Document:

Exhibit 10.5

 

HOSTING SERVICES AGREEMENT

 

This
Hosting Services Agreement (the “Agreement”) between Prosper Marketplace, Inc.
(“Prosper”) and FOLIOfn Investments, Inc.
(“Customer”) is dated March 3, 2009.

 

1.     Overview.

 

1.1.         General.  This agreement states the terms and
conditions by which Prosper will deliver and Customer will receive the Service
provided by Prosper, including facilities, bandwidth and managed services.  The specific service to be provided hereunder
(the “Service”) is identified in Schedule A, hereby
incorporated by reference into this Agreement.

 

1.2.         Definitions.

 

(a)       “Customer
Technology” means Customer’s proprietary technology, including Customer’s
internet operations design, content, software tools, hardware designs,
algorithms, software (in source and object forms), user interface designs,
architecture, class libraries, objects and documentation (both printed and
electronic), know-how, trade secrets and any related intellectual property
rights throughout the world (whether owned by Customer or licensed to Customer
from a third party) and also including any derivatives, improvements,
enhancements or extensions of Customer Technology conceived, reduced to
practice, or developed during the term of this Agreement by Customer.

 

(b)       “Internet
Data Center(s)” means any of the facilities used by Prosper to provide the
Service.

 

(c)       “Prosper
Technology” means Prosper’s proprietary technology, including Prosper
services, software tools, hardware designs, algorithms, software (in source and
object forms), user interface designs, architecture, class libraries, objects
and documentation (both printed and electronic), network designs, know-how,
trade secrets and any related intellectual property rights throughout the world
(whether owned by Prosper or licensed to Prosper from a third party) and also
including any derivatives, improvements, enhancements or extensions of Prosper
Technology conceived, reduced to practice, or developed during the term of this
Agreement by either party.

 

(d)       “Rules And
Regulations” means the Prosper general rules and regulations governing
Customer’s use of the Service, including, but not limited to, on line conduct.

 

(e)       “Service
Commencement Date” means the date Prosper will begin providing the Service
to Customer, as indicated in a notice of service commencement delivered by
Prosper to Customer.

 

2.     Delivery of Services; Term; Exclusivity and Notice.

 

2.1.         Delivery of Services. 
Customer agrees to take, and Prosper agrees to provide, the Service
during the Initial Term and for any period thereafter, as specified in
paragraph 2.2 below.

 

2.2.         Condition to Agreement and Term.

 

(a)       Condition to Agreement. Prosper
has filed an S-1 registration statement with the U.S. Securities and Exchange
Commission (“SEC”) and has filed similar registration statements at the state
level, describing the platform for the purchase and sale of receivables, in
order to activate its platform for the offering and sale of receivables. FOLIO
has filed a form ATS with the SEC seeking authorization to operate a
marketplace for the secondary trading of notes issued pursuant to the S-1
registration statement. The obligations of Prosper and Customer under this
Agreement shall not commence or become effective until the later of (i) the
date that Prosper’s S-1 registration statement filed with the SEC becomes
effective and (ii) the date that the form ATS is approved by the SEC (the “Effective
Date”). The parties further understand and agree that after the effectiveness
of such filing, bids from Prosper lender members may not be made by residents
of a state that has not declared Prosper’s registration statement effective in
such state.

 

(b)       Term Commencement.  The term for the Service will commence on the
Service Commencement Date indicated in the notice of service commencement
delivered by Prosper to Customer when Prosper begins providing the Service to
Customer.

 

(c)       Term. 
Unless earlier terminated as provided herein, this Agreement shall be
effective during the period from the Service Commencement Date until the first
anniversary of the Service Commencement Date, unless terminated earlier in
accordance with Section 10 (the “Term”).

 

(d)       Renewed Term.  If no notice of termination is given in
accordance with Section 10 prior to the expiration of the Term, this Agreement
shall automatically renew for a period of one (1) year (“Renewed Term”).

 

2.3.                                                    Exclusivity.  The
parties acknowledge that Customer has developed an alternative trading system
for notes or securities and that it is constantly modifying that system. The
parties agree that Customer (or any affiliate of Customer) may, in its sole
discretion, operate an alternative trading system (or similar exchange or
system) for the trading of notes or securities by members, participants,
subscribers (or persons of a similar

 

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nature)
of an Internet-based social lending platform (howsoever described) that
directly or indirectly competes with Prosper.

 

3.     Fees.  Prosper shall provide the
Service to Customer during the term of this Agreement for no charge.

 

4.     Confidential Information; Intellectual Property Ownership.

 

4.1.         Confidential Information.

 

(a)                     Customer’s Confidentiality
Obligation.  For so long as
this Agreement remains in effect and for a period of ten (10) years after
any expiration or termination of this Agreement, Customer agrees that it and
its managers, employees, consultants, agents and advisors shall treat
confidentially and not disclose, or permit any affiliate of it or their
respective advisors, employees, agents or representatives to disclose, to any
third party any non-public or proprietary information  received from or on behalf of Prosper or
about Prosper (“Confidential Information”). 
Confidential Information will include all information in tangible or
intangible form that is marked or designated as confidential or that, under the
circumstances of its disclosure, should be considered confidential.  Confidential Information also will include,
but not be limited to, Prosper Technology, Customer Technology, and the terms
and conditions of this Agreement. 
Further, for the avoidance of doubt, such Confidential Information shall
include any personally identifiable information about any borrower or lender
member of the Prosper Internet-based social lending platform, excluding
information provided by any lender member to Customer in the course of
establishing or maintaining a brokerage account for any such person or relating
to executing a transaction for any such person. 
Customer agrees not to use such Confidential Information for any purpose
other than for the purposes contemplated under this Agreement, without
obtaining the prior written consent of Prosper, except (i) portions of
such information that are or become generally available to the public other than
as a result of disclosure by Customer in violation of this Agreement, (ii) portions
of such information received on a non-confidential basis from a third party
who, to such recipient’s knowledge, is not prohibited from disclosing the
information pursuant to a confidentiality agreement with, or fiduciary
obligations to, Prosper, and (iii) for the purpose of making any
disclosures required by applicable law. 
In the event that such Confidential Information is disclosed in
accordance with this paragraph, Customer agrees to contractually require each
person to whom it has provided such Confidential Information as expressly
permitted hereunder or with the prior written consent of Prosper to keep such
information confidential and to use and disclose it only in connection with its
performance under this Agreement.

 

(b)                    Prosper’s Confidentiality
Obligation.  For so long as
this Agreement remains in effect and for a period of ten (10) years after
any expiration or termination of this Agreement, Prosper agrees that it and its
directors, employees, consultants, agents, representatives and advisors shall
treat confidentially and will not disclose to any third party any Confidential
Information received from or on behalf of Customer or any of its affiliates, or
use such Confidential Information for any purpose other than providing the
Service or for the fulfillment of Prosper’s obligations under this Agreement
without obtaining the prior written consent of Customer, except (i) portions
of such information that are or become generally available to the public other
than as a result of disclosure by Prosper in violation of this Agreement, (ii) portions
of such information received on a non-confidential basis from a third party
who, to such recipient’s knowledge, is not prohibited from disclosing the
information pursuant to a confidentiality agreement with, or fiduciary
obligations to, Customer, and (iii) for the purpose of making any
disclosures required by applicable law.

 

(c)                     Permitted Disclosure.  Notwithstanding paragraphs (a) and (b) above,
either party may disclose Confidential Information received from the other if:

 

(i)        such information is
disclosed, in compliance with applicable law, by the receiving party to its
advisors, representatives, agents and employees, acting in their capacity as
such, who have a need to know such Confidential Information in connection with
the performance of this Agreement; provided, however, that such advisors,
representatives, agents and employees shall be required to agree to abide by the
requirements of this Section 4.1 and the receiving party shall be liable
to the other party for any breach of these requirements by its advisors,
employees, agents and representatives; or

 

(ii)       either party determines
that it is required by applicable law to disclose information not otherwise
permitted to be disclosed pursuant hereto. 
In advance of any such disclosure (to the extent legally permitted and
reasonably practicable), the receiving party shall consult with the other party
regarding such disclosure and seek confidential treatment for such portions of
the disclosure as may be requested by the other party.  Such receiving party shall have no liability
hereunder if, prior to the required disclosure, the receiving party receives a
written opinion from its counsel opining that such disclosure is required by
law or regulation.  In addition,
notwithstanding any other provision of this Agreement, either party shall be
permitted to file a copy of this Agreement with any governmental authority or
securities regulatory body, as necessary.

 

(d)                    Damages Not an Adequate Remedy.  Without prejudice to any other rights or
remedies of a party, the parties acknowledge and agree that damages would not
be an adequate remedy for any breach of this Section 4.1 and the remedies
of prohibitory injunctions and other relief are appropriate and may be sought
for any threatened or actual breach of any provision of this Section 4.1.  No proof of special damages shall be
necessary for the enforcement of any party’s rights under this Section 4.1.

 

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4.2.         Intellectual Property.

 

(a)       Ownership.  Except for the rights expressly granted
herein, this Agreement does not transfer from Prosper to Customer any Prosper
Technology, and all right, title and interest in and to Prosper Technology will
remain solely with Prosper.  Except for
the rights expressly granted herein, this Agreement does not transfer from
Customer to Prosper any Customer Technology, and all right, title and interest
in and to Customer Technology will remain solely with Customer.  Prosper and Customer each agrees that it will
not, directly or indirectly, reverse engineer, decompile, disassemble or
otherwise attempt to derive source code or other trade secrets from the other party.

 

(b)       General Skills and Knowledge.  Notwithstanding anything to the contrary in
this Agreement, neither party will be prohibited or enjoined at any time from
utilizing any skills or knowledge of a general nature acquired during the
course of providing or receiving the Service, including, without limitation,
information publicly known or available or that could reasonably be acquired in
similar work performed for another.

