Document:

Exhibit 10.21

 

DIRECTOR INDEMNIFICATION AGREEMENT

PROSPER MARKETPLACE, INC.

 

INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement (this “Agreement”) is dated as of July 18, 2013, and is between Prosper Marketplace, Inc., a Delaware corporation (the “Company”), and Rajeev V. Date (“Indemnitee”).

 

RECITALS

 

A.            Indemnitee’s service to the Company substantially benefits the Company.

 

B.            Individuals are reluctant to serve as directors or officers of corporations or in certain other capacities unless they are provided with adequate protection through insurance or indemnification against the risks of claims and actions against them arising out of such service.

 

C.            Indemnitee does not regard the protection currently provided by applicable law, the Company’s governing documents and any insurance as adequate under the present circumstances, and Indemnitee may not be willing to serve as a director or officer without additional protection.

 

D.            In order to induce Indemnitee to continue to provide services to the Company, it is reasonable, prudent and necessary for the Company to contractually obligate itself to indemnify, and to advance expenses on behalf of, Indemnitee as permitted by applicable law.

 

E.            This Agreement is a supplement to and in furtherance of the indemnification provided in the Company’s certificate of incorporation and bylaws, and any resolutions adopted pursuant thereto, and this Agreement shall not be deemed a substitute therefor, nor shall this Agreement be deemed to limit, diminish or abrogate any rights of Indemnitee thereunder.

 

The parties therefore agree as follows:

 

1.              Definitions.

 

(a)            A “Change in Control” shall be deemed to occur upon the effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity.

 

(b)            “Corporate Status” describes the status of a person who is or was a director, trustee, general partner, managing member, officer, employee, agent or fiduciary of the Company or any other Enterprise.

 

(c)            “DGCL” means the General Corporation Law of the State of Delaware.

 

(d)           “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

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(e)            “Enterprise” means the Company and any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, trustee, general partner, managing member, officer, employee, agent or fiduciary.

 

(f)            “Expenses” include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees and costs of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond or other appeal bond or their equivalent, and (ii) for purposes of Section 12(d), Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

 

(g)            “Independent Counsel” means a law firm, or a partner or member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent (i) the Company or Indemnitee in any matter material to either such party (other than as Independent Counsel with respect to matters concerning Indemnitee under this Agreement, or other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

 

(h)            “Proceeding” means any threatened, pending or completed action, suit, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative or investigative nature, including any appeal therefrom and including without limitation any such Proceeding pending as of the date of this Agreement, in which Indemnitee was, is or will be involved as a party, a potential party, a non-party witness or otherwise by reason of (i) the fact that Indemnitee is or was a director or officer of the Company, (ii) any action taken by Indemnitee or any action or inaction on Indemnitee’s part while acting as a director or officer of the Company, or (iii) the fact that he or she is or was serving at the request of the Company as a director, trustee, general partner, managing member, officer, employee, agent or fiduciary of the Company or any other Enterprise, in each case whether or not serving in such capacity at the time any liability or Expense is incurred for which indemnification or advancement of expenses can be provided under this Agreement.

 

(i)            Reference to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he or she reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.

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2.             Indemnity in Third-Party Proceedings. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 2 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 2, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on his or her behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was unlawful.

 

3.             Indemnity in Proceedings by or in the Right of the Company. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company.

 

4.             Indemnification for Expenses of a Party Who is Wholly or Partly Successful. To the extent that Indemnitee is a party to or a participant in and is successful (on the merits or otherwise) in defense of any Proceeding or any claim, issue or matter therein, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith. To the extent permitted by applicable law, if Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, in defense of one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with (a) each successfully resolved claim, issue or matter and (b) any claim, issue or matter related to any such successfully resolved claim, issuer or matter. For purposes of this section, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

 

5.             Indemnification for Expenses of a Witness. To the extent that Indemnitee is, by reason of his or her Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, Indemnitee shall be indemnified to the extent permitted by applicable law against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.

 

6.             Additional Indemnification.

 

(a)            Notwithstanding any limitation in Sections 2, 3 or 4, the Company shall indemnify Indemnitee to the fullest extent permitted by applicable law if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on his or her behalf in connection with the Proceeding or any claim, issue or matter therein.

 

(b)            For purposes of Section 6(a), the meaning of the phrase “to the fullest extent permitted by applicable law” shall include, but not be limited to:

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(i)    the fullest extent permitted by the provision of the DGCL that authorizes or contemplates additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL; and

 

(ii)    the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers and directors.

 

7.             Exclusions. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any Proceeding (or any part of any Proceeding):

 

(a)            for which payment has actually been made to or on behalf of Indemnitee under any statute, insurance policy, indemnity provision, vote or otherwise, except with respect to any excess beyond the amount paid;

 

(b)            for an accounting or disgorgement of profits pursuant to Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of federal, state or local statutory law or common law, if Indemnitee is held liable therefor (including pursuant to any settlement arrangements);

 

(c)            for any reimbursement of the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company, as required in each case under the Securities Exchange Act of 1934, as amended (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act), if Indemnitee is held liable therefor (including pursuant to any settlement arrangements);

 

(d)            initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees, agents or other indemnitees, unless (i) the Company’s board of directors authorized the Proceeding (or the relevant part of the Proceeding) prior to its initiation, (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law, (iii) otherwise authorized in Section 12(d) or (iv) otherwise required by applicable law; or

 

(e)            if prohibited by applicable law.

 

8.             Advances of Expenses. The Company shall advance the Expenses incurred by Indemnitee in connection with any Proceeding, and such advancement shall be made as soon as reasonably practicable, but in any event no later than 30 days, after the receipt by the Company of a written statement or statements requesting such advances from time to time (which shall include invoices received by Indemnitee in connection with such Expenses but, in the case of invoices in connection with legal services, any references to legal work performed or to expenditure made that would cause Indemnitee to waive any privilege accorded by applicable law shall not be included with the invoice). Advances shall be unsecured and interest free and made without regard to Indemnitee’s ability to repay such advances. Indemnitee hereby undertakes to repay any advance to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company. This Section 8 shall not apply to the extent advancement is prohibited by law and shall not apply to any Proceeding for which indemnity is not permitted under this Agreement, but shall apply to any Proceeding referenced in Section 7(b) or 7(c) prior to a determination that Indemnitee is not entitled to be indemnified by the Company.

