers of funds
to and from your deposit account.  You
agree to make your loan payments by automated withdrawals from your designated
account, or by the use of bank drafts drawn on your designated account.  At the time you create your listing, you will
be asked to choose the method of making your loan payments, and your loan
payments will be made by the payment method you choose.  Prosper will act as the servicer for all
loans you obtain from WebBank through the platform, and all communications
regarding your loan must be made to Prosper.

 

8.  Authorization to Contact Your
Group Leader.  You acknowledge and agree that if you obtain
a loan through the platform as a member of a group registered with Prosper, and
your loan payment becomes fifteen (15) days past due, Prosper may notify your
group leader of the delinquent payment. 
Groups on Prosper may be rated according to the collective payment
performance of the group’s members, so your failure to make loan payments when
due may have a negative effect on your group’s rating.

 

9.  Collection &
Reporting of Delinquent Loans.  In the event you do not make your loan
payments on time, WebBank or any subsequent owner of the loan will have all
remedies authorized or permitted by the Promissory Note and applicable
law.  In addition, when a monthly payment
becomes thirty (30) days past due, your loan may be referred to a collection
agency for collection.  Prosper may report
loan payment delinquencies in excess of 30 days to one or more credit reporting
agencies in accordance with 

 

4

 

applicable
law.  Subject to limitations of
applicable law, you authorize and agree that Prosper or a collection agency may
contact you at any or all of the telephone numbers you provide to Prosper at or
after registration or any of your other telephone numbers.

 

10.  No Guarantee.  NEITHER PROSPER NOR WEBBANK WARRANTS OR GUARANTEES (1) THAT YOUR
LISTING WILL BE MATCHED WITH ANY BIDS, (2) THAT YOU WILL RECEIVE A LOAN AS
A RESULT OF POSTING A LISTING, OR (3) THAT IF YOUR LISTING IS MATCHED YOU
WILL RECEIVE A LOAN WITH AN INTEREST RATE LESS THAN THE MAXIMUM RATE SPECIFIED
IN YOUR LISTING.

 

11.  Restrictions on Use.  You are not authorized or permitted to use the Prosper website to
obtain, or attempt to obtain, a loan 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
loan payments be made from the account. 
Your designated account will be the account into which loan proceeds
will be deposited, and from which loan payments will be made.  Although you are registering as a borrower,
you may also register and participate on the platform as a lender or as a group
leader.  If you participate on the
platform as a lender any amounts in your Prosper funding account are subject to
set-off against any delinquent amounts owing on any loan or loans you obtain as
a Prosper borrower.  If you obtain a loan
and fail to pay your loan in full, whether due to default, bankruptcy or other
reasons, you will not be eligible to post any further listings or re-register
with Prosper as a borrower, lender or group leader.  Prosper may in its sole discretion, with or
without cause and with or without notice, restrict your access to the Prosper
website or platform.

 

12.  Authority.  You warrant and represent that you have the legal competence and
capacity to execute and perform this Agreement.

 

13.  Termination of
Registration.  Prosper may in its sole discretion, with or
without cause, terminate this Agreement at any time by giving you notice as
provided below.  In addition, upon
Prosper’s 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 post listings or otherwise
participate on the platform; (ii) terminate this Agreement and your
registration with Prosper.  Upon
termination of this Agreement and your registration with Prosper, any listings
you have posted on the platform shall terminate, and will be removed from the
platform immediately.  Any loans you
obtain prior to the effective date of termination resulting from listings you
had placed on the platform shall remain in full force and effect in accordance
with their terms.

 

14.  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 17.  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 Prosper Terms
and Conditions, represent the entire agreement between you and Prosper regarding
your participation as a borrower 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
borrower on the platform.

 

15.  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; or (vii) contain viruses, trojan horses,
worms, time bombs, cancelbots or other similar harmful or deleterious programming
routines.  You may not 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 Prosper member
on your Prosper member web page, or elsewhere on the Prosper website.

 

16.  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.  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 Prosper 

 

5

 

if
your registered email address changes, and you agree to update your registered
residence address, mailing address and telephone number on the Prosper website
if your address or telephone number changes.

 

17.  No Warranties.  EXCEPT FOR THE REPRESENTATIONS CONTAINED IN THIS AGREEMENT, PROSPER
DOES NOT MAKE ANY REPRESENTATIONS OR WARRANTIES TO YOU OR ANY OTHER PARTY WITH
REGARD TO YOUR USE OF THE PROSPER WEBSITE AND THE PLATFORM, INCLUDING, BUT NOT
LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.

 

18.  Limitation on
Liability.  IN NO EVENT SHALL ANY PARTY TO THIS AGREEMENT
BE LIABLE TO ANY 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 ANY OTHER PARTY REGARDING THE EFFECT
THAT THE AGREEMENT MAY HAVE UPON THE FOREIGN, FEDERAL, STATE OR LOCAL TAX
LIABILITY OF THE OTHER.

 

19.  Miscellaneous.  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 federal law and, to the extent that state law applies, the laws of the State
of Utah.  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.  WebBank is not a party to this
Agreement, but you agree that WebBank is a third-party beneficiary and is
entitled to rely on your representations and authorizations, and other
provisions of this Agreement.  There are no
other third party beneficiaries to this Agreement.

 

6

 

EXHIBIT A

 

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 made on time, my final payment will be in the amount of
a regular monthly payment.  If payments
are paid late, 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 

 

7

 

immediately
due and payable.  If you exercise the
remedy of acceleration you will give me at least 30 days prior notice of
acceleration.

 

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:

 

8

 

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

 

(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 

 

9

 

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).