 

5.     Prosper Representations and Warranties.

 

5.1.         General.  Prosper
represents and warrants that (a) it has the legal right to enter into this
Agreement and perform its obligations hereunder, and (b) the performance
of its obligations and delivery of the Service to Customer will not violate any
applicable U.S. laws or regulations or cause a breach of any agreements with
any third parties.

 

5.2.         Service Performance Warranty. 
Prosper warrants that it will perform the Service in a manner consistent
with industry standards reasonably applicable to the performance thereof.

 

5.3.         No Other Warranty. 
Except for the express warranties set forth in this Section 5, the
Service is provided on an “as is” basis, and Customer’s use of the
Service is at its own risk.  Prosper does
not make, and hereby disclaims, any and all other express and/or implied
warranties, including, but not limited to, warranties of merchantability,
fitness for a particular purpose, noninfringement and title, and any warranties
arising from a course of dealing, usage, or trade practice.  Prosper does not warrant that the Service
will be uninterrupted, error-free, or completely secure.

 

5.4.         Disclaimer of Actions Caused by
and/or Under the Control of Third Parties.  Prosper
does not and cannot control the flow of data to or from Prosper’s network and
other portions of the internet.  Such
flow depends in large part on the performance of internet services provided or
controlled by third parties.  At times,
actions or inactions of such third parties can impair or disrupt Customer’s
connections to the internet (or portions thereof).  Although Prosper will use commercially
reasonable efforts to take all actions it deems appropriate to remedy and avoid
such events, Prosper cannot guarantee that such events will not occur.  Accordingly, Prosper disclaims any and all
liability resulting from or related to such events.

 

6.     Customer Obligations.

 

6.1.         Warranties of Customer.

 

(a)       General.  Customer represents and warrants that the
performance of its obligations and use of the Service (by Customer, its
customers and users) will not violate any applicable laws, regulations or the Rules and
Regulations or cause a breach of any agreements with any third parties.

 

(b)       Breach of Warranties.  In the event of any material breach of the
foregoing warranty, in addition to any other remedies available at law or in
equity, Prosper will have the right, in its sole reasonable discretion, to
suspend immediately the Service if deemed reasonably necessary by Prosper to
prevent any harm to Prosper and its business. 
Prosper will provide notice and opportunity to cure if practicable
depending on the nature of the breach. 
Once cured, Prosper will promptly restore the Service.

 

6.2.         Compliance With Law and Rules and
Regulations.  Customer agrees that it will use the Service
only for lawful purposes and in accordance with this Agreement.  Customer will comply at all times with all
applicable laws and regulations and the Rules and Regulations, as updated
by Prosper from time to time.  The Rules and
Regulations are incorporated herein and made a part hereof by this reference.  Prosper may change the Rules and
Regulations upon fifteen (15) days’ written notice to Customer.  Customer agrees that it has received, read
and understands the current version of the Rules and Regulations.  The Rules and Regulations contain restrictions
on Customer’s and Customer’s users’ online conduct (including prohibitions
against unsolicited commercial email) and contain financial penalties for
violations of such restrictions. 
Customer agrees to comply with such restrictions and shall use commercially
reasonable efforts to cause Customer’s users to comply with such
restrictions.  Customer acknowledges that
Prosper exercises no control whatsoever over the content of the information
passing through Customer’s site(s).

 

6.3.         Restrictions on Use of Services. 
Customer shall not resell the Service to any third parties.

 

7.     Insurance.

 

7.1.         Prosper Minimum Levels. 
Prosper agrees to keep in full force and effect during the term of this
Agreement:  (i) comprehensive
general liability insurance in an amount standard for the industry and
appropriate to cover its liabilities hereunder and (ii) workers’
compensation insurance in an amount not less than that required by applicable
law.  Prosper agrees that it will ensure
and be solely responsible for ensuring that its contractors and subcontractors
maintain insurance coverage at levels no less than those required by applicable
law and customary in Prosper’s and its agents’ industries.

 

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8.     Limitations of Liability.

 

8.1.         Consequential Damages Waiver.  In
no event will either party be liable or responsible to the other for any type
of incidental, punitive, indirect or consequential damages, including, but not
limited to, lost revenue, lost profits, replacement goods, loss of technology,
rights or services, loss of data, or interruption or loss of use of service or
equipment, even if advised of the possibility of such damages, whether arising
under theory of contract, tort (including negligence), strict liability or
otherwise.

 

8.2.         Basis of the Bargain; Failure of
Essential Purpose.  The parties acknowledge that they each
entered into this Agreement in reliance upon the limitations of liability and
the disclaimers of warranties and damages set forth herein, and that the same
form an essential basis of the bargain between the parties.  The parties agree that the limitations and
exclusions of liability and disclaimers specified in this Agreement will
survive and apply even if found to have failed of their essential purpose.

 

9.     Indemnification.

 

9.1.         Customer’s Indemnification of Prosper. 
Customer shall defend, indemnify and hold Prosper harmless from and
against any and all claims, demands, causes of action, or suits of any nature
or character based on any legal theory, including products liability, strict
liability, violation of any federal, state or local law, rule or
regulation, or the sole or concurrent negligence of any person (“Claims”) to
which Prosper may become subject (including any legal or other expenses
reasonably incurred by it in connection with investigating any Claim against it
and defending any action and any amounts paid in settlement or compromise,
provided Customer shall have given its prior written approval of such
settlement or compromise, which approval shall not be unreasonably withheld or
delayed) that arise, directly or indirectly, from (i) any third party
Claim resulting from any breach by Customer (or its affiliates) of this
Agreement or the failure to perform any activities necessary under this
Agreement by any employee of Customer, (ii) any grossly negligent act or
omission to act by any employee of Customer relating to any activities, if any,
performed under this Agreement, or (iii) Customer’s (or its affiliates’)
willful misconduct or fraud.

 

9.2.         Prosper’s Indemnification of Folio. 
Prosper shall defend, indemnify and hold Customer and its affiliates
harmless from and against any and all Claims to which Customer and its
affiliates may become subject (including any legal or other expenses reasonably
incurred by it in connection with investigating any Claim against it and
defending any action and any amounts paid in settlement or compromise, provided
Prosper shall have given its prior written approval of such settlement or
compromise, which approval shall not be unreasonably withheld or delayed) that
arise, directly or indirectly, from any third party Claim arising from any
activities by Customer, Customer’s affiliates or Customer’s employees or agents
relating to this Agreement (including, for the avoidance of doubt, any action
or claim brought by a regulator or self-regulatory organization under federal
or state securities laws, rules or regulations), except to the extent such
Claim is a result of Customer’s gross negligence, willful misconduct or fraud
(or the gross negligence, willful misconduct or fraud of any Customer employee)
with respect to this Agreement.

 

9.3.         Exclusivity of Remedies. 
Subject to Sections 4.1(d) and 8, absent actual fraud or willful
misconduct by any of the parties to this Agreement, and except for matters for
which the remedy of specific performance, injunctive relief or other
non-monetary equitable remedies are available, the indemnification rights
provided above shall be the sole and exclusive remedy of the parties under this
Agreement.

 

10.   Termination.

 

10.1.       Termination with Notice.  The
following parties may terminate this Agreement:

 

(a)       Prosper in writing, without cause,
effective three (3) months’ after notice is sent to Customer, provided,
however, this Agreement shall terminate along with the Services Agreement if
the Services Agreement is terminated in accordance with Section 2.2(a)(i) thereof;

 

(b)       Customer in writing, without cause,
effective nine (9) months’ after such notice is sent to Prosper;

 

(c)       Either party, in writing, effective
immediately, in the event of any material breach of any warranty,
representation or covenant of this Agreement by the other party which remains
uncured thirty (30) days after written notice of such breach to such other party;
or

 

(d)       Either party, upon mutual agreement of
the parties.

 

10.2.       Cross-termination. 
Notwithstanding the foregoing, this Agreement shall terminate
immediately upon the effective termination of the License Agreement between the
parties, dated December     , 2008 (“License Agreement”)
or the Services Agreement between the parties, dated December     ,
2008.

 

10.3.       Effect of Termination.  Upon
the effective date of termination of this Agreement:

 

(a)       Prosper will immediately cease providing
the Service; and

 

(b)       Within thirty (30) days of such
termination, each party will return all Confidential Information of the other
party in its possession and will not make or retain any copies of such
Confidential Information except as required to comply with any applicable legal
or accounting record keeping requirement.

 

10.4.       Survival.  The
following provisions will survive any expiration or termination of the
Agreement:  Sections 4.1, 4.2, 5.3, 8, 9,
10.3 and 11.

 

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11.   Miscellaneous Provisions.

 

11.1.       Force Majeure. 
Neither party will be liable for any failure or delay in its performance
under this Agreement due to any cause beyond its reasonable control, including
acts of war, acts of god, earthquake, flood, embargo, riot, sabotage, labor
shortage or dispute, governmental act or failure of the internet (not resulting
from the actions or inactions of Prosper), provided that the delayed
party:  (a) gives the other party
prompt notice of such cause, and (b) uses its reasonable commercial
efforts to promptly correct such failure or delay in performance.  If Prosper is unable to provide Service for a
period of sixty (60) consecutive days as a result of a continuing force majeure
event, Customer may cancel the Service.

 

11.2.       No Lease; Agreement Subordinate to
Master Lease.  This Agreement is a services agreement and is
not intended to and will not constitute a lease of any real property.  Customer acknowledges and agrees that (i) it
has been granted only a license to use the Internet Data Centers in accordance
with this Agreement; (ii) Customer has not been granted any real property
interest in the Internet Data Centers; (iii) Customer has no rights as a
tenant or otherwise under any real property or landlord/tenant laws,
regulations, or ordinances; and (iv) this Agreement, to the extent it
involves the use of space leased by Prosper, shall be subordinate to any lease
between Prosper and its landlord(s).