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9.             Procedures for Notification and Defense of Claim.

 

(a)            Indemnitee shall notify the Company in writing of any matter with respect to which Indemnitee intends to seek indemnification or advancement of Expenses as soon as reasonably practicable following the receipt by Indemnitee of notice thereof. The written notification to the Company shall include, in reasonable detail, a description of the nature of the Proceeding and the facts underlying the Proceeding. The failure by Indemnitee to notify the Company will not relieve the Company from any liability which it may have to Indemnitee hereunder or otherwise than under this Agreement, and any delay in so notifying the Company shall not constitute a waiver by Indemnitee of any rights, except to the extent that such failure or delay materially prejudices the Company.

 

(b)            If, at the time of the receipt of a notice of a Proceeding pursuant to the terms hereof, the Company has directors’ and officers’ liability insurance in effect, the Company shall give prompt notice of the commencement of the Proceeding to the insurers in accordance with the procedures set forth in the applicable policies. The Company shall thereafter take all commercially-reasonable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.

 

(c)            In the event the Company may be obligated to make any indemnity in connection with a Proceeding, the Company shall be entitled to assume the defense of such Proceeding with counsel approved by Indemnitee, which approval shall not be unreasonably withheld, upon the delivery to Indemnitee of written notice of its election to do so. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee for any fees or expenses of counsel subsequently incurred by Indemnitee with respect to the same Proceeding. Notwithstanding the Company’s assumption of the defense of any such Proceeding, the Company shall be obligated to pay the fees and expenses of Indemnitee’s counsel to the extent (i) the employment of counsel by Indemnitee is authorized by the Company, (ii) counsel for the Company or Indemnitee shall have reasonably concluded that there is a conflict of interest between the Company and Indemnitee in the conduct of any such defense such that Indemnitee needs to be separately represented, (iii) the fees and expenses are non-duplicative and reasonably incurred in connection with Indemnitee’s role in the Proceeding despite the Company’s assumption of the defense, (iv) the Company is not financially or legally able to perform its indemnification obligations or (v) the Company shall not have retained, or shall not continue to retain, such counsel to defend such Proceeding. The Company shall have the right to conduct such defense as it sees fit in its sole discretion. Regardless of any provision in this Agreement, Indemnitee shall have the right to employ counsel in any Proceeding at Indemnitee’s personal expense. The Company shall not be entitled, without the consent of Indemnitee, to assume the defense of any claim brought by or in the right of the Company.

 

(d)            Indemnitee shall give the Company such information and cooperation in connection with the Proceeding as may be reasonably appropriate.

 

(e)            The Company shall not be liable to indemnify Indemnitee for any settlement of any Proceeding (or any part thereof) without the Company’s prior written consent, which shall not be unreasonably withheld.

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10.           Procedures upon Application for Indemnification.

 

(a)            To obtain indemnification, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and as is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of the Proceeding. The Company shall, as soon as reasonably practicable after receipt of such a request for indemnification, advise the board of directors that Indemnitee has requested indemnification. Any delay in providing the request will not relieve the Company from its obligations under this Agreement, except to the extent such failure is prejudicial.

 

(b)            Upon written request by Indemnitee for indemnification pursuant to Section 10(a), a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Company’s board of directors, a copy of which shall be delivered to Indemnitee or (ii) if a Change in Control shall not have occurred, (A) by a majority vote of the Disinterested Directors, even though less than a quorum of the Company’s board of directors, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Company’s board of directors, (C) if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Company’s board of directors, a copy of which shall be delivered to Indemnitee or (D) if so directed by the Company’s board of directors, by the stockholders of the Company. If it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten days after such determination. Indemnitee shall cooperate with the person, persons or entity making the determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information that is not privileged or otherwise protected from disclosure and that is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or expenses (including attorneys’ fees and disbursements) reasonably incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company, to the extent permitted by applicable law.

 

(c)            In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 10(b), the Independent Counsel shall be selected as provided in this Section 10(c). If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Company’s board of directors, and the Company shall give written notice to Indemnitee advising him or her of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Company’s board of directors, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within ten days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 1 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within 20 days after the later of (i) submission by Indemnitee of a written request for indemnification pursuant to Section 10(a) hereof and (ii) the final disposition of the Proceeding, the parties have not agreed upon an Independent Counsel, either the Company or Indemnitee may petition a court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 10(b) hereof. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 12(a) of this Agreement, the Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

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(d)            The Company agrees to pay the reasonable fees and expenses of any Independent Counsel and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

 

11.           Presumptions and Effect of Certain Proceedings.

 

(a)            In making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination shall, to the fullest extent not prohibited by law, presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 10(a) of this Agreement, and the Company shall, to the fullest extent not prohibited by law, have the burden of proof to overcome that presumption in connection with the making by such person, persons or entity of any determination contrary to that presumption.

 

(b)            The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself create a presumption that Indemnitee did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his or her conduct was unlawful.

 

(c)            For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith to the extent Indemnitee relied in good faith on (i) the records or books of account of the Enterprise, including financial statements, (ii) information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, (iii) the advice of legal counsel for the Enterprise or its board of directors or counsel selected by any committee of the board of directors or (iv) information or records given or reports made to the Enterprise by an independent certified public accountant, an appraiser, investment banker or other expert selected with reasonable care by the Enterprise or its board of directors or any committee of the board of directors. The provisions of this Section 11(c) shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

 

(d)            Neither the knowledge, actions nor failure to act of any other director, officer, agent or employee of the Enterprise shall be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

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12.           Remedies of Indemnitee.

 

(a)            Subject to Section 12(e), in the event that (i) a determination is made pursuant to Section 10 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 8 or 12(d) of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 10 of this Agreement within 90 days after the later of the receipt by the Company of the request for indemnification or the final disposition of the Proceeding, (iv) payment of indemnification pursuant to this Agreement is not made (A) within ten days after a determination has been made that Indemnitee is entitled to indemnification or (B) with respect to indemnification pursuant to Sections 4, 5 and 12(d) of this Agreement, within 30 days after receipt by the Company of a written request therefor, or (v) the Company or any other person or entity takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover from, Indemnitee the benefits provided or intended to be provided to Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by a court of competent jurisdiction of his or her entitlement to such indemnification or advancement of Expenses. Alternatively, Indemnitee, at his or her option, may seek an award in arbitration with respect to his or her entitlement to such indemnification or advancement of Expenses, to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 12(a); provided, however, that the foregoing clause shall not apply in respect of a proceeding brought by Indemnitee to enforce his or her rights under Section 4 of this Agreement. The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration in accordance with this Agreement.