 

(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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10Exhibit 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 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, or descriptions of existing borrower loans that are offered for sale
by financial institutions registered with Prosper (referred to below as “loan
sellers”), that are displayed on the platform. 
Depending on the type of listing, listings include the desired loan
amount, maximum offered interest rate and corresponding yield percentage, or
the minimum sale price and corresponding yield percentage of the borrower loan
being offered for sale.  The yield
percentage is the lender member’s effective yield, net of servicing fees.  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), the borrower’s
self-reported annual income range, occupation and employment status, and
collateral (if any) securing the borrower loan. 
Borrowers are identified by a Prosper user name but are not able to
disclose their identity or contact information to lenders.

 

On
listings posted by Prosper borrowers, Prosper lenders may ask borrowers
questions about their loan 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 or sale price
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 in the amount 

 

1

 

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 or sale price of the corresponding borrower
loan and are in the lowest yield percentage among all bids placed against the
listing.

 

Types of Listings.  Two types of listings may be posted on the platform: (1) listings posted by
Prosper borrowers requesting a loan (“Prosper borrower listings”), and (2) listings
posted by loan sellers describing existing direct loans or retail installment
sale contracts owned by the loan seller and offered for sale on the platform (“open
market listings”).  All loans to
borrowers resulting from Prosper borrower listings (“Prosper borrower loans”)
will be made to borrowers by WebBank, a Utah-chartered industrial bank (“WebBank”)
from its own funds and then subsequently sold and assigned by WebBank to
Prosper.  Borrower loans described in
open market listings (“open market loans”) are existing loans that are owned by
the loan seller that posted the listing, whether or not such loan seller
originally made the loan, and may include secured or unsecured loans.  References in this Agreement to “borrower
loans” or “loans” shall mean both Prosper borrower loans and open market loans,
and in the context of open market listings shall be deemed to include both
direct loans and retail installment sale contracts.

 

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 type of 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 OR LOAN SELLER THAT POSTED THE LISTING.

 

Limits on Bids.  Lenders may bid the entire amount requested
by the borrower or loan seller that posted the listing, 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.

 

2

 

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.  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 or
financial institution that posted the listing. 
Your bid remains outstanding on a listing until you are outbid, or until
the listing is withdrawn by the borrower or loan seller that posted the listing
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 or sale price, 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 borrower or offered for sale through our platform by a loan seller.  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 or sale price, 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 or sale of the
borrower loan that corresponds to the Note you are committing to purchase.

 

Prosper Borrower Listings.  With respect to Prosper
borrower listings, funding occurs when loan proceeds are disbursed into the
borrower’s designated deposit account. 
All borrower loans resulting from Prosper borrower listings will be made
to Prosper borrowers by 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.

 

Open Market Listings.  With respect to open market
listings, the loan offered for sale by loan sellers as described in open market
listings will be sold and assigned by the loan seller to Prosper, without
recourse to the loan seller, at the end of the auction bidding period.  As described in Section 5 below, Prosper
uses the proceeds of the sale of each series of Notes to purchase the
corresponding borrower loan from the loan seller.

 

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 

 

3

 

of
each series of Notes to purchase the corresponding borrower loan from WebBank
or from the loan seller, depending on the type of listing involved.

 

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 and
open market listings on the platform. 
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.

 

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. 
Open market loans will be serviced, both before and after default, by
the loan seller.  Prosper will service
all Notes, whether such Notes are dependent for payment on payments received on
a Prosper borrower loan or on an open market loan.  In servicing borrower loans Prosper or the
loan seller may, in its discretion, utilize affiliated or unaffiliated third
party loan servicers, repossessors, collection agencies or other agents or
contractors.

 

Prosper
and any loan seller or 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, repossess or foreclose upon
any collateral securing 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 or from the loan seller servicing open market 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 loan
seller or 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 the loan seller or third-party
servicer servicing the borrower loan deems uncollectible.

 

Servicing Standard.  In servicing borrower loans
Prosper and the loan seller, as applicable, 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. In addition, the loan seller of open market loans charges
a servicing fee at an annualized rate for servicing the corresponding open
market loan, which is deducted from payments it receives on the open market
loans. The loan seller’s servicing fee rate is set forth in the description of
the loan seller displayed on the Prosper website.

 

4

 

The
applicable servicing fee rate will be disclosed in all listings.  Prosper borrower listings will display
Prosper’s current servicing fee rate. 
Servicing fees will reduce the effective yield on Prosper borrower loans
below the borrower interest rate.  The
servicing fee rate charged by the loan seller on open market loans will vary
depending on the particular loan seller and loan type, but in all instances
will be added to Prosper’s servicing fee for servicing the Note and the total
servicing fee rate will be displayed in open market listings.

 

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 loan seller or 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.  Late
fees received by loan sellers on open market loans may be retained by the loan
seller servicing the open market loan as additional servicing compensation,
depending on the particular loan seller’s servicing guidelines, which will be
set forth in the description of the loan seller displayed on the Prosper
website. 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;

 

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 or, with respect to open market
listings, the loan seller 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, (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.  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, 

 

5

 

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, loan sellers 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.

 

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 amount requested for the borrower loan, 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, loan sellers 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.  In Prosper
borrower listings, the borrower’s income, employment and occupation 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 Prosper
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.  With respect to Prosper borrower
listings, 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.  The information in open market listings describing the borrower loan
for sale and the borrower’s credit characteristics is provided by the loan
seller and is not verified by Prosper or WebBank.

 

6

 

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 funding account are subject to set-off
against any delinquent amounts owing on your loans.  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 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.

 

7

 

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 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 

 

8

 

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.

 

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.

 

11

 

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.

 

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.

 

12

 

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;

 

(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 

 

13

 

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).

 

(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.

 

	
  Date: 

  	
   

  	
   

  
	
   

  
	
  [Borrower]

  
	
   

  
	
   

  
	
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