 

11.3.       Non-Solicitation. 
During the term of this Agreement and continuing through the first
anniversary of the termination of this Agreement, Customer agrees that it will
not, and will ensure that its affiliates do not, directly or indirectly,
solicit or attempt to solicit for employment any persons employed by Prosper or
contracted by Prosper to provide Service to Customer.

 

11.4.       Third Party Beneficiaries. 
Prosper and Customer agree that, except as otherwise expressly provided
in this Agreement, there shall be no third party beneficiaries to this
Agreement, including but not limited to the insurance providers for either
party or the customers of Customer.

 

11.5.       Governing Law.  This
Agreement is made under and will be governed by and construed in accordance
with the laws of the Commonwealth of Virginia (except that body of law
controlling conflicts of law) and specifically excluding from application to
this Agreement that law known as the United Nations Convention on the
International Sale of Goods.

 

11.6.       Severability; Waiver.  In
the event any provision of this Agreement is held by a tribunal of competent
jurisdiction to be contrary to the law, the remaining provisions of this
Agreement will remain in full force and effect. 
The waiver of any breach or default of this Agreement will not
constitute a waiver of any subsequent breach or default, and will not act to
amend or negate the rights of the waiving party.

 

11.7.       Assignment.  Customer
may not assign its rights or delegate its duties under this Agreement either in
whole or in part without the prior written consent of Prosper, and any
attempted assignment or delegation without such consent will be void.  Prosper may assign this Agreement in whole or
part.  Prosper also may delegate the
performance of certain Services to third parties, including Prosper’s wholly
owned subsidiaries, provided Prosper controls the delivery of such Services to
Customer and remains responsible to Customer for the delivery of such
Services.  This Agreement will bind and
inure to the benefit of each party’s successors and permitted assigns.

 

11.8.       Notice.  All
notices, requests, demands or other communications hereunder shall be in
writing and shall be deemed to have been duly given when transmitted by
facsimile during business hours with proof of confirmation from the
transmitting machine, or delivered by courier or other hand delivery, as
follows:

 

Prosper Marketplace, Inc.

111 Sutter Street, 22nd Floor

San Francisco, CA 94104

Attn:  Edward A. Giedgowd

ed@Prosper.com

Facsimile: 415-362-7233

 

FOLIOfn Investments, Inc.

8000 Towers Crescent Drive

Suite 1500

Vienna, VA 22182

Attn:  Michael Hogan

hoganm@foliofn.com

Facsimile: 703-880-7319

 

11.9.       Relationship of Parties. 
Prosper and Customer are independent contractors and this Agreement will
not establish any relationship of partnership, joint venture, employment,
franchise or agency between Prosper and Customer.  Neither Prosper nor Customer will have the
power to bind the other or incur obligations on the other’s behalf without the
other’s prior written consent, except as otherwise expressly provided herein.

 

11.10.     Entire Agreement; Counterparts;
Originals.  This Agreement, including all documents
incorporated herein by reference, constitutes the complete and exclusive
agreement between the parties with respect to the subject matter hereof, and
supersedes and replaces any and all prior or contemporaneous discussions,
negotiations, understandings and agreements, written and oral, regarding such
subject matter.  This Agreement may be
executed in two or more counterparts, each of which will be deemed an original,
but all of which together shall constitute one and the same instrument.  Once signed, any reproduction of this
Agreement made by reliable means (e.g., photocopy, facsimile) is considered an
original. This Agreement may be changed only by a written document signed by
authorized representatives of Prosper and Customer in accordance with this Section 11.10.

 

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AUTHORIZED
REPRESENTATIVES OF CUSTOMER AND PROSPER HAVE READ THE FOREGOING AND ALL
DOCUMENTS INCORPORATED THEREIN AND AGREE AND ACCEPT SUCH TERMS EFFECTIVE AS OF
THE DATE FIRST ABOVE WRITTEN.

 

	
  FOLIOfn Investments, Inc.:

  	
   

  	
  Prosper Marketplace, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature:

  	
  /s/ Michael J. Hogan

  	
   

  	
  Signature:

  	
  /s/ Kirk T. Inglis

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Print Name:

  	
  Michael J. Hogan

  	
   

  	
  Print Name:

  	
  Kirk T. Inglis

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Chief Executive Officer
  and President

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  March 3, 2009

  	
   

  	
  Date:

  	
  March 3, 2009

  

 

6

 

SCHEDULE A

 

Service

 

The
operation and hosting of the current release and version of Prosper’s computer
software program as configured for use by FOLIOfn
Investments, Inc., to operate an alternative trading system for the
trading of certain notes issued by Prosper and held by members of the Prosper
Internet-based social lending platform who also are customers of Folio,
including all related updates, revisions, error corrections and enhancements
thereof which are provided by Prosper to Customer.

 

7Exhibit 10.6

 

Prosper-Folio Services Agreement

 

THIS
SERVICES AGREEMENT  (this “Agreement”),
dated as of March 3, 2009, is by and between FOLIOfn
Investments, Inc., a Virginia corporation registered as a broker-dealer
under the Securities Exchange Act of 1934, as amended (“Folio”), and
Prosper Marketplace, Inc. a Delaware 
corporation (“Prosper”).

 

RECITALS

 

WHEREAS,
Folio has agreed to operate and maintain an alternative trading system (the “Trading
Platform”) for the purchase and sale of Borrower Payment Dependent Notes and
Open Market Notes issued respectively by Prosper and other financial
institutions (“Notes”) to investors (referred to as registered Prosper “lenders”)
among such investors who also are customers of Folio (“Folio’s Business”)
through Prosper’s online marketplace at www.prosper.com;

 

WHEREAS,
Prosper and Folio have entered into a License Agreement whereby Prosper has
agreed to license to Folio certain software and technology that Folio will use
to operate the Trading Platform (“Software”);

 

WHEREAS,
Prosper and Folio have entered into a Hosting Services Agreement whereby
Prosper has agreed to host such Software for Folio’s exclusive use; and

 

WHEREAS,
in connection with Folio’s Business, Prosper has agreed to provide to Folio,
for the exclusive benefit of Folio, certain services, in accordance with the
terms and conditions set forth herein;

 

NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants contained
in this Agreement, subject to the satisfaction of the terms and conditions set
forth herein, and intending to be legally bound, the parties hereto agree as
follows:

 

ARTICLE I

SERVICES

 

SECTION 1.1                        Folio
Services.  Subject to the terms and conditions of this
Agreement, Folio shall operate and maintain the Trading Platform for the
purchase and sale of Notes among investors who are issued such Notes through
Prosper’s online credit marketplace. 
Folio shall provide to Prosper the services as listed and described on Exhibit A,
or as otherwise described in this Agreement (collectively, the “Folio  Services”).

 

(a)           Operation of
Trading Platform.  Folio shall
effectuate the purchase and sale of Notes by and among Prosper’s investors who
own Notes through the Trading Platform. Folio shall open customer trading or
brokerage accounts with Prosper investors who desire to sell or purchase Notes.
Folio shall, in accordance with the License Agreement and the Hosting Services
Agreement, handle the transfer and payment of the purchase price among
investors’ trading accounts for such Notes, and record and maintain accurate
transaction records of all Note purchases and sales. Folio shall manage and
record the transfer of title of Notes from sellers’ Folio accounts to buyers’
Folio accounts. Folio shall keep funds and securities belonging to Prosper
investors in a separate account for the sole benefit of its customers, and
shall not commingle sellers’ or buyers’ funds with Folio’s own funds.

 

(b)           Compliance.  Folio shall direct and oversee the purchase
and sale of Notes on the Trading Platform, and otherwise operate and manage the
Trading Platform in compliance with the Applicable Law of any Governmental
Authority (as those terms are defined below), including without limitation laws
governing the purchase, sale and transfer of securities and securities
broker-dealer requirements.

 

(c)           Broker-Dealer
Licensing.  Folio warrants and
represents to Prosper that it is registered as a broker-dealer under the
Securities Exchange Act of 1934 and holds and shall maintain all necessary
licenses and registrations to operate and maintain the Trading Platform and
perform of the Folio Services in all 50 states of the United States.

 

SECTION 1.2                        Prosper
Services.  Subject to the terms and conditions of this
Agreement, Prosper shall provide to Folio the services as listed and described
on Exhibit B, or as otherwise described in this Agreement
(collectively, the “Prosper  Services”).  Prosper shall render the Prosper Services as
an independent service provider subject to the supervision and direction of
Folio.

 

1

 

(a)           Scope.  The Prosper Services (i) shall include
the services set forth in Exhibit B, as amended from time to time,
and (ii) shall be provided (A) in a manner and with reasonable care
consistent with the manner and reasonable care used by Prosper in the conduct
of its own business, and (B) in a manner consistent with the requirements
of applicable law, statute, order, rule, regulation, policy or guideline (“Applicable
Law”) of any United States or foreign government, any state or other
political subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government, including the U.S. Securities and Exchange Commission (“Commission”),
or any other authority, agency, department, board, commission or
instrumentality of the United States, any State of the United States or any
political subdivision thereof or any foreign jurisdiction, and any court,
tribunal or arbitrator(s), and any United States or foreign governmental or
non-governmental self-regulatory organization, agency or authority (including
the Financial Industry Regulatory Authority, Inc.) (“SRO”), in each
case, having competent jurisdiction or authority (collectively, “Governmental
Authority”).  Subject to the first
sentence of this Section 1.2, Section 1.6 and the Applicable Law of
any Governmental Authority, the parties may agree from time to time that in
addition to the existing Prosper Services, other services are necessary for the
conduct of Folio’s.  Such other services
will be included in the Prosper Services upon the written agreement of the
parties.