 

(b)            Neither (i) the failure of the Company, its board of directors, any committee or subgroup of the board of directors, Independent Counsel or stockholders to have made a determination that indemnification of Indemnitee is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor (ii) an actual determination by the Company, its board of directors, any committee or subgroup of the board of directors, Independent Counsel or stockholders that Indemnitee has not met the applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has or has not met the applicable standard of conduct. In the event that a determination shall have been made pursuant to Section 10 of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 12 shall be conducted in all respects as a de novo trial, or arbitration, on the merits, and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 12, the Company shall, to the fullest extent not prohibited by law, have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

 

(c)            To the fullest extent not prohibited by law, the Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 12 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement. If a determination shall have been made pursuant to Section 10 of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 12, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statements not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

 

(d)            To the extent not prohibited by law, the Company shall indemnify Indemnitee against all Expenses that are incurred by Indemnitee in connection with any action for indemnification or advancement of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company to the extent Indemnitee is successful in such action, and, if requested by Indemnitee, shall (as soon as reasonably practicable, but in any event no later than 60 days, after receipt by the Company of a written request therefor) advance such Expenses to Indemnitee, subject to the provisions of Section 8.

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(e)            Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification shall be required to be made prior to the final disposition of the Proceeding.

 

13.           Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amounts incurred by Indemnitee, whether for Expenses, judgments, fines or amounts paid or to be paid in settlement, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the events and transactions giving rise to such Proceeding; and (ii) the relative fault of Indemnitee and the Company (and its other directors, officers, employees and agents) in connection with such events and transactions.

 

14.          Non-exclusivity. The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Company’s certificate of incorporation or bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Company’s certificate of incorporation and bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change, subject to the restrictions expressly set forth herein or therein. Except as expressly set forth herein, no right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. Except as expressly set forth herein, the assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

 

15.           Primary Responsibility. The Company acknowledges that Indemnitee may have certain rights to indemnification and advancement of expenses provided by a venture capital fund and/or certain affiliates thereof (collectively, the “Secondary Indemnitors”). The Company agrees that, as between the Company and the Secondary Indemnitors, the Company is primarily responsible for amounts required to be indemnified or advanced under the Company’s certificate of incorporation or bylaws or this Agreement and any obligation of the Secondary Indemnitors to provide indemnification or advancement for the same amounts is secondary to those Company obligations. The Company waives any right of contribution or subrogation against the Secondary Indemnitors with respect to the liabilities for which the Company is primarily responsible under this Section 15. In the event of any payment by the Secondary Indemnitors of amounts otherwise required to be indemnified or advanced by the Company under the Company’s certificate of incorporation or bylaws or this Agreement, the Secondary Indemnitors shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee for indemnification or advancement of expenses under the Company’s certificate of incorporation or bylaws or this Agreement or, to the extent such subrogation is unavailable and contribution is found to be the applicable remedy, shall have a right of contribution with respect to the amounts paid. The Secondary Indemnitors are express third-party beneficiaries of the terms of this Section 15.

 

16.           No Duplication of Payments. Subject to Section 15 of this Agreement, the Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder (or for which advancement is provided hereunder) if and to the extent that Indemnitee has otherwise actually received payment for such amounts under any insurance policy, contract, agreement or otherwise.

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17.           Insurance. To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, trustees, general partners, managing members, officers, employees, agents or fiduciaries of the Company or any other Enterprise, Indemnitee shall be covered by such policy or policies to the same extent as the most favorably-insured persons under such policy or policies in a comparable position.

 

18.           Subrogation. In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

19.           Services to the Company. Indemnitee agrees to serve as a director or officer of the Company or, at the request of the Company, as a director, trustee, general partner, managing member, officer, employee, agent or fiduciary of another Enterprise, for so long as Indemnitee is duly elected or appointed or until Indemnitee tenders his or her resignation or is removed from such position. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement to continue Indemnitee in such position. This Agreement shall not be deemed an employment contract between the Company (or any of its subsidiaries or any Enterprise) and Indemnitee. Indemnitee specifically acknowledges that any employment with the Company (or any of its subsidiaries or any Enterprise) is at will, and Indemnitee may be discharged at any time for any reason, with or without cause, with or without notice, except as may be otherwise expressly provided in any executed, written employment contract between Indemnitee and the Company (or any of its subsidiaries or any Enterprise), any existing formal severance policies adopted by the Company’s board of directors or, with respect to service as a director or officer of the Company, the Company’s certificate of incorporation or bylaws or the DGCL. No such document shall be subject to any oral modification thereof.

 

20.           Duration. This Agreement shall be effective as of the date that Indemnitee began service as a director or officer of the Company, or as a director, trustee, general partner, managing member, officer, employee, agent or fiduciary of any other Enterprise, as applicable, and shall continue until and terminate upon the later of (a) ten years after the date that Indemnitee shall have ceased to serve as a director or officer of the Company or as a director, trustee, general partner, managing member, officer, employee, agent or fiduciary of any other Enterprise, as applicable; or (b) one year after the final termination of any Proceeding, including any appeal, then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 12 of this Agreement relating thereto.

 

21.           Successors. This Agreement shall be binding upon the Company and its successors and assigns, including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company, and shall inure to the benefit of Indemnitee and Indemnitee’s heirs, executors and administrators. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company, by written agreement, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

22.           Severability. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company’s inability, pursuant to court order or other applicable law, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (i) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (ii) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (iii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

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23.           Enforcement. The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director or officer of the Company.

 

24.           Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Company’s certificate of incorporation and bylaws and applicable law.

 

25.           Modification and Waiver. No supplement, modification or amendment to this Agreement shall be binding unless executed in writing by the parties hereto. No amendment, alteration or repeal of this Agreement shall adversely affect any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his or her Corporate Status prior to such amendment, alteration or repeal. No waiver of any of the provisions of this Agreement shall constitute or be deemed a waiver of any other provision of this Agreement nor shall any waiver constitute a continuing waiver.

 

26.           Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or electronic mail or otherwise delivered by hand, messenger or courier service addressed:

 

(a)            if to Indemnitee, to Indemnitee’s address, facsimile number or electronic mail address as shown on the signature page of this Agreement or in the Company’s records, as may be updated in accordance with the provisions hereof; or

 

(b)            if to the Company, to the attention of the Chief Executive Officer or Chief Financial Officer of the Company at 111 Sutter Street, 22nd Floor, San Francisco, California 94101, or at such other current address as the Company shall have furnished to Indemnitee.

 

Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one business day after deposit with the courier), or (ii) if sent via mail, at the earlier of its receipt or five days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent via facsimile, upon confirmation of facsimile transfer or, if sent via electronic mail, upon confirmation of delivery when directed to the relevant electronic mail address, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day.

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27.           Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 12(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Delaware Court of Chancery, and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court of Chancery for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) appoint, to the extent such party is not otherwise subject to service of process in the State of Delaware, The Corporation Trust Company, Wilmington, Delaware as its agent in the State of Delaware as such party’s agent for acceptance of legal process in connection with any such action or proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware, (iv) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court of Chancery, and (v) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court of Chancery has been brought in an improper or inconvenient forum.

 

28.           Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. This Agreement may also be executed and delivered by facsimile signature and in counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

 

29.           Captions. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

(Signature Page Follows)

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The parties are signing this Indemnification Agreement as of the date stated in the introductory sentence.

 

	
 

	
PROSPER MARKETPLACE, INC.

	
 

	
 

	
a Delaware corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ Sachin Adarkar

	
 

	
 

	
Name: Sachin Adarkar

	
 

	
 

	
Title: General Counsel

	
 

	
 

	
INDEMNITEE:

	
 

	 		
	
 

	
/s/ Rajeev Date

	
 

	
 

	
(Signature)

	
 

	 		
	
 

	
Rajeev Date

	
 

	
 

	
(Print name)

	
 

	 		
	
 

	
 

	
 

	
 

	
(Street address)

	
 

	 		
	
 

	
 

	
 

	
 

	
(City, State and ZIP)

	
 

	 		
	
 

	
 

	
 

	
 

	
(Facsimile Number)

	
 

	 		
	
 

	
 

	
 

	
 

	
(Email Address)

	
 

 

[SIGNATURE PAGE TO INDEMNIFICATION AGREEMENT]

EXHIBIT A

Schedule of Other Officer and Director Indemnification Agreements

	
Name of Counterparty to PMI

	
Date of Agreement

	
Christopher Bishko

	
May 14, 2013

	
Kenneth Niewald

	
May 1, 2013

	
Aaron Vermut

	
March 30, 2013

	
Stephan Vermut

	
January 22, 2013

	
Ronald Suber

	
January 22, 2013

	
Josh Tonderys

	
September 24, 2012

	
Daniel Sanford

	
June 1, 2012

	
Dawn Lepore

	
March 15, 2012

	
Eric Schwartz

	
March 14, 2012

	
David Silverman

	
March 5, 2012

	
Sachin Adarkar

	
March 1, 2010

 

[SIGNATURE PAGE TO INDEMNIFICATION AGREEMENT]Exhibit 10.25

 

BACKUP SERVICING AGREEMENT

This BACKUP SERVICTNG AGREEMENT (the "Agreement"), dated as of January 9, 2014 (the "Effective Date''), is entered into by and between Prosper Funding LLC, a Delaware limited liability company ("PFL"), and First  Associates Loan  Servicing, LLC, a Delaware limited liability company (the "Backup  Servicer").

 

WHEREAS, PFL owns an online credit platform (the "Platform"), pursuant to which individuals can obtain unsecured consumer loans ("Loans") originated by WebBank, a Utah industrial bank.

WHEREAS, PFL funds each Loan by either (i) issuing borrower payment dependent notes ("Notes", and together with "Loans", the «Obligations") that are entirely dependent for payment on payments received on the corresponding Loan (the "Note Channel"); or (ii) agreeing to sell the Loan to certain qualified institutions, provided that PFL is retained as servicer of the Loan (the "Whole Loan Channel").

 

WHEREAS, PFL desires that Backup Servicer perform certain backup servicing duties in accordance with the terms of this Agreement, and assume the role of Successor Servicer (i) for the Loans and Notes originated through the Note Channel if requested to do so by the indenture trustee under that certain Amended and Restated Borrower Payment Dependent Notes Indenture, dated as of January 22, 2013 between PFL and Wells Fargo Bank, National Association (the "Indenture"), as amended or supplemented; or (ii) if requested to do so by one of the qualified institutions that purchased Loans through the Whole Loan Channel (each, a "Controlling Party").

 

WHEREAS, Backup Servicer is willing to perform the backup servicing duties specified herein and to assume the role of Successor Servicer pursuant to the conditions described herein.

 

NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, PFL and Backup Servicer hereby agree as follows:

 

	 	
I.

	
Definitions.

 

(a)    "Insolvency" means (i) a decree or order of a court or agency or supervisory authority or governmental authority having jurisdiction for the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, including bankruptcy, marshalling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of affairs, that has been entered against a party and where such decree or order shall have remained in force undischarged or unstayed for a period of thirty (30) days; or (ii) consenting to the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings; or (iii) commencement of a voluntary or involuntary bankruptcy petition against a party; or (iv) an offer or assignment of compromise for the benefit of a party's creditors.

(b)    "Applicable Law" means all federal, state and local laws, statutes, regulations and orders applicable to a party and relating to or affecting the servicing, collection or administration of any Loan, and all requirements of any governmental authority having jurisdiction over a party with respect to its servicing activities, which includes the Fair Debt Collection Practices Act, the Electronic Transfers Act, the Fair Credit Reporting Act, the Consumer Financial Protection Act of 2010 and the Equal Credit Opportunity Act, as any such laws, statutes, regulations, orders and requirements may be amended and in effect from time to time.

		2.	Duties of Backup Servicer.

 

(a)    In furtherance of its undertaking in Section 3 below, from and after the date hereof until the Appointment Effective Date, Backup Servicer agrees to perform the Backup Servicer functions as set forth in this Section 2.