 

(b)           Review of Scope.  If one of the parties wishes to conduct a
review of, or make changes to, the Prosper Services, that party shall request
in writing that a services review meeting be held within ten (10) business
days, to discuss the provision of Prosper Services; provided that no changes to
the Prosper Services will be made without the prior written consent of all
parties.  For the avoidance of doubt,
Prosper may choose to use different facilities, equipment, software programs,
and employees to provide the Prosper Services without the prior approval of
Folio.

 

(c)           Regulatory
Requirements relating to Prosper Services.  
Prosper shall file an undertaking with the Commission, in the form
attached as Exhibit D to this Agreement, within seven days after
execution of this Agreement, and provide a copy to Folio.

 

(d)           Consideration to
Folio.  For each Note sold, the
seller shall pay Folio a percentage of the proceeds received from such sale (“Transaction
Fee”). Transaction fees shall be collected by Folio from the proceeds of
sales of Notes.  Further, the parties
acknowledge that Prosper has an interest in the establishment and successful
operation of Folio’s Business because of the shared customers of Prosper and
Folio.  As such, and in consideration for
Folio’s services under this Agreement, to the extent aggregate Transaction Fees
for a calendar month during the Term or any Renewal Term do not equal or exceed
twenty thousand dollars ($20,000) (the “Minimum Monthly Fee”), Prosper shall
pay Folio the difference. For example, if aggregate transaction fees in April of
2009 equal $16,000, Prosper shall pay Folio $4,000 ($20,000 minus $16,000). In
the event transaction fees for a particular month exceed $20,000, the excess
amount shall be applied as a credit toward any shortfall in succeeding months
during the Term or any Renewal Term. For example, if aggregate transaction fees
equal $23,000 in May of 2009 and $12,000 in June of 2009, Prosper
shall be entitled to a credit of $3,000 against the Minimum Monthly Fee for
June, so that Prosper shall pay Folio $5,000 for June ($20,000 minus
($12,000 + $3,000) = $5,000). Prosper shall make any required payments to Folio
toward the Minimum Monthly Fee no later than 15 days after the end of each
calendar month during the Term  or any
Renewed Term .  Further, for any period
for which Folio conducts Folio’s Business that is less than one calendar month,
Prosper shall pay a pro rata share of the Minimum Monthly Fee set forth above
minus the aggregate Transaction Fees received by Folio for that period of time,
less any credits from prior months.

 

(e)           Marketing.  For the Term (as defined below), Prosper
shall showcase Folio through the use of its corporate name or trademark, if
any, in a manner mutually agreeable to the parties on either Prosper’s homepage or
any homepage through which a lender member would access the Prosper
website.  In addition, the parties agree
to facilitate the marketing campaign calendar set forth in Exhibit E.

 

(f)            Audit.  Once during the Term (as defined below) and
once during the Renewed Term (as defined below), Folio shall have the right to
conduct (or direct an agent to conduct) at Prosper’s expense not to exceed
twenty five thousand dollars ($25,000) per audit, an audit of any appropriate
site, facility or performance documentation of Prosper, as directly related to
the Prosper Services, and as may be reasonably necessary for compliance
purposes under Applicable Law.  Such
audits shall be conducted during normal business hours and in a manner so as
not to cause Prosper to be in violation of any Applicable Law or contracts or
other rights of third parties.  Prosper
shall provide to Folio or any auditor or attorney acting on Folio’s behalf with
respect to conducting an audit of the Services such assistance as they
reasonably require, including installing and operating audit software.  With respect to any agreement between Folio
and any auditor or attorney acting on Folio’s behalf under this Section 1.2(f),
Folio shall require such auditor or attorney to maintain any confidential
information created or received relating to Prosper in accordance with Section 4.1
of this Agreement.

 

2

 

(g)           Phase 2
Development. Foliofn Investments, Inc. may, at its sole discretion,
decide to host and manage the secondary note trading platform for Prosper as
part of a phase 2 development efforts. Preliminary cost estimates to develop
said platform are projected to be approximately $240,000. Upon receipt of
written notice from Foliofn anytime during the term of this agreement, Prosper
agrees to contribute up to 50% of the projected development expense not to
exceed $120,000, provided however that Prosper shall not be obligated to
contribute toward any projected expenses that are not approved by Prosper prior
to expenditure, provided however that Prosper shall have the ability to review
and approve all projected expense items, which approval will not be
unreasonably or untimely withheld. Payment for development would be pro-rated
across the estimated development time schedule. In the event of a phase 2
development, both parties agree to amend the existing hosting agreement to
reflect all necessary changes related to Foliofn managing the secondary market
platform on behalf of Prosper.

 

SECTION 1.3                        No
Employment Relationship.  At all times during the performance of the
Prosper Services, all persons performing Prosper Services shall be in the
employ and/or under the control of Prosper (including agents, contractors,
temporary employees and consultants) and shall be independent from Folio and
shall not be considered to be employees of Folio or its affiliates and shall
not be entitled to any payment, benefit or perquisite directly from Folio or
its affiliates on account of the Prosper Services received.  Prosper agrees that no person acting as an
employee of Prosper who performs Prosper Services under this Agreement may, at
such time and in the exclusive capacity as a Prosper employee, make any
representation regarding Folio, hold himself or herself out as an agent or
employee of Folio, bind, or attempt to bind, Folio or take any similar action.

 

SECTION 1.4                        Relationship
of the Parties.  Folio and Prosper acknowledge they are
independent contractors.  Nothing herein
contained shall be deemed or construed (i) to constitute the parties as
partners, joint venturers, co-owners or otherwise as participants in a joint or
common undertaking or (ii) to allow either party to create or assume any
obligation on behalf of the other party. 
The duties and responsibilities of the parties hereto shall be rendered
by each as an independent contractor and not as an agent for the other
party.  Folio acknowledges that,
notwithstanding the provision of the Prosper Services by Prosper to Folio,
Folio shall remain responsible to any relevant Governmental Authority for the
continued performance by Prosper of the Prosper Services under this Agreement.

 

SECTION 1.5                        No
Conflicts.  Notwithstanding any other provision of this
Agreement, Prosper shall not be required to provide or to cause to be provided
Prosper Services hereunder that conflict with any Applicable Law, contract,
rule, regulation, order, license, authorization, certification or permit.

 

SECTION 1.6                        Limitation
of Services.  Except as otherwise expressly contemplated by Exhibit B,
Prosper shall not be obligated to (a) make modifications to its existing
systems, or (b) acquire additional assets, equipment, rights or properties
(including computer equipment, software, furniture, furnishings, fixtures,
machinery, vehicles, tools or other tangible personal property) or hire
additional personnel in connection with this Agreement.

 

SECTION 1.7                        No
Exclusivity.  The parties acknowledge that Folio has
developed an alternative trading system for notes and/or securities and that it
is constantly modifying that system. The parties agree that Folio (or any
affiliate of Folio) may, in its sole discretion, operate an alternative trading
system (or similar exchange or system) for the trading of notes or securities
by members, participants, subscribers (or persons of a similar nature) of an
Internet-based social lending platform (howsoever described) that directly or
indirectly competes with Prosper.

 

ARTICLE II

CONDITION TO AGREEMENT AND TERM OF THE AGREEMENT

 

SECTION 2.1                        Condition
to Agreement.

 

Prosper has filed an S-1 registration statement with the U.S.
Securities and Exchange Commission (“SEC”) and has filed similar registration
statements at the state level, describing the platform for the purchase and
sale of receivables, in order to activate its platform for the offering and
sale of receivables. FOLIO has filed a form ATS with the SEC seeking
authorization to operate a marketplace for the secondary trading of notes
issued pursuant to the S-1 registration statement. The obligations of Prosper
and Folio under this Agreement shall not commence or become effective until the
later of (i) the date that Prosper’s S-1 registration statement filed with
the SEC becomes effective and (ii) the date that the form ATS is approved
by the SEC (the “Effective Date”). The parties further understand and agree
that after the effectiveness of such filings, bids from Prosper lender members
may not be made by residents of a state that has not declared Prosper’s
registration statement effective in such state.

 

3

 

SECTION 2.2                 Term
of the Agreement.

 

(a)                                  The term of
this Agreement shall commence on the Effective Date and shall continue until
the first anniversary of the Effective Date, unless terminated earlier in
accordance with Section 2.3 (“Term”).

 

(b)                                 If no notice of
termination is given in accordance with Section 2.3 prior to the expiration
of the Term, this Agreement shall automatically renew for a period of one (1) year
(“Renewed Term”).

 

SECTION 2.3                Termination.