 

(b) PFL shall provide to Backup Servicer nightly information that shall include, at a minimum, (i} the status each Loan and its current position (ii) all transaction information posted to each Loan; (iii) payments on each Loan that have been scheduled for a future date; and (iv) current information regarding ownership of each Loan and Note, payment processing information  and borrower and lender contact information with respect to each Loan and Note (the "Backup Servicing Information"). PFL shall provide the Backup Servicing Information via Backup Servicer's secure FTP site or through such other means as shall be agreed to by PFL and Backup Servicer.

(c) Within fifteen (15) business days of receipt of the Backup Servicing Infom1ation for the final business day within a calendar month, Backup Servicer shall load the Backup Servicing Information into Backup Servicer's standby system and provide PFL with a certificate stating that the complete set of Backup Servicing Information has been received for such month (the "Monthly Backup Servicing File"), is in an acceptable format and Backup Servicer is able to begin servicing of any or all of the Obligations within five (5) business days of receipt of such Monthly Backup Servicing File.

(d) Backup Servicer shall receive and review the monthly PFL report related to each Monthly Backup Servicing File, which report shall be in the form attached hereto as Exhibit A (the "Monthly Report"). The Monthly Report shall be provided to Backup Servicer via email or through such other means as shall be agreed to by PFL and Backup Servicer. Backup Servicer shall verify the information set forth on Exhibit B attached hereto, to the extent such information is contained in the Monthly Backup Servicing File. The verification shall compare the information on the Monthly Report to the information produced on Backup Servicer's system using the Monthly Backup Servicing File.

(e) Within fifteen (15) business days of receipt of the Monthly Backup Servicing File, Backup Servicer will deliver to PFL a notice either (i) certifying that it has confirmed the accuracy of the information specified in Exhibit B in the Monthly Report related to such Monthly Backup Servicing File, as described above, or (ii) describing any discrepancies discovered in the information specified in Exhibit B hereto contained in the Monthly Report related to such Monthly Backup Servicing File.

(f)  PFL agrees to provide  Backup  Servicer with  any  information  it  may  reasonably  request  that  is reasonably necessary for Backup Servicer to perform its obligations hereunder.

(g) Except as provided herein, Backup Servicer shall have no obligation to supervise, verify, monitor or administer the performance of PFL and shall have no liability for any action taken or omitted by PFL. In performing its duties hereunder, Backup Servicer shall have full power and authority to do or cause to be done any and all things in connection with its duties hereunder which it may deem necessary or desirable within the terms of this Agreement.

 

	 	
3,

	
Appointment as Successor Servicer.

(a)    Backup Servicer and PFL hereby agree that any time during the period beginning on the Effective Date and ending on the date on which this Agreement is terminated or the Obligations have been paid in full, whichever comes first (such period, the "Appointment Period"), at the sole option of (i) the indenture trustee solely with respect to the Loans and Notes originated through the Note Channel, the indenture trustee may appoint Backup Servicer to act as PFL's successor servicer in the event of FL's Insolvency or an Event of Default (as defined in the Indenture); and (ii) a qualified institution solely with respect to the Loans purchased by such qualified institution through the Whole Loan Channel, such qualified institution may appoint Backup Servicer to act as PFL's successor servicer in the event of PFL's Insolvency (as it relates to any such appointment , the "Successor Servicer").

(b) Within five (5) business days of receipt of notice from a Controlling Party (the "Appointment Effective Date") that such Controlling Party has appointed Backup Servicer as a Successor Servicer with respect to the Obligations controlled by such Controlling Party, Backup Servicer shall assume the duties and rights of the servicer with respect to the applicable Loans and/or Notes under a servicing agreement to be entered into between such Controlling Party and  Backup  Servicer (a "Servicing Agreement"). Backup Servicer agrees to offer the following financial terms to each Controlling Party who enters into a Servicing Agreement: (i) A charge of no more than five dollars ($5.00) per month per Loan serviced; (ii) No separate charge for the servicing of Notes; and (iii) A one-time conversion fee charge of no more than $25,000. In addition, under each Servicing Agreement, Backup Servicer shall agree to service substantially in accordance with PFL's Accepted Servicing Practices, a copy of which is attached hereto as Exhibit C, as such may be amended from time to time by providing written notice to Backup Servicer, and Applicable Law, unless otherwise agreed to in writing between Backup Servicer and the relevant Controlling Party.

 

(c)    Backup Servicer hereby agrees that in the event that Backup Servicer becomes a Successor Servicer during the Appointment Period, (i) Backup Servicer shall be ready, willing and able to assume, and shall assume, responsibilities for servicing the applicable Loans and/or Notes, and (ii) if appointed Backup Servicer for all outstanding Obligations, all fees set forth herein, except for those Servicing Agreement fee limitations identified in Section 3(b) and agreed to by Backup Servicer, shall no longer be payable to Backup Servicer.

		4.	Backup Servicer's Fees.    In  connection  with  this Agreement,  PFL  shall  pay  Backup  Servicer  the fees set forth in Exhibit D.

		5.	Consultation Requirements.   PFL shall consult fully with Backup Servicer as may be necessary from time to time for Backup Servicer to perform or carry out its obligations hereunder.

		6.	Access to Records.

(a)    Backup Servicer shall afford to PFL and its employees, agents, accountants, advisors and counsel, reasonable access at reasonable times during normal business hours to books, records, documents and other information concerning the conduct and performance of Backup Servicer of its obligations hereunder.

		7.	Representations and Warranties.  Backup Servicer hereby makes the following representations, warranties and covenants as of the date hereof:

 

(a)    Organization and Good Standing. It is a limited liability company duty organized, validly existing and in good standing under the laws of the state of Delaware.

(b)    Due Qualification. It is duly qualified to do business and, where necessary, is in good standing as a foreign limited liability company (or is exempt from such requirements), except where the failure to so qualify or obtain such approvals would not have a material adverse effect on its ability to perform its obligations under this Agreement.

(c)    Due Authorization. It has duly authorized, by all necessary action on its part, the execution and delivery of this Agreement and the consummation of the transactions provided for or contemplated by this Agreement.

(d)    No Conflict. Its execution and delivery of this Agreement , its performance of the transactions contemplated by this Agreement and the fulfillment of the terms hereof applicable to it will not conflict with, result in any breach of any of the material terms and provisions of, or constitute (with or without notice or lapse of time or both) a material default under, any material indenture, contract, agreement, mortgage, deed of trust or other instrument to which it is a party or by which it or its properties arc bound.

(e)    No Violation. Its execution and delivery of this Agreement, its performance of the transactions contemplated by this Agreement and its fulfillment of the terms hereof applicable to it will not conflict with or violate any material law applicable to it.

(f)    No Proceedings. There are no proceedings pending or, to the best of its knowledge, threatened or investigations pending or threatened against it before or by any governmental authority (i) asserting the invalidity of this Agreement, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement, (iii) seeking any determination or ruling that, in its reasonable judgment, would materially and adversely affect its performance of its obligations under this Agreement or (iv) seeking any determination or ruling that would materially and adversely affect the validity or enforceability of this Agreement.

(g) All Consents Required. All material authorizations, consents, orders, approvals or other actions of any governmental authority required to be obtained or effected by it in connection with its execution and delivery of this Agreement, its performance of the transactions contemplated by this Agreement and the fulfillment of the terms hereof applicable to it have been duly obtained or effected and are in full force and effect.

(h)    Enforceability. This Agreement constitutes its legal, valid and binding obligation, enforceable against it in accordance with the terms hereof, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereinafter in effect affecting the enforcement of creditors' rights and except as such enforceability may be limited by general principles of equity (whether considered in a proceeding at law or in equity).

(i)    Standard of Care. It shall use a standard of care and diligence reasonable in the consumer loan servicing industry  in providing  the services called for under this Agreement and will act in compliance with all Applicable Law.

 

		8.	Indemnity.

(a)  Indemnity by PFL. PFL agrees to defend, indemnify and hold Backup Servicer and any officers, managers, members, employees or agents of Backup Servicer harmless against any and all claims, losses, penalties, fines, forfeitures, legal fees and related costs, judgments, and any other costs, fees, and expenses (collectively, "Losses") that Backup Servicer may sustain under this Agreement in connection with claims asserted at any time by third parties against Backup Servicer which result from any act taken or any omission by Backup Servicer acting in good faith or Backup Servicer's performance (or lack of performance) under this Agreement, unless such Losses are the result of (i) the breach of this Agreement by Backup Servicer, (ii) Backup Servicer's failure to comply with requirements of Applicable Law, in performing its duties as Backup Servicer hereunder, (iii) the gross negligence or willful misconduct of Backup Servicer or (iv) any failure of the representations and warranties made by Backup Servicer hereunder or in connection herewith to be true and correct in all material respects. The indemnities in this Section 8 shall survive the tem1ination of this Agreement or the removal or resignation of Backup Servicer.

(b) Indemnity by Backup Servicer. Backup Servicer agrees to defend, indemnify and hold PFL and any officers, managers, members, employees or agents of PFL harmless against any and all Losses that PFL may sustain under this Agreement in connection with claims asserted at any time by third parties against PFL which result from any act taken or any omission by Backup Servicer in breach of this Agreement, (ii) Backup Servicer's failure to comply with requirements of Applicable Law, in performing its duties as Backup Servicer hereunder, (iii) the gross negligence or willful misconduct of Backup Servicer or (iv) any failure of the representations and warranties made by Backup Servicer hereunder or in connection herewith to be true and correct in all material respects. The indemnities in this Section 8 shall survive the termination of this Agreement or the removal or resignation of Backup Servicer.

 

		9.	Limitation of Liability.

(a) In conjunction with Backup Servicer's obligations hereunder, Backup Servicer is authorized to accept and rely on all the accounting, records and work of PFL, and Backup Servicer shall have no duty, responsibility, obligation, or liability for the acts or omissions of PFL. The degree of examination of such accounting, records, and work which Backup Servicer deems  necessary to complete any conversion and portfolio transfer in connection with Backup Servicer becoming a Successor Servicer shall not be construed as a representation by Backup Servicer of the accuracy of such accounting, records, and work.

(b) Neither Backup Servicer nor any of its members, managers, officers, employees or agents will be under any liability to PFL or any other person for any action taken or for refraining from the taking of any action in the capacity as Backup Servicer under this Agreement whether arising from express or implied duties under this Agreement; provided, however, that this provision does not protect Backup Servicer or any such person against any liability that would otherwise be imposed by reason of (i) the gross negligence or willful misconduct of Backup Servicer, (ii) the breach of this Agreement by Backup Servicer, or (iii) any failure of the representations and warranties made by Backup Servicer hereunder or in connection herewith to be true and correct in all material respects when made. Backup Servicer and any of its members, managers, officers, employees or agents may rely in good faith on any document of any kind prima facie properly executed and  submitted by any person respecting any matters arising hereunder. Backup Servicer will not be under any obligation to appear in, prosecute or defend any legal action which is not incidental to its servicing responsibilities hereunder and that in its reasonable opinion may involve it in any expense or liability.

(c)    Backup Servicer will have no responsibility and will not be in default hereunder or incur any liability for any failure, error, malfunction or any delay in carrying out any of its duties under this Agreement if such failure or delay results from Backup Servicer acting in accordance with information prepared or supplied by any person other than Backup Servicer or the failure of any such other person to prepare or provide such information. In the event Backup Servicer becomes aware of errors, which in the opinion of Backup Servicer, impairs its ability to perform its services hereunder, Backup Servicer shall immediately notify PFL of such errors. Backup Servicer will have no responsibility, will not be in default and will incur no liability for (i) any act or failure to act of any third party, including PFL, (ii) any inaccuracy or omission in a notice or communication received by Backup Servicer from any third party, (iii) the invalidity or unenforceability of any Obligation under Applicable Law, (iv) the breach or inaccuracy of any representation or warranty made with respect to any Obligation, or (v)  the acts or omissions of any successor Backup Servicer. Except for the obligations undertaken  by Backup  Servicer  in  this  Agreement,  Backup  Servicer  will  have no obligation to take any action, or to perform any of the duties of PFL until such time as Backup Servicer has become a Successor Servicer.