 

(a)                                  The following
parties may terminate this Agreement:

 

(i)                                     Prosper may
terminate this Agreement:

 

(1)  During the
Term, in writing, without cause, effective three (3) months’ after notice
is sent to Folio; provided, however, that Prosper may terminate in writing,
without cause, effective one (1) month after notice to Folio and Folio
shall be entitled to receive liquidated damages in the amount of sixty thousand
dollars ($60,000) minus any monies paid to Folio by Prosper during the term of
the Agreement pursuant to Section 1.2(d);

 

(2) During the Renewed Term, without cause, effective three (3) months’
after notice is sent to Folio;

 

(ii)                                  In writing,
effective thirty (30) days after notice is sent, if Prosper determines, in its
sole discretion, that lender members of Prosper may transfer their notes
through a structure that does not require a resale trading platform operated by
a registered broker-dealer, and that the use of such structure is approved by
the Securities and Exchange Commission, provided, however, that Prosper shall
use reasonable efforts to notify all customers of Prosper that are also
customers of Folio of such change, and shall assist Folio in the transition of
such customers, as requested by Folio; Folio may terminate this Agreement in
writing, effective immediately, if Prosper commits a breach of Applicable Law
that materially affects Folio’s ability to provide brokerage services to
customers of Folio (“Folio Customers”) in compliance with any federal or
state securities laws, rules or regulations or any rules of a
self-regulatory organization of which Folio is a member, provided, however,
that Prosper shall provide the Services for a commercially reasonable period of
time to allow Folio to close out any outstanding transactions relating to Folio’s
Business at the time of termination;

 

(iii)                               Folio may
terminate this Agreement in writing, without cause, effective nine (9) months’
after such notice is sent to Prosper;

 

(iv)                              Either party
may terminate this Agreement, in writing, effective immediately, in the event
of any material breach of any warranty, representation or covenant of this
Agreement by the other party which remains uncured thirty (30) days after
written notice of such breach to such other party; or

 

(v)                                 Either party
may terminate this Agreement, upon mutual agreement of the parties.

 

(b)                                 Notwithstanding
the foregoing, this Agreement shall terminate immediately upon the effective
termination of the License Agreement between the parties, dated March 3,
2009 (“License Agreement”) or the Hosting Services Agreement between the
parties, dated March 3, 2009.

 

SECTION 2.4                     Consequences
of Termination, Expiration of the Term or Expiration of the Renewed Term.  Upon termination, for any reason, expiration
of the Term or expiration of any Renewed Term of this Agreement, (i) Prosper
shall maintain the Books and Records for the terms outlined in Exhibit B
on behalf of, and for the benefit of, Folio; and (ii) either party shall,
if required by the other (disclosing) party, return or destroy all Confidential
Information (as defined below), subject to Applicable Law.  Termination or expiration of this Agreement
will not relieve Folio of its obligations to any lender member who has become a
customer of Folio.

 

4

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

SECTION 3.1                       Representations and Warranties. Each party represents and warrants
to the other party that, except as otherwise disclosed in writing to the other
party:

 

(a)           it is a company duly
incorporated and validly existing under the laws of the jurisdiction of its
establishment;

 

(b)           it has the full
power and authority to enter into this Agreement and to perform its obligations
under this Agreement;

 

(c)           it has obtained all
material consents and approvals and taken all actions necessary for it to
validly enter into and give effect to this Agreement;

 

(d)           this Agreement will,
when executed, constitute lawful, valid and binding obligations on it,
enforceable in accordance with its terms; and

 

(e)           it has since February 2006,
in all material respects, carried on and is carrying on its business in
compliance with all Applicable Law, and since February 2006 has complied
and is able to comply with the rules and requirements of all relevant
Governmental Authorities.  It has not
breached, and there are no breaches, of its organizational documents.  Except for the Consent Orders entered into by
Prosper with the SEC and a settlement entered into with the North American
Securities Administrators of America as disclosed to Folio, to its actual
knowledge, there has not been and there is no investigation or inquiry by, or
order, decree, decision or judgment of, any Governmental Authority outstanding
or anticipated against it, which, in each case, would have a material adverse
effect on its ability to enter into or perform its obligations under this
Agreement.

 

SECTION 3.2                       Continuing Effect.  The representations and warranties set out in
Section 3.1 shall be deemed to be repeated throughout the term of this
Agreement.

 

ARTICLE IV

CONFIDENTIALITY

 

SECTION 4.1                       Folio’s
Confidentiality Obligation.  Folio agrees that it and its managers,
employees, consultants, agents and advisors shall treat confidentially and not
disclose, or permit any affiliate of it or their respective advisors,
employees, agents or representatives to disclose, to any third party any
non-public or proprietary information 
received from or on behalf of Prosper or about Prosper (“Confidential
Information”).  For the avoidance of
doubt, such Confidential Information shall include any personally identifiable
information about any borrower or lender member of the Prosper Internet-based
social lending platform, excluding personally identifiable lender information
received by Folio in the course of establishing or maintaining an account for
any such member or relating to executing a transaction for any such member.  Folio agrees not to use such Confidential
Information for any purpose other than for the fulfillment of Folio’s
obligations in connection with the transactions contemplated by this Agreement,
without obtaining the prior written consent of Prosper, except (a) portions
of such information that are or become generally available to the public other
than as a result of disclosure by Folio in violation of this Agreement, (b) portions
of such information received on a non-confidential basis from a third party
who, to such recipient’s knowledge, is not prohibited from disclosing the
information pursuant to a confidentiality agreement with, or fiduciary
obligations to, Prosper, and (c) for the purpose of making any disclosures
required by Applicable Law.  In the event
that such Confidential Information is disclosed in accordance with this
paragraph, Folio agrees to contractually require each person to whom it has
provided such Confidential Information as expressly permitted hereunder or with
the prior written consent of the other Party to keep such information
confidential and to use and disclose it only in connection with the conduct of
Folio’s Business.

 

SECTION 4.2                       Prosper’s
Confidentiality Obligation.  Prosper agrees that it and its directors,
employees, consultants, agents, representatives and advisors shall treat
confidentially and will not disclose to any third party any Confidential
Information received from or on behalf of Folio or any of its affiliates, or
use such Confidential Information for any purpose other than providing the Services or for the
fulfillment of Prosper’s obligations under this Agreement without obtaining the
prior written consent of Folio, except (a) portions of such information
that are or become generally available to the public other than as a result of
disclosure by Prosper in violation of this Agreement, (b) portions of such
information received on a non-confidential basis from a third party who, to 

 

5

 

such recipient’s knowledge, is not prohibited from disclosing the
information pursuant to a confidentiality agreement with, or fiduciary
obligations to, Folio, and (c) for the purpose of making any disclosures
required by Applicable Law.

 

SECTION 4.3                        Protection
of Customer Information.  For purposes of complying with their
obligations under Applicable Law relating to the protection of consumer
personal information, if any, the parties will comply with the terms and
conditions set forth in Exhibit C attached hereto.

 

SECTION 4.4                        Permitted
Disclosure.  Notwithstanding the forgoing provisions of
ARTICLE IV, either party may disclose Confidential Information received from
the other if:

 

(a)           such information is
disclosed, in compliance with Applicable Law, by the receiving party to its
advisors, representatives, agents and employees, acting in their capacity as
such, who have a need to know such Confidential Information in connection with
the performance of this Agreement; provided, however, that such
advisors, representatives, agents and employees shall be required to agree to
abide by the requirements of this ARTICLE IV and the receiving party shall be
liable to the other party for any breach of these requirements by its advisors,
employees, agents and representatives; or

 

(b)           either party
determines that it is required by Applicable Law to disclose information not otherwise
permitted to be disclosed pursuant hereto. 
In advance of any such disclosure (to the extent legally permitted and
reasonably practicable), the receiving party shall consult with the other party
regarding such disclosure and seek confidential treatment for such portions of
the disclosure as may be requested by the other party.  Such receiving party shall have no liability
hereunder if, prior to the required disclosure, the receiving party receives a
written opinion from its counsel opining that such disclosure is required by
law or regulation.  In addition,
notwithstanding any other provision of this Agreement, Prosper shall be
permitted to file a copy of this Agreement with any Governmental Authority.

 

SECTION 4.5                        Damages Not an Adequate Remedy.  Without prejudice to any other rights or
remedies of a party, the parties acknowledge and agree that damages would not
be an adequate remedy for any breach of this ARTICLE IV and the remedies of
prohibitory injunctions and other relief is appropriate and may be sought for
any threatened or actual breach of any provision of this ARTICLE IV.  No proof of special damages shall be
necessary for the enforcement of any party’s rights under this ARTICLE IV.

 

ARTICLE V

LIMITATION OF DAMAGES

 

SECTION 5.1                        Folio’s
Liability to Prosper.  EXCEPT TO THE EXTENT (A) INCLUDED IN A
FINAL AWARD AGAINST PROSPER RESULTING FROM A THIRD PARTY CLAIM FOR WHICH
PROSPER IS INDEMNIFIED PURSUANT TO SECTION 6.1, OR (B) RELATING TO OR
ARISING FROM THE WILLFUL OR INTENTIONAL MISCONDUCT OF FOLIO, IN NO EVENT SHALL
FOLIO OR ITS AFFILIATES BE LIABLE TO PROSPER FOR ANY LOST OR PROSPECTIVE
PROFITS OR ANY OTHER SPECIAL, CONSEQUENTIAL, PUNITIVE, INCIDENTAL, OR INDIRECT
LOSSES OR DAMAGES FROM THEIR PERFORMANCE UNDER THIS AGREEMENT, OR, EXCEPT AS
OTHERWISE SPECIFICALLY SET FORTH HEREIN, FOR ANY FAILURE OF OR DEFECT IN
PERFORMANCE HEREUNDER OR RELATED HERETO, WHETHER ARISING OUT OF BREACH OF
CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. 
IN NO EVENT SHALL THE LIABILITY OF FOLIO OR ITS AFFILIATES UNDER THIS
AGREEMENT EXCEED IN ANY GIVEN CALENDAR YEAR ONE PERCENT OF THE TOTAL DOLLAR
AMOUNT OF TRANSACTIONS EXECUTED BY FOLIO WITH RESPECT TO FOLIO’S BUSINESS.

 

SECTION 5.2                        Prosper’s
Liability to Folio.  EXCEPT TO THE EXTENT (A) INCLUDED IN A
FINAL AWARD AGAINST FOLIO RESULTING FROM A THIRD PARTY CLAIM FOR WHICH FOLIO IS
INDEMNIFIED PURSUANT TO SECTION 6.2, OR (B) RELATING TO OR ARISING
FROM THE WILLFUL OR INTENTIONAL MISCONDUCT OF PROSPER, IN NO EVENT SHALL PROSPER
BE LIABLE TO FOLIO OR ITS AFFILIATES FOR ANY LOST OR PROSPECTIVE PROFITS OR ANY
OTHER SPECIAL, CONSEQUENTIAL, PUNITIVE, INCIDENTAL, OR INDIRECT LOSSES OR
DAMAGES FROM ITS PERFORMANCE UNDER THIS AGREEMENT, OR, EXCEPT AS OTHERWISE
SPECIFICALLY SET FORTH HEREIN, FOR ANY FAILURE OF OR DEFECT IN PERFORMANCE
HEREUNDER OR RELATED HERETO, WHETHER ARISING OUT OF BREACH OF CONTRACT, TORT,
STRICT LIABILITY, OR OTHERWISE.

 

6

 

ARTICLE VI

INDEMNIFICATION

 

SECTION 6.1                        Folio’s Indemnification of
Prosper.  Folio shall defend, indemnify and hold
Prosper harmless from and against any and all claims, demands, causes of
action, or suits of any nature or character based on any legal theory,
including products liability, strict liability, violation of any federal, state
or local law, rule or regulation, or the sole or concurrent negligence of
any person (“Claims”) to which Prosper may become subject
(including any legal or other expenses reasonably incurred by it in connection
with investigating any Claim against it and defending any action and any
amounts paid in settlement or compromise, provided Folio shall have given
its prior written approval of such settlement or compromise, which approval
shall not be unreasonably withheld or delayed) that arise, directly or
indirectly, from (i) any third party Claim resulting from any breach by
Folio (or its affiliates) of this Agreement, any failure by Folio to comply
with Applicable Law or the failure to perform any activities necessary to
facilitate the operation of Folio’s Business by any employee of Folio, (ii) any
grossly negligent act or omission to act by any employee of Folio with respect
to facilitating the operation of Folio’s Business, or (iii) Folio’s (or
its affiliates’) willful misconduct or fraud.

 

SECTION 6.2                        Prosper’s
Indemnification of Folio.  Prosper shall defend, indemnify and
hold Folio and its affiliates harmless from and against any and all
Claims to which Folio and its affiliates may become subject
(including any legal or other expenses reasonably incurred by it in connection
with investigating any Claim against it and defending any action and any
amounts paid in settlement or compromise, provided Prosper shall have
given its prior written approval of such settlement or compromise, which
approval shall not be unreasonably withheld or delayed) that arise, directly or
indirectly, from any third party Claim arising from the operation of Folio’s
Business, except to the extent such Claim is a result of (i) any breach by
Folio of this Agreement, (ii) any failure by Folio to comply with
Applicable Law or (iii) Folio’s gross negligence, willful misconduct or
fraud (or the gross negligence, willful misconduct or fraud of any Folio
employee) with respect to facilitating the operation of Folio’s Business.

 

SECTION 6.3                        Exclusivity of Remedies.  Subject to Section 2.3, absent actual
fraud or willful misconduct by any of the parties to this Agreement, and except
for matters for which the remedy of specific performance, injunctive relief or
other non-monetary equitable remedies are available, the indemnification rights
provided above shall be the sole and exclusive remedy of the parties under this
Agreement.

 

ARTICLE VII

MISCELLANEOUS

 

SECTION 7.1                        Successors
and Assigns.  Neither party shall assign or transfer this
Agreement or any of the rights, interests or obligations hereunder without the
prior written consent of the other party. 
A purported assignment of this Agreement or any of the rights, interests
or obligations hereunder not in compliance with the provisions of this
Agreement shall be null and void ab initio.

 

SECTION 7.2                        Cooperation.  Each party shall cooperate with the other
party as is reasonably necessary to assist in the performance of the other
party’s obligations under this Agreement.

 

SECTION 7.3                        Entire
Agreement; Amendment.  This Agreement, including the exhibits
referred to herein, which are hereby incorporated in and made a part of this
Agreement, constitutes the entire contract between the parties with respect to
the subject matter covered by this Agreement. 
This Agreement supersedes all previous agreements and understandings, if
any, by and between the parties with respect to the subject matter covered by
this Agreement.  This Agreement may not
be amended, changed or modified except by a writing duly executed by the
parties hereto.

 

SECTION 7.4                        Governing
Law.  This
Agreement, and the rights and liabilities of the parties hereunder, shall be
governed by the substantive laws of the Commonwealth of Virginia to the exclusion
of its rules of conflict of laws and the parties agree to submit to the
exclusive jurisdiction of the state and federal courts located in the
Commonwealth of Virginia for the resolution of all disputes arising out of this
Agreement or in connection with the Services.

 

SECTION 7.5                        Notices.  All notices, requests, demands or other
communications hereunder shall be in writing and shall be deemed to have been
duly given when transmitted by facsimile during business hours with proof of
confirmation from the transmitting machine, or delivered by courier or other
hand delivery, as follows:

 

7

 

If to Prosper:

 

Prosper Marketplace, Inc.:

111 Sutter Street, 22nd Floor

San Francisco, CA 94104

Facsilime: 415-362-7233

 

Attn: Kirk T. Inglis,
kirk@prosper.com

 

If to Folio:

 

FOLIOfn Investments, Inc.

8000 Towers Crescent Drive

Suite 1500

Vienna, VA 22182

Facsimile: 703-880-7319

 

Attn:       Michael Hogan,
hoganm@foliofn.com

 

SECTION 7.6                   Third
Party Beneficiaries.  Nothing expressed or implied in this Agreement
is intended or shall be construed to confer upon or give any person, firm, or
corporation other than the parties, any rights or remedies under or by reason
of this Agreement.

 

SECTION 7.7                   Force
Majeure.  Neither party shall incur liability to the
other party due to any delay or failure in performance hereunder caused by
reason of any occurrence or contingency beyond its reasonable control,
including but not limited to failure of suppliers, strikes, lockouts or other
labor disputes, riots, acts of war or civil unrest, earthquake, fire, the
elements or acts of God, novelty of product manufacture, unanticipated product
development problems, or governmental restrictions or other legal requirements;
provided, that such party notifies the other party in writing immediately upon
commencement of such event and makes diligent efforts to resume performance
immediately upon cessation of such event.

 

SECTION 7.8                   Severability.  In the event that any provision of this
Agreement is declared by any court or other judicial or administrative body of
competent jurisdiction to be null, void or unenforceable, such provision shall
survive to the extent it is not so declared, and all of the other provisions of
this Agreement shall remain in full force and effect.  IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT
EACH AND EVERY PROVISION OF THIS AGREEMENT WHICH PROVIDES FOR A LIMITATION OF
LIABILITY, DISCLAIMER OF WARRANTIES OR EXCLUSION OF DAMAGES, IS INTENDED BY THE
PARTIES TO BE SEVERABLE AND INDEPENDENT OF ANY OTHER PROVISION AND TO BE
ENFORCED AS SUCH.

 

SECTION 7.9                   Headings.  The headings contained in this Agreement are
for convenience only and are not a part of this Agreement, and do not in any
way interpret, limit or amplify the scope, extent or intent of this Agreement,
or any of the provisions of this Agreement.

 

SECTION 7.10             Counterparts
and Facsimile.  This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which
together shall constitute one and the same agreement.  Transmission of facsimile copies of signed
original signature pages of this Agreement shall have the same effect as
delivery of the signed originals.

 

8

 

IN WITNESS WHEREOF, the parties have caused
their respective names to be subscribed to this Services Agreement as of the
date and year first above written.

 

	
   

  	
  Prosper
  Marketplace, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Kirk T. Inglis

  
	
   

  	
   

  	
  Name: Kirk T. Inglis

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  FOLIOfn Investments, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michael Hogan

  
	
   

  	
   

  	
  Name: Michael Hogan

  
	
   

  	
   

  	
  Title: Chief Executive Officer and President

  

 

9

 

Exhibits

 

Exhibit A: Description of Folio Services

 

Exhibit B: Description of Prosper Services

 

Exhibit C: Protection of Consumer Information

 

Exhibit D: Written Undertaking to Create and Maintain
Certain Books and Records

 

Exhibit E: 
Marketing

 

10

 

Exhibit A

 

Description of Folio Services

 

1.                                       The
following process will apply to registered Prosper lenders who desire to sell
their Notes on the trading platform, or to bid to purchase other lenders’ Notes
on the Trading Platform:

 

(a)                                  The
lender member will click on a button saying the lender will be directed to the
Folio website. That landing page will be designed as mutually agreed by
Folio and Prosper, and will bear Folio graphics predominantly, with the Prosper
logo appearing lower on the page.

 

(b)                                 The
lender member will then need to become a Folio customer by entering his or her
relevant information (name, social security number, address, birth date, etc.).
Folio will take that information and run its own OFAC search and make an
immediate decision as to whether to create an account for the customer. The
account will be a Folio account, and will allow that customer to also trade in
other Folio products, along with Prosper Notes.

 

(c)                                  To
become a Folio customer, lenders must accept Folio’s legal agreements, and
receive specified Note Trading Platform Disclosures. Once a lender becomes a
Folio customer, the lender can sell his or her own Notes on the Trading
Platform, or buy other lenders’ Notes offered for sale on the Trading Platform.
Notes sold and purchased may correspond to Prosper borrower loans, or to open
market (i.e., previously-funded) loans originated by other financial
institutions.

 

2.                                       On
the day following the close of the auction bidding period for a Note offered
for sale on the Trading Platform the following process will occur:

 

(a)                                  Prosper
relinquishes custody and control of the electronic original of the Note to
Folio, such that ownership of the Note can only be transferred at Folio’s
direction.