(d)    Backup Servicer offers no representations concerning, and shall have no liability hereunder with respect to, the collectability, enforceability or other characteristics of the Obligations. Backup Servicer shall have no responsibility and shall not be in default hereunder nor incur any liability for any failure, error, malfunction or any delay in carrying out any of its duties under this Agreement if any such failure or delay results from Backup Servicer acting in accordance with Applicable Laws, regulations or rules or from acts of God, war or terrorism, insurrection, strikes, stoppages of labor, power or equipment failure or malfunction (including that of any common carrier or transmission line), loss or malfunction of communications or computer (hardware or software) services, emergency conditions, tornado, flood, fire, earthquake or similar event, adverse weather conditions or any other factor, medium, instrumentality or any cause or circumstances, directly or indirectly, beyond Backup Servicer's control or for information prepared or supplied by a person other than Backup Servicer as contemplated hereunder or the failure of any such person to prepare or provide such information.

 

(e)  THERE ARE NO WARRANTIES MADE BY EITHER PARTY. EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY CONSEQUENTIAL, PUNITIVE, INCIDENTAL OR SPECIAL DAMAGES INCLUDING, BUT NOT LIMITED TO DAMAGES FOR LOSS OF CURRENCY, FUNDS, DATA, PROFITS OR GOODWILL, REGARDLESS OF WHETHER SUCH PARTY HAS BEEN ADVISED OF THE LIKELIHOOD OF SUCH LOSS OR DAMAGE AND REGARDLESS OF THE FORM OF ACTION.

	 	
10.

	
Termination.

 

(a) This Agreement may be terminated immediately by PFL upon the occurrence of any of the following conditions:

		(i)	Backup Servicer's Insolvency; or

		(ii)	Any gross negligence or willful misconduct of Backup Servicer.

 

(b) This Agreement may be terminated immediately by either party if the other party commits a material breach of this Agreement, which has not been cured within thirty (30) calendar days of the terminating party's written notice of said breach to the non-terminating party.

 

(c) This Agreement may be terminated by PFL for any reason or no reason following one hundred eighty (180) calendar days' notice to Backup Servicer.

(d) Backup Servicer may terminate this Agreement if it does not receive any payment required to be made under the terms of this Agreement, which failure continues unremedied for a period of thirty (30) calendar days after written notice of such failure shall have been given to PFL.

(e) This Agreement will be automatically and immediately terminated when all of the Obligations have been paid in full.

(f) This Agreement will be automatically and immediately terminated with respect to any Loans and/or Notes for which Backup Servicer becomes a Successor Servicer pursuant to Section 3.

		11.	Backup Servicer Not to Resign.  Except as may provided for in Section 10, Backup Servicer shall not resign from the obligations and duties hereby imposed on it except by mutual written consent of Backup Servicer and PFL or upon the determination that its duties hereunder are no longer permissible under Applicable Law and such incapacity cannot be cured by Backup Servicer without any unreasonable costs or expenses. Any such determination permitting the resignation of Backup Servicer must be in the reasonable determination of Backup Servicer and must be accompanied by an opinion of outside counsel reasonably acceptable to PFL regarding such impermissibility under Applicable Law.

		12.	Confidential Information.

(a)    Backup Servicer will preserve the confidentiality of any non-public information ("Confidential Information") obtained by it in connection with its performance of its responsibilities hereunder,  provided, however, that nothing herein shall prevent Backup Servicer from disclosing such information to (a) Backup Servicer's managers, officers, members, employees, agents, subservicers and professional consultants in connection with Backup Servicer's obligations under this Agreement, provided that such persons are informed of the confidential nature of such information and instructed to keep such information confidential, (b) any federal or state regulatory agency having jurisdiction over Backup Servicer, (c) any federal or state regulatory agency or governmental authority to which such disclosure is required (1) to effect compliance with any law, rule, regulation or order applicable to Backup Servicer, (2) in response to any subpoena or legal process) (3) in connection with any litigation or adversary proceedings to which Backup Servicer or any other party hereto is a party, or (4) as required to execute and administer this Agreement or (d) to the extent such information becomes public through no act or fault of Backup Servicer. In the case of any disclosure permitted by clause (b) or (c), Backup Servicer shall use commercially reasonable efforts to (x) provide PFL with advance notice of any such disclosure and {y) cooperate with PFL in limiting the extent or effect of any such disclosure. To the extent that any information provided to Backup Servicer in connection with this Agreement meets the definition of "non-public personal information" as that term is defined in Title V of the Gramm-Leach-Bliley Act, 15 U.S.C. Section 6801 et seq. (the "GLB Act") and/or is subject to protection under any federal or state statute, rule, regulation or guideline relating to privacy (including, but not limited to, the GLB Act and each federal or state rule, regulation or guideline implementing requirements of that statute) ("NPI Rules"), Backup Servicer shall treat such information as confidential and in accordance with the terms of the GLB Act and the NPI Rules, regulations and guidelines implementing requirements thereof. This Section 12 shall survive the termination of this Agreement or the removal or resignation of Backup Servicer.

(b)    Security Event. If Backup Servicer learns or has reason to believe that PFL's Confidential Information has been disclosed or accessed by an unauthorized party (each, a "Security Event"), Backup Servicer will immediately give notice of such event to PFL to the extent permitted by law or law enforcement authorities. In such notification, Backup Servicer will report on the nature of the incident, the estimated impact on PFL and investigative action taken or planned. Security Events shall include, without limitation, violations of Applicable Law. Notwithstanding anything in this provision, Backup Servicer will also comply fully with all Applicable Law applicable to security breaches. Except as may be required by law or law enforcement authorities, to the extent the breach involves "non-public personal information ", Backup Servicer will not notify any of PFL's customers or potential customers of unauthorized access of such Security Event without PFL's express consent or upon PFL's specific instruction. Backup Servicer will be responsible for the costs of any required notifications.

 

(c)    Return of Confidential Information. Within fifteen (15) calendar days after termination of this Agreement, Backup Servicer shall return to PFL or destroy (and certify as tot the destruction thereof, without retaining any copies) all originals and duplicates of any Confidential Information, as defined in this Section 12, in any form or medium.

	 	
13.

	
Backup Servicer Security Commitment. Backup Servicer shall at its own expense on an annual basis have an SSAE 16, type II audit performed and Backup Servicer shall provide PFL with the results of such audit.