 

(b)                                 Prosper
(i) transfers funds in the amount of the purchase price from the Note
buyer’s Prosper funding account to Folio’s Wells Fargo account for customer
funds.

 

(c)                                  Assuming
each Folio client’s instructions for the following action have been obtained,
Folio transfers 99% of sale proceeds (retaining their 1% fee), less any
Applicable Withholding, to Prosper, which Prosper places, at Folio’s
instruction, in the selling lender’s Folio Note trading account.

 

(d)                                 Prosper,
acting as a “good control location” for Folio, at Folio’s instruction, transfers
ownership of the Note from the selling lender to the buying lender, and such
transfer shall be reflected in the selling lender’s and buying lender’s Note
trading accounts at Folio.

 

(e)                                  Assuming
each Folio client’s instructions for the following action have been obtained,
Prosper, at Folio’s instruction, transfers the Notes from the “good control
location” buying lender’s Note trading account to the buying lender’s Prosper
account.

 

3.                                       Folio’s
telephone number and email address will be displayed on the Trading Platform
web pages, and all customer service questions relating to the Trading Platform
will be received by or directed to Folio. Prosper will maintain all records of
the transactions in a separate database, on Folio’s behalf, that Folio may
query on its own.

 

11

 

Exhibit B

 

Description of Prosper Services

 

On behalf of Folio, Prosper agrees to perform the following services:

 

New Account Opening

 

1.                                       Prosper
will collect and pass electronically to Folio information regarding prospective
Folio Customers via an online automated process, as required by Folio and in
the form determined by Folio, necessary to open a customer account with
Folio.  Folio will review such
information and in its sole discretion approve all new accounts prior to
opening.

 

2.                                       Prosper
will collect and pass electronically to Folio such information from prospective
Folio Customers, as required by Folio, and in the form agreed to by Folio,
relating to anti-money laundering and customer identification laws, rules and
regulations, to permit Folio to conduct its anti-money laundering and customer
identification programs.

 

Creation and Maintenance of Books and Records

 

1.                                       The
books and records to be created and maintained for the specified period of time
by Prosper on behalf of Folio (collectively “Books and Records”), in the
medium agreed to by the parties, shall be as follows:

 

(a)                                  A
memorandum of each order, and of any other instruction given to Folio or
received by Folio for the purchase or sale of Notes, whether executed or
unexecuted, including the terms and conditions of the order or instructions and
of any modification or cancellation thereof and the movement of funds related
to such order, the account for which the order or instruction was entered, the
time the order or instruction was received, the time of entry, the price at
which executed, a notation indicating that a customer entered the order or
instruction on an electronic system, and, to the extent feasible, the time of
execution or cancellation (must be preserved for a period of not less than ten (10) years,
the first two (2) years in an easily accessible place);

 

                                                (b)                                 Copies
of confirmations of all purchases and sales of Notes for the account of Folio
Customers (must be preserved for a period of not less than ten (10) years,
the first two (2) years in an easily accessible place);

 

                                                (c)                                  A
record of any written (to include email) communications from a Folio Customer
sent to a Prosper address including specifically any communications expressing
any complaint (must be preserved in an easily accessible place until at least
ten (10) years after the earlier of the date the account was closed or the
date on which the information was replaced or updated).

 

2.                                       Under
no circumstances shall Prosper destroy, delete or otherwise eliminate any or
all or any part of such Books and Records without the prior written approval of
Folio.

 

3.                                       At
all times, the Books and Records, including all copies thereof, whether
electronic or otherwise, are the property of Folio and, as such, will be
surrendered to Folio promptly upon Folio’s request.

 

4.                                       Prosper
hereby undertakes to permit examination of such Books and Records at any time
or from time to time during business hours by representatives or designees of
the Commission or relevant SRO, and to promptly furnish to said Commission or
relevant SRO or their designee true, correct, complete and current hard copies
of any or all or any part of such Books and Records.

 

5.                                       The
parties acknowledge that the Agreement shall not relieve Folio from the
responsibility to prepare and maintain such Books and Records as specified in
Exchange Act Rule 17a-4(i) or in Rule 17a-3.

 

6.                                       To
the extent that Prosper receives a demand from any Governmental Authority or is
otherwise required by operation of law to permit examination of or to furnish a
copy of any or all or any part of such Books and Records, Prosper must
immediately notify Folio.

 

7.                                       Prosper
shall maintain and preserve the Books and Records in electronic form in accordance
with the electronic storage media requirements outlined in Exchange Act Rule 17a-4(f)(2).  Specifically the electronic storage media
must: (a) preserve the records exclusively in a non-rewriteable,
non-erasable format; (b) verify automatically the quality and accuracy of
the storage media 

 

12

 

recording process; (c) serialize the original and, if applicable,
duplicate units of storage media, and time-date for the required period of
retention the information placed on such electronic storage media; and (d) have
the capacity to readily download indexes and records preserved on the
electronic storage media as agreed to between the parties, as required by the
Commission or the SRO of which Folio is a member.

 

8.                                       Prosper
shall,

 

(a)                                  at
all times have available, for examination by Folio, the staffs of the
Commission and any SRO of which Folio is a member, facilities for immediate,
easily readable projection or production of electronic storage media images of the
Books and Records and facilities for producing easily readable images of the
Books and Records;

 

(b)                                 be
ready at all times to provide, and immediately provide, any facsimile
enlargement which Folio, the staffs of the Commission, any SRO of which Folio is
a member, or any State securities regulator having jurisdiction over Folio may
request;

 

(c)                                  store
separately from the original, a duplicate copy of the Books and Records for the
specified period of time;

 

(d)                                 organize
and index accurately all Books and Records maintained on both original and any
duplicate storage media.  At all times,
Prosper shall make available such indexes for examination by the Firm, the
staffs of the Commission and any SRO of which Folio is a member.  Each index must be duplicated and the
duplicate copies must be stored separately from the original copy of each index
and the original and duplicate indexes must be preserved for a period of not
less than ten (10) years, the first two (2) in an easily accessible
place;

 

(e)                                  have
in place an audit system providing for accountability regarding the inputting
of Books and Records to electronic storage media and inputting of any changes
made to every original and duplicate record of the Books and Records.  At all times, Prosper must be able to have
the results of such audit system available for examination by Folio, the staffs
of the Commission and any SRO of which Folio is a member.  Further, the audit results must be preserved
for a period of not less than ten (10) years, the first two (2) in an
easily accessible place; and

 

(f)                                    keep
current, and provide promptly upon request by Folio, the staffs of the
Commission and any SRO of which Folio is a member all information necessary to
access records and indexes stored on the electronic storage media; or place in
escrow and keep current a copy of the physical and logical file format of the
electronic storage media, the field format of all Books and Records written on
the electronic storage media and the source code, together with the appropriate
documentation and information necessary to access records and indexes.

 

9.                                       Annually,
Folio (or a third party auditor) may review the audit system established by
Prosper pursuant to this Agreement for the purpose of ascertaining the
effectiveness of such audit system for accountability regarding inputting of
the Books and Records and inputting of any changes made to every original and
duplicate record.

 

10.                                 Prosper
shall, prior to the Effective Date of the Agreement, enter into a contract (“Contract”)
with at least one third party, who shall have access to and the ability to
download information from Prosper’s electronic storage media, maintained on
behalf of Folio, to any medium permitted under Section 17(a) of the
Exchange Act and Rule 17a-4 there under. 
Folio shall be specified in such Contract as a third party beneficiary
of such Contract.  Such Contract between
Prosper and such third party(ies) shall include the following undertakings, and
shall require the third party, upon execution of the Contract, to submit the
following undertakings to the Financial Industry Regulatory Association, Inc.
at a place to be designated by Folio:

 

(a)                                  [Name
of Third Party] hereby undertakes to furnish promptly to FOLIOfn Investments, Inc. (“Folio”), the U.S. Securities and
Exchange Commission (“Commission”), its designees or representatives, any
self-regulatory organization of which Folio is a member, or any State
securities regulator having jurisdiction over Folio, upon reasonable request,
such information as is deemed necessary by Folio, the staffs of the Commission,
any self-regulatory organization of which Folio is a member, or any State
securities regulator having jurisdiction over Folio to download information
kept on Prosper’s electronic storage media, maintained on behalf of Folio, to
any medium acceptable under Securities Exchange Act of 1934 Rule 17a-4.

 

(b)                                 Furthermore,
[Name of Third Party] hereby undertakes to take reasonable steps to provide
access to information contained on Prosper’s electronic storage media, maintained
on behalf of Folio, including, as appropriate, arrangements for the downloading
of any record required to be maintained and preserved by Folio pursuant to Rules 17a-3
and 17a-4 under the Securities 

 

13

 

Exchange Act of 1934 in a format acceptable to the staffs of the
Commission, any self-regulatory organization of which Folio is a member, or any
State securities regulator having jurisdiction over Folio.  Such arrangements will provide specifically that
in the event of a failure on the part of Prosper on behalf of Folio to download
the record into a readable format and after reasonable notice to Prosper acting
on behalf of Folio, upon being provided with the appropriate electronic storage
medium, [Name of Third Party] will undertake to do so, as the staffs of the
Commission, any self-regulatory organization of which Folio is a member, or any
State securities regulator having jurisdiction over Folio may request.

 

11.                                 All
Folio files and records shall be maintained segregated, separate and apart from
the files and records of Prosper.

 

Good Control Location for Purposes of Rule 15c3-3 under the
Exchange Act

 

1.                                       Prosper,
as a “good control location” for Folio in compliance with Rule 15c3-3
under the Exchange Act, will maintain records regarding the uncertificated
Notes issued by Prosper and held by Folio Customers.

 

2.                                       Prosper
shall ensure and warrant that the Notes held in each Folio Customer’s account
are not subject to any right, charge, security interest, lien, or claim of any
kind in favor of Prosper or any person claiming through Prosper.