	 	
14.

	
Insurance. Backup Servicer at its sole expense agrees to maintain the following insurance coverage during the Term:

(a)  All insurance required by federal, state, or local law and statute, including Worker's Compensation insurance; and

(b)  Employer's general liability insurance of $2,000,000 per claim and in the aggregate; and

(c)  Errors & Omissions insurance of $2,000,000 per claim and in the aggregate.

	 	
15.

	
Counterparts. This Agreement may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument. The parties agree that this Agreement and signature pages may be transmitted between them by facsimile or by electronic mail and that faxed and PDF signatures may constitute original signatures and that a faxed or PDF signature page containing the signature (faxed, PDF or original) is binding upon the parties.

	 	
16.

	
Governing Law. THE AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL LAW, WITHOUT REGARD TO ITS CONFLICTS OF LAWS.

	 	
17.

	
Waiver. No waiver, amendment or modification of this Agreement shall be effective unless it is in writing, is signed by the party against whom waiver, amendment, or modification is sought.

	 	
18.

	
 Notices. All notices, demands, instructions and other communications required or permitted under this Agreement must be in writing and will be deemed to have been duly given upon delivery or, in the case of a letter mailed by registered first class mail, postage prepaid, three days after deposit in the mail. Unless otherwise specified in a notice sent in accordance with the provisions of this section, notices, demands, instructions and other communications in writing will be given to the respective parties at their respective addresses listed on the signature page to this Agreement.

	 	
19.

	
Further Assurances. PFL and Backup Servicer agree to do and perform, from time to time, any and all acts and to execute any and all further instruments required or reasonably requested by the other parties hereto in order to effect more fully the purposes of this Agreement.

	 	
20.

	
Independent Contractor. Backup Servicer is an independent contractor and shall perform the services called for under this Agreement as such, and not as the agent, employee or servant of PFL. Backup Servicer and PFL shall remain fully responsible for their respective employee's actions, salaries, benefits, taxes, worker's compensation, unemployment insurance, and any other employee costs or benefits. Nothing in this Agreement shall create a partnership or joint venture between Backup Servicer and PFL.

	 	
21.

	
Assignment. Neither party shall assign this Agreement or any of its rights or duties hereunder without the other party's prior written consent, except that either party may assign this Agreement to an affiliate, acquiror of fifty percent (50%) or more of such party's business (by way of stock sale or merger) or successor in interest upon written notice to the non-assigning party. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.

	 	
22.

	
Integration. This Agreement, including, without limitation, any Exhibits referred to herein and annexed hereto, constitutes the entire agreement between the parties with respect to the subject matter hereof. There are no agreements, representations, warranties, promises, covenants, commitments or undertakings between the parties hereto other than those expressly set forth herein. This Agreement supersedes all prior agreements, representations, warranties, promises, covenants, commitments or undertakings between the parties hereto, whether written or oral, with respect to the subject matter contained in this Agreement.

	 	
23.

	
No Petition. To the fullest extent permitted by law, Backup Servicer agrees that it shall not file, commence, join, or acquiesce in a petition or a proceeding that causes (a) PFL to be a debtor under any federal or state bankruptcy or similar insolvency Jaw or (b) a trustee, conservator, receiver, liquidator, or similar official to be appointed for PFL or any substantial part of any of its prope1ty.

 

[Signature page follows]

IN  WITNESS  WHEREOF, each  of  the  parties  has  duly  executed  this  Backup  Servicing Agreement as of the date first written above.

 

	
BACKUP SERVICER:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
FIRST ASSOCIATES LOAN SERVICING, LLC

	
 

	
PROSPER FUNDING LLC

	
 

	
 

	
 

	By:	/s/ Laurence Chiavaro		By:	/s/ Aaron Vermut
	Name:	Laurence Chiavaro		Name:	Aaron Vermut
	Title:	Executive VP		Title:	President
	 				
	
Address:

	
 

	
 

	
Address:

	
 

	
 

	
15373 Innovation  Drive, Suite 300

	
 

	
 

	
c/o Prosper Marketplace, Inc. 

	
 

	
San Diego, CA 92128

	
 

	
 

	
101 Second Street, l5th  Floor

	
 

	
Attention: Laurence Chiavaro

	
 

	
 

	San Francisco, CA 94105 
	
 

	
Executive Vice President

	
 

	
 

	
Attention: General  Counsel

 

Exhibit A

Form of Monthly Report

Exhibit B

 

Information to be Confirmed by Backup Servicer

 

	 	
1.

	
The aggregate outstanding balance of the Loans at the beginning of the collection period

	 	
2.

	
The number and principal balance of delinquent and defaulted Loans at the close of the collection period

	 	
3.

	
The aggregate outstanding balance of Loans at the close of the collection period

Exhibit C

 

Accepted Servicing Practices

Exhibit D

Backup Servicer Compensation

(a) A one-time set-up fee of [***] due on the Effective Date of this Agreement.

(b)    The ongoing back-up servicing fee shall be equal to [***] per month for up to a [***] Loan portfolio, and [***] per month for over a [***] Loan portfolio (the "Monthly Fee"). The Monthly Fee shall be billed monthly in advance. For the avoidance of doubt, the Loan portfolio shall be determined based on the Loans for which PFL is servicer (i.e., Loans for which Backup Servicer has taken over as Successor Servicer shall not be included in the calculation).

Legal and any costs relating to due diligence are additional.

(c)    Consulting time provided by Backup Servicer to PFL will be billed at [***] per hour per person, or then current rates, for reasonable time expended at the request of (and with the approval of), or the initiation of, PFL. PFL agrees to pay such reasonable fees within thirty (30) days of receipt of an invoice from Backup Servicer.

(d)    Pre-approved (by PFL), reasonable out-of-pocket expenses incurred by Backup Servicer in its performance of its duties hereunder, including, but not limited to, expenses incurred for travel for site visits, and due diligence.

(e)    The fees and expenses set forth herein are stated in U.S. Dollars, and all invoicing and payments hereunder shall also be in U.S. Dollars. Billing is in advance and PFL shall pay outstanding invoices within thirty (30) days or incur interest charges of 1.5% per month on any outstanding balance or the maximum allowable by law, whichever is less.

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