 

3.                                       As
part of the Books and Records, Prosper shall maintain  separate records on behalf of Folio that
reflect all positions in the Notes in each Folio Customer’s account.

 

Trade Confirmations and Monthly Statements for Folio Customers

 

Prosper shall provide trade confirmations and monthly account
statements on behalf of Folio to Folio Customers substantially in the form
required by Folio.  Such trade
confirmations and monthly account statements will be provided to each Folio
Customer by electronic delivery.

 

Withholding and Information Reporting

 

1.                                       Prosper
and Folio agree that concurrent with the transfer of funds contemplated under Section 3(b) of
Exhibit A, Prosper shall inform Folio of any withholding or backup
withholding applicable to the proceeds from the purchase and sale of a Note (“Applicable
Withholding”) under applicable United States federal tax laws (the “Tax
Laws”).

 

2.                                       Prosper
will provide Folio securities sales and cost basis information for Folio to
prepare 1099s. Folio will send PDFs of 1099s to Prosper to distribute to Note
Trader clients through an online “filing cabinet” feature. Folio shall prepare,
or cause to be prepared, the Internal Revenue Service Form 1099-Bs
required to be filed under applicable Tax Laws in connection with each purchase
and sale of a Note (the “1099s”). 
Prosper shall deliver the 1099s to the IRS on behalf of Folio within a
period of time reasonably calculated to allow Folio to comply with its
obligations to file such 1099s with the Internal Revenue Service and provide
such 1099s to the selling lenders.

 

3.                                       The
parties agree that clients subject to withholding taxes will not have access to
the Note Trader platform. Both parties agree to develop a process for existing
Note Trader clients that become subject to withholding retroactively, after
becoming a Note Trader client.

 

14

 

Error Correction

 

On behalf of, and for the benefit of, Folio, Prosper shall use
commercially reasonable efforts to assist Folio in correcting transaction
errors by assigning an initial severity category to the error in accordance
with the description set out below (“Service Levels”):

 

	
  Category

  	
   

  	
  Definition

  	
   

  	
  Target Action

  
	
  1-Critical

  	
   

  	
  Production
  use of any of the Software is not possible and no reasonable workaround
  exists. Folio requires resolution urgently due to financial, legal, and
  public risk.

  	
   

  	
  Initial
  response within two hours of notice. Resource assigned immediately thereafter
  and remains assigned until resolution.

  
	
  2-Severe

  	
   

  	
  Production
  use of any of the Software is possible, but a business function is disabled
  and no reasonable workaround exists. This category also applies to errors and
  problems that severely impact the progress of an implementation project where
  no reasonable workaround exists.

  	
   

  	
  Initial
  response within one business day of notice. Resource assigned within one
  business day thereafter and remains until resolution.

  
	
  3-Medium

  	
   

  	
  Production
  use of any of the Software is possible, but a workaround is unacceptable for
  more than a short period due to frequency of the affected function’s usage
  and the criticality of the function. This category also applies to errors and
  problems that severely impact implementation projects where there is an
  unacceptable long-term workaround.

  	
   

  	
  Initial
  response within two (2) business days of notice. Resource assigned
  within one (1) business day of initial response. Target resolution: 80%
  within 20 business days, the remainder resolved within 60 business days.

  
	
  4-Low

  	
   

  	
  All others.
  Production and/or implementation is not impacted severely for one of the
  following reasons:

   

  A.                                   A
  reasonably acceptable workaround exists;

  B.                                     The
  error or problem is resolved onsite;

  C.                                     The
  error or problem is not severe; or

  D.                                    The
  extent of the error or problem is limited.

  	
   

  	
  Response and
  resolution as time permits or indefinitely postponed. Any resolutions made
  available as part of next scheduled Update.

  

 

A new severity category to the error may be assigned, after research,
if the initial description was not accurate or after provision of a reasonable
workaround if the provision of the workaround lessens the severity of the
error.

 

15

 

Email Reporting System

 

Prosper shall maintain an email reporting system that permits Folio
Customers to report Errors and seek assistance with the use of any of the
Software, and Folio shall monitor and respond to such reports and requests for
assistance in accordance with the Service Levels.

 

Customer Service

 

Prosper shall publish a telephone number and link to Folio’s customer
service department that allows Folio Customers to contact Folio’s customer
service department for questions relating to Folio’s Business.

 

Scope

 

Prosper shall provide the Services for the then-current version of the
Software.

 

16

 

Exhibit C

 

Protection of Consumer Information

 

For purposes of complying with their obligations relating to the protection
of consumer personal information, if any, each party represents, warrants and
covenants to the other that:

 

(a)                                  it
will process, use, maintain and disclose personal information only as necessary
for the specific purpose for which this information was disclosed to it and
only in accordance with the terms of this Agreement;

 

(b)                                 subject
to ARTICLE IV of the Agreement it will not disclose any personal information to
any third party (including to the subject of such information) or any employee,
agent or representative who does not have a need to know such personal
information;

 

(c)                                  it
will implement and maintain an appropriate security program to (a) ensure
the security and confidentiality of all information provided to it by the other
party, including personal information (collectively, the “Confidential
Information” as such term is defined in Section 4.1 of this Agreement), (b) protect
against any threats or hazards to the security or integrity of the Confidential
Information, including unlawful destruction or accidental loss, alteration and
any other form of unlawful processing and (c) prevent unauthorized access
to, use or disclosure of the Confidential Information;

 

(d)                                 it
will immediately notify the other party in writing if it becomes aware of (a) any
disclosure or use of any of the Confidential Information by it or any of its
employees, agents or representatives in breach of this Agreement, (b) any
disclosure of any Confidential Information to it or its employees, agents or
representatives where the purpose of such disclosure is not known, and (c) any
request for disclosure or inquiry regarding the Confidential Information from a
third party;

 

(e)                                  it
will cooperate with the other party and the relevant supervisory authority in
the event of any apparent unauthorized access to or use of Confidential
Information, litigation or a regulatory inquiry concerning the Confidential
Information, provided, however, it will not communicate with the other party’s
customers or members concerning a security breach unless required by applicable
law without the written consent of the other party;

 

(f)                                    it
will enter into further agreements as reasonably requested by the other party
to comply with Applicable Law from time to time; and

 

(g)                                 it
will cause any employee, agent or representatives to act in accordance with
this Exhibit C.

 

The provisions of this Exhibit supplement, are in addition to, and
will not be construed to limit any other confidentiality obligations under the
Agreement.  For purposes of this
Agreement, “personal consumer information” means personally identifiable
information about or relating to any former or current members of the Prosper
Internet-based social lending platform and any Folio Customer, in each case,
that the other party receives or otherwise has access to; provided, however,
personally identifiable information independently obtained by Prosper about any
Prosper member or independently obtained by Folio about any Folio Customer
shall be excluded from the definition of “personal consumer information” with
respect to the relevant party for purposes of the Agreement.

 

17

 

Exhibit D

 

Written Undertaking to Maintain Certain Books
and Records

 

[Date]

 

Securities and Exchange Commission

 

RE:                              Written Undertaking to
Maintain Certain Books and Records on behalf of FOLIOfn Investments, Inc.

 

Pursuant to Section 17(a) of the Securities Exchange Act of
1934, as amended (“Exchange Act”) and Rules 17a-3 and 17a-4 promulgated
there under, FOLIOfn Investments, Inc. (“Firm”)
is required to create, maintain and preserve (or contract with a third party to
create, maintain and preserve) certain books and records for prescribed periods
of time.  Accordingly, the undersigned
undertakes to maintain such books and records on behalf of the Firm and
stipulates that:

 

1.                                       At
all times, such books and records, including all copies thereof, whether
electronic or otherwise, are the property of the Firm and, as such, will be
surrendered to the Firm promptly upon the Firm’s request.

 

2.                                       With
respect to the books and records maintained or preserved on behalf of the Firm,
the undersigned hereby undertakes to permit examination of such books and
records at any time or from time to time during business hours by
representatives or designees of the Securities and Exchange Commission (“Commission”),
and to promptly furnish to said Commission or its designee true, correct,
complete and current hard copies of any or all or any part of such books and
records.

 

3.                                       The
agreement between the Firm and the undersigned shall not relieve the Firm from
the responsibility to prepare and maintain records as specified in Exchange Act
Rule 17a-4(i) or in Rule 17a-3.

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  Prosper Marketplace, Inc.

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

18

 

Exhibit E

 

Marketing

 

1.                                       Foliofn will send one email per quarter to those Prosper lender
members who opened an account with Foliofn in order to
become a trading member and participate in the Trading System to inform them of
the availability of other Folio investments.

 

2.                                       Foliofn will be included in Prosper’s promotions about Prosper’s
secondary market.

 

3.                                       A
logo and link to the Foliofn Note Trader
platform will be included on Prosper’s help page (http://www.prosper.com/help/).

 

4.                                       Foliofn will be featured in Prosper’s Investing 101 video, upon
creation.

 

5.                                       Prosper
will put Folio Investing links on appropriate pages.  Any link will have anchor text only, no key
words.

 

6.                                       Foliofn landing pages will go to Folio Investing Note
Trader.  In circumstances where Foliofn requests a link to a general Folio Investing Landing
Page, Prosper must review and approve.

 

7.                                       Folio
Investing Note Trader pages to include the standard Folio Investing footer
statement and may include any and all links found in our site map. See attached
image below for reference.

 

8.                                       Foliofn will have final approval on all Foliofn
placements or changes.

 

9.                                       Foliofn reserves the right to make changes to all treatments and
placements within the “Invest” tab at any time, acknowledging Prosper’s release
schedule and in compliance with Prosper’s approval.

 

 

19

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